The Hard Part is Payments

Implications: Whilst the US has seen an explosion in Mobile Banking it is yet to see the users trust the service for Payments. Payments needs to address not just the Banked but the Unbanked, in Africa Vodafone and MTN have  established services that allow micropayments to be made to those that have no Bank Accounts.  The ability to make person-to-person payments is something that sees the service grow. Qualcomms Firethorn service whilst signing a number of contracts is yet to launch.  This service uses a Java Applet rather than SMS and Browser based technology to allow users to access multiple banks rather than a single bank.  This thus should enable a better uptake of Payments rather than Banking Services. The Stakeholders in the Mobile Banking world are moving towards a mobile wallet that uses NFC based technology to allow users to "wave and pay".

Analysis: I have been following the development of Mobile Banking in the US for the last year.  In this time I have been able to talk with Bankers, Service Providers and Mobile Networks about the efforts that they have made to seed the industry. 

I have looked on in envy as American Banks have spent over $240M promoting the mobile as another channel.  Wells Fargo are the most developed provider with 18 different mobile banking products that use SMS, Browser and Java technologies to allow customers to Check Accounts, Transfer Funds, Bill Pay and Authorise Transactions.  They are yet to launch a service that replaces Money and or cheques.   Bank Of America last month reported that it had 1M customers for its Mobile Banking Service, it also reported that less than 40% were using the payments service, but those that were we making payments of a high value than credit cards and the value was higher than they had forecast.

In Africa we see 2.5M Kenyans using the MPesa payments service from Vodafone.  The majority of these were not using the banking system and so have turned their handset into an ATM.  In the US 30% of the adult population are unbanked and so the potential to address these consumers with a service that also gets them to join the Mobile Phone community is of interest not just of Banks but also Operators.

For High Value customers Banks will use a Java Application as seen from Firethorn that will allow them to view more than one Bank at a time and thus manage funds between a National Bank, Local Bank and Payment Card.  The average American has 11 Cards and so needs to be able to view the funds available and move money across these accounts.  18 of the top 25 Banks have signed contracts to use Firethorn but the majority have yet to go live withy the service as they eductate customers in the mechanics of Mobile Banking.

The Ecosystem of trusted service providers in the US is highly developed, whilst in most other countries we see a few providers of the technology needed.  mFoundry is a provider of Banking technology that over the last two years has seen its service deployed by a number of leading US Banks and has just received investment from Bank of America amoungst others in its latest funding round as well as acknowledgement as one of teh leading private firms in mobile.  ClairMail is a Partner to mFoundry that allows banks to combine SMS and Browser based services.  Yodlee is a provider that some Analysts are talking about today in the same way that they were about Firethorn and mFoundry 12-18 months ago.

In the US you have three of the four Mobile Networks opening up to Banks and Trusted Service Providers to enable banking, T-Mobile are the only hold out.  Those in the sector see what they are doing today as the first steps towards a mobile wallet.  They see banking follwed by payments which will the include store cards, then they see ticketing moving to the mobile. Once you then start to store data on the phone they see the use of near field technology to access it.  This new short wave radio service can be built into the handset or SIM card and will see the handset used not just for payment but also security cards amd transit tickets.  Here in Europe later this year we see mass market services for Transit launch in France and Germany that use NFC technology after 12 months of trials.