Is 2008 The Tipping Point For Mobile Banking In the U.S.?

Implications: The demand for mobile banking is growing and over the next 4-5 years, m-banking and m-payments will drive the boom in demand for wireless payments and banking. Banks, processors, card networks and mobile carriers are pushing two types of transactions with mobile devices, m-banking and m-commerce. The m-banking segment is projected to  grow to $50 billion by 2012 and m-payment transactions volumes will surpass $36 billion by 2012. Banks and credit unions have launched pilot programs to determine if SMS-Short Messaging Service, NFC-Near Field Communication or WAP-Wireless Application Protocol is the "killer application" for m-transactions. Consumers are interested in m-banking transactions that allow them to check balances (61%), account history (17%), transfer funds (11%), make bill payments and P2P payments (8%), password change (2%) and m-payment transactions enable consumers to download music, ringtones, games, access the Internet and conduct transactions at the POS.  

Analysis: m-banking and m-payments has caught the attention of stakeholders who are lining up to cash in on m-commerce (m-banking & m-payments) transactions. m-banking has picked up some steam in the U.S. as consumers' appetite for m-banking and as financial institutions, card networks, mobile carriers, hardware and software providers and other key players attempt to work in a fragmented payments infrastructure and determine who controls the transaction, the financial institution or the mobile carrier and perhaps come together to converge technologies to create mobile applications which may be adopted by the masses. There are three major platforms that have emerged over the last year, including SMS, (Short Messaging Service) NFC (Near Field Communication) and WAP (Wireless Application Protocol). 

1.  SMS-Short Messaging Service - tech exists on most mobile devices available in the market today and allows users to receive and send short text messages (from 150-160 characters) to other mobile devices and employ the use of an assigned PIN and confirmation

2.  NFC-Near Field Communication - is a short range (close proximity) wireless connectivity tech that supports SIM-Subscriber ID Module - where carriers charge a monthly subscriber fee or per transaction fee (NFC based mobile payments may experience growth related to payment terminals already deployed for use with contactless payment cards)

3.  WAP-Wireless Application Protocol - tech is an open,, international standard for applications that use wireless communication and is primarily used to enable web access from mobile devices, i.e. Internet access, music downloads, gaming, telecasts, etc. SMS & WAP technologies can be used in conjunction to configure mobile devices for short text messaging and Internet access to make purchases and downloads

Takeaway:  Asia is viewed as the leading region for m-commerce, followed by Europe and the U.S. However, the U.S. faces regulatory, technological and cultural differences because the existing e-payments infrastructure is expensive to replace, especially for merchants, which has impeded m-commerce adoption in the U.S. Financial institutions, card networks, mobile carriers, service providers and other players may need to structure a sound business model and value proposition to encourage the adoption of m-commerce in the U.S., to drive m-banking and m-payments into the payments mainstream to capture market share and shift consumers' purchasing behavior to their mobile devices.  2008 could be the "tipping point" for m-banking in the U.S.