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Mobile banking - banking on mobile devices including mobile phones, iPhones, Blackberries, and PDAs is taking off again, and financial institutions around the world are rushing to leverage the technology to gain new customers. In Korea, a harbinger of new technology, store owners are paying their employees with a few clicks on a mobile phone1. In Singapore, banks are sending out notifications when payments are finalized and in Australia, Citibank and Telestra are teaming up with the goal of providing all banking services - short of dispensing cash - from the touch of a cell phone.
Since the dawn of the Internet and the rise in popularity of mobile phones and other communication devices, banks have been enthusiastic consumers of new technologies. The rewards have been enormous. Enabling consumers and merchants to conduct sales through mobile devices - the holy grail of mobile banking - would cut out middle-tier services such as credit cards, and put the banks themselves squarely into Since the dawn of the the middle of trillions of dollars of transactions.
Internet and the rise in popularity of mobile phones
But if the potential rewards are enormous, so are the risks.
What has Stopped Banking Before?
People tend to forget what life was like before the Internet. Many would be shocked when reminded that they only started using banking services over the Internet around 1999. Internet banking has become so ubiquitous and imbedded in our lives, that it is hard to remember how we coped in the old pre-Internet days. Still, it took people on average about 6 years, after signing-up with AOL (or another service provider), to start using online banking services. New technological developments in everyday environments have been speeding up with each passing decade. So why haven't we seen more banks offering services on mobile phones and other mobile devices? What is the problem? What went wrong?
The answer is found in a combination of factors and conditions. First, unlike home and office computers that largely run the same operating systems, (which by the late ?90s could be abstracted away through a Web browser and the World Wide Web) mobile devices - until recently - rarely had a Web browser and varied greatly in terms of technology, compatibility, memory, and processing power. It has also taken some time for consumers to start seeing their mobile phones as mini computers. Finally, the recession of ?01 followed by the dot-com bust shook consumer confidence in the technology sector. During the dot-com boom, consumers had faith in new technologies. After the dot com crash, the question shifted from, "How can I get the technology of the future?" to "How will this technology help me right now?" Economic losses, layoffs and mergers made the banking industry less convinced.
What has Changed?
There are a number of impressive developments in creating useable, successful banking applications for mobile devices. This paper concentrates on three of these: (1) Technological advances in phones and protocols, (2) Greater business understanding of technology, and (3) More technically savvy consumers demanding faster, more mobile information.
Technological Advances
There are four important advancements in mobile device technologies that have cleared major roadblocks in mobile banking: (1) Mobile devices are more powerful and easier to use, (2) They are now compatible with standard Web technology (HTTP, email), (3) The emergence of software platforms that enable smooth integration of multiple channels, and (4) Advances in security, chip manufacturing and wireless services makes banking wirelessly potentially much more secure.
This increase in computational and navigational power has led to a new wave of phones being developed with Web (HTTP) and email (SMTP) support. Wireless banking projects can now use HTTP instead of WAP (Wireless Application Protocol), and email instead of SMS.
Another important development is the emergence of software platforms that enable banks to use existing business processes/workflows and decisioning logic across multiple channels by allowing the pairing of these channels with any set of business logic. In addition, these platforms allow banks to maintain their brand name and image, use any carrier and any mobile device, and increase their overall operational efficiency.
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