Wireless Banking Apps: The Calm & the Storm

Have you ever been out in the country and seen it raining on one side of a fence while the ground on the other side remains dry? The climate around today's wireless financial services is like that. Things are heating up on the supply side, with banks, carriers and vendors partnering to launch the services. But the demand side remains relatively cool.

In early December, the supply-side activity got a jump-start from Claritybank.com. The company launched its first wireless banking services using 724 Solutions' software infrastructure. The e-bank customers now can access account balances and transaction histories via AT&T Wireless's PocketNet service.

Around the same time, Alltel signed an agreement with SensCom to use the ASP's software platform to enable its financial-institution customers to offer banking services via Web-enabled wireless devices.

Rewind about one week, and you have S2 Systems (an e-business software solutions provider for several industries, including the financial services industry) and JP Systems, (a wireless software and application provider) creating an alliance to provide wireless financial applications to the banking industry. And a couple of weeks before that, two software solutions providers, Aether Systems and Euronet Worldwide, announced a similar partnership.

On the other side of the fence, analysts and researchers are saying that little interest exists for these applications. The American Banker/Gallup Consumer 2000 survey found that although many banking customers own wireless devices, most expressed no interest in conducting financial transactions using the devices. But most of the survey respondents said that if their primary financial institutions offered wireless services, they would use them.

Recent research by TowerGroup predicted the users of wireless financial services in North America will grow to approximately 35 million by 2005. The research group forecasted approximately 450,000 U.S. and Canadian users at the end of 2000.

Commenting on the findings, Edward Kountz, TowerGroup analyst said, "The rise of wireless connectivity is pushing financial services firms in key world areas to embrace wireless delivery in order to stay competitive."

Gil Anderson, Euronet vice president of wireless product marketing, agreed, but added another incentive for financial institutions to launch wireless services as quickly as possible.

"The banks or financial institutions are worried about the carriers coming into their marketplace, and I think rightfully so," he said. "The carriers could be set up to handle payments, which has really been the banks' area of expertise."

Anderson's explanation could partially explain the recent flurry of activity in the ASP segment of the wireless financial-services environment.