TowerGroup has just released a new research note discussing the growing adoption of mobile banking in the United States. The research unit of MasterCard is predicting a five-fold increase in active users (note 1) between year-end 2009 and year-end 2013.

In comparison, we (note 2), are projecting a four-fold increase. But either way, it's a phenomenal growth curve and is a market that financial institutions must pay attention to.

Following are the numbers Tower released, more details are contained in the full report (purchase here). I also compared to those that we projected in our Jan 17 Online Banking Report.

Please note: TowerGroup is forecasting active USERS, we forecast active HOUSEHOLDS. There are about 1.9 adults (18+) per household in the United States, but often, not all the adults in the household will be active banking users, so it's a bit hard to compare the two figures. But if you assume 1.2 to 1.4 mobile banking users per household (note 3), we are pretty close this year, but TowerGroup is a bit more bullish five years out.

Sources: Online Banking Report, Jan 2009; TowerGroup, May 2009

Notes:
1. Active mobile users have used the service within the past 90 days.
2. See our Online Banking Report: Mobile and Online Banking Forecast or the Online Banking Report: Banking on the iPhone for complete details.
3. We assume the number of mobile users per household will grow over time starting with 1.2 per household in 2009 to 1.4 per household in 2013.  

My credit card number was stolen again. It's the third or fourth time since the Internet came along. It's annoying, and a little disconcerting, but not a major problem, thanks to efficient card issuers who take the info, credit my account, and send me a new card. On a ten-point "hassle scale," where 10 is having your hard drive crash, it's only a 2 or 3.

And my previous stolen cards resulted in little financial loss to the issuer, other than the cost to process the chargeback and reissue the plastic. In those cases, either the issuer caught the fraud before anything was shipped, or the items purchased were digital (online subscriptions) and didn't result in any lost inventory.

But this time was different. Someone used my card number to buy a PS3 gaming console and three games at a Best Buy in the Bronx. Assuming Best Buy follows proper procedures, Wells Fargo will be out more than $600 just for the merchandise. All told, with the cost of the investigation and processing, it's probably an $800 to $900 loss to the bank and merchant.

Wells Fargo is generally very good about suspicious charges and usually calls us. I've had the card for almost two decades, and it's been othe primary card for both my wife and me for much of that time. WF knows our purchasing habits better than we do.

Yes, we get to NYC at least once a year, but our charges are usually travel- and tourist-related ones in Manhattan. And we probably visit Best Buy in Seattle a couple times a year (we have teenage boys), so the gaming system charge is understandable. But it's highly unlikely we'd buy a system while visiting NYC, and we've never visited the Bronx, so the authorization request likely triggered flags.

But unless there was inside theft, the bank's authorization system evidently decided the $10 in interchange was worth the risk. Bad call this time, but probably right 99%+ of the time; otherwise, they'd be out of the card business.

What's mobile have to do with it?
But if Wells Fargo had a real-time connection to me via mobile phone, they could have texted me for an OK (similar to the screenshot above, which is a text-based activity request to Wells Fargo). If it really had been I who stood at Best Buy's register, it would have taken a second to reply "yes," and the transaction would have gone through.

Of course, in this case, I would have said 'no, I'm in San Francisco right now.' Or even better, in the not-so-distant-future, if I'd allowed the bank to track me via GPS, they would have known, without even contacting me, that I was 3,000 miles away from that store. Either way, the bank saves nearly a grand from that single text message. Multiply that by the millions of fraud purchases every year and you have serious money, billions by most estimates.

So yes, mobile banking (really mobile payments) does have a robust and tangible business case from fraud reduction and customer service savings. The technology is in the hands of the users now, and most know how to use it. So, let's get moving.

Note: For more information see our Online Banking Report on iPhone Mobile Banking. 

Day two of the Mobile Commerce Summit ran just for the morning (see Day 1 highlights), but anyone who overslept missed the highlight of the conference: the much-too-short panel discussion on revenue opportunities that started at 8:15 AM and ended at 9:00 (note 1). 

Panel: Mobile revenue opportunities 

• Drew Sievers, founder & CEO, mFoundry
• Joe Salesky, chairman & chief strategy officer, ClairMail
• Cameron Franks, director, Mobile Commerce Americas, Sybase 365
• Jayatsu Bhattacharya, SVP business development, Mobile Money Ventures (Citigroup & SK Telecom joint venture)
• Mustafa Patni, former director of mobile banking, WaMu

Observations from the panel:

• POS payment services: NFC at point of sale
• Value-added services
• Fees for mobile banking services: transaction, monthly, or annual
• Premium accounts with a rich mobile feature set
• Stock/investment trading (Citi Hong Kong is able to charge a premium for mobile trading)
• Bill pay: expedited payments
• Person-to-person (P2P) payments
• Much of the revenues will be indirect, from deepening and improving customer relationship
• Remote deposit capture for businesses
• Merchant advertising: offers to customers as they shop
• Loyalty programs: driving customers to certain merchants with alerts, offers, and discounts
• Lots of cost-saving opportunities: self-service customer service, moving bill payments to on-us transactions, loyalty program management, security, fulfillment, marketing, call deflection

Panel: Smartphone impact on the customer experience 

Armin Ajami, VP retail Mobile channel, Wells Fargo

• Almost half of smartphone users use the mobile Web daily (source: ABI research, Feb. 2009)
• 18% of U.S. consumers have smartphones
• 263,000 apps now available for smartphones, predicted to grow to about 700,000 by 2013
• There are 27 different app stores today
• Mobile-optimized website <wf.com> launched in July 2007, text banking launched Oct. 2007, native iPhone app launched May 2009
• Funds transfer on mobile-optimized websites takes 2 minutes with 5 clicks, no zooming or scrolling vs. 10 minutes via iPhone mobile browser with 7 clicks, 5 zooms, 7 scrolls and 10 minutes

Alain DeSouza, sr. mgr., market development solutions marketing, Research in Motion

• Globally, 12% to 14% of mobile phones sold now are smartphones; in North America, it's now above 20% (22% to 26%)
• Blackberry app store officially launched April 1, 2009
• Not excited about putting NFC chips into handsets (adds cost); will do it when it makes business sense (last year it was a top-5 opportunity, this year more of a top-20)
• P2P transfer is not a killer app, but could be important for adoption
• Be careful not to waste bandwidth in your app development

Note:
1. Note to conference organizers: Never start a session at 8:15 AM after a Thursday night in Las Vegas.

About 100+ folks gathered in the brand new M Resort near Las Vegas for the third annual Mobile Commerce Summit by SourceMedia. Jeff Dennes from USAA and Jim Simpson from City Bank of Texas, both provided an extraordinary amount of metrics on their mobile rollouts (details below).

The biggest innovation of the day was iPhone-enabled remote check-deposit capture soon to be available from USAA (official launch June 25; see picture below). 

Session highlights
Jeff Dennes, executive director, mobile money & movement, USAA:

• 7.9 million logins so far this year vs. about 7 million in all of 2008
• Highest week to date, 476,000
• 4.8 million USAA members own mobile; 1.5 mil use it to access Internet
• 20% say mobile is primary channel
• 11.4% of members using USAA mobile
• Why so much usage: no branches, members trust USAA, extremely mobile military-oriented customer base, more technically capable than average
• Have SMS, Firethorn downloadable app, WAP <mobile.usaa.com>, native iPhone app
• Native iPhone app released 2 weeks ago: Went to number 1 in first week with 55,000 downloads; 45,000 logins in first week, 93,000 in second week
• iPhone app built in-house and has patents filed
• Will be launching first iPhone remote deposit-capture app on June 25 (see photo above); tune in to the bank's webcast at 7 PM Central time at <budurl.com/usaaannouncement>
• Current iPhone app has insurance functions: filing a claim, roadside assistance
• Personal financial management functions coming soon
• With mobile rollout, are seeing call volumes going down
• 35% of access to mobile site comes from iPhone, 35% from Blackberry
• Will be building app for Blackberry; others as demand warrants (e.g., Pre)

Jim Simpson, VP IT, City Bank of Texas

• Mobile banking is powered by ClairMail (use Jack Henry for core processing and online banking)
• Launched 17 Oct 2008 with balance, history, funds transfers, "call me," near-real-time alerts (not batch) including reward-checking status/summary (sent out 7 days before end of checking cycle telling users how they stand on meeting necessary activity levels
• Have microsite: www.citybankmobile.com
• Made a major cross-channel marketing effort at launch: TV, print, radio, in-branch, and so on; used it to differentiate themselves in competitive Lubbock market
• 10.2% online banking penetration
• 64% use weekly
• Average age is 32
• Average account balance on primary account is over $5,000
• More than 3,000 active users
• Limited use of mobile browser site, bnkngo.mobi; text-message banking is much more popular (also have gocitybank.mobi); get 5,000 balance requests via text messaging each week vs. 25 or 30 mobile Web logins
• Real-time alerts (vs. batch) is one of the key benefits that users like; they often can text message a confirmation of the transaction while still standing at the checkout counter; not always that fast, sometimes can be a few minutes later
• Coming: End-of-day, text-based account summary, "payit" loan payment via text (in response to text alert), iPhone/Blackberry apps
• How to make money? Adding ad-supported links within text messages; e.g., link back to the restaurant where the transaction originated

Ginger Schmeltzer, SVP, SunTrust

• Currently at 2.5% penetration of online banking users powered by Firethorn
• 33% access via iPhone; 33% via Blackberry
• Have an RFP out now to find vendor(s) to increase functionality
• See real benefits from using mobile channel to decrease fraud

Patrick Reetz, VP & director, online banking, M&I Bank

• Rolled out mobile in Oct 2008 powered by MShift
• Within 11 days, achieved one-year goal of 2% penetration of online banking users (longer term, their initial goal was 10% by YE 2010)
• Currently have 7% penetration

Ellen Johnson, SVP retail online services, Huntington Bank

• Have just under 25,000 users of mobile Web banking, launched in June 2008
• Number of users of text banking surpassed mobile Web in April, launched 6 months ago
• Mobile banking customers are 38% more profitable; text banking, 13% more profitable
• Call center contacts per active user dropped 3.4% in first 6 months
• Have a mobile microsite for marketing

Juli Anne Callis, president & CEO, National Institutes of Health Federal Credit Union (previously at Keypoint Credit Union)

• At Keypoint Credit Union, even usage between iPhone and Blackberry access
• Keypoint powered by mShift and will be using mShift at her new CU
• Launched on Facebook Nov 2007 (OBR Best of Web winner)
  

Amy Johnson, channel manager -- CEO Mobile, Wells Fargo

• Launched 2 years ago (April 2007), and Wells Fargo remains the only major U.S. bank offering full corporate mobile banking
• Mobile Web-based system
• No charge except certain text messages (and those fees may go away)
• No set-up process -- just log in at mobile site with existing online credentials
• Will not disclose usage, but are targeting top-tier customers: top 10%-15%
• Access: 30% iPhone, 50%+ BlackBerry -- no Android so far
• $2.5 billion in wire approvals via CEO Mobile in 2008

Kevin Morrisson, AVP card products, H&R Block

• Using text messages to defer calls to call center (currently receive 80 million annually), especially people checking to see if their refund has arrived.
• Program was piloted this year and is expected to roll out nationwide later this year. Found dramatic decline in voice calls from test group.
• Mobile program powered by Metavante/Monitise joint program. 

Rebecca Mann, director of strategic alliances, Western Union

• Using mobile to replace either the sending or receiving part of a money transfer
• Partnering with US Bank for international remittances

Lisa Stanton, CEO, Monitise America

• Can do more secure services within an app compared to mobile Web or SMS

Matt Krogstad, VP business development, M-Com

• Critical for banks to be point of registration and source of funds
• Should be able to register outside online banking -- via call center, ATM along with mobile phone
• In Australia, mobile money transfers was slower to take off, approx. 18 months after adoption of mobile banking

Clint Heyworth, attorney, consumer finance group, Chambliss, Bahner & Stophel

• One-to-one relationship with phone (e.g., you have it with you) makes it better for security compared to PC where others have access
• Not a lot of legal differences between delivering banking services via mobile vs. online
• Don't expect to see specific regulation regarding the mobile channel; will likely be the same regulations as for online banking

Tom Wills, senior analyst, Javelin Strategy & Research

• Security is single biggest factor inhibiting mass consumer uptake
• Only 500 pieces of malware have been identified so far in mobile vs. thousands of new ones every day online
• 47% of respondents are uncomfortable with mobile security (Mar 2008 data)
• Main concern is hackers, mentioned by 73% of those above
• Expects anti-virus software makers to build mobile versions

Rebecca Sausner, editor, Bank Technology News

• Total revenues for mobile banking vendors this year will be $26 million (source: Aite)

Sean Moshir, CEO, CellTrust (also mobile banking sub-committee co-chair of Mobile Marketing Association)

• 66% of consumers still not yet comfortable using mobile device for financial transactions (source: 2009 KPMG Global Consumer Survey)
• 7% said they would pay a nominal fee to access online banking services via mobile phones (source: 2009 KPMG Global Consumer Survey)

More than 10 months after the iPhone App Store launched, two U.S. credit unions have joined the application marketplace, which numbers more than 40,000 in the U.S. store alone.

The first was Texas Dow Employees Credit Union (TDECU), whose ATM and shared-branch locator, Culoc8, launched on April 29, according to the company's Twitter page (below, link).

The TDECU app (see inset) is unbranded and can be offered by other CUs to their members. 

Eaton Family Credit Union is offering CuLoc8 to members on its website (see below).

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

Yesterday, Tech CU, became the first credit union with a full-featured branded native iPhone app (App Store link, see note 1). The app (see below) includes full online banking functionality and an ATM/shared branch finder (second screenshot). The credit union also added something we haven't seen yet, an iPhone optimized feed of its blog, Money Savvy (third screenshot). Nice touch.

Tech CU has offered a mobile website since Sept. 2007. 

Note:
1. America First Credit Union was the first CU with native iPhone support via its participation in Firethorn's shared mobile banking app which launched in Nov. 2008.

Twelve hours ago, Wells Fargo became the last of the "big four" banks to release a native iPhone app in the Apple App Store (see screenshot below; note 1). The bank, which has long been a pioneer online, let Bank of America reap much of the branding benefits of their association with iPhone banking for the past two years.

But we are glad to see Wells Fargo available and enjoyed checking our balance via iPhone for the first time. At just 0.1MB, the application was a quick download and compatible with my first-generation iPhone. There's no need to first visit the bank's website, as the app can be immediately used with your normal online banking username/password (see note 2).

While it won't win any design awards, it's simple to use with the typical online banking functions: balance inquiry, transaction listings, funds transfer, bill pay and GPS-enabled ATM/branch finder. Only the 12,000 Wells or Wachovia ATMs are listed in its database.

During the initial signon, the app encouraged users to create a short account nickname for easier reading on the small screen. And the bank also prompted me to sign up for text-message banking, something I hadn't used at Wells before. When I agreed to do so, a six-digit confirmation code was texted to my phone, which I entered back into the app. 

There is no mention of the new app on the Wells Fargo site.

Wells Fargo listing in Apple iTunes App Store (18 May 2009; link)

Notes:
1. Big four U.S. banks: Bank of America, Citibank, Chase/WaMu, Wells/Wachovia.
2. We'd previously registered our mobile number, which may have eased the activation hurdle.  

Last week, USAA released astounding figures on its mobile banking usage: The 10-month-old service is already used by 11.4% -- about 800,000 -- of its 7 million members, making USAA one of the largest mobile banking providers in the country (press release; see note 1).

The mobile platform has bagged more than 13 million logins in ten months, about 3% of its nearly 500 million annual customer contacts (note 2).

With the introduction of its own native iPhone app last week (note 3), USAA now supports the three primary methods for mobile access (see screenshot below):

• mobile website at <mobile.usaa.com>
• text-message banking (see inset above)
• downloadable app for iPhone (link to app in iTunes) and other phones (via Firethorn)

Only Bank of America, with 2.6 million mobile users, has publicly revealed a larger mobile base. That makes USAA number two among known user bases. However, it is highly likely that both Chase/WaMu and Wells Fargo/Wachovia have cracked the one-million-user mark and are second and third largest. 

USAA's mobile landing page (18 May 2009)

Notes:
1. On a side note, USAA posts its press releases in blog format which allows visitors to comment and/or subscribe via RSS.   
2. The 3% is approximated from data in the press release: 470 million customer contacts in 2008 and 13 million mobile logins since the service was launched in summer 2008.
3. Since last fall, USAA users could access their accounts via Firethorn's multi-bank iPhone app.

Yesterday, Intuit launched its first native app for the iPhone, Quicken Online Mobile. It's already risen to number four in the Finance category (note 1), and will likely hit number one given the number of Intuit fans using the iPhone. Currently, E*Trade's new Mobile Pro claims the top spot.

Intuit has incorporated some interesting features including this user-friendly "what's left until payday" feature. Users can access a graphical map of their future balance level (below) and get a warning (right) if the account looks like it will run out before the next payday.

Intuit also uses the GPS/location-based capabilities of the iPhone with a built-in ATM finder (click on inset for larger view). And finally, users are able to input transactions on the fly to get a real-time look at the impact to their budgets on the latest expenses.

The two-minute YouTube video (link) is worth watching to see how to position your iPhone PFM as a mobile financial assistant (speaker is Intuit product manager, Barron Ernst):

There are a number of personal finance apps available on the iPhone platform including Mint, Wesabe (announced Tuesday at FinovateStartup), MoneyTrackin, iBearSoft Software, and dozens more. 

Notes:
1. Quicken's mobile app is number four in the free apps section of the iTunes Finance apps section as of 8:30 AM Pacific time, 2 May 2009. It has 73 user reviews with an average 4-star rating (excellent). In comparison, Mint which launched its iPhone app in December has nearly 13,000 reviews.
2. According to VentureBeat, Quicken Online passed the 1-million user mark in mid-April.

Apple must be one of the more lucrative advertisers these days at the Wall Street Journal. Apple has bought the back page more times than I can count to show off the iPhone and more-importantly, the diversity of applications available (see inset, note 1).

Lately, Apple has run "theme" ads showing applications related to a single category. Last week (Thurs, 9 April), the back of the A section showed personal finance apps (see left column below). Yesterday, the apps all supported small business and ran on the back of Marketplace (B) section (see right column below).

The only app to make both lists: personal finance superstar, Mint, which even scored top billing in the personal finance page, occupying the upper-left corner, where it's blurb would likely score the highest readership. 

The Apple website also has themed app guides. The managing money page (see screenshot below) features again features Mint, which gets the biggest graphic, Bank of America, who's app was featured in dozens of Apple ads in 2008 and earlier this year, Bloomberg, Gas Cubby, iXpenseIt, Save Benjis, and Home Finder.

Bottom line: Financial institutions should think about how to add similar money management functionality to their mobile and online offers. As Aite's Ron Shevlin pointed out in a comment here last week (emphasis added):

.....(the FinovateStartup participants) you talk about are helping people manage their financial lives, while the banks are [still] focused on helping people manage their financial accounts.

Big difference.

Table: iPhone apps listed in recent WSJ ads (clockwise from upper left)

Apple's Money Management page on its Website (link, 16 Apr 2009)

Notes:
1. My apologies for the image quality, taken via iPhone naturally.
2. For more info, see our latest Online Banking Report: Mobile Banking via iPhone.

A few weeks ago there wasn't a single dedicated ATM finder in Apple's App Store, and now there are three, not counting the bank-branded versions (more on that below). MasterCard is the latest entrant with a cute app called ATM Hunter (see inset; iTunes link) launched six days ago.

The free app can lead you and your iPhone to any of more than one million ATMs worldwide. The app automatically senses your location and lists nearby machines. And it's integrated with Google maps so you can map the location with a single click.

Unlike other ATM finders, MasterCard's version has a helpful filter to zero in on the following ATM types:

• surcharge-free
• drive-thru
• wheelchair accessible
• 24-hour
• deposit sharing

It also has a "share" function (upper-right of second screenshot below) that allows you to text the ATM location to a friend or to yourself for later reference. 

Here's what's in the app:

                         Main page                                   List after "location" search

              Filtering by feature                                           ATM detail

The launch is supported with a webpage at MasterCard's Priceless.com (see screenshot below).

Bottom line: It's an excellent app that should prove popular; however, I wonder if MasterCard is encroaching a bit on its banking clients' turf. Location-based ATM/branch finders are one of the cornerstones of a retail bank's mobile application (note 1). If customers are already using MasterCard's app, they have less reason to go mobile with their own financial institution.

On the other hand, the vast majority of financial institutions that don't yet have their own mobile app can safely recommend MasterCard's app and keep customers from using a banking competitor's app. 

MasterCard's ATM Hunter landing page (link, 10 April 2009)

Notes:
1. For more info, see our Online Banking Report on Mobile Banking: iPhone Edition.
2. Apple is approaching 1 billion downloads since the App Store opened last July. The company is celebrating the coming milestone with a $15,000 gift to the person that downloads lucky 1 billion. It also has a huge ticker on its website (below) that counts to the big number in real time (here).

Billion-download counter at Apple's website (10 April 2009, 6 PM Pacific)

Apple's new iPhone operating system was announced last week. There are more than 100 new features that will make the phone even more valuable plus 1,000 new APIs to keep developers innovating like mad. The new OS will be available "this summer."

Most changes are relatively minor, but two are significant for online banking and personal finance apps:

• Push notifications: Apple currently offers this feature only on its built-in email and SMS application (see screenshot below). But with OS 3.0, application developers can push notifications to the iPhone without the app being launched. For banks, that means you can show users when a new transaction, message, or alert is available to view.
  
• In-app purchases: This is probably less important for financial institutions who generally don't charge transaction fees for mobile or online services. However, non-bank financial apps can now charge transaction fees for value-added services such as an expedited payment or a credit score. The transactions are processed via Apple so now customers needn't provide the app developer their credit card number.

Bottom line: We believe every financial institution large enough to offer online banking should support the iPhone platform. With OS 3.0, it's even more important to be in the App Store. For more information, see the latest Online Banking Report on Mobile 3.0 -- iPhone Edition (see announcement post).

iPhone home screen (30 March 2009) >>>
Here's my main iPhone screen showing push alerts (clockwise) for new text messages (11), new emails (196), voice mails (6), and application updates (2).

In a completely unscientific poll of 123 LinkedIn users I conducted about two hours ago, I found they overwhelmingly prefer the online channel over all others when accessing bank transaction data (see notes 1, 2, 3).

I was expecting mobile to be higher. But unless you have a new-generation smartphone and your financial institution supports mobile, it's unlikely to be your first choice. So given that mobile's only been widely available in the United States for about a year, a one-in-ten preference is a strong start. 

I also expected a bit more interest in the other choices: ATM, voice and social network, which only drew 3% of responses in total. Social networks went 0 for 123, showing that it's not yet viewed as a place to review financial data (note 4), at least among LinkedIn users. In a much differently worded poll of Facebook users a year ago, we found that 13% willing to view their bank balance within the social network.

Q. All else being equal, how would you prefer to access bank transaction data?

Source: Netbanker/Online Banking Report poll of 123 U.S. Linked:In users who self-selected to respond to poll while logged in to Linked:In; fielded between 1 and 2pm on 1 April 2009 using in-network polling tool.

Notes:
1. The question is strictly limited to 75 characters, I couldn't make it as precise as I would have liked. For instance, I would have like to add "assuming its secure" and "your personal" to "transaction data." It's possible some respondents were thinking more about global banking data than their own personal transactions. The poll also displayed "by Jim Bruene, Owner, Online Banking Report" in the lower-left, potentially biasing results.
2. LinkedIn users are given opportunities to respond to polls while logged in to the service. There is no financial benefit to taking the survey, but they do get to see results after taking it.
3. There were significant differences based on demographics, for instance women were almost twice as likely to select "mobile." And zero men, and 4% of women, chose voice call as the preferred method. But due to the small sample size, these demographic breakdowns don't hold much weight. There also appears to be some mathematical errors in the demographic splits, so I'm not going to cite them further until Linked:in cleans up it algorithms.
4. An interesting result, given the poll was conducted within a social network among social network users. Actually, "the branch" beat social networks, drawing one "write-in vote" in the poll comments (it was not one of the five choices). 
5. For more info on mobile banking see our latest Online Banking Report on Mobile Banking 2.0 -- iPhone Edition. 

While working my way through the RSS backlog tonight,
I found a post from Rob Findley at The Bank Channel, I wish I'd seen a week ago. It would have made a nice example in our latest Online Banking Report on the iPhone and other mobile applications. 

Last month, Dutch giant ING released a Google Android mobile application called ING Wegwijzer (see translated page below), that goes one step beyond the iPhone's GPS-enabled ATM finder apps.

In the ING (Netherlands) version, you have three choices of how to view the nearest ATMs (see below):

• List
• Map (regular or satellite)
• Camera

The camera option is very cutting edge. Users point the camera in their G1 mobile phone camera (inset) and the app overlays a pointer to the nearest ATM (see below). The application works for all ATMs, ING-owned and others, but only in The Netherlands. 

The application was developed for ING by SprxMobile using technology from Australia's Austria's Mobilizy.

I saw a Japanese startup demonstrate a broader mobile shopping app at TechCrunch50 last September, the Sekai camera from Tonchidot, but this is the first production app I've seen using the technology.

Bottom line: This is probably overkill in terms of a mobile ATM finder. However, it shows the power and versatility that's rapidly being engineered into mobile phones.   

ATM location as pointed out by ING app running in camera viewfinder

ATM locations also displayed via typical mapping

ING landing page for the Wegwijzer (link) (Google translation, 18 March 2009)

This is a report I've been meaning to write for a few months, but it kept getting pushed back for more pressing (Growing Deposits in the Digital Age) or timely (Year-end Wrap and Forecast) reports.

But a few days ago, we put the finishing touches on the latest Online Banking Report. It will be mailed to subscribers by the end of this week. It's also available online here. There's no charge for current subscribers; others may access it immediately for US$495.

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

Mobile Banking 2.0: iPhone Edition
How to build a smartphone app even
your CFO will love

In the report (press release), we outline the reasons why every financial institution should consider an iPhone app, even if it's just a simple surcharge-free-ATM/branch finder like 1st Mariner Bank (iTunes link; see note 1) or a one-screen interface to your mobile website, essentially what Bank of America started with last year. Being on the iPhone is like having a website in 1995. Just by being there, even if it's crappy, you are ahead of the curve. And for the rest of time, you can brag that you were an early adopter of all things mobile.

And the icing on the cake, you get to slap Apple iPhone pictures all over your website. Baltimore, MD-based 1st Mariner, a bank that doesn't appear to even support basic mobile banking (note 2) has the most iPhone-ish website in the land (see screenshots below).

The report also looks at:

• Mobile banking application market (Apple's App Store, RIM's Blackberry App World, and Google's Android Market)
• Mobile banking forecast (U.S.)
• 33 features to consider for your mobile banking app
• Leveraging iPhone hype to increase interest in financial products and services
• Legal issues in mobile banking from our guest columnists at Chambliss, Bahner & Stophel
  

1st Mariner Bank homepage (16 March 2009)
Note: Nice job with the St. Patty's day theme too!

1st Mariner iPhone landing page (16 March 2009)

Notes:
1. The 1st Mariner app, built by PointAbout, identifies the nearest of 16,000 surcharge-free MoneyPass ATMs. It also features other integrated apps for local weather, lowest gasoline prices, accident alerts, traffic (powered by MapQuest), grocery stores, and Zagat restaurant listings (but not reviews or ratings).
2. Ironically, if you navigate to the bank's website on your iPhone, you cannot even see its iPhone homepage graphic (shown above) because the graphic is Flash-based which is not supported by the iPhone's Safari browser

Financial institutions vary considerably in how easy they make it to move money in and out of bank accounts.

On the one extreme is U.S. Bank, which still requires a retail customers to visit a branch to initiate an electronic payment (note 1). Plus, if you come in after the wire transfer deadline, 2 PM I believe, you can set it up to go out the next day, but you still have to call back and reconfirm before 2 PM the following day. When asked why they needed a phone call after I've already appeared in person, shown my ID, and signed multiple documents authorizing the transfer, they responded in all seriousness, "to make sure you are still alive."

Then there's University of Wisconsin Credit Union, who not only assumes its members are alive, but also wants to keep them satisfied.

The credit union's novel Money Link service allows anyone to send money to a UW CU member via an email-enabled system similar to PayPal but free of any fees and branded by the CU. The service can also be accessed via UW CU's mobile banking. 

Transfers from outsiders take 3-4 days for the ACH items to clear. But member-to-member transfers occur in real time. It's a great way for students to get money from mom and dad in time to thwart that Monday morning overdraft.

The CU also supports full inter-institutional account-to-account transfers online. There is no cost to move money into UW CU, but there is a $2 fee for outgoing transfers.

Members who can't wait for the 3 to 4 days for an ACH to clear, can elect the the Express Service that offers one-day turnaround for $10. The Express service has a $2,000 limit where the Standard Service can be used up to $10,000 (see inset).

Bottom line: This is the type of transfer service most consumers expect from their bank or credit union. It's amazing that it's still not supported at many financial institutions, including some of the majors.

Note:
1. Referring to wire transfers here initiated in the Seattle area. There could be other procedures in other areas of the bank's footprint. Also, customers can CheckFree-powered online bill pay to pay any U.S. resident or business within 5 days. 

It will be a long time before the new mobile application markets, Google's Android Market and RIM's Blackberry App World, get anywhere close to Apple's App Store in breadth or depth. Currently, there are 162 apps listed across all categories in the Android market and 88 for the Blackberry (North America), compared to more than 25,000 for the iPhone (U.S.).

However, Blackberry already has tied the iPhone in one sub-category, big-name U.S. financial services companies. As of today, each has four. Bank of America is the only one supporting both.    

*Blackberry App World also has an Obopay mobile payments app with ties to Citibank.

Financial institution opportunities: The list of participating financial institutions won't stay short for long. You must support iPhone and Blackberry users, the sooner you do so, the more free publicity you can garner. For more information, see our latest Online Banking Report, published today, Mobile Banking 2.0: iPhone Edition.

Blackberry App World Finance & Banking section
(9 March 2009, 10 PM Pacific)

It will take years before the mobile phone fulfills its promise as a true mobile payments device. Or will it?

If you don't mind a bit of a work-around and you limit your purchases to MasterCard PayPass-enabled merchants, you can pay by cell phone today thanks to Blaze Mobile.

How it works:

1. Download the Blaze Mobile Wallet at the Apple App Store (iTunes link), cost $1.99 (note 2).
2. Sign up for a Blaze pre-paid MasterCard issued by MetaBank
3. Affix the MasterCard PayPass RFID sticker to the back of your iPhone
4. Wave and pay at MasterCard PayPass terminals

Granted, few people will go through this trouble just to buy an Arby's sandwich without pulling out their plastic (note 1). However, it shows that the technology is available today to enable at least some mobile payments. And for financial institutions, it provides a cool way to differentiate debit and credit cards.

Notes:
1. According to MasterCard, there are 463 PayPass locations within 25 miles of my Seattle location. 
2. The wallet also works on other mobile platforms, see the company's website.
3. Previous post on paying via credit card stickers (here).
4. For more info see our Online Banking Report on Mobile Payments.

Earlier today, Citibank launched a dedicated iPhone app (iTunes link) powered by mFoundry. Previously, certain Citi cardholders could use the Firethorn iPhone app, but there was no App Store listing under the Citi brand.

The app, which is free to download, is currently number 10 in the App Store Finance (free) category. It will likely rise to the top, at least briefly, as Citi customers download the app.

The app is featured on the Citi homepage today (see first screenshot below) and is front and center on the Citi Mobile landing page (second screenshot below). The bank has also posted a nine-screen demo of the app here (see inset).

Anyone that's ever used a mobile website will appreciate the Citi login screen (see inset below). A jumbo-sized numerical keypad is included below the signin area to make typing the PIN easier on the small screen.

The Citi application does the usual four functions:

• check balances
• transfer funds
• pay bills
• find Citi branches and ATMs

The bank wisely informs users that their iPhone access can be deactivated immediately in the event of a lost or stolen phone by calling its toll-free number.

With this launch, four of the 10 largest U.S. consumer banks have a dedicated presence in the Apple App Store: Bank of America, Chase, and PNC Bank.

Citibank homepage features the iPhone app (2 March 2009)

Left: Landing page for Citi Mobile (link, 2 March 2009)

The Citibank application page in the iTunes App Store (link, 2 March 2009)

Note:
1. See our Online Banking Report on Mobile Banking for more information on the market. 

You'd think that seven months after Apple launched the App Store for the iPhone, it would no longer be news when a U.S. bank adds an application to the store.

It's not like a cost-prohibitive slotting fee is involved. Developers pay Apple exactly zero dollars to be listed in the store (note 1). Apple's revenue is from the 30% share of any fees charged for an app. All the bank apps are free, so that's not an issue.

But it is news since the addition of PNC Bank two weeks age (app here) brings the grand total of bank-specific apps to four, five if you count PayPal. Even if you include the several dozen banks supported by Firethorn's multi-bank app, there are still no more than 40 banks supported (note 2). And there's not a single credit union, yet. 

Here are the five App Store participants in order of their appearance:

• Bank of America and PayPal were both in the App Store when it first opened in July 2008 (post here)
• IBC Bank (powered by mFoundry) launched in Sept. 2008 (post here)
• Chase Bank launched Dec. 2008 (post here)
• PNC Bank (powered by mFoundry) launched late January 2009

Wells Fargo has an iPhone app, but it's not yet shown up in the official App Store.

PNC mobile banking app
PNC's entry is a full-featured app powered by mFoundry. Along with balance and transaction activity, it includes bill pay, funds transfer, and an ATM finder with location-based capabilities. Users must enable mobile banking from within online banking in order to use the app.

The app has risen from number 17 in the Finance category a week ago to 13 today (note 3). However, the app has not yet made it to the PNC website (note 4).

PNC iPhone App screenshots (11 Feb 2009)

Notes:
1. The app does need to be approved by Apple, a process that can take weeks or longer.
2. Users can also track thousands of financial institutions through Mint or PageOnce.
3. Bank of America is #1, Chase is #4, PayPal is #5, Mint is #6, Firethorn is #9.
4. A PNC.com site search for "iphone" yielded just one result, an iphone listed in a mobile banking compatibility table. (Off topic: Note to PNC Bank, your site search doesn't function in Firefox 3.0).
5. For more information on the market, see our Online Banking Report on Mobile Banking and the latest forecast in last month's Online Banking Report Online & Mobile Forecast.

MoBank, the U.K.-based mobile banking and payments said to be launching this month, is creating some buzz on the other side of the Atlantic (stories here, here, and here).  Given the pedigree of its two founders, Steve Townsend and Dominic Keen, who blazed many online banking trails at Egg and First Direct, it should provide a glimpse of the future of mobile finance.

The company is establishing a call center on the Isle of Man, run by Steph Gregg, a veteran of Egg, First Direct and Vodafone. Melanie Hunter is head of marketing, and David Rubin is head of mcommerce.

The company was named to Red Herring's top-100 global start-up list last month (here) along with FinovateStartup alum ClairMail (demo video here).

It appears at launch the service will support bill payment and certain mcommerce activities, such as purchasing movie tickets. An iPhone app is expected at launch. Users will register their credit/debit card(s) with the service. The company plans to expand into mobile banking and money-management activities in the future. 

The company has raised more than $1 million according to news reports. The company was founded in 2006 and presented at The Essential Web conference in June 2007
(p. 43, here) and had four employees at that time.

Here's how the company described itself 18 months ago:

MoBank is creating the world's first mobile-led online bank. The company believes that, for some sections of the population, small screen devices will become the channel of choice for most banking and payment services. moBank's business model is based on providing a free-to-use basic banking service with paid-for add-on features. Furthermore, moBank's users are enabled to participate in a range of unique, value-generating m-retail activities.

What's innovative: It sounds like a mobile-based account aggregation and bill-pay service, similar to Mint on the iPhone. But it could also contract directly with one or more banks like SmartyPig has (previous coverage). But as ING Direct proved, optimizing on a new delivery channel can pay off with great word of mouth and positive press.

MoBank pre-launch homepage (6 Feb. 2009)

Note: For more info on the growing market, see our Online Banking Report on Mobile Banking.

Bank of America has been making the rounds with the press touting the runaway success of its mobile banking solutions. Major stories ran in American Banker and The Wall Street Journal this week.

The bank, with 29 million online banking users, reports numbers just shy of the 2-million mark in mobile. That's up from one million early this summer (post here). While it's still less than 10% of online banking customers, it's an impressive number considering fewer than 4 million mobile banking households exist in the entire country (see note 1).

Several other interesting stats from BofA:

• More than 40% of active mobile bankers --  someone who's logged in within the past 90 days --  use an iPhone or iPod touch. That's about double the usage you'd expect given Apple's 23% share of the U.S. installed smart phone base (note 2, 3).
• The bank believes the mobile channel is driving some new business to the bank with 8% to 10% of mobile bankers, almost 200,000, having signed up for the service within 90 days of opening a BofA account (note 4).

Source: ChangeWave Research, survey of 3,800 cell phone users fielded Dec. 9 - 15, 2008 (link)

Notes:
1. See our latest Online Banking Report: Online & Mobile Forecast for more details.
2. The 23% figure does not include iPod Touch.
3. One other bank provided its usage numbers to the WSJ: Mississippi's BankPlus reported 4,000 users with 60% of the usage (2,400) coming from iPhone users.
4. That number doesn't seem all that surprising. You'd expect new customers would be somewhat more likely to sign up for new delivery channels than the existing base. And given typical banking churn, 10% to 20% of a bank's customer base are new every year.

The latest Online Banking Report: 2009 to 2018 Online & Mobile Banking Forecast is now available. It was mailed yesterday to subscribers. It's also available online here. There's no charge for current subscribers; others may access it immediately for US$495.

The report includes our latest 10-year online banking and bill pay forecast. This year we again bumped our long-term usage forecast to 6%, up from 3%, to reflect a more robust outlook for adoption, primarily from mobile-only users. For example, we are now projecting 71 million U.S. households banking and/or paying bills online by 2013 compared to last year's forecast predicting 66 million for the same period.

Mobile banking (see note 1) access is included in the overall online banking numbers, but it's also shown as a separate line item. Based on the new open-platform standards ushered in by the iPhone and App Store, we increased both our short- and long-term adoption forecast by 10% to 20%. For example, by year-end 2011 we now predict there will be 18 million U.S. mobile banking households. A year ago we forecasted 16 million.

We also included a revised forecast for U.S. peer-to-peer lending. We cut back our short-term estimates by more than 50% due to regulatory and economic constraints on the business. A full 10-year forecast is included in the report.

Top ten innovations & trends of 2008
The report also includes a summary of the top ten innovations of the past year including the surge in mobile banking demand and the marked increase in traffic to personal finance speciality sites such as Mint and SmartyPig.  

Note:
1. A mobile banking household is one where someone has used a mobile device to access bank or credit card account info within the past six months. Includes text-based queries, but not simple broadcast alerts.

When researching yesterday's post on BofA's iPhone app, I searched Google for "Bank of America mobile banking" and ended up at the bank's mobile banking news blog (see screenshot below).

This is the second blog the bank has launched in recent months. The first supports its MIT Center for Future Banking (post here).   

While purists may claim this latest effort is not really a blog because there are no community features such as comments, it's updated infrequently (5 posts in 3 months, see note 1) and appears purely promotional in nature. The bank doesn't even refer to it as a blog. The official title is: Mobile Banking Media Center for Bank of America.

But it's laid out like a blog. The content is arranged in reverse chronological postings, with categories/tagging/permalinks. The variety of content includes YouTube videos, and you can subscribe via RSS feeds.

That's a blog to me, and a very good one at that. While the core audience consists of press and analysts, it's a great resource for anyone interested in the bank's mobile offerings. And as my search yesterday proved, Google has rewarded it with a high organic result, the first position on my search. That can potentially save the bank hundreds of thousands of dollars in search-engine advertising.

Bottom line: Call it what you will, but BofA demonstrates one of the most effective uses of the blog-like format: supporting PR and educational efforts for a new strategic effort (mobile banking) in an easy-to-follow and easy-to-administer format (see note 2).

Notes:
1. There are five posts on the homepage, but if you drill into the top categories, you'll find some older press releases.

2. For more ideas, see our Online Banking Report on Bank 2.0 Techniques. 

3. BofA's new Blackberry app is shown at the top of this post.

Bank of America, which has been at or near the top of the Finance category (free apps) in the iPhone App Store since its July 11 launch, was back at the top today (12:45 PM Pacific). Mint, which has been number one since its Dec. 22 launch, moved to number two.

Contributing to the rise in the App Store standing is BofA's purchase of a feature spot in the iTunes store (see screenshot below). The release of a new version Dec. 28, is also helping the download count. 

The BofA application now leverages the location-based capabilities of the iPhone, automatically showing nearby ATMs without inputting a Zip code (see video below, posted in the BofA mobile media center here).

iTunes App Store main page (20 Jan. 2009)

Note: For more info on the market, see our Online Banking Report on Mobile Banking.

No one knows for sure how Apple compiles the list of its top-selling iPhone apps, but it's related to how many are sold during the past few hours. I've seen speculation that the measurement period is 2 hours (see note 1).

But there is no doubt about the benefits of rising to the top. The winner receives prime exposure in the iTunes Store and on the iPhone itself (see screenshots below).

I've checked the Finance category rankings dozens of times since the store opened in July, and the top app had always been Bloomberg with Bank of America usually the runnerup.

But Friday, a new top seller emerged in the Free list in the Finance category (note 2), Chase Mobile  while Bloomberg and BofA were each knocked down a spot to numbers 2 and 3. The Chase app was released just one week ago (12 Dec). But by Saturday morning (20 Dec), Chase had already been replaced at the top by online personal finance startup Mint, which released its iPhone app Monday (15 Dec), but it didn't show up in the iTunes store until 1 AM Friday.  Mint stayed at the top all weekend and is still number one now (10 AM Pacific, 22 Dec).

In the screenshot below and right, you can see the free publicity derived from holding the top spot. Also, note that you should put your name into the application. Bank of America, ranked number 3, neglected to include its name in the title, so it loses some branding value. Although, they would have to use BofA to fit into the space.  

Chase App (link to iphone App)
The Chase app itself is attractive and is similar to Bank of America's with a login button to the website and an ATM/branch-finder utility. As of this evening, 64 reviews have been posted with an average 3.5-star rating out of five, slightly better than the 3-star rating of Bank of America's iPhone app with similar features.

Mint App (link to iPhone app)
As expected from a company that is carefully using design to help distinguish it from the pack, Mint's new app is great looking. Across all aggregated accounts, the mobile app shows account balances, transactions, and progress towards budget goals. A nifty alerts icon on the bottom provides a convenient way for users to keep tabs on important info on the go.

Another difference from most banking apps: Mint lets users choose whether they want password protection enabled after their initial login. If you choose to log out, then the app erases all data in memory, and you must log back in next time. If you choose not to log out, then your data remains visible until the next visit with no login required (note 4). This is a great convenience, but something that may not be allowed at regulated financial institutions.

Some users have reported trouble with the app on older phones. On my first-generation iPhone running version 2.1 software, the Mint app wouldn't download. But once I upgraded the iPhone software to version 2.2, it downloaded flawlessly and all functions worked perfectly. In Mint's forum, some users were reporting problems with the Budget feature, but it seems to work fine for me (forum thread) (note 3).

Top Apps in the finance category of iTunes' App Store
(7 PM Pacific, 19 Dec 2008) 

 Top free finance apps list displayed on iPhone:
          at 7 PM Pacific, Fri. Dec. 19                               at  2 PM Pacific, Sat. Dec. 20         

Chase Mobile iPhone app                    Mint iPhone app main screen
main screen (19 Dec 2009)                          (19 Dec 2009)

Notes:
1. That 2-hour window could be about right. When I made this screenshot, the new Mint app was at number 10; two hours later (9 PM) it had risen to number 5 (see screenshot above). By 9 AM Saturday morning (20 Dec) it had risen to number 1.

2. The App Store divides the top apps into two categories, free and paid. The top 20 free apps are listed on the right side and the top 20 paid apps are listed on the left. The apps in the middle are listed by newest first.

3. These operating system incompatibilities, a real problem in pre-1995 online banking services, had largely been left behind when banks embraced the Web in the mid-1990s. Unfortunately, mobile banking will add to your tech-support costs. 

4. Mint also reminds users that they can choose to lock their entire iPhone for extra security.

5. For more info on the market, see our Online Banking Report on Mobile Banking. 

Like much of the Internet, many free iPhone apps have embedded advertising as their revenue model. The most popular tip calculator, and third-most-popular app in the finance category, CheckPlease, added advertising across the top of its calculator in its version 3.3 release (Nov. 12).

The current sponsor? Bank of America mobile banking, which has the second-most-popular finance app in the iPhone App Store. The advertising is handled by Mobclix, an advertising network focused on the iPhone and Android markets that debuted at TechCrunch50 in September. In a half-dozen visits, I've seen only the BofA ad. But the developer, Hardy Macia, says he's seen several movies advertised on the app. 

Clicking on the BofA ad (first screenshot) takes users to the BofA landing page (second screenshot on right) hosted within the App Store environment, i.e., the pages are not displayed within the normal Safari environment. The only navigation options are:

• Learn more (see 3rd screenshot)
• Download (see 4th screenshot)
• Visit bofa.mobi
• Close (the X in the lower-right) which takes you back to the CheckPlease app

CheckPlease is a product of Catamount Software which has developed mobile personal finance software since 1994, when it launched PocketMoney for the Apple Newton. PocketMoney is now available for the Palm and iPhone. The company just added an ad-free version of CheckPlease for $0.99.

The free CheckPlease iPhone app has been downloaded more than 200,000 times according to its developer and owner of Catamount Software, Hardy Macia.

      CheckPlease iPhone App                       BofA landing page

          Learn More page                                 Download page (note 1)

Note:
1. Surprisingly, the buttons on this page are not clickable. To download the BofA app, iPhone users must close this screen and open the App Store button on the home screen(s) of their iPhone.

I've communicated with Privier founder Charles Polanco a number of times over the years. He's a Wachovia alum who's been working on a financial startup for several years. The company launched a suite of payment services on Oct. 16 that aims to get the plastic card out of the ATM business (press release).

Privier's value prop is straightforward and compelling: Enable money transfers from any device at any time with the cash delivered through the worldwide ATM network.

The system initiates transfers in three ways:

• ATMsend: ATM to ATM
• iTransfer: Web to ATM 
• mPayment: Mobile phone to ATM

In Privier's model the ATM card is replaced by a one-time authorization code that recipients key into the ATM to withdraw transferred funds.

Analysis
From a usability perspective, it's a great idea. After all, what's not to like? Consumers need to send cash. ATMs have cash. Why not let folks authorize a remote ATM withdrawal from the comfort of their own home or office. A proposed fee in the $7 range beats most alternatives for long-distance money transfers.

However, from a practical standpoint there are two massive roadblocks to overcome:

• Retrofitting ATMs to accept a keyed-in code instead of a mag stripe for authentication
• Convincing banks to add ATM-transfer capabilities to Web, mobile and telephone services

It will likely take an organization the size of Visa, MasterCard, or Bank of America to pull this off. To ensure that those behemoths work with it, Privier has a portfolio of patents pending on the business process. 

What it means for Netbankers
It may take decades, but eventually, the Web married to mobile will eliminate the plastic debit/credit card; however, unless you are a major bank or payments company, this isn't likely anything you need worry about for a number of years.

A better short-term solution for smaller financial institutions is to enable P2P funds transfers using PayPal so you can send money to anyone with a PayPal account (see note 1).

Privier's Web-based interface for sending cash to an ATM (5 Nov 2008)

Note:
1. See our latest, the Online Banking Report 2009 Planning Guide, for more info on project priorities for this year and beyond. 

I check the Finance applications in the Apple iTunes store at least once per week to see which of the companies we track has posted an app. But I missed one of the most popular finance apps, because it's categorized under Productivity.

An iPhone application called A Personal Assistant (iTunes link) from PageOnce has been downloaded more than 200,000 times according to the publisher. The application is an account aggregation service that automatically downloads balance and transaction activity from financial, billing, and other service providers.

In an interview on FastCompany TV (here), co-founder Guy Goldstein said that 65% of users are checking financial accounts through its account aggregation app. Assuming 100,000 total active users, that would imply more than 60,000 iPhone users tracking financial accounts via the PageOnce app (see inset).

That would likely make PageOnce the third largest provider of banking info to the iPhone, trailing only BofA and Firethorn (see note 1).

During the FastCompany interview, Goldstein identified one focus to be banking and bill pay transactions, and said that plans are in place to add bill pay functionality to the app.

Palo Alto-based PageOnce opened to the public in July. The company also offers a Web-based version of the account aggregation service (screenshot below), but sees its core audience being smartphone users. The company launched a Blackberry version a few days ago (see homepage below, company post here).

Implication for Netbankers
Because mobile website navigation is relatively more difficult, the allure of having all your personal and financial info in one place is stronger for smartphone users than for website users. 

However, users are still very concerned about handing their passwords to an unknown startup such as PageOnce. But convenience-minded consumers will do it if there are no viable alternatives from trusted brands such as banks, credit unions and card issuers. If you work at a financial institution, and you still have development dollars available, move the iPhone app up your priority list.

Or partner with someone that already has an app and get your brand on that precious screen. PageOnce is actively looking for partners and has already announced three, none in the financial sector.

PageOnce homepage (5 Nov. 2008)

Notes:
1. Firethorn added a mobile banking app two weeks ago (post here) that has risen to fourth most popular, behind Bloomberg, Bank of America, and Check Please, a tip calculator (see previous coverage here).

2. For more info on the mobile area, see our Online Banking Report on Mobile Banking.

Verizon Wireless mobile phone users can now download PNC Bank mobile banking directly from the Verizon Wireless site (here). The free service, powered by mFoundry, is housed in the Features & Downloads area (see first screenshot below).

However, unlike Firethorn's mobile banking app which carries a "recommended" endorsement from the wireless carrier (see second screenshot), the PNC Bank app is found only via site search (see last screenshot). The PNC app is currently not available via browsing the business apps.

Users may click on the Send to Phone button, a shortcut that sends an application directly to their mobile phone for easy downloading. Both mobile banking applications are free.

PNC Mobile Banking app on Verizon Wireless site (3 Nov 2008)

Search results for "banking" at Verizon's Tools & Applications area
(3 Nov 2008)

Firethorn's mobile banking app is recommended at the Verizon site
(3 Nov 2008)

Note:
1. For more information on the market, see our Online Banking Report on Mobile Banking.

Firethorn (owned by Qualcomm) has a new iPhone app called Mobile Banking for AT&T Customers. The app is currently ranked number eight in the finance category of the Apple iTunes App Store (see screenshot below). Of the transactional services, only PayPal and BofA's Mobile Banking are higher.

The application can be used to access online banking at any of the ten financial institution holding companies, and their subsidiaries, currently supported by Firethorn:

• 1st Bank (Colorado)
• America First Credit Union
• Arvest
• BancorpSouth
• Caroline First
• Mercantile Bank
• Suntrust
• Synovus
• USAA
• Wachovia (now owned by Wells Fargo)

The Firethorn application has 27 reviews so far and has scored a 4-star average (out of 5), much better than the typical finance app (see previous coverage here). The main complaint is lack of coverage for the user's bank, which is not the fault of the app.  In comparison, Bank of America's app garnered 434 reviews and a 2.5-star rating.

I downloaded the application today and, unfortunately, I don't have an account at any of the financial institutions; however, that will change next week if they hit the dates contained in the Featured Providers page.

Here are coming-soon financial institutions:

• Citi Cards (Citibank) "coming Nov. 1" (previous press release here)
• Chase Bank "coming soon"
• Regions Bank "beginning this fall"

A few hours ago, I talked to a friend who'd just purchased the T-Mobile G1 phone this morning in Atlanta. He was pleased with it so far and said he was impressed to see Bank of America available on day one through Google's Android Market.

Apparently, BofA was the only app in the Finance section this morning (see inset). However, that will change rapidly as the store opens to other developers next week. Thanks to Alan Martin for the screenshots.

The bank's Android app looks like the other mobile versions. It includes online banking access and an ATM/branch locator that uses built-in, location-based services (see pictures below).

I also read several blog reports of successful downloads  of the BofA app. However, when visiting the Android market website, the BofA app is not shown amongst the 40-some programs currently available. Apparently, the public market website is different than the app market accessible through the phone. I guess I'll have to hit the T-Mobile store tomorrow to see for myself.

Congratulations to BofA for again beating its U.S. competitors in mobile deployment. It now has a three-peat in recent smartphone application launches:

• First iPhone application in Apple directory (non-native) in Nov. 2007
• First bank with iPhone native app via app store in July
• First bank with Google android app in app market

For more info on the market, see our Online Banking Report on Mobile Banking.

The last of our mobile demos is from Carlo Cardilli, SVP business development & sales, at mFoundry. 

mFoundry is a mobile banking provider founded in 2004. The San Francisco-based company has worked with Citibank among others.

What's New
mFoundry just launched the second native banking app, available through the Apple App Store. The demo showed a fictitious bank, but the bank that launched the app with mFoundry is IBC.

The iPhone app has full online banking and payments capabilities. It also has an ATM/branch finder that uses the location-based or GPS capabilities in the iPhone.

Next we have Awele Ndili, CEO of mShift.

Founded in 1999, mShift is one of the oldest mobile banking providers and now supports 120 clients.

Today, mShift is showing its new mobile business banking solution with full payment capabilities.

Active Messaging System was also demo'd. It's a new multi-channel alert system that enables alerts to text, voice, email or fax.

Eventually the distinction between mobile and online banking will disappear as the devices and services converge (see note 1). But until then, mobile banking, because it's perceived as cutting edge, is more interesting to many customers. That's why Bank of America, Chase, Citi and many others have featured mobile banking in on- and off-line media (see previous coverage here).

But it's not just a mega-bank game; any financial institution can play up its mobile capabilities. Texas-based IBC Bank, in the top-100 with $11 billion in assets and more than 200 branches, flaunts its mobile capabilities with a large banner on its homepage (see screenshot below). The mobile banner currently rotates with an identity-theft-protection pitch.

IBC Bank homepage featuring mobile banking (2 Oct 2008)

IBC Bank releases iPhone app
Last week, IBC became just the second U.S. Bank to release a native iPhone app in the Apple iTunes App Store. The mFoundry-powered application was the 36th most popular finance app yesterday, out of about 120. Following is a screenshot of the application's entry in the App Store. Bank of America, which launched its app on the first day of the App Store, is the other App Store participant (see previous coverage here).

mFoundry will demo its latest innovations at our Finovate Conference Oct. 14. Video of its previous demo is here.

Note:
1. For more info, see our Online Banking Report on Mobile Banking.

I'm certain most major PFM providers will have an iPhone app within the next six to 12 months. It's a valuable product extension from a functionality standpoint (see note 1). Even more important are the marketing benefits from blogger/press coverage and the App Store listing itself. 

Mint posted a blog entry last week reviewing ten iPhone finance apps. The post drew two dozen comments, most asking when a Mint app would be released for the iPhone. Mint Product VP Aaron Forth replied, "We are busy working on one now."

Most of the better-funded PFM companies are likely working on an iPhone app, but the approval process at Apple can easily take a month or more (one developer's story is chronicled here). So we expect to see them trickle out over the coming months.

The first established online PFM to make it into the iPhone App Store is Moneytrakin', the Barcelona, Spain-based multi-language, multi-currency PFM (note 2). We covered its launch more than two years ago (here).

The company recently announced it had surpassed 5 million transactions tracked. Assuming 250 per customer, that's 20,000 active users. According to Compete, U.S. website traffic averages 1,000 to 2,000 per month. But many (most?) of Moneytrackin's customers are outside the United States.

The Moneytrackin' program, released on Sept. 19, is currently the seventh most popular app in the Finance category.

Notes:
1. For more information, see our Online Banking Report on Personal Finance Features.

2. There are at least a dozen check registers and mini PFMs in the App Store, but none are from established online PFM providers. The only exception is iBuxfer, which claims to work with Buxfer using its API, but was not developed by the company. And in fact, according to the comments in the App Store, may be violating Buxfer's terms of service. All the more reason to get your own app into the store before someone else does.

With all the bad financial news circling the globe, you may not have been thinking about innovations in financial technology. While that's understandable, this is not the time to ignore the fundamental changes occurring in the consumer marketplace (see below).

Yes, we are biased towards new technology, but with registrations to our upcoming Finovate Conference running 75% ahead of last year, there seems to be plenty of people who agree. By the way, this is the last day to save $100 on your ticket (register here) and ensure your ring-side seat on Oct. 14 to see these 24 inventive financial companies showcase their latest improvements.

But let's address the elephant in the room. Is this the time to be concerned about new bank tech products, or is it time to just hold on and ride out the storm? While good arguments can be made on either side of that issue, here are two interesting examples that made bold bets on online technology in the middle of Internet gloom and doom: 

ING Direct, launched during the depths of the dot-com bust (Sep 2000), is on track to become a top-10 U.S. bank by the end of the decade (note 1)

PayPal, also launched right before the low point (Nov. 1999), now has more customers that any other financial-services provider in the world other than the payments gateways themselves (Visa, MasterCard)

Who will be the ING Directs and PayPals coming out of the current crisis? Your guess is as good as mine, but my vote goes to the companies that do the best marrying online services with mobile delivery.

Why financial technology remains important
There's no doubt that budgets will contract in 2009 and beyond. But new technology usually holds the promise of cutting costs or at least making it easier to serve more customers without adding resources. Here are the trends you cannot afford to ignore in your 2009/2010 plans:   

1. Always-connected mobile consumer: Consumer services continue to move online as ubiquitous broadband and cellphone connectivity keeps most banking households connected 24/7 at home, work, and now with mobile, everywhere. Apple's iPhone, and the next generation of competitive devices, are changing the game in mobile. There are already more than twice as many mobile phones in the world as there are credit cards (note 2). And location-based technology allows users to interact with merchants and payment providers in new and potentially more secure ways.

Implication: Mobile services today are about where the Internet was in 1996. And globally, mobile banking and payments will be even more important than online banking and payments. 

2. Over-extended consumers seek guidance: Just as millions of amateur stock traders learned a harsh lesson about risk vs. return in 1999/2000, tens of millions of consumers will are learning the downside of extensive debt and leverage in 2008+.

Implication: This is a great time to get consumers hooked on tools that help them manage their spending, savings, and debt. And virtually all the activity will take place online with mobile support.

3. Branch exodus intensifies: The U.S. over-investment in branches will come to a screeching halt in 2009. With several of the big branch builders, especially WaMu, being acquired, there will be less of a competitive imperative, not to mention less capital, to build fancy new branches on every street corner. Some of the savings will be funneled into alternative delivery. Even the fanciest website can be built today with the fraction of the cost of a single urban branch.

Implication: Increasingly, financial institutions large and small will compete online.

4. Online research is the norm: According to a 2007 study published in November by the National Association of Realtors, 84% of households used the Internet in their search for a house. And in a dramatic change compared to ten years ago, online sources were nearly as important as humans in locating the house that was ultimately purchased (29% found it online first vs. 34% who said their agent told them about it). Similar numbers are reported for autos and other big tickets items.

Implication: A good web presence is crucial to landing new customers.

Note:
1. Industry consolidation is helping them move up the ranks, they jumped two spots in the past week alone.

2. Source, Communities Dominate Brands blog, 8 Jan 2007 (with updates)

Visa today put a stake in the ground to be viewed as the innovation leader, a position that American Express has claimed for some time with its chip cards, social media efforts, and even an online lab site. At today's "innovation briefing" in NYC, Visa announced several pilots and upcoming initiatives.

Mobile person-to-person transfers
The most far-reaching announcement was the ability for Visa cardholders to transfer funds from one card to another via mobile device. So far, just one bank is participating in the pilot. US Bank says it will make the service available to a few thousand cardholders as a test later this year. PaymentsNews has more details here.

It sounds good, but as always the devil is in the details. For instance:

• Through what hoops will cardholders have to jump to enable their card and phone for the service?
• Will the transfers be treated as cash advances triggering fees and finance charges?
• Will it be available to all cardholders using any mobile phones? 

Visa jumps on the android bandwagon
A more immediate innovation is a location-and-alert-based service built for Google's android platform, a new mobile system launching in late October. Visa's new service, to be rolled out initially by Chase Bank (no time frame given), promises some important new developments:

• "Near real-time" purchase alerts (see note 1) so you can see immediately whether your server added an extra digit in front of your tip on that bar tab. The real-time alert pilot was announced a month ago (here) involving several thousand accounts at PNC Bank, SunTrust Bank, US Bank, Wachovia, Wells Fargo, Royal Bank of Canada, TD Bank, and Vancity.
• Visa merchant finder based on your location-based/GPS technology  (nice!) with targeted marketing offers (hmmm??). The merchant locations will be integrated with Google Maps.

Again, PaymentsNews has the entire press release here.

Notes:
1. Visa says that the alerts will arrive "typically before (the consumer) leaves the store."

2. For more information, see our Online Banking Report on Mobile Money & Payments.

Since the July opening of Apple's App Store, we've been tracking the apps in the Finance category (see previous coverage here). But there are also several apps in the Productivity category of interest to financial institutions: the eWallets.

There are two wallets available in the U.S. iTunes store:

• eWallet from Ilium Software: #46 in popularity in Productivity with a cost of $9.95 and rated 3.5 stars (out of 5) across 143 reviews (see inset)
• Memengo Wallet: #48 in Productivity with a $0.99 cost and rated 4 stars across 43 reviews (website)

Web-based eWallets never took off because of security concerns and because they provided only marginal improvements in desktop productivity. However, a mobile version has more utility owing to sticky notes with password reminders and credit card info, helpful to users away from their desks.

How it works
Storage of usernames and passwords for websites is the primary use of eWallet, but it also has a Finance category (see inset above) where users can store credit card numbers and contact info (see screenshots below).

That info is helpful when using a card to make a purchase online or through the mobile phone. It's also a great place to store the info in case the card itself is lost or stolen.

Financial institution opportunities
While these apps haven't gained an overwhelming following, a financial institution could offer a free version that highlights its own card offerings while providing storage space for other card numbers. That way, you get your logo on the iPhone instead of Mint, Wesabe, or some other financial institution. 

The bank-branded eWallet could also include a financial calculator and direct connection to online banking.

 Note:
1. For more info see our Online Banking Repot on Mobile Money & Payments.

Intuit joined the messaging race with the beta release of Quicken Beam. The free service sends users text-messaged balance-and-activity alerts from most U.S. bank, credit card, and credit union accounts. Users may also query the service for balance plus last five transactions by texting "Bal" to the short code 636363.

Currently, the service runs independently of Quicken and can be used by anyone free of charge. According to the official press release, the service was developed in Intuit Labs.

What's innovative
It's not a new feature. Quicken Online (see second screenshot below), along with most major banks and personal finance specialists (Mint, Rudder, Wesabe), already supports text-message alerts (see note 1). But this is a relatively low-cost way to hook users early on with an extremely simple service, then migrate them to more robust Intuit services later on (Quicken, QuickBooks, TurboTax).

And the Quicken stamp of approval means a lot when turning over your log-in credentials to a third party. If you want to talk to the company about Quicken Beam, Intuit will be demo'ing the latest features of Quicken Online at our Finovate Conference in October. 

Financial institutions that lack text-message support might consider linking customers to Quicken Beam. Yes, you are turning customers over to another financial provider, and yes, your compliance folks will hate it. But customers are going to do it whether you want them to or not. You might as well get credit for making a solid recommendation. And realistically, using Quicken Beam is unlikely to hasten anyone's exit from your bank or credit union.

Qucken Beam homepage (25 Aug 2008) 

 Text messaging in Quicken Online (25 Aug 2008)

Notes:
1. Geezeo really differentiated itself with mobile capabilities in its May 2007 launch. 

2. For more information, see our Online Banking Report on Personal Finance Features.

Even though I have credit cards from Citibank, Wells Fargo, U.S. Bank, American Express and Chase, I have never been offered the opportunity to add contactless payment capability to my card, so I still have no firsthand experience of that particular wave of the future. 

And it hasn't been too high on my list of things to try, since it still requires carrying a piece of plastic or an additional device such as keychain fob (inset). I don't see much benefit to tapping a piece of plastic compared to swiping it.

However, I do look forward to NFC-enabled mobile phones. But given the hurdles for adoption among carriers, payment processors, and issuing banks, I wasn't expecting that much before the next summer Olympics.

But now an interim workaround is being tested around the world: the contactless payment sticker. It's a quarter-sized sticker you plop on the back of your mobile phone making it instantly payment-enabled.

That allows consumers to leave their wallets at home, a nice benefit for outdoor enthusiasts, club goers, or anyone who doesn't want to worry about losing their wallet while on the go. Of course, we'll need a few million more contactless-enabled merchants before the wallet-free world is realistic for most, but widespread use of stickers could move that along (see note 1).

Who has it?
There are several rollouts under way around the world. For example:

• Turkish banking giant GarantiBank recently won an industry-innovation award for its RFID sticker (press release). The sticker is produced by On Track Innovations. The bank began a pilot a year ago with several thousand Turkish customers.
• Silicon Valley-based Blaze Mobile says it will be delivering a Blaze Debit MasterCard with PayPass payment sticker to subscribers to its $4.99/mo Blaze Wallet this month.
• Though not yet connected to a major credit card, Malvern, PA-based USA Technologies launched its Pay Dot contactless sticker this spring (press release).

Note:
1. There are about 110,000 PayPass merchants worldwide, less than 1% of the 25 million locations that accept regular MasterCard cards. 

It's been almost a month since Apple launched its App Store for native iPhone apps. According to the company, 25 million have been downloaded, an impressive one-million-per-day pace (11 Aug update: The company reported 60 million downloads, with $30 million in sales, during the first 30 days.)

Luckily for banking geeks, Apple added a Finance category (see screenshot below), so it's easier to track what's popular in our sector. As of early today, a total of 42 finance apps were listed. The 20 most popular were (note 1): 

Source: Netbanker/Online Banking Report analysis of Apple App Store data, 5 Aug 2008
PFM = Personal financial management
*Release date of latest version; there may have been previous versions released earlier; currently reviews carry over from previous versions
**Average user rating on 1-to-5 point scale
***Number of user reviews posted

 What's notable:

• Nine apps have a download fee ranging from $0.99 to $9.99
• Only four have a user-rating of 4.0 or better (on a five-point scale): Balance (4.5), Bloomberg (4.0), LoanShark (4.5) and TipTap (4.0)
• Three apps, including two of the most popular, are rated below 3.0: BofA (2.5), PayPal (2.0) and MyAccounts to Go (2.5)
• The most-reviewed apps are Bloomberg (337 user reviews) and BofA's mobile banking (323) (see previous coverage)

What's innovative:
I haven't used any of the apps yet, but from reading the descriptions, there's not much new here (notes 3, 4). The apps fall into four main categories:

• Tip calculators
• Other financial calculators such as loan payments
• Expense/check registers
• Personal finance tracking apps

Even though these functions aren't very advanced, the ability to access them easily from your mobile phone makes them more interesting. And banks looking to create a useful iPhone app should take note. BofA was criticized in early user reviews for posting little more than a landing page for its normal mobile banking screen (see screenshot above).

Financial institutions would likely find a more receptive audience if a couple useful functions were added to the application besides an online banking login screen. It would be relatively trivial to add an expense register, tip calculator and other calculator functions to the banking app. 

Notes:
1. Apple does not provide any metrics on how many times the apps have been downloaded. It just lists them in rank order.

2. Download transactions from more than 200 financial institutions supporting Intuit's DirectConnect

3. The most interesting app is SplashMoney's account aggregation app that allows you to download transactions from more than 200 financial institutions that support Intuit's Direct Connect.

4. See our Online Banking Report on Mobile Banking for more info.

While the launch of a mobile-optimized version of your online banking site is no longer news on the national level, it's still important for your customers. And the launch will generate many questions starting with "How much" then, "Is it secure" followed by, "How tricky is it to use."

That's why I love Central Florida Educators' Federal Credit Union's landing page for its new mobile service (thanks to Brandon McGee for the link, see note 1). The CU makes it easy for users to get questions answered with three choices:

• Video tour for the YouTube crowd, those willing to sit still for a few minutes while it downloads and plays
• Live demo, where the DIY/ADD crowd can get right at it, plugging their username/password into the emulator and accessing their own account data
• FAQs where the "manual readers" of the world can check out all the do's and don'ts before trying it

The CU makes it clear the offering is FREE but overlooks a key member concern: security. It is question number three of the mobile FAQ, but for those of us who don't read manuals, a graphical security icon or link would be a good addition to the page.

Note:
1. CFE's mobile service is available at <mobile.mycfe.com>.

Kiwibank has one of the most eye-catching homepage designs in the world.  Who can resist a lime green Smart Car with four monstrous speakers strapped to the roof?

As I was obsessing about iPhone apps this week (see note 1), I ran across Kiwibank's landing page for iPhone banking (see second screenshot below). Now that the iPhone has gone global, we'll see if more banks leverage the iPhone hype, something that didn't really happen in the United States so much. According to CNet Australia, ANZ is building an iPhone-specific interface, but a search of the ANZ website found nothing.

Kiwibank's homepage iPhone promo, one of three rotating in the lower right, leads to the not-so-exciting landing page. Still, when you are riding the hype, you don't necessarily have to put that much effort into your own work (see note 2), just grab ahold of Apple's coattails and hang on tight.

Kiwibank homepage featuring iPhone promo (11 July 2008)

Kiwi Bank iPhone banking landing page (11 July 2008)

Notes:
1. Yesterday, I promised it was my last iPhone post for a while, but I couldn't resist one more. Consider it a Saturday bonus post.

2. Case-in-point, the BofA non-app app being dissed by the vast majority of early-early-adopter reviewers at the Apple App Store (see yesterday's post).

It took almost six months, but Bank of America finally has company in Apple's iPhone Web App Directory (see note 1).

USAA posted its iPhone-optimized Web app on July 2 (here). USAA's browser-based app can be used by anyone with online access to their USAA accounts
(see note 2).

The resolution in the screenshot (right) is not great, but you can see the bank is using large iPhone-like icons to navigate to the main functions:

• Balance/transaction inquiry
• Funds transfer
• Bill payment
• Stock trading
• Order auto insurance cards

Provident Bank added its mShift-powered solution to the Apple directory June 11. Users are able to perform all typical online banking functions: balance/transaction inquiry, transfer funds, and pay bills. Its pedestrian format (see below) is clearly built to work across many different mobile devices. The small links would be harder to navigate on an iPhone compared to USAA's icons.

See previous iPhone banking coverage here.

Notes:
1. BofA was first in the United States. Germany's Postbank was the first bank in the world in the app directory, beating BofA by a few weeks last fall.

2. These are mobile browser-based solutions optimized for the iPhone. They are NOT native apps running on the iPhone OS, soon to be featured in Apple's App Store (see previous post).

Last week, the Puget Sound Business Journal reported on a Pacific Northwest stealth startup that's receiving a lot of attention from Silicon Valley, at least measured in dollars. The $10 million round for Finsphere is an impressive endorsement, especially given the apparent involvement of prominent VC Mohr Davidow.

There's not a lot we know about the company other than the founders are out of the wireless industry, and the company's services are described as "location-based transaction verification services." That sounds like using the GPS-based or triangulated location of mobile phone users to authenticate card transactions and/or online banking logins. Armed with the GPS reading, card companies would know that you (or at least your mobile phone) are where your credit card activity says you are, e.g., buying a tank of gas in Washington D.C.

With GPS capabilities coming to the iPhone next month, this could be a very large market indeed. If we are right about the product, we'll try to convince the company to demo at one of our Finovate conferences. 

As expected, Bank of America reached the one-million-mobile-user milestone this week. Last month the bank disclosed it had 840,000 active mobile users as of March 31. With 160,000 new users in the past 9+ weeks, it appears that BofA has stayed on the 75,000/mo pace of first quarter.

Even more interesting to me was the news that the bank has "nearly 25 million" online banking users. That's 3 million more than the bank had last fall, an impressive 13% gain. Six years ago, there weren't even 20 million online banking households in the entire country (see note 1).

The bank also passed along a few other mobile metrics in today's press release:

• 40% are using mobile for money movement (bill pay and/or funds transfer within BofA accounts)
• 80% viewed transactions and balance data (leaving 20% who check balances only)
• In May, the bank had 4 million mobile sessions, or 4.2 sessions per user/per month, assuming 950,000 active users
• Two-thirds of mobile users are under 35, about 13% are age 35-44 and 20% are older than 45

Note:

1. Source: Online Banking Report: 2008 through 2017 Forecast

I've written about how the iPhone could change the way consumers use mobile phones to access data (see note 1). But this slide from the Steve Jobs keynote yesterday at Apple's Worldwide Developers Conference (WWDC), says it much better:

In case you can't read the slide, it says that 98% of iPhone users use the built-in Safari browser, 94% use email and 90% use text messaging. That's an amazing level of usage for what used to be considered "advanced" smartphone features. So far, the impact on ecommerce companies has been relatively small, with just 6 million users worldwide. But with Apple dropping the price by 50% to $199, there will soon be 10, 20, or 30 million Americans connecting to the Web via iPhone. If 90%+ use the browser and messaging, it will have a major impact in online/mobile banking usage.

New App Store
And to help those millions of new users find useful things to do on their phone, Apple is building a new App Store, accessible directly from the main deck of the iPhone once users download the 2.0 software in July. The App Store will include thousands of applications optimized for the iPhone that can be downloaded over the air.

Some will have a cost, with the developer keeping 70% of the revenue, but most are expected to be free. Since there is NO COST to list your app in Apple's App Store (see update below), financial services companies should rush to get their app loaded as close to the July 11 launch date as possible.

So far, only two banks, Bank of America and Germany's Postbank, have included their apps in the current online applications directory (here). A number of other financial apps are listed including Wesabe, Buxfer, and the latest, QuickBooks from Intuit (see inset right and screenshots below). Expect many more in the months and years to come.

Update 11 June: Important clarification from commenter "gerontius" (number 3 below). The current app directory includes webpages optimized for the iPhone. The new App Directory will include "native" apps that run directly on the iPhone operating system. That makes the bar quite a bit higher, depending on what you want to do. 

Bank of America    Buxfer  

myBudget        Postbank 

Wesabe           Yodlee 

Note:

1. For more info, see our Online Banking Report on Mobile Banking

WaMu just launched its first foray into mobile banking, a text-message-based (SMS) service believed to be powered by New Zealand's M-Com (previous post here). Thanks to Brandon McGee, blogging from his vacation via iPhone, for the tip (here).

The free service provides text-based access to balance and history of checking and savings accounts. To use the mobile services, WaMu customers must first register through online banking to activate their phone. Up to five phones can be registered through a single online banking account.  

Chase is the other U.S. top-10 bank using a primarily text-based approach for mobile delivery. See our Online Banking Report on Mobile Banking for more information on the growing market, including a 10-year adoption forecast.

More info at the WaMu website:

• FAQ
• Landing page
• Mobile services agreement

In its latest quarterly financial results (here), Bank of America said it signed up 224,000 new users during the quarter to bring its active mobile banking base to 840,000. Assuming the 75,000/mo pace continues through second quarter, the bank should be over 900,000 now and will surpass 1 million in the next few weeks.

Although it's a nice milestone, it's only 4% of the bank's 23+million active online banking users (here). Given that mobile is pushed frequently in the bank's online banking area, one could argue that 4% adoption is pretty anemic. But according to M:Metrics, less than 14% of U.S. mobile phone users accessed info via the mobile Web in February. So 4% of a 14% universe is much more impressive, indicating the bank has tapped almost 1/3 of the short-term potential for mobile Web-based services, a good start.

To really goose adoption, text-based solutions may need more emphasis (see Chase screenshot below). According to M:Metrics, U.S. text users outnumbered mobile Web users almost 4 to 1 in February, 110 million to 30 million.

Industry forecast update
These adoption rates are about what we expected. In the forecast published a year ago in our Online Banking Report on Mobile Banking, we were relatively bearish short term, projecting 900,000 mobile users by year-end 2007 growing to 2.5 million by the end of 2008.

With BofA reporting 840,000 and assuming they have about half of all users, the U.S. market has likely already passed the 1.5 million mark and will end the year at more than 3 million.

The adoption rate depends on how hard banks push mobile options. Along with BofA, Chase has been one of the most aggressive, showing mobile use in its advertising for several years now (previous coverage here). I love its "Text your account. It texts you back." Just seven words conveying more than most 3-minute demos.

Judging by the title and the date of this post,  you might think it a prank.

But no, Mitek Systems has actually developed software that lets you deposit paper checks by taking their picture with your mobile phone and transmitting the images to your bank. The company has a good demo of the service on the product page.

The company first demo'd it to bankers at BAI's Transpay in early February (press release here). I wasn't there but I heard it was a must-see on the trade show floor.

Here's how it works:

• Call up the app on your phone (first-time users would need to download the app from the bank)
• Log in
• Enter the amount of the check
• Take a photo of the front of the check
• Wait for the software to optimize the photo
• Take a photo of the back of the check
• Wait for the software to optimize the photo
• Transmit it to the bank
• Receive a confirmation message from the bank

Analysis
I'll admit, I didn't see this one coming. And I still can't decide if it's a good idea. On the one hand, it's cool and innovative and allows you to do something on your mobile that you really can't do on your PC (although a digital camera hooked to your PC could do the same thing). I could imagine a smaller service business with just a couple checks per month using it. The photo documentation of the deposited check would be handy to have and a dedicated check scanner is too pricey (note 1).

But for consumers? Not many would go through this much trouble to deposit a check. It would be easier to drop it in an ATM, the mail, or walk it into their branch during lunch hour. And no major business can use it. Biz owners don't want their bookkeepers snapping photos of customer checks with their Razr. 

If you have a massive tech budget, it might be worth the cost to demonstrate that you are the leading innovator in your market. Or if your mobile banking vendor can deliver this capability within a larger mobile banking system for little or no extra cost, give it some thought.

But if your are already behind on your 2008 plan, your budget fits on the display of an eight-digit calculator, or you are still haven't gotten around to creating an iPhone button for your bank, this is not the project for you.

Let me know what you think.  

Note:

1. CheckFree or USAA's system using existing home scanners might work better for most small- or micro-businesses.

As I was holding my family's place in a long line over the holidays (note 1), I took the opportunity to look at the 20 largest U.S. retail banks through my iPhone. They are all passable as long as you are willing to take the time to zoom in and navigate with your finger on the touchscreen. 

The best-looking sites are those with relatively simple hompage designs, notably ING Direct and HSBC and to a lesser extent Wells Fargo. But the hands-down winner is Bank of America, the only top-20 U.S. bank with an iPhone-optimized homepage.

This provides BofA with several short-term advantages:

• Bragging rights as the first major bank to design for the iPhone
• A spot on Apple's directory of Web apps for iPhone (here) (screenshot below)  
• Several mentions in tech and personal finance blogs
• An entree to the 1.4 million, decidedly upscale, iPhone users

Note:

1. Survey of 20 largest U.S retail banks, by deposit size, made at 4 PM on Dec. 24 from Seattle IP address through iPhone browser on AT&T Edge network.

Wachovia Bank is not exactly a household word in Seattle. According to the bank's website, the nearest retail branch is 627 miles away in Sacramento, California (see note 1). So I was surprised to hear an advertisement for Wachovia's mobile banking services in the middle of the afternoon on a relatively obscure alt-rock station in the heart of Seattle yesterday. 

Wondering whether I'd missed an acquisition or maybe the launch of a direct banking effort in the Seattle metro area, I Googled "wachovia seattle" and confirmed there were no retail branches (note 1, 2). I double checked through wachovia.com's office locator which informed me there were no offices within 30 miles.

As for direct banking, there were no bank ads displayed for "wachovia," "wachovia bank" or "wachovia direct" on either Google or Yahoo, so I'm pretty sure Wachovia is not targeting Seattle on the direct banking front.

But searching "wachovia mobile" did result in a targeted ad on Google which led to a mobile banking landing page at Wachovia (see below).

And surprisingly, AT&T Wireless was advertising under "wachovia seattle." Unfortunately, they dropped interested parties on its wireless homepage (see below), not the mobile banking page. Finding mobile banking on AT&T's site requires using the search box. It's buried under the not-so-obvious "Ringtones & More" category (note 3).

Summary
I still don't know why Wachovia is advertising in Seattle. I suspect it was an inadvertent placement within a larger radio buy. And/or the advertising was orchestrated by AT&T Wireless, which has a large Seattle metro presence, but no mobile banking partner in the area. Perhaps Wachovia was dropped into the regionalized ad by default. In any event, it's wasted air time. 

Note:
1. There are three Wachovia Securities brokerage offices, but those aren't even listed on the main Wachovia website. 

2. Search conducted at 2 PM Dec 20 from a Seattle IP address.

3. Note to AT&T: Time to update your FAQs and webpage, which still say that mobile banking is "coming soon" at Wachovia.

Each month there is a new report published on the topic of mobile banking adoption (see my Mobile Banking blog for more on the recent Forrester report.) At first glance, there appears to be a wide variance in projections -- from enthusiastic to pessimistic. Yet, as you dig deeper and look at the definitions and methodology, I conclude that the various researchers have arrived at very similar projections.  

To illustrate, below are five reports published by the most well-known and highly respected vendors in the financial research industry. By reading the clips below you can see that three reports predict a low penetration number, while the other two reports suggest a more robust adoption. However, it is critical to understand the “base” for each estimate. Some researchers report adoption as a “percentage of total households,” while others project the “percentage of online banking users.”

Now, let’s perform a couple of calculations using with the assumption that 30% of households utilize online banking.

Glass is half empty:

Only 8% of people are interested in Mobile Banking.

(100,000 Households x 8% Adoption) =                                                 8,000 users

Glass is half full:

More than 30% of people are interested in Mobile Banking

(100,000 Households x 30% Online Banking Clients) = 30,000

Even though the headlines suggest very different outlooks about the future of mobile banking, the market penetration predictions vary by just 1%.

So, if you have been asking yourself, “How can two valid surveys return such different results?” The answer: they usually don’t. By looking at the forecast detail, you'll often find very similar projections. For more details on the estimates, refer to the following links:

Additional Research on Mobile Banking:
Mobile Banking - Getting it Right This Time - Javelin Strategy & Research

Brandon McGee is vice president and senior product manager at The Huntington National Bank. He is not only the real deal, a genuine industry insider, but also knows exactly what's on the minds of financial service pros as they contemplate the various mobile options. For more great content, check out his blog, Mobile Banking. 

Today I am blogging live from Finovate 2007. Please check back throughout the day to learn more about the presenting vendors.  - Brandon McGee (Mobile Banking)

1) Geezeo -
"Geezeo is a social finance application that helps you make educated financial decisions." 
Newsworthy: Geezeo has moved past simple account aggregation and now incorporates investment data.

2) Metavante -
"Banking and Payment Technology Solutions for Business"
Newsworthy: Metavante has a new expedited payment tool to help banks capture a larger percentage of payments by recapturing the "biller direct" payments.

3) Lending Club -
"Lending Club is a lending community where you can borrow or lend money, bypass the banks and get better rates."
Newsworthy: Facebook members have financed over one million dollars of loans through Lending Club.

4) Andrea -
"The industry's leading integrated account opening solution."
Newsworthy: Until today I was not familiar with the company. They have a very slick account opening tool that manages the entire new account opening process from start to finish. I have reviewed the account opening processes at all of the top U.S. banks and this process is simple!

5) CheckFree -
"Banking and financial transaction management solutions."
Newsworthy: The combination of Corillian and Checkfree has resulted in a very powerful online banking solution. The account summary screen now facilitates drag-drop functionality that is unlike anything I've seen to date. 

6) Mortgagebot -
"The leader in Web-based mortgage origination technology"
Newsworthy:  A new product called MortgageMarvel.com. The customers only need three pieces of information to search for rates: Loan amount, Property Value, Property Zip Code.

7) Billeo -
"Whether you're paying bills, shopping online or need help managing passwords, Billeo combines three great tools into one convenient package to make your online life easier and more secure."
Newsworthy: This is a revolutionary tool to manage all of your payment devices, and integrates with the websites that you ordinarily visit to perform biller direct payments.

8) Online Resources -
"A new way to collect loan and credit card payments at your website - securely and quickly."
Newsworthy: The Virtual Collection Agent, a better way to automate the collection of outstanding debts without the risks involved with relying on people and their inherent shortcomings.

9) Identity Theft 911 -
"Leading America's institutions to cutting-edge identity solutions."
Newsworthy: Customer satisfaction rate in excess of 98%. They never market additional products to your clients. They work with the client to resolve the issue from the beginning to end - not just giving advice and then disappearing.

10) Yodlee -
"Know the bottom line. Experience higher profits."
Newsworthy: Now multilingual (French, Spanish, English, Chinese). Averaging a new user every 2 seconds. Product is completely mobile ready.

WHEW - that's the morning session. I love this format. Allowing only 7 minutes per presentation forces the vendors to truly focus on the key concepts! 
*************
Lunch was terrific and the networking opportunities were the best I have experienced at a conference. I was able to meet with the heads of mobile for Chase and Citi Bank; plus, I was able to meet a number of vendors that I have only heard of date.
*************

Afternoon Session:

1) Firethorn -
"Firethorn mobile banking and payment solution helps carriers and financial institutions deliver valuable services to their wireless customers."
Newsworthy:
* Focus is on the consumer wallet.
* Branded experience with the banks logo 
* Strong relationships with the carriers to prevent pop-ups and error messages
* Solution offers offline mode for when signal is not available
* Signed clients: Wachovia, Suntrust, Bancorp South, Synovus, 1stBank
* Application is burned onto handset and marketing materials are contained at the purchase 

2) Monitise -
"Monitise has created the most extensive and commercially successful mobile banking and payments service in the world."
Newsworthy:
* First part of demo is conducted on a mainstream 2G phone
* Joint partnership between Metavante and Monitise PLC
* Use ATM network for simplicity and low cost
* Branding is customized for the institution
* Mobile wallet demonstration conducted on a smart phone. Complete demonstration was conducted live with projectors and actual devices.
* Very bold to conduct entire demo with live phone real time.

3) Clairmail -
"Clairmail optimizes any mobile phone for 2-way customer interaction."
Newsworthy:
* Platform supports the "Triple Play" (SMS, Browser Based, Downloadable)
* Again full demo is conducted with an actual device being projected onto the screen
* Focus on 2 way customer interaction
* Demo includes a marketing message on screen to cross-sell product (revenue generation!!!)
* The browser based solution can be activated by dial back reply to an SMS message
* Focus on security by not requiring login and password at once
* Conducted a demo where the client requested "call me" and the bank called the client to offer a product (revenue generation!!!)

4) mShift -
Newsworthy:
* This is a browser based solution
* Nothing to download to the device
* Over 100 deployments currently live representing 80-90% of the mobile banking market
* Wide compatibility with all devices. Over 9000 handsets are compatible
* Demonstrates how 2 factor authentication is incorporated into the solution
* Only bill payments to existing payees are allowed - additional level of security
* Product also has the ability to view check images and perform bill presentment 

5) mFoundry -
"mFoundry's Spotlight Platform provides all of the components necessary to bring mobile financial services to millions of consumers. Spotlight enables all parties in the mobile financial ecosystem."
Newsworthy:
* Begins with demo using Citi solution (Top 5 Bank - impressive)
* Solution offers a calendar feature to that you don't have to input a date
* Demo is conducted on a 2G phone yet still very quick
* Promotes flexibility and the fact that solution can be customized to your liking
* Allows GPS functionality - zip not required
* Branch locator even gives you the branch hours, directions, map of the surrounding location
* Citi mobile can be updated on the fly without impacting the client or requiring them to re-download the application.
* Demonstrates an application designed with Yahoo finance functionality

6) Prosper -
"Where people come together to borrow and lend money." 
Newsworthy:
* 430,000 members
* 91 million dollars in loans during the first year
* New feature (out in 2 weeks) will show - loans like this one have X% likelihood of default. Previously the lender would have needed to make a judgment call solely based upon looking at the credit bureau.
* Another new feature (out in 2 weeks) will allow you to build a "Portfolio Plan" For instance, if you have $10,000 to invest the solution will help you build a diversified loan portfolio.

7) Jwaala -
"A unique and refreshing company that is bringing technology innovation galore to the world of Credit Unions and their members."
Newsworthy:
* PFM tool
* Allows you the opportunity to review spending, budgets, reports, etc.
* Questions that clients ask: What do I have? / Where's it going? / How can I do better?
* Announced: iPhone view of the application
* Announced: RSS via OFX (open source)

8) iPay -
* Application developed called - Mobile Shortcut
* Two way SMS
* Built from online banking solution
* Person to person payments, account to account transfers
* Functionality allowing charitable donations and gift checks

9) Digital Insight -
"Our mission is to help our clients compete and win."
Newsworthy:
* The next generation of online banking by combining the strengths of Intuit and Digital Insight
* Account summary page now includes a pie chart of where money is being spent
* Homepage also includes an icon showing the number of bills due "Envelope image - 3 bills due"
* Lots of other web 2.0 features that make the service much more user friendly
* Tool now incorporates a check register feature to assist customers in managing their finances

10) Mint -
"The free, automatic, online way to manage your money is here."
Newsworthy:
* Sign up in under two minutes
* Tool connects to financial institutions through Yodlee
* Their tool alerts you when you're about to be charged a bank fee
* Mint finds ways to help you: Make money. Save Money. It analysis your current financial situation and then finds offers that will help you improve your financial situation.
* Clients already signed up: ING, HSBC, AT&T
* Launched two weeks ago. Login volume during that time period higher than Wells Fargo

In all the discussions about mobile banking — will it be text-based, go through a mobile website, or do 225 million U.S. mobile phones all have to download some sort of an app — there is little discussion on an obvious use case, voice to text.

The only person I've heard talking about this publicly is Richard Crone of Crone Consulting, a fixture on the conference circuit, and the keynoter at SourceMedia's Mobile eCommerce conference in June (see our previous coverage here).

Here's what I want my bank, card company, and credit union to offer (assumes my mobile phone is registered with my bank):

Call my bank's 800 number from my mobile phone, then without touching the keypad, simply say "text me" and hang up (or for multiple account holders, "text me checking," "text me credit card," and so on). Or if background noise is bad or the connection isn't clear, let me press a single number on the first VRU tree that triggers the same text message.

Then, the bank sends me an SMS message with my current and available balance and last ten transactions, or whatever else would fit in the 160 character message. Ideally, I could text back to get more transactions or even make a transfer. But I'll take just the simple one-way message for now.

Would I pay for it? No. But I'm not the core market, since I'm online 24/7. But if I'm a a twenty-something, on the go and managing my account to the last $25 every week, a reasonable fee ($0.25) per message would seem fair. Would it decrease overdraft income? Yep, some. But you'd have a happier customer and potentially some decreased call center expenses.

Zillow Example
While I don't know any banks using this approach, Jott, which is a voice-to-text Web 2.0 company, recently used Zillow's API to offer voice-to-text delivery of home values (see Zillow blog post here). After registering with the sites, users can call Jott, say an address, and receive a text message with the estimated home value of the property. While this is not exactly a mainstream app, it's surely valuable for real estate agents, home buyers, and nosy neighbors.

September, October and November are traditionally great months for new product announcements. True to form, at least five major U.S. mobile banking announcements appeared last week. Brandon McGee posts a quick synopsis here.

Of special interest were the announcements by Firethorn/CheckFree and Monitise/Metavante, all of which will be presenting at our upcoming FINOVATE conference in New York City on Oct. 2 (see note 1).

Firethorn
Firethorn ended a relatively quiet stretch with an important announcement, the addition of Ogden, Utah-based America First Credit Union to its mobile banking consortium which includes Wachovia Bank among others (see previous coverage here). The top-10 credit union has more than 400,000 members and gives Firethorn a reference account in the credit union and non-mega-bank categories. The service is expected to go live in early 2008.

We've had the pleasure of hearing the Firethorn story several times, but going into the critical fall marketing period, it will be interesting to hear an update on the Firethorn rollout with AT&T and Verizon Wireless.

Monitise/Metavante Joint Venture
Although disclosed in March of this year, the Monitise and Metavante joint venture was officially announced last week (here). Monitise crosses the Atlantic with mobile banking and payment solutions already widely deployed in its United Kingdom home market under the MONILINK brand. Its client list reads like a who's who of U.K. financial and telecom players: BT Global Services, T-Systems, HSBC, First Direct, Alliance & Leicester, Royal Bank of Scotland, NatWest, Vodafone, Orange, O2, T-Mobile and Hutchison 3G. The JV's Oct. 2 presentation at FINOVATE marks the first time the new entity, Monitise Americas, will be on stage to DEMO the new service expected be available by year-end.

Note:

1. Our FINOVATE 2007 DEMO conference is expected to sell out some time next week, so if you want to reserve a place you should register ASAP at www.finovate.com.

As I have written before on my blog, Mobile Banking, all financial institutions benefit when the large U.S. banks begin promoting the channel; what follows is another perfect example.

Here is a well-designed, interactive demo from Bank of America. The bank did an outstanding job illustrating various situations where mobile banking can save time.

The demo covers the critical topics including:

• View Balances
• Pay Bills
• Transfer Funds
• Find Locations
• Security
• Get Started

In addition, the demo effectively incorporates a good cross section of target users:

• Jeanie – young, on a budget, needs to view her balance before a shoe purchase
• Jim – a white collar professional, traveling on business, needs to pay a bill
• Samantha – a busy mother of two, needs to transfer money to cover a bill
• Jake – a traveling student, is out of money and needs to find a branch

If you recently either have launched a mobile solution, or are preparing to do so, I highly recommend that you develop an interactive demo. It will help facilitate client adoption and reduce costly inquires to your already-busy call centers.

As mentioned in Brandon's post earlier today, New Zealand-based
M-Com has amassed an extensive client list in the Australia/New Zealand market. Whether they can make the leap to the United States is unknown, but we should find out soon, since the company is targeting some well-known U.S. banks.

ANZ - Mobile Phone Banking
ANZ BankAnywhere Case Study - mobile phone banking
Customer Site - ANZ Mobile banking

BNZ - Mobile Credit Card Payment
BNZ PayAnywhere Case Study - M-Credit

ETSL - Mobile Payment Platform
Electronic Transaction Services Limited (ETSL / Paymark) is the transaction-processing business of New Zealand's leading banks.

ETSL/Paymark PayAnywhere Case Study - Paymark Remote
Customer Site - ETSL mobile payment engine

National Bank - Mobile Phone Banking
The National Bank - BankAnywhere Case Study - mobile phone banking
Customer Site - National Bank mobile banking

Telecom - Mobile Prepay Bill Payment
Telecom customers can top up their prepay mobile phone credit, using their everyday bank account, via a simple text message instruction.

Telecom - M-Billing Case Study - Mobile Phone Recharge
Customer Site - Telecom M-TopUp

Westpac - SMS Banking
Westpac - BankAnywhere Case Study - txt banking
Customer Site - Westpac SMS Banking

Several weeks ago I had the pleasure of reviewing presentations from two lesser known, yet formidable mobile banking vendors: India's SRM Technologies and M-Com headquartered in Auckland, New Zealand.

The story of each company is similar. Both have been active in the mobile banking space for years, but neither has yet entered the U.S. market. Their experience within the more mobile India and New Zealand markets provides a deep knowledge base that North American financial institutions may be able to tap into.

The United States is playing catch-up with other markets around the world in the deployment of mobile banking. If you are searching for an experienced vendor, and are willing to work with someone on the other side of the Atlantic or Pacific, these companies are worth investigating.

See related post for a list of M-Com's customer base here.
 

The virtual-ink had barely dried on our substantially lowered forecast for SMS banking adoption in the U.S. (here; check out the comments as well), than the ever-aware Brandon McGee had the scoop that Chase, the third-largest U.S. bank, had quietly made SMS banking available to its customers.

We still don't know if it's a market test, or a full-blown launch, but we do know that this puts SMS back on the table again in the United States. Here's the bank's clever tagline:

Text Your Account. It Texts You Back.

Although Chase hasn't yet linked its SMS banking to the home page, it's not too hard to find at <chase.com/mobile>.

Note: For more on SMS and other types of mobile banking, see our full Online Banking Report on the subject here.

Chase has launched an SMS-based mobile banking solution, but you will not find any information on their homepage. The links are contained only within online banking. Once you are in the system, look for the link along the right-hand margin.

Visit Mobile Banking for even more images.

Last week, we received a tremendous comment/question from one of our readers, an officer in the risk-management department at a very large U.S. financial institution. His question, “I may have overlooked it, but did not see too much discussion around mobile banking fraud threats, such as mobile malware and smishing. Are these threats real? If so, what controls are financial institutions putting in place to mitigate these risks? Are there other mobile banking risks on the horizon?” 

That's a great question. Yes, threats of malware are real, and I expect to see the number of attacks grow exponentially greater over the next 18 months. However, so far only a handful of attacks have been recorded. See Wikipedia for a listing of mobile viruses.

The next question, “What controls are financial institutions putting in place?” The majority of financial institutions with mobile banking are using a vendor product; therefore, they are relying on the tools built in to the solution. In my previous entry on the subject (see Mobile Banking), I explained that after reviewing solutions from numerous vendors I believed they all had done a top-notch job making information security the number one priority. So, unless you are going to follow Bank of America and Wells Fargo down the path of an in-house WAP solution, you should find that the vendor has already addressed the issue on your behalf (see note 1).

That said, there is one HUGE security risk not receiving the attention it deserves and that is – THE CUSTOMER. As with online banking, the most critical element in reducing fraud is to simply educate the customer. Education can take a number of forms, including awareness campaigns, security checklists, recommended settings, and providing examples of how other clients have been deceived.

One good resource is the Microsoft page:  

Also, there are a number of companies already providing mobile antivirus security software including (note 2):

Bullgard
MyMobiSafe
Symantec
UMU
AirScanner
Kaspersky
F-Secure
Trend Micro

And as my Apple friends already know, the iPhone utilizes the OS X platform. While there is no guarantee, the accepted belief is that viruses are not an issue for Apple and that security software is not needed (note 1).

I hope this provides a better understanding of the mobile security environment. I encourage others to comment or send questions.

Notes:
(1) This is an opinion and not an implied guarantee of security or performance.
(2) This is in no way an endorsement of the product(s) or guarantee of performance. These were the top search results for the keywords “mobile antivirus security.”

I had an interesting conversation with Scott Loftesness, partner at Glenbrook Partners, and the man behind the curtain at the most successful blog in the financial services arena, Payments News, on my fave five list.

We were debating the merits of the various mobile banking models as he updated the mobile section of his Payments Boot Camp material. For the most part, we agree as to how the market is likely to evolve. But one small difference is our outlook for SMS/text services.

In the report I wrote at Online Banking Report in February (here), I predicted that SMS/text services would be an important bridge technology to get us to full browser-like mobile banking interfaces. Scott's not so sure.

 Apparently, the major U.S banks agree with Scott, so far. There has been little activity in this area. Fremont Bank is the only one throwing their support behind this technique (previous post here), partnering with ClairMail (see FINOVATE below), the biggest proponent of this model in the United States.

Here's the short-term forecast we published Feb. 23, 2007, in our Mobile Banking report (we go out on the limb through 2016 in the full report). The number shown below is U.S. households that have ever used the given mobile technology to access their bank account balance or transactions:

Original 2-Year Mobile Banking Forecast (23 Feb 2007)

                                        2007  2008

SMS banking 400,000 2 million
Mobile website 600,000 1.2 million
One-touch banking (1) 100,000         250,000
     Total (2)                        900,000 2.5 million

Source: Online Banking Report estimates, +/- 33%, Feb. 23, 2007 (report here); estimates are for Dec. 31 of each year
Notes:
(1) Downloadable banking app, eg. rich user interface
(2) Total is less than the sum, because some households use more than one access method

As you can see, six months ago we expected SMS to be the major driver, especially in 2008 and 2009. However, we are somewhat dubious now. Not because we don't think customers will like it, but because it doesn't look like the big players are planning on supporting it. It's too early to revise our entire model, but based on what we know today, here's how we see the next two years.

Revised 2-Year Mobile Banking Forecast (30 Aug 2007)

                                         2007          2008            2008 Change (from 23 Feb)

SMS banking 50,000 300,000 (1.7 mil)
Mobile website 600,000 1.5 million +250,000
One-touch banking (1) 100,000         350,000        + 100,000
     Total (2)                        700,000 2.0 million  (500,000)

Source: Online Banking Report estimates, +/- 33%, Aug. 30, 2007 (report here); estimates are for Dec. 31 of each year

Why we still like SMS banking

As I was rethinking the forecast, I read Walt Mossberg's column this morning and was reminded why I believe the United States is on the verge of mass-adoption of text-messaging. Mr. Mossberg was extolling the virtues of the new upgraded Yahoo Mail, specifically how it supported text messaging, e.g., users can send a text message to a phone directly from Yahoo Mail on their desktop PC.

Our take: As text-messaging is added to popular desktop email programs, Gmail, Hotmail, and even Outlook, it will make messaging a common activity among the core online banking constituency, the 30-to-55 crowd. As this group warms up to the convenience of text messaging, they will be far more receptive to retrieving basic bank and card-balance data in the same manner.

More important, what do you think? Comments are open. Everyone that leaves a substantive comment on this thread, and emails me their mail address, gets a $5 Starbucks card (note 1).

See the major mobile vendors DEMO their latest at FINOVATE 2007

ClairMail, along with four other mobile banking platform providers, will be DEMOing their latest solutions at our FINOVATE 2007 conference. The Aug. 31 deadline for early-bird admission is approaching quickly, so reserve a seat now.

Note:

1. Industry participants only.

One of the best things about mobile banking is the cool graphics you can post on your website of people logging in while standing in front of dramatic objects. For example, Chase print ads have featured an appealing picture of someone reading an account alert from Chase in the stands of a baseball game (see post here).

We've also started seeing visuals on the websites of early adopter mobile banks and credit unions. And no one has taken it further than Eisenhower Bank, a division of Austin, Tex.-based Broadway Bank that caters to members of the military.

Currently, Eisenhower's home page is dominated by a rotating group of pictures with a leather-encased Treo with the Eisenhower Bank page superimposed over impressive backdrops, many with a military theme. See the series below.

Eisenhower's mobile banking is powered by Mobilearth, a Vancouver, Canada-based mobile provider. Thanks to guest blogger Brandon McGee for the tip.

When you first begin researching the mobile banki