by Michael Nuciforo

Editor's note: This post was written by Michael Nuciforo, a Mobile Banking Consultant at Keatan. He previously worked at ANZ on a number of developments, including goMoney, and more recently was Head of Mobile Banking at RBS managing the UK Retail portfolio.

Banks has perfected what I refer to as the ‘negative pricing model.’ In simple terms, fees are charged when customers make mistakes. We are all familiar with it. It is the annoying cost of returning a DVD late, or staying too long in your parking space.

At present, banks rely significantly on revenue generated from fees when customers fall afoul of their terms and conditions. Amongst all the doom and gloom of regulatory pressure, the euro debt crises, and record low margins, could mobile banking be the right service to implement a ‘positive pricing model’?

Tiered charges for access to additional features and content have become common due to the popularity of games such as FarmVille and Sims. This is great news for banks as the market has likely reached the right point of innovation, access and acceptance to allow for the monetization of mobile banking.

Now that most banks have launched first-generation mobile services, new features are perfect for tiered pricing. Areas such as NFC payments and remote deposit-capture are a great place to start. They are tangibly more convenient than existing processes, and are designed to leverage the specific capabilities of a mobile device.

But can banks pull this off? Or will it just be seen as yet another annoying banking fee?

When implementing a pricing model, banks need to be clear about their strategy and objectives. For the model to work, it is critical that unique, mobile-specific services are delivered to warrant the cost. And banks shouldn’t charge for services that they already offer for free today. This will only anger existing users. They should also avoid charging for services available in other channels for free, although some exceptions could apply. Banks need pricing that is fair, transparent and that rewards loyalty as well.

Any new fee will disappoint some customers. Banks should also expect negative media attention at first. This will happen any time bank and fee are included in the same sentence. Banks need to be proactive about engaging regulators during the process and communicating actively to customers. It is important that fees are integrated seamlessly into the customer journey. Regular enhancements should also be made to the service. Success will ultimately rely on the quality of new features.

With traditional revenue streams under attack, and investment in mobile growing, pressure will come on mobile leaders to justify the costs. The honeymoon period for mobile banking will be tested at some stage. Customer retention and transaction migration are fine, but are they enough for your senior executives? And can they be accurately proven?

With customers now familiar with this pricing model in other facets of their everyday life, it is important that banks also take the opportunity to do this now. Otherwise mobile banking, like online banking, will become a free channel for life.

I'm not sure if this is normal or not, but I enjoy the process of updating the 100-some apps on my iPhone. I'm always interested in what's changed and how the company communicates the new info to users. I've noted before that banks aren't good at leveraging this customer touchpoint, but they are getting better.

In the latest round of app updates, I noticed a nice improvement from USAA (see inset; note 1). Instead of automatically logging you off whenever you move out of the app, say to take a call or fire off a text, the bank provides the option of staying logged in for up to 20 minutes.

Sure, there's a tiny risk that if you were to lose your phone or loan it to someone during that time, they could get into your account. But your average smartphone thief is unlikely to click on the USAA button during those first 20 minutes. And even if they did, it's unlikely they could do much with the info.

Bottom line: I want this option on all my banking apps.

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Notes:
1. This iPhone update (v. 4.0) was pushed out, 8 Nov 2011
2. For more on mobile banking, see our subscription publication, Online Banking Report.

Last week, we looked at how Square makes a single webpage look great across various mobile platforms. Today, we look at the exact opposite problem. How to showcase your various mobile apps on a single webpage. 

Pageonce does it as well as we've seen, using a single showcase panel that includes all five of its mobile app platforms across the top: iPhone, iPad, Android, BlackBerry and Windows. Users can scroll horizontally to see two sets of screenshots for each platform.

The company also includes version number, date of the last update, and app size in the lower right corner. And of course, there's a link to download the appropriate marketplace to download the app. The Android page uses a QR code instead of a link.

In other news, Pageonce added bill payment to its iPhone and Android app today, moving ahead of Mint in the features arm race. The new Gold service, which we haven't tested yet, is priced at $4.99/mo, good news for fee-starved online financial providers. Mint says it has bill payment coming too. It will be interesting to see if they put a fee on it.

Relevance for Netbankers: The addition of transactional services such as bill payment makes third-party PFMs, or virtual banks such as BankSimple, bigger threats to mainstream banks and credit unions. As uber-consultant Richard Crone always says, "He who enrolls, controls."

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Pageonce iPhone app

iPad

Android

BlackBerry

Windows

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Note: We cover mobile banking and payments periodically in our Online Banking Report (subscription).

Skimming my news feeds in the post-Finovate logjam, I flagged a news release about a new app that just landed in the Android Market (the iPhone version rolled out last December). The app allows Californians to easily pay their PG&E power bills from their mobile phone using a credit/debit card or checking/savings account. It's powered by Tio Networks. 

And while you'd think that three years into mobile app era, there'd be hundreds, if not thousands of similar apps, a quick search of the Apple App Store came up empty (see note 1). 

The app is drop-dead simple to use, as it should be (see screenshots below). The amount owed (across multiple PG&E accounts if necessary) is shown. Then, users select payment method, "sign" the screen with their finger, and submit. An email confirms the transaction.

TIO levies a $1.45 transaction fee per payment (well disclosed, see second screenshot below), which is a buck more than a stamp, but it also gives customers the option of paying by card, something that can't be done in the mail, online or in person. And payments received by 5pm are posted the same day, an important benefit for the large segment of the population that prefers to pay bills at the last minute.

Summary: Company specific same-day billpay apps are a great convenience for the majority of customers who pay their bill upon receipt (rather than relying on automated options). We expect to see many more like this. FIs and payment processors that serve billers would be wise to help them mobilize their payments.

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PG&E mobile billpay screenshots (iPhone version)

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Notes:
1. There are likely at least a few others that I didn't find. The app search tools are not super sophisticated.
2. As of 7 July 2011, there are more than 425,000 available apps and more than 15 billion cumulative downloads.

I look at lot of mobile banking apps. But there are several thousand in the U.S. alone, so I'm not going to claim that I know which one is "best" or even who should be in the top-100.

But I will say, of the mobile banking apps I'm familiar with, ANZ Bank's is right up at the top. Kudos to the bank and Fiserv's M-Com unit that helped with development.  

Why is it so good? It's full featured, of course. But it's the first banking app that feels like it runs WITHIN the iPhone instead of being bolted on. It's almost like what Apple would have done if it was building a banking app right into the operating system (notes 1, 2, 3).  

I especially like how the person-to-person payments function integrates with iPhone Contacts. And how iPhone's photo gallery can be used throughout the app to illustrate goals and payees with your pictures (click on inset above for a better view) and to store bill payment-receipts (see screenshot below).

But never mind what I think, look at actual customer usage. According to a July 15 investor presentation, in the year since it was released, the ANZ goMoney already accounts for 26% of the bank's total online traffic. If ANZ mobile can continue that pace for another 12 months, it will surpass regular PC-based online traffic by this time next year.   

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ANZ goMoney demo video is definitely worth two minutes of your time
Note: Clickthrough below to ANZ website and play the video (the version on YouTube is the older version of the app)

Notes:
1. Hyperbole alert. It's Friday afternoon, so I may be getting a bit carried away. But I stand by the opinion.  
2. I don't have an ANZ account, so I'm basing my observations on the superb demo video, complete with Apple-esque soundtrack (see screenshot above).

A few days ago I was on a Chicago-Seattle flight on Alaska Airlines and was surprised to hear an overhead announcement about Bank of America sponsoring free wi-fi on the flight. But it came with a catch, the free access applied only to smartphones (notes 1, 2).

While I'm a big user of airborne wi-fi on my laptop, there isn't much I want to do on a smartphone connection at 35,000 feet. But my curiosity got the best of me, so I gave it a shot and found the free connection was delivered as promised. I had simply to type in my email address, agree to the terms and conditions, and hit the big blue button (see first screenshot).

It didn't take me long to figure out why BofA was being so generous. The second page of the sign-on process included a full-page ad for the bank's Alaska Airlines affinity card (see second screenshot).

My take: Sponsored wi-fi is an effective way to reach the lucrative smartphone-carrying market. But the credit card application user experience was flawed. The bank dumps the whole app and disclosures onto a single mobile webpage, which required scrolling down about eight screens' worth of info (see screenshots 3, 4, and 5). And the fonts were way too small to engage most users.

If BofA were to build a proper mobile-optimized credit card application form, they'd likely increase app volume two- to three-fold. In the meantime, the bank should add an option for the user to request a full-sized app to be completed later on their laptop. 
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1. First screen of free wi-fi promotion on Alaska Airlines (7 Aug. 2011)

2. BofA credit card solicitation on page 2 of the login process

3, 4, 5: The rest of the mobile application (click to enlarge)
Note: This shows only the beginning of the disclosures; the full text ran several more screens down the page.

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Notes:
1. I didn't test it, but I assume it would have been free on the iPad as well.
2. I believe they said the offer would continue through the month of August.

I've been thinking about mobile delivery a lot in the last few years. Two years ago, I opened presentations with "mobile is the new online." But lately I've changed that line to: 

Mobile is the new a better online

Equating mobile banking to online is selling it short. Really, it's much better than online. I believe that in the not-too-distant future (i.e., 10 years out), we'll come to look at online as an extension of mobile, not the other way around.

Here's why mobile is not only better than online, but also changes everything about remote delivery: 

• Mobile knows where you are
• Mobile is with you all the time
• Mobile has a voice option (duh)
• Mobile can be more secure
• Mobile can interrupt you (text message, on-screen alerts)
• Mobile can use the accelerometer (shake to log in)
• Mobile has a camera and an input device
• Mobile will be able to communicate directly with other devices (NFC)
• Mobile will allow you to pay at the POS and be your primary wallet and ID too

No doubt, your product folks have their work cut out for them integrating mobile into all that you do. Yet, despite all the hype, mobile changes nothing about your underlying banking business:

• Everyone will offer it, so you won't gain market share
• Everyone will price it the same, so you won't gain incremental profits
• Customers will expect it, so you won't improve customer satisfaction

Bottom line: Ultimately, banks will win or lose based on how well they execute on gathering deposits, making loans, facilitating transactions/payments, servicing customers effectively, and pricing it all correctly (note 1). 

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Notes:
1. Graphic image from Chase (click on it to go to the site)
2. And I thought of adding, "keeping regulators happy." But that probably goes without saying these days.

I've been accused of falling for the Bank Simple hype. Just to prove that I don't discriminate, I bring you MoveNBank, a mobile-optimized banking startup founded by Bank 2.0 author and consultant Brett King.

From what little is disclosed on its Facebook page, Twitter feed and Startuply profile I've assembled the following facts:

Timeline:

• Founded July 2010
• Private beta to begin soon (per 1 July 2011 Tweet)
• Soft launch scheduled for July 2012

Company:

• Global startup with HQ in NYC (Madison Square Park, 25 W. 31st)
• Founder and Chairman is Brett King
• 8 employees

Product description:

• Mobile only, with no paper or plastic
• NFC-enabled app
• Incorporates "gamification" in UX
• According to Startuply, "reinventing credit scores and more with an open, social transparent, and viral model" (sounds P2P lending-esque)

Bottom line: MoveNbank is looking to leapfrog the competition by removing all vestiges of old-school banking. No branches (of course). No paper (no surprise). And no plastic (what?).

That's how ING Direct got its start (they did have paper statements), so it's not unprecedented. But if MoveNbank plans on offering payments, it will be harder to pull off. But with a soft-launch still a year away, it should be able to ride the NFC wave expected to roll across the globe in the next five years.

Are there any other remote banking startups I'm missing? Drop me an email (jim@netbanker.com).

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MoveNbank placeholder page (11 July 2011)

I was reading one of my favorite personal finance blogs today, Lazy Man and Money, and I noticed an intriguing ad from TD Bank. Actually, the blog is covered in TD ads, with the faces of spokescouple Regis & Kelly peering out from every corner.

But originally I noticed only the ad in the upper-right corner (see first screenshot below). The mobile interactivity, along with the 10 spaces asking for my number, grabbed my attention. 

The text-message campaign is powered by Cielo Mobile, whose URL was displayed in the browser status bar after I clicked the banner.

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How it works 
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1a. Users type their mobile number into the interactive banner ad (upper-right).

1b. The banner returns this thank-you message:

2. The link in the text message (left) opens the mobile webpage (right).

3. The app is downloaded from the iTunes App Store and this is the first screen at launch:

_________________________________________________________

Analysis
_________________________________________________________

Apparently, I'm not the target audience for this banner ad since I don't have an account at TD Bank. But if inclined to change that, I'd like a little more help opening an account. The bank does better than most by including links to its call center and webpage on the first screen of its native iPhone app (see #3 above), but there should be a direct call to action, or even a different app, for non-customers. 

This guest post was written by Daniel Thomas, a 25-year strategy and product development veteran of the financial services industry. He is a principal consultant with Mindful Insights LLC.

Back in April, we showed you the list of the 30 most popular iPad apps from U.S. banks and other financial services companies listed on iTunes. The list featured the usual big names, but one surprise was #14, Texas Dow Employees Credit Union (TDECU), a 132,000 member, 19-branch, $1.6B credit union headquartered in Lake Jackson, TX.

The app, UniFI, available on iPad, iPhone and Android platforms, was developed by startup FI-Mobile. The full-featured offering includes:

• All the banking functions offered in online banking
• Linkage to Facebook and Twitter
• Branch locations
• Rates
• Advertising capabilities
• Analytics

FI Mobile says it can launch the app in three weeks for FIs that already have a mobile banking application, and seven weeks if they have to develop a native app.

_____________________________________________________________

Features
_____________________________________________________________

Clicking on Mobile Banking from the home screen launches the WAP service developed by Q2ebanking (note 1).

Both the Locations screen and the Check Our Rates page fetch real-time content from tables that the bank or credit union maintain in FI Mobile's advanced-content management system (admin tool). 

TDECU has an active social network presence, so Facebook and Twitter integration facilitates more frequent views and comments.

The app also includes contact information, rates, and access to TDECU credit cards through gotomycard.com.

__________________________________________________________

Results
________________________________________________________________________

According to Brad Clutter, Online Banking Product Manager at TDECU, in the first two months after the app's launch in March, mobile subscribers grew 50% (their target was 10%) and the number of mobile transactions (balance inquiries, transfers, etc.) grew 30% compared to their existing WAP-only, mobile-banking program. He said, "We have been blown away by the results we've seen, and they have more than justified the cost."

Thanks to FI Mobile's analytics, TDECU can now see that their app is being used by members in all 50 states and in 16 different countries. They know that 84% are returning users and use of Android devices outnumbers Apple iOS nearly 2-to-1.

----------------------

Note:
1. UniFI is vendor agnostic and will launch the mobile banking program developed by any vendor. And if you don't have one, FI Mobile will develop one.

I've been waiting for something like Chase Bank's Jot (see note 1). It's part of the "second wave" of mobile apps that demonstrate why mobile banking will soon be better than online banking.
_________________________________________________________________________________

Mobile banking phase 1: 2008 through 2011
________________________________________________________________________________

Mobile's first wave was all about porting the most-used online functions, balance inquiry and statement viewing, to a smaller screen. That was convenient for smartphone owners on the go, but it didn't add much to the overall user experience. 

The test of whether you've nailed the mobile UX is if that even if you are within arm's reach of your laptop, you still pick up the mobile to perform a function. Most mobile banking systems fail that test, i.e. you only use mobile banking when online access is inconvenient or insecure.
________________________________________________________________________________

Mobile banking phase 2: 2011+
________________________________________________________________________________

The second wave is much more interesting. Your mobile phone can do financial chores that simply cannot be accomplished online, for example:

• Deposit a paper check via mobile camera (USAA, Chase, PayPal and many more)
• Transfer money to your friend by "bumping" phones (PayPal, ING Direct)
• Alert you to special merchant offers in your exact location that are redeemable simply by using your bankcard (BankOns)
• Pay your bill automatically by scanning the billing statement (Mitek)
• Upload paper receipts and append them to expense reports (Expensify)

And the latest addition to that list:

• Receive feed of transactions and tag them with categories for future reference and reporting (Chase Jot)

________________________________________________________________________________

How Jot works
________________________________________________________________________________

Chase's new app (announced 1 June 2011) may not be as cool as remotely depositing a check, but it's much more useful for most cardholders. The iPhone and Android app, which is currently available only for the bank's Ink business credit card, sends push notifications of each transaction (see inset) and enables users to (relatively) quickly append transactions with category information, i.e. "tag" transactions. 

One key Jot feature, missing in most mobile banking services, is a running list of the transactions waiting to be tagged (see right).

That way, when the business owner has a few spare moments, they can quickly get caught up with their categorizing work. This ongoing attention will reduce the quarterly game of "what's that transaction" played when finalizing the company books.

So not only does Jot save time, it potentially improves the quality of the accounting data, always a good thing for business management. 

The app also includes other business credit card management functions such as basic reports by tag, the ability to change employee credit limits, and info on outstanding balances and payment due dates.

While the functionality is still pretty basic (e.g., there is no way to add more than one tag to a transaction), there are only 60 days of transactions available, and login needs to be simplified, overall Jot is a winner. We are tagging it with an A-.

----------------------------------------------------

Notes:
1. The Jot landing page is well done and includes a series of four short demo videos.
2. For OBR subscribers, see our previous Online Banking Reports on mobile banking and payments.

A little more than a year after the iPad launched, Bank of America finally made it their own with a native app. It appeared in the iTunes store around midnight last night and has already climbed to #42 on the list of most popular free apps across all categories (5 PM Pacific; see update below and notes 1, 2).

I took it for a spin a few minutes ago and it's about what you'd expect for the first version. The most important functions are all there: view recent transactions, transfer funds, pay bills, find ATM/branch locations, and contact customer service. It also includes the ability to apply for a new account within the app, something that is still relatively rare (and not included in the bank's iPhone app).

Analysis: Overall, it's a solid, if somewhat tardy, initial effort and will be adequate for most users. However, BofA has a reputation for being an online leader, and there is nothing in the app so far that supports that brand positioning. But, then again, simply having an iPad app puts it ahead of most competitors (see list of top banking apps as of last week).

A few other notable features:

• Users have the option to store their username, so subsequent logins can be accomplished by simply entering a password (screenshot 1)
• Pressing anywhere on a line item in the statement brings up a small popup with additional transaction detail (screenshot 2)
• While it won't win any design awards, the app gets a passing grade with an overall look and feel that is consistent with other iPad apps with relatively intuitive navigation. At least it's not simply an expanded version of its iPhone app (like the Chase iPad app)

It also disappoints in a few areas:

• I tried to pay my credit card bill, but the iPad app doesn't support payment via external checking account (regular online banking does)
• It times out after 10 minutes (good), but leaves your account balances visible until you dismiss the popup (screenshot 4)
• I was not able to access business credit card statement data (system unavailable) but was able to get personal card data
• The squares didn't quite fit the screen right in portrait mode (screenshot 4)
  
  

1. Initial iPad app sign in (3 May 2011)

2. Transaction details popup

3. New account app

4. Time-out warning still shows account balances

Notes:
1. The app still shows up as #32 in the finance category. So clearly, the top list among all apps is refreshed more often than the individual category lists.  
2. There is no mention of the app on the bank's website as of 5 PM.
3. For more info on mobile banking, see our previous Online Banking Reports.

I've always admired ING Direct's focus on deposit accounts primarily sold and serviced through the Internet. While the bank has diversified into checking accounts, mortgages, and investments during the ten years since it launched, the core website look and feel is virtually unchanged (see 2001 version here). 

So I was more than a bit surprised to learn this weekend that ING Direct became the second U.S. financial institution to add Bump-powered phone-to-phone payments to its iPhone app. PayPal was first, adding the feature more than a year ago.

Bottom line: Evidently, with "high-yield savings" stuck at 1%, the giant direct bank needs to be a little more creative on the feature side to attract new business. While bump-to-pay will eventually be replaced with direct communications via NFC or other technologies, it's a nice addition that positions ING Direct as a mobile leader.

Bump is now one of two choice on the P2P menu on ING Direct's iPhone app (2 May 2011)

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Note: For more info on mobile banking, see our previous Online Banking Reports.

This is a followup to last week's 30 most popular iPad apps. Unlike the iPad, most major financial institutions have had an iPhone app for a year or longer. So the most-popular list reads pretty much like a who's who of U.S. banking.

Observations:

• Only 16 (25%) of the top-65 also have iPad apps
• 36 (55%) apps are from banks representing 29 unique banks (i.e., 7 apps are second or third ones from the same bank)
• 15 apps (23%) are from credit unions
• Banks/card issuers command 6 of the top 10 spots (7 if you count PayPal)
• The highest credit union is #23, Navy Federal Credit Union; Suncoast Schools FCU is second highest at #35

Methodology: Using an iPhone in the late afternoon today, I accessed the Free apps in the Finance category of the Apple App Store and sorted by "Most Popular." I included apps only from U.S. financial institutions or from third parties that tap directly into financial institution data using account aggregation (e.g., from Yodlee, CashEdge, etc.). Pure content apps, like ING Direct's ATM Finder, were not included even if from a financial institution.

Note: The first column below is the rank among all financial institutions (as defined above). The second column in the app's rank within the entire App Store "finance" category. And the third column is the rank of that company's iPad app, if they have one.

Table: 65 Most-Popular U.S. Banking Apps

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Note: For more info on mobile banking, see our previous Online Banking Reports.

It's been more than six months since we last featured a new mobile app from a financial institution (see Arvest Bank's financial calculators). It's not because of lack of activity, or importance. In that time, more than 1,000 financial institution apps have been introduced and the market has really heated up.

But we focus on what's new and different. And for the most part, the class of 2010 and 2011 have been "me-too" entries. Which is exactly as it should be. Every mid-sized and larger bank and credit union needs at least one app in the iTunes store, so the last 18 months have been about gaining competitive parity. 

But things will start to get more interesting again as financial institutions:

• Introduce advanced features such as mobile photo billpay
• Reinforce their overall brand positioning with a novel look and feel
• Look to mobile to differentiate themselves from other players
• Introduce niche apps for defined customer segments

Southern Bancorp's new mobile app, Shake and Bank, ticks all four boxes. It's an iPhone/iPod Touch app designed to give kids (or any account holder) a quick look at the balance in their account. As you can see below, Shake and Bank is pretty much self-explanatory:

1. Open app (note 1)

2. Shake iPhone

3. See balance

The app requires a setup code to launch. According to the iTunes entry, the code can be obtained through the bank's website or at a branch. But as of today, I see no mention of Shake and Bank, or mobile banking for that matter, at their website.

Bottom line: I'm a sucker for pigs, so obviously I like it. But more importantly, Southern Bancorp makes it easy to monitor account balances with a simple kid-friendly approach. And parents will appreciate the help reinforcing the savings habit (note 1).

Southern Bancorp has $1.1 billion in assets and 40 branches in Arkansas and Mississippi.
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Southern Bancorp's iPhone app targeted towards kids (link, 25 April 2011)

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Notes:
1. Since I couldn't test the app without an account, I assume there is no subsequent login requirement once you've entered the setup code. And more importantly, I hope that it oinks when shaken. 
2. For more info on mobile banking, see our previous Online Banking Reports.

Apple tweaked its propriety algorithm that ranks apps in terms of popularity (Cnet article). Evidently the changes had an impact on overall rankings, but little or no effect on intra-category ranks.

That holds true with my casual observations within the finance category. Regardless, it seemed like a good time to visit the App Store and document which financial iPad apps are currently most popular (see Table below).

Note: The first column below is the rank among all financial institutions (as defined below). The second column in the app's rank within the entire App Store "finance" category.

Observations:

• The highest rated bank is Chase at number 9 in the finance category
• There are only two banks (Chase & USAA) in the top 20
• There are only seven consumer banks in the top 200 (Chase, USAA, Bank of Oklahoma, Trustmark, BB&T, BBVA, Bank of Texas)
• There are more credit unions (8) than banks (7) in top 200 in the finance category
• Still missing some huge banking names (Amex, BofA, Capital One, Citi, Discover, Mint, PayPal, US Bank)

My methodology: Using an iPad and iPhone, I accessed the finance category of the App Store and sorted by "Most Popular." I am including only apps from any U.S. financial institution or from third parties that tap directly into financial institution data using account aggregation (e.g., from Yodlee, CashEdge, etc.). Pure content apps, like Schwab's On Investing magazine, were not included even if from a financial institution.

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Note: For more info on mobile banking, see our previous Online Banking Reports.

Groupon may be the biggest company in history that everyone thinks they could have built. Facebook, I guess, is up there too.

It seems everyone is wondering how they could do the "Groupon of ____" (fill in the blank). In my world, the blank is "banking." I already wrote about the potential for selling financial products through Groupon and other flash marketing sites last July, so I won't repeat that part. Anyway, that's Groupon 1.0. 

It's Groupon 2.0 that I think is even more interesting for financial institutions. The new model, coming in a few weeks, is all about mobile deals. The company is said to be planning on adding two buttons to your smartphone:

I'm hungry...which will alert you to nearby Groupons you can use for food deals.

I'm bored...which will alert you to just about anything else Groupon sells.

It's brilliant. And so simple. Again, everyone will wish they'd built it. 

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Banking Opportunities
________________________________________________

So how could you do the same thing in personal finance? What would those buttons be?

• I'm broke....leads to ATM finder, cash-back location, credit card site, loan app, friends & family loans, P2P lender, etc.
• I've just been paid...leads to ATM finder, branch locations, deposit accounts, billpay, investments, automated savings plans, etc.
• I'm out of town...leads to ATM finder, FX locations, travel services, 
  resource locator, card-issuer notifications, security preferences, etc.

But those are all pretty much standard functions of online/mobile banking today. The bigger opportunity may be to beat Groupon at the local level, with merchant-funded rewards tied to debit/credit cards (see note 1). Banks could potentially use the same "hungry/bored buttons" and direct customers to cash-back deals at restaurants and other merchants making offers to your cardholders.

Bottom line: Location-based rewards is another example of why mobile banking will be more important than online banking. To put it simply:

Banks enable commerce.

Mobile enables location-based commerce.

So financial institutions are right in the middle of a multi-billion dollar shift in retail spending. Enjoy all the opportunities!

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Notes:
1. For more on merchant-funded rewards, see the latest Online Banking Report.
2. Picture credit: All Things Digital

I was surprised to see the news release that U.S. Bank had upgraded its Firethorn-powered mobile banking app to include mobile remote deposit. I've been following the development of the bank's PC-scanner-based remote deposit option which also launched yesterday, and I'd never seen the mobile option mentioned (previous post). 

True to form, when I logged in to my account online and clicked on the "Make a Deposit (New)" link, there was still no mention of the mobile option. However, I was greeted with the news that I was now eligible to use the bank's new PC scanner-based program at a cost of $0.50 per deposit.

I went through the simple online enrollment process (see below), but didn't test an actual deposit because I don't have a scanner attached to my laptop.

Bottom line: Congratulations to US Bank for being the second major bank to support both mobile and PC-based consumer remote deposit, trailing just USAA which launched PC-remote deposit in Dec. 2006 and the mobile version in Aug. 2009. Chase also offers mobile consumer remote deposit (launched in July 2010)  but does not offer a consumer PC-based service.

________________________________________________________________________

How it works
________________________________________________________________________

1. Select "Make a Deposit" link on left

2. Enrollment
Users must enter their email address, agree to the terms, and answer the following three usage questions:

3. Select "Get Started" on main deposit page

4. Choose account to deposit to

5. Enter check details

6. Error message requesting Java be downloaded

Here's the first time I've seen a QR code used on a bank's homepage. After an animation sequence (below) announcing Chase Bank's new Android mobile banking app, the final graphic displays a code that Android smartphone users can scan to download the new app. Very clever.  

Chase Bank homepage (20 Jan. 2011)

Landing page (link)

Animation graphic 1:

Animation graphic 2:

Animation graphic 3:

I meandered into Intuit's lab site today and ran across a nifty app released last year called TurboTax SnapTax. It allowed California residents to file simple tax returns by photographing their W-2 form, answering a few questions, then e-filing directly from the iPhone app (inset).

As you can see in the following video, the whole process could be completed in a few minutes. The app launched last year on Jan. 15, just in time for the 2010 tax season. The cost was $9.99 which included Federal and state e-filing. 

There's no word yet on whether the company will be releasing a 2011 version (update: it launches Jan. 13, 2011 and is good in all 50 states). There is no entry in the iTunes store for SnapTax as of today. However, Intuit does have two tax tools available: TaxCaster to estimate your refund and MyTaxRefund to track it. 

Analysis: The Intuit app is part of a trend we expect to continue, using smartphone cameras to capture, store, and eliminate the need to store paper receipts and statements. And like Mitek's Mobile Photo Bill Pay, Intuit's Snaptax is much more than a dumb scanner. It takes the scan, reads the info, and assists in completing the transaction.

Opportunity for NetBankers: It's probably too late for 2011 tax season, but if you can be the first one in your market to offer mobile-photo tax-prep next year, it should provide a healthy PR boost come April 2012. You might also consider offering a tax estimator and/or refund tracker to your mobile offering. 

I just realized that I haven't posted anything about non-app-based mobile websites (aka WAP) since the pre-iPhone days of early 2007, when I tried unsuccessfully to log in to ING Direct's mobile site through my trusty Samsung Blackjack.  

Mobile banking has come a long way since then, primarily through native apps, now supported by more than 1,000 financial institutions in the U.S. alone. But a mobile-optimized website is still an important part of your overall mobile mix. Not everyone has a smartphone and not every smartphone user will download your app.

And some observers believe that the mobile Web, enhanced with HTML 5 and whatever comes next, will eventually run all the apps out of business. With 300,000 apps for the iPhone already created, I think that's unlikely, but possible.

But whatever the future holds, today you need a good mobile-optimized website. And Wells Fargo, for one, hasn't forgotten about it. Today they sent an email to customers announcing a remodeled mobile site at WF.com, its mobile URL (see screenshot below).

After logging in at the WF.com site, users are greeted with a menu button that opens up a new window of choices (note arrow in screenshot). It's a nice way to navigate and makes the mobile website feel more like an app. The email also says there is more info on the page to minimize clicking, an important change. I still prefer the native app (note 1), but this is a nice improvement.

Wells Fargo email to customers announcing its redesigned mobile banking site, WF.com (5 Jan. 2011; landing page)
Note: The "Menu" button, when pressed, opens or closes the navigation choices (shown in open mode below)

--------------

Note:
1. Ironically, the native app doesn't seem to be working on my iPhone 4 at the moment (update 6 Jan., it's working now). Another reason you want to have a good mobile website alternative.

In the holiday spirit, I thought I'd lay out the perfect mobile banking/payments app for 2011 (note 1). These are the features I hope to be using on my smartphone at this time next year: 

Security

• Option to log in with 4-digit PIN only
• Authorize unusual and/or declined card transactions and unusual checks presented for payment

Bank account management

• Banking data presented in order of importance with new transactions in bold (like Gmail Priority Inbox, previous post)
• Quick view of current balance with predicted balance going forward based on known upcoming transactions

Paper management

• Deposit paper checks via camera (remote deposit)
• Pay bills by taking a picture of the billing statement (photo bill pay)
• Scan-and-store paper receipts and statements

Payments

• Use NFC or bar-codes at the point of sale to make payments directly via phone, without the plastic
• Pay bills or individuals via their mobile phone number

Alerts & calculators

• Receive important alerts via push messages to the phone's main screen
• Take action or adjust alert sensitivity by responding to messages via text messaging or within the app
• Key financial calculators, such as loan/mortgage payments

And a partridge in a pear tree.

Enjoy the real thing here:

------------------------

Notes:
1. I'm missing important features, but I had to stop at 12 to fit the holiday theme. Thanks for bearing with me.  
2. For more info on mobile banking, see our previous Online Banking Reports.
3. Photo credit: Apple holiday promotion in United Kingdom <itunes12daysofchristmas.co.uk>

As hard as it is to believe, last year at this time only 30 financial institutions had apps in the U.S. iTunes App Store (note 1). And that was a full 18 months after Apple's phone had opened its OS to third-party programs. A few in the industry still questioned whether smaller banks and credit unions would ever need a native iPhone app.

I think that question has been answered: In the past 12 months, the total financial institution app-count has rocketed upwards to more than 1,200, a 40-fold increase. That's 100 new apps per month for the past 12 months.

In raw numbers, the past seven days have been relatively unremarkable with just 17 new FI apps. But it's been one of the biggest weeks in terms of major launches:

• BofA Merrill Lynch research library for iPad only (note 4; iTunes)
• Capital One, whose app was released on Sunday, went to #5 Monday and is up to #4 when I checked a few minutes ago (see inset; note 2; iTunes)
• NetSpend (iTunes)
• Schwab, both v1 of its iPhone app (iTunes) and an iPad version of its On Investing magazine (iTunes)
• SmartyPig (pending Apple approval)
• Stanford Federal Credit Union, which used a striking background for its app home page (see below; iTunes)

And while it's not nearly as crucial as the iPhone, we are waiting for a slew of iPad apps. Apparently, BBVA Compass demo'ed a cool unreleased iPad app at a mobile conference (note 4). And just today, Schwab released its monthly magazine in iPad format, an industry first.

--------

Notes:
1. See Online Banking Report #176, Table 18 (link subscription required)
2. Rank is of free apps in the Finance category in the U.S. store. The apps above it are #1 Bank of America, #2 Chase, #3 PayPal
3. HT David Eads in Mobile Manifesto
4. At the same conference as note 3, Bank of America revealed it hit the 6-million mark in active mobile banking users.

One of the best innovations to come out of this recession is in-statement, merchant-funded rewards. First-mover Cardlytics launched at last year's BAI Retail Delivery (see post).

A year later, it was already reaching 30 million consumers  through relationships with more than 100 card-issuing banks and 100 merchants (see notes 1, 2). That's unheard of growth in financial services. If just one-third of the 30 million customers look at their statements each month, Cardlytics would have more unique visitors than Groupon (note 3), which has been called the "fastest growing company ever." 

We're not saying Cardlytics has anywhere near the $60-70 million in monthly revenues attributed to Groupon, nor the $6 billion valuation. But enough similarities can be seen in their business models that I'd be very, very happy if I were an early Cardlytics investor (note 3). For example:

• Both earn revenue directly from merchants who pay only when sales are made
• Both leverage online channels to deliver significant discounts to targeted users
• Both are first movers with aggressive growth tactics

And Cardlytics is different too:

• Cardlytics focus (for now) is national merchants, whereas Groupon is closely associated with local merchants (but is adding national merchants)
• Cardlytics can target much more precisely and keep offers out of the hands of the merchant's existing customers, a huge and unique benefit
• Cardlytics does not need to market its own site to consumers; it rides on the coattails, and leverages the trust, of its banking partners

Mobile opportunity
Cardlytics operates at the intersection of payments and advertising. And while the online card statement is the place to be in 2010 (see screenshot below), clearly the future for any shopping-related service is mobile.

Although no specific products or partners were revealed, the startup signaled its intention to go mobile with its ClairMail partnership announced today (press release).

Cardlytics example: in-statement McDonald's offer made to Burger King customers

-----------------------------------------------------------------

Notes:
1. Cardlytics will be demoing the latest innovations in its service at our Finovate Europe conference on Feb. 1, 2011.
2. BillShrink won a Best of Show award at Finovate Fall for its take on the concept (video).
3. On the strength of its early growth, Cardlytics landed a huge $18 million C-round in August.
4. According to Compete, Groupon had more than 8 million unique U.S. visitors in October.

For the second time in three years, Mitek completely wowed me on the floor at BAI Retail Delivery. In 2008, I was amazed to see them deposit a check with their mobile phone; this year, the trick was similar, but with a bill.

Mitek CEO James DeBello demonstrated the new systam to me at their booth (press release). He grabbed a bill from a pile, took its picture via the Mitek iPhone app, and sent it off via 3G connection to servers which read the characters through OCR and queued it up for payment. The billing and payment-due info was presented in an easy-to-read table for the user to verify before hitting the "pay" button (see screenshots below). I coveted it for my checking account ... now. 

Analysis
While the deposit of a paper check has a little more of a "wow" factor (as in wow, I don't have to go to the branch anymore), the mobile scan-and-pay of a bill is actually far more useful. The potential market for mobile deposit-capture is limited by the shrinking number of personal checks in use, especially by iPhone-wielding early adopters. I'd guess the total U.S. market for mobile deposit is no more than 10 to 15 million households and shrinking.

And even though paper bills will eventually be eliminated by Doxo or someone, they are still a fact of life for just about everyone with a checking account. And even if consumers start accepting ebills from their major payees, most will still have a few paper bills every month for at least another decade or two.

So not only is the market for photo bill-pay about 10x that of mobile deposit, but the service also solves a peskier problem for most end-users: getting bills paid on time, something that has far more financial consequences than processing the occasional paper check gathering dust in the drawer. 

And for financial institutions, photo bill pay provides several important benefits:

• Helps get customers started with online bill pay by eliminating the data-entry task of setting up new billers
• Helps convert customers from other bill pay providers by eliminating much of the conversion hassle of re-establishing payees at a new bill pay service
• Provides a tangible, value-added mobile service to differentiate from the competition
• Provides a fee-revenue opportunity from either monthly subscriber fees and/or expedited payment fees

The downsides:

• Cost
• Tech support/customer service
• Potentially harder to wean customers off the paper bill, if it's so convenient to just point-and-shoot to get it paid

Bottom line: Without knowing costs, what type of back-office integration hurdles the app faces, or even personally testing the user experience, I can't say for sure how popular it becomes. If the scanning is finicky, it could be a non-starter. But, if it works like it did in the demo, Mitek may have figured out how to finally eliminate the data entry from the electronic bill payment process, a HUGE win.

1. Main screen                               2. Scan with mobile camera

3. Verify data (3 screens)

Note: For more info on mobile banking, see our mobile banking series in Online Banking Report.

Barcode scanning via mobile phone has been around for a a while. But until Amazon.com added it to its mobile app this week, I hadn't experienced it firsthand. Target's iPhone app also supports barcode scanning, powered by RedLaser.

And it's impressive. Unlike mobile remote check deposit, where the trial-and-error method of getting a good picture can be tedious, barcode scanning provides real-time feedback so you know exactly when the camera is positioned for a successful scan (see screenshots of the process below).

Yes, it took a minute or so to get my first scan to work, but the built-in feedback mechanism makes it feel more like a game that I eventually won, not a frustrating task. But don't take my word, it's something you should try yourself via the Amazon Mobile or RedLaser app (see inset).

Relevance: Robust payment capabilities are the reason we believe mobile banking eventually eclipses online banking in importance. Whether it's location-based fraud monitoring, mobile wallets, or contactless payments, mobile phones have so many advantages that users will naturally gravitate to them to manage their spending/banking.

Barcode scanning, or the even cooler picture-recognition (also supported by Amazon, see screenshot #5), are important shopping value-adds that many mobile users will use. However, it seems to be more of a feature than a standalone app. And where's the most logical place to locate that feature? Integrated directly into bank debit and/or credit card apps. 

Amazon.com Mobile App barcode scanning screenshots (13 Oct. 2010)

1. Barcode-scan option within search                 2. Position UPC within orange bars

3. Orange bars turn green when                   4. Actual results from my scan of
the barcode is properly aligned                     a DVD lying around our house

5. Even faster, at least for media titles, is the photo-recognition feature offered by Amazon. Within seconds after snapping the photograph, Amazon had it identified and stored for future reference.

Note: For more info on mobile banking, see our mobile banking series in Online Banking Report.

Like American Express, Arvest Bank is one of the dozen or so U.S. financial institutions with multiple apps in the Apple iTunes App Store (note 1). The bank has one app for account access and another which can be used only to find its branches and ATMs (app link).

However, the non-transactional app, which debuted last November, is undergoing a major facelift, with version 2.0 due in the store shortly. The bank offered a sneak peek on its blog this week (see inset).

The update contains four new functions:

• Calculators: The app now includes access to a suite of 40 financial calculators (e.g., loan payment calculator) saving customers the time and hassle of searching for similar tools within the App Store.
• Customer Connect will use the user's GPS location to provide location-sensitive customer service contacts, a great way for a financial institution to demonstrate their commitment to local service. 
• Current Rates are easily accessible from a single button on the main page.
• Arvest News houses its blog feed.

Bottom line: While these functions have been common on websites for a decade, as far as I know, this is the first app from a bank or credit union that includes all these features. Nice work.

Note:
1. In a search at AppFinder.com, there are currently 583 iPhone apps in the finance category with "bank" in their name or description. Another 483 contain "credit union" for a total of 1,066 banking apps. Not all of these are from financial institutions, but an estimated 70% to 80% FI apps.

In the spring, we predicted that 10 to 15 years from now there would be tens of thousands of iPhone apps from financial institutions alone (note 1). Our reasoning: Many (most?) larger FIs would have more than one app, perhaps dozens. At that time, nine financial institutions (note 2) were tied for most-prolific app deployers, each with two iPhone apps.

Today, I found out that American Express has blown that record away. With the release this week of a youth-oriented Foursqure-powered app, Social Currency (app link), the card issuer now has seven apps available for the iPhone alone (but still none for the iPad).

AmEx iPhone lineup
Two are from American Express Publishing (making the comparison to other financial institutions a little unfair):

• Best New Chefs
• Eat and Drink

Two are published by other companies:

• eSkyGuide from American Express published by GoldenWare
• Social Currency from American Express published by Federated Media and powered by Foursquare (app link)

And finally, three more from core card-issuers:

• American Express used to access most AmEx cards
• OPEN Forum for small business clients
• mobileXtend that can only be used by employees of corporate clients who have licensed this service option 

American Express has seven apps available for the iPhone
Note: Shown here in search via iPad (22 Sep 2010)

Notes:
1. See Online Banking Report: The Case for Mobile Banking (published March 2010)
2. See Online Banking Report: Mobile Banking and Finance Apps (published April 2010)

I love September. When I was a kid it was the excitement of going back to school, a new football season, wonderful Midwest weather, plus my birthday to boot.

Nowadays the birthday isn't so much fun, but the weather is still fine and it's like Christmas for new tech products. I can't prove it, but I bet there are more major product announcements in Sep/Oct/Nov than the rest of the year combined. 

This month already, 70 new tech products launched at DEMO last week, and several dozen will debut at TechCrunch Disrupt next week. Then, of course, we have 56 new financial launches at Finovate, Oct 4/5 (which unfortunately is sold out).

Today alone, there were at least six new things I would have liked to blog about. Maybe I can get some of them into my Twitter feed at least. I have chosen the one that was the biggest "aha" moment of the day. The seemingly off topic, but oh-so-cool service, that can turn any mobile phone, yes even those low-end freebies, into an electronic hotel room key. And without any additional hardware/case/SIM/SD card or anything. It's like magic. Watch.

They use sound to engage the lock. Aha! Would I trust the thing? Probably not, but I'd use it anyway. The key benefit (pun intended) is that you get to bypass the endless lobby check-in queue when you arrive at the hotel and simply proceed directly to your room. For that, I'd take the risk that it didn't work. Besides, four times in my life I've been given a key card at the front desk that opened up on a room already occupied (see note 1), so this system can't be any worse.

The system, called MobileKey, is being piloted for the next three months at a Holiday Inn in Chicago and Houston. It's powered by OpenWays. When using the service, the hotel sends the guest a text message with a link that plays a unique sound that opens the door. Brilliant! 

Relevance: When your phone becomes your Starbucks card, then your airline boarding pass, and now your hotel room key, it's only a matter of time before it becomes a mobile wallet, not only controlling your bank accounts, but also used at the point of sale for purchases. 

Notes:
1. Does this happen to everyone or am I just cursed? At least three times the door was not deadbolted from inside, so I actually went partway in to the room. Once I was politely told to go away, once I was screamed at by a fellow whom I'd awakened after midnight, once the occupant was in the shower so I quickly backed out, and the fourth time there were dishes out front so I called the front desk first. Anyway, I always knock before going into my room the first time.  
2. HT ReadWriteWeb

Quick. What comes to mind when you envision mobile banking? I'm guessing most of you pictured a mobile website or shiny new app running on a recent iPhone, Blackberry, Android or other smartphone.

And if mobile banking was used only by techies, that would be about right. But banking is used by just about everyone, and everyone still doesn't have a smartphone and Internet data plan.

According to the latest study out of Pew Internet (note 1), 82% of U.S. adults have a cell phone (and another 6% of the total live in a household where someone else owns one). And 72% of those cell phone owners use text messaging while only 38% access the Internet through their phone.

And only 60% of the mobile-Internet users, or 23% of all cell phone users, are frequent users, accessing the Internet 3 or more times per week (note 2). 

So the text-banking gap is 49% (72 less 23) or half of all cell phone users. Those are the people that use text messaging but do not regularly access the Internet through their phones. Another way to think of it, the non-Internet-using segment is more than twice the size of the mobile-Internet-using group. Or more simply, text users outnumber (frequent) mobile Internet users 3 to 1. 

Bottom line: Don't overlook the mainstream text-message group for both alerts and balance inquiries. And make sure your marketing and educational material speaks to the sizable segment that could care less about your new iPhone app and just wants to know how to txt for their bal. 

Notes: 
1. Adult data compiled via telephone interviews in May 2010. N = 2,252. Teen data is from a year ago in a telephone survey of 800 teens (age 12-17) fielded June through Sept. 2009.
2. In comparison, text-message usage is crazy high (see eMarketer graph of the Pew Internet data inset). According to the Pew data, adult (18+) text-message users send/receive almost 40 text messages a day. Of course, that's nothing compared to the thumb-weary, under-18 crowd who send/receive an average of 110 messages per day. Side note: The wording on the question asks for the number of messages sent AND received, so one exchange, text out and reply back, should only count as one message. But I'm guessing respondents are thinking of this more as "sent OR received" so that each exchange counts as two messages. I also suspect the kids are over-estimating their usage quite a bit, wanting to wow the researchers with their uber-connectedness. But the bottom line is the same: Teens have embraced texting, and adults have caught the bug as well.   
3. For more info on mobile banking, see our mobile banking series in Online Banking Report.

Chase Bank rolled out a major new release to its iPhone app on Thursday (v. 2.3.1) with the addition of both remote deposit capture and peer-to-peer (P2P) payments (see inset). Chase is the first to support both those important features in its mobile app (note 1). This post covers remote deposit, and I'll look at the P2P feature later.

How it works
I had been looking forward to depositing a check via the magic of the iPhone. But sadly, despite following the directions and capturing a good image of the front and back of the check, the software failed to scan the amount correctly (see screenshot 7).

The Chase app said the check scanned in at $0, despite it being a printed $200 check. I was testing with my trusty version 1 iPhone (circa 2007), which may not have a sharp enough camera. I'll try it on a newer iPhone and update the post. 

Here's the process for new users (click on the thumbnails to view larger versions):

1. The Chase Quick Deposit service has been added to the main navigation bar across the bottom.

2. Customers agree to terms and conditions. Note: The service is limited to $1,000 per day and no more than $3,000 per month, eliminating many businesses as potential users.

3. On the first screen, users enter the dollar amount of the check.

4. The app provides instructions on how to successfully capture the check image.

5. Take pictures of the front and back of the check.

6. Double check image quality.

7. Error message saying that the dollar amount from the scan ($0) did not match the amount entered ($200).

Summary: Despite the glitch on my first deposit attempt, I'm glad to see Chase moving the mobile state-of-the-art forward. I'm sure we'll see remote deposit added to most major mobile banking apps in the near future.

1. Signup screen           2. Customer agreement  3. Enter amount

4. Hints on image capture   5. Photograph the check front and back

6. View photo results                             7. Error message

Notes:
1. USAA was the first major bank with mobile remote deposit, launching it in Sep. 2009; while WV United FCU was the very first with it almost exactly one year ago.
2. For more on mobile banking and payments, see the most recent issue from Online Banking Report.

With today's launch from Citibank (press release), the big four U.S. banks now all support text banking (Bank of America, Chase, Citibank, and Wells Fargo) (see note 1).

With these four giants on board, text banking turns into table stakes going forward, i.e., a must-have feature. Those without it have a tangible deficiency that will cost them customers, especially in the heavy-texting youth market.

The Citibank service is read-only offering Bal, Stmt, and Hist commands sent to its shortcode MyCiti (692484) (see second screenshot for command list). It also includes the all-important Stop function to turn off all text messages and alerts. Chase Bank recently became the first major U.S. bank to offer text-based funds transfers.

Citibank isn't making a big deal of the new option on its website. The text option is now positioned on the mobile page with equal billing with the bank's iPhone and (other) smartphone options (see first screenshot below).

Citibank mobile landing page (link, 22 June 2010)

Text banking page (link)

Notes:
1. Update June 23: While BofA and Citi added text banking this year, Wells and Chase have offered it since 2007.
2. For more on mobile banking and payments, see the most recent issue from Online Banking Report.

Logging in to my Bank of America credit card account today, I received a full-page promotion for the bank's new text-messaging service.

Even though my mobile phone was already enrolled, the bank served the following interstitial encouraging me to to enroll:

 
Bank of America's interstitial promotion after logging in to online banking (11 June 2010)

I chose the "enroll now" link in the lower left above and was taken to this page:

Mobile enrollment landing page (secure site)

Evidently, I'd already enrolled, which I should have remembered considering I'd blogged about it two months ago.

However, if you arrive at this page, as I did, expecting to enroll in text banking, it's a bit confusing. It would be helpful to see a bolder statement that "you are already enrolled." It would also be nice if they provided the short code (692632) to quickly test your phone to verify enrollment. To find that info, you must click the small "Text Banking Guide" link.

Relevance for NetBankers: If you are unable to screen out existing users, make sure you communicate clearly so customers don't waste their time re-enrolling. 

Note:
1. I don't know if BofA's text messaging is down, or if it's something related to my account, but I am getting no response to my text-message queries (bal, menu) to the bank's short code (3:41 PM, 4:12 PM, and 4:32 PM Pacific time, June 11). 
2. For more information, see our Online Banking Report: Selling Behind the Password (published April 2009).

It's been 13 years since email bank-account alerts first appeared in the United States (see note 1). And for 12.99 years, users have wished they could just reply back to the message to cover a checking account shortfall. 

Well finally, Chase Bank has delivered on that promise with real-time Chase Instant Action Alerts:

Chase account holders now receive real-time text-message alerts when their account drops below preset minimums. Customers can initiate funds transfers by texting back transfer instructions. Currently, transfers can be initiated only via text message.

While we would have been more impressed if the service covered the more common email alerts, the new feature does move the online/mobile banking state-of-the-art up a notch. That's enough to earn Chase the second OBR Best of the Web awarded in 2010 and the 77th all-time (notes 2, 3).

The bank is promoting the new feature via Google AdWords (see screenshots below). And, they've done a good job identifying the key benefit in the landing page title:

Avoid Overdrafts | Chase Instant Action Alerts

I don't see any mention of the new capabilities on the Chase homepage today, nor does it appear to be touted within online banking (note 4). However, a site-search for "alerts" drives users to the landing page shown below.

Advertising on Google search for "Chase email alerts"
(2 June 2010, 9 AM from Seattle IP)

Landing page (link)
Note: The top graphic is animated, showing how the alert and reply work (see images at the top of this post)

Notes:
1. Signet Bank was the first major to offer email account alerts. We covered it in OBR 22 (Feb 1997). We didn't learn until a few months later that community bank Britton & Koontz actually beat Signet to market with alerts launched in the summer of 1996.
2. You could argue that Chase is not first with this capability. The handful of U.S. text-banking programs that support transfers are already offering the same capabilities as Chase (for example, see text commands at Natco Credit Union).  However, Chase is the first major bank to provide the functionality, as well as the first to really promote the reply-back function as a major benefit.
3. OBR Best of the Web awards are given periodically to companies that pioneer new online/mobile banking features, products, or enhancements. It is not an endorsement of the company or product, just recognition for what we believe is an important development that "raises the bar" in alt-delivery. Chase's Instant Action Alerts are the 77th recipient since we began the awards in 1997. It's the second for Chase. The bank also won in 2007 for being the first major U.S. bank to roll out text banking. For a list of the top innovations of all time, see our January 2010 Online Banking Report.
4. It was not mentioned within my business banking account or consumer credit card account. I don't have a Chase consumer checking account.
5. For more information on alerts and messaging, refer to this Online Banking Report published in 2003.

Who hasn't played this game? "If I give up x, I can justify buying y." At our house, after two decades the game is mostly now limited to big-ticket items. For example, "If we don't replace our 11-year old Toyota, we can take a summer trip to the U.S. Open."

The basic premise is that the extra three grand you DON'T spend on the new car essentially pays for the vacation, making it seemingly "free" and more guilt-free. It's a common and powerful principal of consumer behavior.     

Piggymojo's just-launched service taps into this psychology and gives it a mobile twist. The startup uses text/Tweet-based data input so it's easy to track all the expenses you've avoided during the day. And because it takes just a few seconds to tap out a message, the principal can be used to track even trivial daily savings that can add up over time.

For example, if you decide to start brown bagging lunch instead of hitting your normal lunch spots, you can track the savings by Tweeting/texting to your Piggy Mojo account:

Packed own lunch, saved $5 (or on Twitter, "d piggymojo 5 lunch not out")

Drank free office coffee, saved $2.75

Read office newspaper, saved $1

The service collects all these messages and tracks the total amount "saved." The totals can be applied to various savings goals to measure progress. The site uses a unique photo mosaic to visually represent goal progress. You can choose from dozens of exisiting photos or upload your own. As you build your savings, the photo gradually fills in until it's complete (see screenshot below).

You can add your spouse/partner to the account so both of you can contribute towards the savings. There's also a way to set up "recurring savings" so you don't have to constantly text repetitive items. For example, if you cancelled your cable TV, you can input the amount saved once at the Piggymojo site and it will automatically credit your account each month (see second screenshot).

There's also a social piece, allowing you to bring friends and family into the fold. Piggy Mojo will automatically send them a weekly progress report on your goal, providing that all-important peer pressure to your spending discipline.

Relevance for netbankers
Currently, the site is not hooked to an actual bank/CU savings account. The user is responsible for actually moving these fictitious savings amounts to a real savings account for later use. But this concept would be much more powerful if every time you texted "saved $6 at lunch" that six bucks were actually transferred from checking to savings.

Piggy mojo goal-tracking via completing picture of your goal (1 June 2010)
Note: The arrows point to the color sections that have been completed, visually demonstrating that I'm about 7% of the way to the goal

Recurring savings input form

Notes:
1. HT: Credit Karma blog
2. For more info, see our Online Banking Report, where we wrote about various ways to leverage your online/mobile channel to boost deposits in late 2008 (here).

Despite the best intentions of governments worldwide, does anyone really believe that consumer financial services will become simpler anytime soon?

Yet, I've been intrigued by Bank Simple and apparently, so have many others. Evidently, Twitter/Square founder Jack Dorsey and TechCrunch founder Michael Arrington talked about Bank Simple on stage at the TechCrunch Disrupt conference this week.

While most articles are hopeful, first-mover skeptics have already posted counterpoints to the startup's "motherhood and apple pie" messaging (make sure you read the comments on Ron Shevlin's post).  

I can't remember any financial entity, other than those with celebrity founders (Square, Revolution Money, Virgin Money) receiving this much attention before it even launched (note 1).

I still don't know exactly what Bank Simple will offer. Certainly, they have a great name and a positioning that's right for the times. But can they live up to it? Basic banking really is pretty simple. You deposit some cash, earn some interest, then take it out and give it someone else. Rinse. Repeat.

Innovation often creates complexity
Banking got complicated only when new features were introduced. People got tired of going to the bank, pulling cash out of the vault, and hauling it around to pay people. So checks were invented. Payment became much easier, and personal security greatly enhanced. And as a nice by-product, the returned check was the first PFM tool, serving as a handy authenticated record of who was paid for what, when.

That worked great for a couple generations, but then too many people wrote too many bad checks and it started to become a slow and cumbersome process to identify yourself at the point of sale. So debit cards came along to speed the purchasing process, fight fraud, and return some fee income to the issuing banks (note 2). And the electronic records of merchant name and SIC code made record keeping even easier, originally on paper statements and now online.

Those two innovations, checks and debit cards, really helped consumers save time and hassle. But did they make finances simpler? Not really. Those payment services led to NSF/overdraft fees, PIN vs. signature decisions, card authorizations, check-hold times, float, authorization holds, chargebacks, annual fees, check-printing fees, positive pay, reverse positive pay, remote deposit capture, mobile remote deposit capture, Quicken, My Spending Report, Mint, interchange regulation. The list goes on and on.

It may not be simple, but no one (except visitors to this UAE hotel) is going back to carrying gold nuggets to the general store to buy crackers out of a barrel.

Technology MIGHT be the answer
Technology advances often bring wonderful, sometimes life-altering, benefits (think electricity or water purification), but often at a cost of increased complexity. As much as I love, love, love the Internet, it's not known for its overall ease of use. 

But there's a glimmer of hope on the horizon, and you are carrying it in your purse, pocket, or briefcase.

The smartphone.

I'm still amazed at my iPhone after more than 2.5 years of continual use (note 3). It's the one and only device I've owned that makes life better AND simpler, albeit at a hefty monthly fee.

And I believe mobile apps will ultimately make banking better AND simpler. Why?

• The phone knows who you are and where you are, vastly simplifying authentication at the point of sale and reducing fraud significantly.
• The phone (via real-time links to the bank and retailer) knows exactly how much money you have and what you are buying, virtually eliminating overdrafts and unknowingly overspending.
• The phone can provide an instant, secure way to pay any person or any business, with immediate settlement.
• The phone has built-in scanning capabilities for depositing checks, capturing receipts, documenting insurance claims, etc.
• The phone has access to every database on the planet to assist in shopping, evaluating, financing, insuring and closing any deal for any thing.
• And if you have a question about any of the above, just speak into the device and you'll get an answer in moments via voice recognition self-service.

So yes, there is hope for banking/financial simplification, and I think it will almost exclusively come through mobile apps with the occasional visit to an online mission control (note 4). So if you want to compete with Bank Simple, or Bank of America for that matter, get cracking on your mobile strategy (note 5).  

Notes:
1. Now that Twitter's Alex Payne has been added as a co-founder, Bank Simple could probably be classified as a celebrity-founded company.
2. I'm still using my first-gen phone bought in Oct. 2007. The battery is still very strong, the touch-screen virtually unmarked, system performance seems unchanged, and it only crashes a couple times every year despite being carried, set down, and tucked away day in and day out.
3. This is a vast oversimplification of the move to debit cards, but the point is they disrupted checks at the point of sale.
4. If you are still unconvinced that mobile will overtake online for banking tasks, here's a thought:  Consider how often you go online now to check the local weather. A waste of time -- right? -- when all you have to do is press a button on your smartphone. The same near-instant response will happen for basic banking info.
5. In our Online Banking Report, we've published several reports on mobile banking strategies.

Last week, Spain's BancSabadell and "la Caixa" became the first banks in the world with iPad apps. But the U.S. was still shut out until today, when Chase became the first U.S. bank with a native iPad app (iTunes link). It doesn't yet show in the Finance category of my iPad. But if I search for Chase, it appears as a download option.

It successfully downloaded, and about 60 seconds later, I was looking at my Chase account. Unlike some banks, it was not necessary to activate the app in online banking. First-time users log in to the app with their online banking credentials. Then an 8-digit code is sent to a pre-existing phone number or email address. Users then enter this code into the iPad.

Chase's app is basically a stretched-out version of its iPhone app. But the extra real estate does make it easier to accomplish tasks, such as sending a bill payment (right screenshot). But the biggest initial benefit of the iPad app is all the blog posts and news articles it will generate. 

Chase is betting big on the iPad platform, taking a reported six-figure sponsorship of the NY Times iPad app (see inset, click to enlarge). The bank really had no choice but to support that advertising expense with a banking app of its own. Chase launched its iPhone app in Dec. 2008.

Chase Bank's native iPad app (5 May 2010)

Note: For more on mobile banking and payments, see the most recent issue from Online Banking Report.

Apple today said it has shipped one million iPads (one of which went to a lucky Mint user, see inset). I don't think that's a surprise to anyone who's even mildly interested in tech.

It's debatable whether the iPad is a laptop killer, but if nothing else, it's a really capable portable media and game player. Given its appearances on The Grammys, Modern Family, Lettermen, and so on, and with Apple's cachet, how could the iPad not sell a million?

But the iPhone arrived with even more hype, and it took more than two months to sell a million back in the summer of 2007. But it was much more expensive considering the price of the phone and $800+ per year to AT&T. And there was no App Store back then: it was just email, SMS, Safari, YouTube, stock tracking and of course, my personal favorite, the weather button.

So I'm not surprised the iPad has consumer appeal. But I am surprised that no major U.S. financial brand, other than E*Trade (see screenshots below) has a native iPad app yet in the U.S. store (notes 1, 2). I expected at least a half-dozen by now. But there have been very few new apps in the iPad store across all categories. Only nine new apps have launched since April 3 in the finance category, bringing the total to 39 (see note 3; original post here ).

So, it may not entirely be the fault of the FIs. There is probably a logjam of apps waiting for approval from Apple. We look forward to seeing what the FIs and PFMs bring to the iPad throughout 2010.

E*Trade Apps: iPhone vs. iPad
Note: Relative size is accurate; see CNET's comparison of iPhone vs. iPad versions across 20 popular apps (previous post on why you need an iPad app here)

Notes:
1. Square also had its app available at launch, although they have yet to launch credit card processing, so it's not really functional yet. Card processing is expected to launch later this week when the iPhone app becomes available.
2. (Updated May 4 with "la Caixa" info and search info) They don't show on my U.S. iPad, but Spain's "la Caixa" added an iPad app to the U.S. store a few days ago (link) and Banco Sabadell has one in the U.S. store (link). Also, I just learned (May 4) that if you search specifically for the Spanish banks on my U.S. iPad, they do show up and have been successfully downloaded.
3. There are many mysteries of the App Store. One new one is the discrepancy between what's shown on my iPad vs. what's in the iTunes store. On my iPad, 30 finance apps showed on April 3, and there are now 39, for a growth of 9. iTunes shows 61 available today, up 18 from the 43 available on April 3. None of the extra 22 in iTunes are from financial institutions.
4. For more on mobile banking and payments, see the most recent issue from Online Banking Report.

As I've pointed out, the key to boosting mobile banking adoption is to make the user experience better than the desktop computer/browser version. But many banks shoot themselves in the foot immediately by requiring existing online banking users to first log in to online banking to enroll in mobile banking (see note 1).

I've never quite understood the logic. Why can't online banking customers use their existing credentials to log in via the mobile app? What's the new risk? If anything, you are more likely to get your credentials stolen via desktop login than mobile login (at least for now).

So far, the mobile banking apps I've used have required initial activation via online banking (see note 2). I'm sure their security folk can sleep better knowing that I've proven ownership of the phone before logging in from it. But you don't have to prove you own the PC before using it, so what's the difference?

But finally, one of my financial providers, American Express, launched an iPhone app (note 3; iTunes link) that I can use right away by logging in with my online banking credentials (see screenshot below). I expect this will soon become the industry standard.

American Express iPhone app screenshots (version 1.1)

American Express mobile landing page (link, 29 April 2010)

Notes:
1. Even more important is enabling online enrollment of customers NOT using online banking; but that's a trickier, albeit potentially lucrative, project.
2. I am using mobile iPhone banking at Wells Fargo, Bank of America, and US Bank. While BofA, Wells and Chase (Update April 30, Chase has online enrollment for text messaging only; you can sign on to its iPhone app with your online banking credentials) all have a relatively painless 60-second signup process, US Bank's is truly cumbersome. It's a ten-screen experience that not only takes several minutes, but also requires the creation of not one, but two new PINs. A 4-digit one for transferring funds via mobile and a six-digit one for use in subsequent mobile app logins. While I'm all for simplified logins, six-digit PINs are not standard and many users will have a tough time remembering it. Many users may resort to using their mobile number, which kind of defeats the purpose. Use four digits and block access after four attempts.
3. The American Express app was released March 31 and a new update was released today.
4. For more on mobile banking see our recent Online Banking Reports.

We've been closely tracking mobile apps. In the 21 months since Apple opened its App Store, 77 U.S. financial institution added apps, about four per month (see our latest report for more info).

Then last week, 18 new bank apps appeared. And they all shared a certain, shall we say utilitarian, look (see below). Turns out they are pushed out by Jack Henry for its NetTeller clients. While they won't win any design awards, it's good to be in the app store.

In total, Jack Henry now has 24 clients represented in the store. All but one, Ohio Valley Bank, were added in April (see table below).

We can now officially report there are more than 100 U.S. financial institution in the iTunes App Store. Just 10,000+ more to go.

Source: AppShopper.com (data drawn from iTunes), 22 April 2010

The two screenshots posted for Western National Bank's iPhone app, powered by Jack Henry (26 April 2010)

Your best excuse to delay your text-banking project ended today. Bank of America launched the mobile service via an interstitial ad to online banking customers (see below).

The new service may be rolling out in waves since it's neither mentioned in online news sites, nor featured on the BofA site. And there is only a single Twitter message posted three days ago. 

The signup process required the entry of a mobile number and a YES response from that mobile device (see screenshots below). While that's not much to ask, it did seem unnecessary since I was already signed up for mobile banking through that number. 

After responding yes from my mobile, I received a welcome text from the bank (see iPhone screenshot right).

That seemed like a nice touch until I clicked on the link and was taken to the regular webpage, rendered impossibly small on my first-generation iPhone, where I first had to select my state. That took me to another page full of barely readable mouse-type regarding text options (see last screenshot).

Action item: If you don't support text banking yet, it's time to move it up the priority list. 

Bank of America online banking login splash screen (12 April 2010, 6 PM Pacific)

Landing page when selecting "Enroll now" above

Enrollment page (within online banking)

Page displayed while waiting for activation via mobile phone

Page displayed after activating via mobile and clicking "Check Activation Status" button (above)

Mobile help screen as viewed in first-generation iPhone

Note: For more on the importance of mobile banking and payments, see the most recent issue from Online Banking Report.

One week into the iPad era there are still no banks or credit unions with iPad-specific apps (note 1). There also aren't any major PFM or other financial brands present, other than Square and E*Trade. Mint's not even there yet.

What's going on? On Friday, The Financial Brand's Jeffry Pilcher tweeted the question that's on a lot of bankers' minds:

While I suspect Jeffry is mostly being provocative, it's a question worth discussing. Should financial institutions build an iPad app?

The Web experience on the iPad is outstanding. It has a lightening-fast Safari browser built in. It loads my bank's webpage as fast or faster than my MacbookPro or Thinkpad X41. The iPad virtual keyboard makes it easy to type username and password. And for the most part (Flash is a problem), websites look and perform perfectly on the iPad (use ipadpeek.com if you want to see what your webpage looks like in an iPad layout).

So yes, online banking works fine on iPads. But you can say the same thing about most evolutionary products. Telephone calls work fine on corded phones. Cars work fine without cup holders. Refrigerators work fine without ice makers. And so on.

An iPad app isn't about utility, it's about a great user experience. The ability to click on a banking button on the main iPad screen and launch a perfectly sized online banking app shaves 30 to 45 seconds off the traditional browser-based approach (open Safari, navigate to my bank, and find the login button). There are also things you can do with an app, such as location-aware ATM/branch finder, that make it a better experience (note 2). 

So here's why most major financial brands should have an iPad app now:

• Free publicity (part 1): As of today, there are only 39 iPad apps in the Finance category. Each of the 562,000+ iPad owners, and millions of others browsing the iTunes App Store, would see your brand showcased there.
• Free publicity (part 2): There was, and is, a tremendous amount of hype around the iPad. Being the first bank/CU in your country/state/region/city/neighborhood with an iPad app will net you numerous mentions online and in print.
• It's cool: While financial institutions are rightly focused on the basics right now, there is still considerable value in being seen as a technology leader.
• It's inexpensive: Building a basic iPad/iPhone app is a relatively simple project. If it did nothing more than connect to online banking and show nearby ATMs/branches, you'd receive most of the benefits listed above.
• It's the future: Apps and widgets will play a large role in banking info delivery going forward, especially in mobile banking. You should be designing apps for every significant platform. In the U.S. that means the iPhone and Android, then iPad and Blackberry after that (see note 3).

And one final note for the 67 U.S. financial institutions that already have iPhone apps. Yes, you still need an iPad one. While the iPhone app runs fine, it is displayed in a small window the size of an iPhone. Users can press a button in the lower-right corner to doublesize the app, but images and text become fuzzy, and it just doesn't look right (although it is functional as you can see in the screenshots below).

Bank of America's iPhone app displayed on iPad screen (5 April 2010)
Note: Click on the images below to see the quality difference

              Normal size                                                             Double sized

Notes:
1. As of 11 PM Pacific April 10, the only major financial brand with an iPad app is E*Trade MobilePro, which is more about stock trading, not banking.
2. For more on financial apps and the iPhone, see our March 2009 Online Banking Report.
3. For more on the importance of mobile banking and payments, see the most recent issue from Online Banking Report.
4. Hat-tip to Banking Kismet for blogging on the subject.

After months of hearing about the iPad, I finally got my hands on one Saturday afternoon. It's a great piece of technology, but if you have an iPhone, you pretty much already know what it's like.

While the iPad runs all 150,000 apps available for the iPhone, developers are encouraged to produce iPad-optimized versions to take advantage of the significantly bigger-screen real estate.

When you open the App Store on the iPad, it focuses almost entirely on iPad apps. You have to do a specific keyword search to find non-iPad apps that work on the iPhone.

And I was surprised that neither banks nor credit unions are represented among the 30 Finance category apps available on April 3 (see screenshots below), a situation likely to be rectified with a flood of banking and credit union iPad apps during the next few months. It's definitely a place you want your brand represented (note 1).

The only big financial services brand that made it to bat on opening day was E*Trade MobilePro (which hit the store last Thursday), and another trading app, iStockManager, to be used with TD Ameritrade.  Bloomberg, too, had its popular info app available on day 1 (see screenshots below for all 30 finance apps).                                       

The biggest surprise in the iPad Finance category was Square, the much-touted card-to-card payments service from Twitter's founder, which released its iPad app on April 1 (see inset). We'll be testing Square this month and hopefully using it to take last-minute credit card payments at our upcoming FinovateSpring Conference.                                                                                  Square's iPad app

The 30 iPad finance category apps available on the launch day (3 April 2010)
(Note: Organized by "featured")
Page 1: Apps 1-12                                                     Page 2: Apps 13-24  

Page 3: Apps 25-30

Note: For more coverage of mobile banking and payments, see the most recent issue from Online Banking Report.

Apple loaded iPad apps into the main iTunes store today (see screenshot below). Search is limited and apps by category are not yet available, but you now can browse the iTunes store for iPad-optimized apps.

I looked at all 2,400 and spotted three financial titles -- a credit card merchant terminal, a stock-info tracker (see below), and E*Trade's Mobile Pro -- plus a few calculators

I was disappointed that no banks or credit unions were represented. But the iPad launch is still 36 hours away, so I may still win my bet that Bank of America will be there on the morning of April 3.  

Apple iTunes App Store now features iPad apps (1 April, 5 PM Pacific)

E*Trade Mobile Pro for iPad (iTunes link)

Credit Card Terminal for iPad from Inner Fence
(for Authorize.net users; iTunes link)

MarketScan by Michael Foster (iTunes link)

Note: For more coverage of mobile banking and payments, see the most recent issue from Online Banking Report.

This month we've explored several new features that promise to propel mobile banking into the mainstream market. Unlike developing nations, where mobile is the ONLY way to conveniently bank, in the U.S. and other online-centric countries, mobile has to compete with online for awareness and usage.

There doesn't seem to be a single killer app for mobile. But a growing list of things that mobile does better than online will eventually tip the scales in favor of the new channel. Here's what we've seen so far:

• Location-based ATM/branch finders (here)
• Remote check depositing (here)
• Simple login with 4-digit pin (here)
• Insurance discounts after graduating from iPhone-based program (here)

The latest addition to the list:

• PayPal's Bump to Pay (see video below): Users of PayPal's latest iPhone app can transfer funds to each other merely by entering the amount and moving their phones within close proximity of each other (see screenshots below).

As David Eads points out at Mobile Manifesto, bumping to pay has some drawbacks in the real world:  

.....most of the time I want to send money to someone, I'm not standing beside them. And if I am, most of the time I would feel awkward actually touching the person. Imaging bumping someone for admission to a high school football game. Imagine bumping a street vendor for a newspaper or flowers. Imagine bumping a scalper for tickets outside the game.

My take: I agree with David that physically placing iPhones next to each other seems awkward today. But then again, so was writing paper checks back in the day when everything was paid for in cash/coins.

If so-called bump pay is super-convenient, fairly priced, and the perceived security issues are overcome, there's no reason why it couldn't become the predominant method of person-to-person payments. While it's way too early to make any kind of prediction, I'm just saying, don't dismiss it yet.

David's closing remark is spot on:

The key for P2P is getting people comfortable with the idea of transacting electronically between individuals. Bumping and Zooming makes it more fun.

Bumping is now an integral part of PayPal's iPhone app

-----------------------------

Off-topic addendum: As much as we like new bells and whistles, bump pay pales in comparison to the really big news at PayPal this week: the announcement that it's teaming with China UnionPay and Singapore's DBS Bank to offer payment services. The 2-year DBS deal will put PayPal in the hands of the bank's four million customers, 1.3 million of whom are currently banking online.

How big are these deals? A good indicator is PayPal's plan to double its staff in the region to 2,000 employees. Wow, has any financial company anywhere in the world added 1,000 to its staff in the past two years?

-------------------------------

Note: For more coverage of mobile banking and payments, see the most recent issue from Online Banking Report.

The latest Online Banking Report: The Case for Mobile Banking is now available. It will mail next week to OBR subscribers. It's also available online here. There's no charge for current subscribers; others may download it immediately for US$395.

There is little doubt that mobile is the next online, not just in banking, but with many information-rich, time-sensitive services. Even in the online-centric United States, we expect mobile banking to eclipse online by the end of the decade. 

Another way to look at it: Starting from essentially zero just three years ago, more than half of the U.S. online banking population will be using mobile banking, by 2015. That's zero-to-40 million households in just eight years.

Most financial institutions should be making their mobile bets during 2010/2011. The report outlines ten ways that mobile banking supports overall strategic goals at financial institutions. It also includes our ten-year forecast for U.S. mobile adoption (note 1).

This report is number four in a series we've published on the mobile area during the past three years:

Note:
1. The mobile forecast was originally published last month in our year-end recap.

Last week I talked about how USAA is making the mobile experience better than online thanks to the magic of mobile remote deposit and PIN-based login. For the sake of discussion, I'm defining magic as anything you could not have imagined doing on your mobile phone two years ago (note 1).

The latest novel financial app: State Farm's Steer Clear program that provides auto insurance discounts "up to 15%" for new drivers (under age 25) that pass its safe driving program. Users can undergo the self-assessment program online or off, but the app makes it easier and with a built-in stopwatch (screenshot below) to track the required 20 practice drives. See how it works in the company's video below (press release here; iTunes link here). 

As much as I like it, the State Farm app doesn't quite make it into the magical category. Had it used GPS to automatically track the 20 practice drives, it might have passed the bar. I'm sure that's in a future version.

Regardless, it's clever, unique and positions the company well with the youth market and their parents that often foot the insurance bills. That's a good return on the small investment needed to port the program over to a mobile app (note 2).

Notes:
1. I am using two years, since that predates the opening of the iPhone App Store in July 2008.
2. Read more about the strategic advantages mobile banking can give your financial institution in our latest Online Banking Report published today.

Stories from our Finovate blog are covering the most innovative financial technology companies in the world, and more alumni news is available on our Finovate Twitter feed.

Half of Fast Company's 10 Most Innovative Financial Companies are Finovate Alums

Fast Company's list of the 10 most innovative financial companies includes five Finovate alums - FiLife, Intuit, Yodlee, Credit.com, and Simplifi. FiLife was not only #1 in finance, but also the only financial company to be ranked in the overall Top 50.

Finovate alumni commanded the top three positions, with Intuit and Yodlee following FiLife. Credit.com was #7 and Simplifi was #9 (full post here).

FiLife and Mint Top Finovate Alumni Traffic Chart

FiLife also has the highest website traffic among Finovate alums with more than 2.7 million visitors. Mint was second with 1.7 million. FiLife and Mint were also the fastest-growing alumni sites, gaining 2.6 million and 612,000 visitors respectively over the previous year.

And the zero-60 awards go to ThreatMetrix and Home-Account who both went from zero to nearly 200,000 unique visitors, a phenomenal amount of traffic for a financial company in their first year (full post here).

Firethorn App Provides Mobile Access to More Than 3,700 Financial Institutions

Firethorn has updated its mobile banking app to allow consumers to access accounts at more than 3,700 U.S. financial institutions. Expanding beyond its current list of integrated banking partners brings the company's app to a wider range of consumers.

Since its mobile app interfaces with existing online banking systems, Firethorn can provide consumers with mobile banking even when their bank doesn't support it. The app also gives users the ability to access account information from multiple institutions from within a single interface (full post here).

Jawalla Adds Skype and Twitter Alerts to its Online Banking Platform

Jwaala has added Twitter and (in what we believe to be a first) Skype alerting capabilities to its MoneyTracker BOB (Better Online Banking) platform. The addition gives Jwaala's clients the ability to offer consumer alerts through channels already familiar to their customers.

Alert systems are important to financial institutions because they provide personalized information to customers where and when they most need it. Expanding its alert capabilities helps Jwaala differentiate itself from competing platforms (full post here).

Here's a test that tells you when you've built a successful mobile app:

1. Place your laptop next to your iPhone/Android
2. Choose a task
3. Reach for the device that's easiest to use for that task 

If you don't reach for the mobile phone first, you still have work to do on the user experience. 

I've always chosen the laptop for banking, even though I've ported more than a dozen other routine tasks to the iPhone (note 1). The hassle of logging in with those tiny iPhone keys pushes me to the laptop. But as of Tuesday, USAA's latest iPhone app, version 2.2, has changed the equation, and there's no looking back. 

Mobile vs. online banking
The key to making mobile a profitable channel is to make the user experience BETTER than online. And USAA is the only U.S. financial institution doing that today.

USAA's biggest mobile "wow" is mobile check deposits (see Deposit@Mobile screenshot below) introduced six months ago for the iPhone. While it may not seem novel to those in the industry familiar with scanner-based remote deposits, the average consumer considers an iPhone check deposit to be almost magical. Other than a few small credit unions, no other major banking competitor offers it, so USAA continues to own mobile magic.  

But with Bank of America rumored to be readying a launch mobile deposits, which will no doubt be featured in Apple TV ads, (see latest one here), USAA needs to keep innovating. 

And this week, USAA delivered with a single-PIN login with authentication powered by VeriSign VIP service. The optional 4-digit sign-on process is available now on the iPhone and will be available in April for Android and "shortly thereafter" for Blackberry (note 2).

In a time when it's more tedious and less secure to log in online, USAA takes us back in time to a simpler day, when you could log in with just a few digits.

And by using techniques that authenticate the mobile phone during login, the bank says that mobile access is more secure than online.

Think about that for a moment. Mobile is MORE SECURE than online. With tens of millions of customers deathly afraid of logging in via their virus-laden PCs, imagine what that could do for mobile adoption.

It will take time to educate the market. Currently, most consumers believe the mobile channel is far less secure. But if they can be convinced the opposite is true, many will kiss online banking goodbye forever.

Notes:
1. According to yesterday's release, USAA has 1.3 million mobile users, 17% of its 7.4 million customer base.
2. Previously, USAA users were required to sign on with username, password and PIN. The simple sign-on process is optional for those not trusting the simpler process.
3. For more info on financial services opportunities on the iPhone, see our March 2009 Online Banking Report.

Apple today introduced its latest invention, a gigantic $499 iPod Touch called the iPad (inset shows iPad, Kindle, vs. iPhone; note 1).

It's a gorgeous piece of technology that will soon be the movie-watching, ebook-reading device of choice for the rich and famous. But what does it mean for the average financial institution?

Tactically, it should have almost zero impact. Your iPhone/iTouch app should work pretty much the same on the iPad. There may be some design tweaks your programmers will need to understand, but the basic functionality is the same.

It would make a wonderful giveaway item, either as part of a high-end business/private banking package (note 2), or as a sweepstakes prize.     

So those of you who already have an iPhone app launched, or in the pipeline, can stop reading now. But read on if you haven't yet hopped on the app bandwagon.

___________________________________________________________________________

The movement to apps, and away from old-school "browsing," is unstoppable. The iPad joins a growing list of new devices (Android, Kindle, etc.) that are app-primary, browser-secondary (note 3).

It's a massive shift that's happened in less than two years, beginning in July 2008 when Apple opened the iPhone platform.

The popularity of apps is changing how users tap online info. Even power laptop/desktop users are making dramatic changes in their information consumption. For example, within a few months of the Apple app store launch, I had already moved 12 of my routine info-gathering tasks to the iPhone. The speed/convenience of pressing a single button vs. navigating to a website via the browser is a significant improvement in user experience. More than a year later, my habits have changed little. 

The change from serving customers who were "online browsers" and are now "mobile app users" has profound implications for banking. Instead of talking to your customers in batch- mode with built-in time delays, you are now real-time, feeding data to customer on the go, where they need up-to-the-minute status on their cash situation.   

In many ways, the ROI for real-time banking (and here) is more dramatic than online-batch banking. The ability to stamp out POS fraud, to nip budding customer service nightmares, and just plain get closer to the customer, all bring nice returns on the mobile investment (note 3).

Notes:
1. Photo credit: TechCrunch post today.
2. For more info on using a dedicated device for small business customers, see our October Online Banking Report.
3. Groundswell author and Forrester analyst Josh Bernoff calls this the "splinternet."
4. For more info on financial services opportunities on the iPhone, see our March Online Banking Report.
5. Initial response online was mixed, 2,700 readers of CrunchGear, voted "thumbs sideways" today (link, results at 4PM Pacific below)

In November, we predicted that large financial institutions would each offer dozens of mobile apps targeted to various lines of business and/or customer segments (previous post). PNC Bank, Wells Fargo and Chase each have two apps in the iPhone store.

Three weeks ago, a fourth financial company added its second app: Nationwide Insurance.

The company originally launched an app (inset) geared towards its insurance customers in April 2009 (press release; iTunes store link). This app is designed to assist its insurance customers when they have an accident. The most recent version includes a toolkit, auto claim form, agent finder and even a flashlight.

Then in mid-December, the company released a second app geared towards automobile shoppers, Cartopia (screenshots below; iTunes link; press release). It helps buyers research prospective cars on the go.

By inputting a vehicle identification number (VIN), consumers can quickly access the following info on a prospective vehicle:

• Car specs (fuel economy, dimensions, weight, etc.)
• Average retail and wholesale prices
• 5-year cost-of-ownership estimates
• Original warranty info
• Safety info
• History of the VIN number, powered by Experian's AutoCheck (similar to Carfax report; limited to six free lookups each month; note 1)

In addition, users can calculate monthly loan payments with a built-in loan calculator. Nationwide also provides links for customers to call in to apply for vehicle financing and or receive an insurance quote. Unfortunately, there is no online loan application or insurance price quote engine.

Finally, the app contains space to keep notes and rate the cars you are considering purchasing.

Relevance to Netbankers: If you are in the auto loan and/or insurance business, getting your name in front of car buyers as they shop is the ultimate marketing coup. While you may not be able to emulate all the functions in Nationwide's app (note 2), even a simple loan calculator and note-taking area, along with links to your call center, could drive incremental business.

                                                                                    Cartopia #2 Main Loan info with link to
     Cartopia #1: Splash screen                          insurance quote (via voice call)

Notes:
1. I was unable to access the report on my test vehicle; the error message said it was temporarily unavailable.
2. Although the app is loaded with features, its UI is a bit clunky and the app is only rated two stars in Apple's App Store. Consequently, a slimmed down, simpler app, would appeal to many users.  
3. For more info on financial services opportunities on the iPhone, see our March Online Banking Report.

Mercantile Bank of Michigan is riding the wave of free publicity from being first to market (probably) with iPhone-based P2P payments powered by PayPal. That's a triple play in both alliteration and PR value. See the teaser ad on the bank's website below (first screenshot).

The new service, a joint effort from PayPal and S1, is expected to go live in early 2010. It will allow customers to send money directly from their iPhone to any other individual on the worldwide PayPal network. All the sender must know is the recipient's mobile phone number or email address. According to the five-question FAQ on the landing page (see second screenshot), the service will be available to all MercMobile customers and will be free of charge.

Mercantile Bank has become one of the most innovative banks we follow. Congratulations to CIO John Schulte and his team for leading the industry on several fronts and providing great material for Netbanker (previous posts here; note 1).

------------

For more on the P2P payments market, see our latest Online Banking Report, published earlier this week, Making the Case for Person-to-Person Payments. 

Mercantile Bank's powered-by-PayPal mobile P2P app (7 Dec. 2009):

Mercantile Bank of Michigan homepage (8 Dec. 2009):
Note: MercMobile P2P Payment teaser in lower left and home-based remote-deposit capture on the top banner.

P2P payments landing page (link)

Note:
1. Mercantile even earns its very own category at Netbanker: <netbanker.com/mercantile_bank_of_mi>. 

It appears that the Obopay/Citibank co-branded service is being shut down. From the sparse note on the webpage <citi.obopay.com> (see screenshot below), it doesn't sound like a temporary hiatus: 

As of Dec. 22, 2009, "Citi Obopay" will no longer be available.
If you would like to use the Obopay service go to www.obopay.com.
The service available at www.obopay.com has no affiliation with Citibank.

The companies have been working together on Obopay-powered mobile payment for more than three years.

Citi Mobile SVP Marylou Dowd said on Thursday in American Banker that the Obopay tests were concluded this summer. Not coincidently, Citi's mobile joint venture MMV announced last week that it was partnering with CPNI Inc. of Toronto to build a mobile P2P payments service.

Obopay's website still shows Citi Obopay on its Financial Institutions page (see inset above). But Citigroup, which invested at least twice in Obopay in the July 2007 C-round and April 2008 D-round, is not listed on Obopay's investors page.

The site was never publicized by Citibank. Traffic peaked at 7,000 unique visitors in Feb. before falling so low that Compete could not measure it after April 2009:

Source: Compete, 3 Dec 2009, link

For future reference, we've archived the website screenshots below.

Citi Obopay homepage (3 Dec 2009, 4 PM Pacific)
Note: The <citi.obopay.com> URL now redirects to the Obopay homepage.

How Citi Obopay Works page <citi.obopay.com>

Get Citi Obopay page <citi.obopay.com>

Citi Obopay Fees page <citi.obopay.com>

Note: For more info on mobile banking, see our Online Banking Report: Mobile Banking via iPhone (March 2009) as well as our earlier reports on Mobile Banking (Feb. 2007) and Mobile Payments (April 2007).

A few days ago, we predicted there would be tens of thousands of financial institution iPhone apps as the big banks released dozens to support their major business lines. PNC Bank and Wells Fargo were the two examples we cited.

There's another multi-app bank: Chase. In our search for an iPhone gift planner to replace the web-based Zions Bank service, we ran discovered the bank's Gift Planner (iTunes link).

Version 1.0 was released in time for the holidays last year (3 Dec. 2008), but it looks like Chase didn't take over ownership/sponsorship until release 2.0 in August. The app is supported by an excellent small website at yourgiftplanner.com that displays the app and solicits feedback.

The app and website are 100% Chase branded. The only indication that a third party is involved is a notation in the iTunes store that the app is sold by The Archer Group (inset), a Wilmington, DE-based digital agency.

Evidently, the app didn't show up on our radar because it's placed in the App Store Productivity category instead of Financial. The app doesn't appear to be mentioned on the Chase main website. A site search there came up blank.

Review: It's great looking app that can be used for any holiday. The app supports "shake for help," an advanced feature. The integration with your contact list makes it easy to add new contacts without typing, although you must wade through your entire list. And, the process of adding gifts is a bit tedious. You have to add a gift to the master gift list, then go to each person and add the gift to their profile. It would be better if you could simply type a gift on the fly.

iPhone users have been relatively unimpressed, giving the latest version a 2-star rating out of five; pretty low for a professional app (see inset).

It's a good branding tool for Chase, but it the app itself could use retooling.

Gift Planner iPhone screenshots (24 Nov 2009)

Gift Planner website (link)

Note: For more info on mobile banking on the iPhone see our March Online Banking Report.

Are you tired of hearing "there's an app for that" yet? Well, get used to it, we are still at the beginning of the great app rollout. 

Even as recently as our iPhone Banking Report published in March, I assumed most financial institutions would have a single iPhone app. One bank. One app. It's how the Web worked, for the most part.  

But when Starbucks unveiled a dedicated app just for its stored-value card (separate from the main Starbucks brand app), I realized that I wasn't thinking big enough.

For example, in August PNC Bank become the first U.S. financial institution to offer multiple apps when it released an app for its Gen-Y-focused Virtual Wallet. That was followed last week by Wells Fargo when it unveiled its cash-management app for larger businesses, CEO Mobile (screenshot below; press release).

Now, I believe that each major bank will roll out dozens of apps, perhaps hundreds, to support their business lines, major products and large segments. There will be an app for each major affinity credit/debit card, one for students, one for small businesses, one for large business, one for senior checking, one for home equity lines, and so on.

And, if that's not enough, there could be a dedicated app for each stock broker, loan officer and mortgage broker. There could be one app for every branch, neighborhood, or region. Right now the search-and-discovery tools at Apple would implode under the weight of all these apps. But they'll figure that out. It's worth billions to them. 

Today, more than 100,000 apps are available for the iPhone. But fewer than 20 are for U.S. financial institutions. It's conceivable that in the banking vertical itself, well over 10,000 apps could be developed, possibly many tens of thousands (see notes 1, 2). 

Wells Fargo is first U.S. bank with a cash management iPhone app (12 Nov 2009)

Notes:
1. They won't all be iPhone apps. The mobile market is too big to have it all consolidated at one player. 
2. It's also conceivable that we'll move away from the dedicated app framework, and users will be able to configure their phones with hundreds of info feeds without needing to install an app for each one. More like the iGoogle portal model.  It will be fascinating to see how it plays out.

The biggest surprise of the year in the world of alt-payments is PayPal's newfound reach into banking circles as evidenced by their agreements with S1, FIS, and FirstData announced at last week's Retail Delivery conference.

But a huge question remains: Will banks play ball with PayPal or will they provide the same functions via home-grown solutions or non-PayPal alternatives such as CashEdge, Fiserv, or Visa/MasterCard?

I don't think anyone has that answer yet. There are simply too many variables. But if you believe there's no way a bank would use a "powered by PayPal" solution, read this quote by Mercantile Bank of Michigan's CIO, who plans on launching the S1/PayPal person-to-person mobile service next year (note 1):

"(PayPal) is a network, it doesn't scare me at all. They're never going to steal significant deposits out of our bank and keep [them] in PayPal accounts. Visa and MasterCard probably look at PayPal as the enemy, and they probably should, but that's their problem, not mine."
   -- John Schulte, CIO Mercantile Bank of Michigan in a
       Nov. 10 article from Digital Transactions

Note:
1. You might remember Mercantile Bank from our May post lauding its fee-based consumer positive-pay service.

In an article in today's Austin Business Journal about the coming launch of mShift-powered mobile remote deposit at Randolph-Brooks Federal Credit Union, the CU revealed its penetration number in its EasCorp-powered, home-scanner-based service, eDeposits:

Total members: 300,000
Total checking account customers: 202,000
% of checking using remote deposit: 5%
Number of remote deposit users: 10,000 (derived)
% of members using remote deposit: 3+% (derived)

The San Antonio, TX-based credit union expects more mobile users than in-home users. The product, which debuted at Finovate on Sep. 29, is currently being tested with employees before it rolls out to select customers.

USAA was the first major financial institution to launch mobile remote deposits in August.  But WV United beat them to market in July earning our OBR Best in the Web award. And this week, speaking at BAI Retail Delivery, Bank of America's Doug Brown was bullish on the feature, leading many to believe that the giant would add the feature to its mobile offering at some point (see note). And if that happens, it's not inconceivable the feature could show up in television commercials, either from BofA or Apple.

Note:
1. In response to an audience question after his presentation, Brown said that the bank was seeing 1 million envelope-free deposits made at ATMs every day, and "there was an obvious use-case in mobile". Note that he did not specifically say, or even directly imply, that BofA would launch it, but he also didn't dismiss the idea. 

Once again, the first mover gets the attention. Bank of America, long a fixture in Apple iPhone advertising, now figures prominently in Sprint's marketing for the Google's Android marketplace.

In a whirling dervish of apps on the Sprint microsite, Bank of America's mobile banking app appears in the second set of four apps displayed (see screenshot below). 

Spring microsite featuring BofA app (link, 21 Oct 2009)

Android market has BofA mobile banking on the second page of top free apps (link)

Note: For more info on mobile banking via apps, see our Online Banking Report: Mobile Banking via iPhone (March 2009)

There was an interesting piece by Jessica Vascellaro in the Technology supplement of today's Wall Street Journal. The title says it all, "Why Email No Longer Rules....and what that means for the way we communicate."

The primary thesis:

• Old-school email is a passive way to communicate, more like a letter, and has been overrun by more information than the technology can manage.
• It will be replaced by more active services (e.g., Twitter, Facebook) that are akin to a conversation with filtering technology to keep noise levels down.

But Techcrunch's MG Siegler's take on the matter is even more profound. He argues that the winning technology will be something that combines both active and passive communication, such as Google Wave (see inset; short video explanation here). Users will be able to choose between active or passive, or anything in between, depending on the situation.

Relevance for Netbankers
The passive vs. active communication metaphor is a good one for banking too. Passive banking is the old way of doing things. We waited for our monthly statement, balanced the account, and walked in to the branch or called customer service if there was a problem, usually many weeks after the fact.

Passive banking is not a bad thing. As long as there are no problems or financial shortfalls, it's the desired state for most customers. 

Telephone banking, then online banking, made it much easier to keep closer tabs on your account. Instead of reviewing transaction activity once per month, most users log in at least once per week to review activity. This helps ease anxiety during the intervals between looking at your data.  

But it's still passive in the sense that a user deals with banking only when the choice is made to log in. And that passive nature limits the usefulness of online banking in situations where a user needs to pay attention NOW! For example, security issues, low-balance alerts, over-budget warnings, and so on.

Enter mobile banking. With text messages or direct-to-the-phone alerts, users can have an always-on, or active, connection to their accounts. This is great for those infrequent, yet urgent, events such as authorizing an unusual card transaction.

But most users will want to be in active banking mode as little as possible. So the challenge for financial institutions will be to make it easy for mobile users to balance "active banking" (alerts, warnings) with "passive banking" (logging in, requesting more data, changing settings and preferences).

Ultimately, companies that well manage this communication challenge will have customers for life.

Notes: For more info on mobile banking, see our Online Banking Report: Mobile Banking via iPhone (March 2009) as well as our earlier reports on Mobile Banking (Feb 2007) and Mobile Payments (April 2007).

As an analyst who covers new developments in online and mobile finance, I will forever be grateful to Apple for opening up the mobile-phone platform, thereby unleashing a rush of innovations sure to rival the Internet circa 1995 to 2001 (note 1).

The latest financial app is from none other than Mercedes-Benz. The luxury-car maker has several iPhone apps available to its fans, but the latest, which appeared in the App Store last Tuesday, is specifically designed for its finance customers (iTunes link to app). It's the first captive finance company with its own app, at least in the U.S.

Other than the striking homepage image, the app is pretty pedestrian so far. It allows