Mobile banking emerges at CTIA

The wireless industry is still a long way from contactless payments on the handset, but the first mobile financial services popped up at Wireless 2007 last month. AT&T announced a partnership with a slew of banks to allow customers online account access on their phones. Verizon Wireless inked a deal with mobile banking platform provider Firethorn. And just last week, Citibank signaled its own intentions to dive into mobile transactions with its own independent service powered by mFoundry.

AT&T and Citibank's initiatives are particularly aggressive. The two are enabling fully encrypted financial transactions for bill payments, transfers and payment scheduling. AT&T's embedded application, built by Firethorn, can access multiple accounts from different banks, giving customers access to all their financial institutions, though AT&T has currently only signed deals with BancorpSouth, Regions Financial Corp., SunTrust Banks and Wachovia.

Tripp Rackley, CEO of Firethorn, said mobile banking presents an enormous opportunity for carriers because of the comfort level many people already have with online banking. Firethorn provides the federation services and management systems that link 200 banks' Web portals today. Collectively, they serve 8 million online banking customers. But because of security and trust issues, carriers can insert themselves as a critical partner in the value chain, collecting incremental fees on transactions, as well as encouraging customers to sign up for data plans, Rackley said.

“The complexity of online banking becomes even more complex when you add mobile,” he said. “All of a sudden, you have the wireless operators as a critical component of the mix. Any successful vertical has only been successful in mobile when the wireless operators were included.”

Verizon Wireless also teamed up with Firethorn but is taking a far more cautious approach to the market. The two are working on a mobile banking and payment platform on the VZW network. Jim Straight, vice president of wireless data and Internet services for Verizon Wireless, said that while the platform will support mobile bill payments and transfers, Verizon Wireless will initially focus on account access. Straight also said he expects the pool of banks embracing mobile banking will likely be small.

“We do not anticipate seeing a whole bunch of players in this space,” he said. “It will be the best of the best.”

Bob Egan, chief analyst for TowerGroup, believes that if the majority of the national banks migrate to mobile banking, they can expect about 25% of their Web online banking customers to gravitate toward the service — but only if it becomes ubiquitous. If it does not, penetration will suffer. Banking is a compelling application, Egan said, but forcing a customer to pick a particular operator or handset to do finances online won't cut it.

That may explain the approach Citibank is taking. Instead of partnering with a particular carrier or transaction aggregator, Citibank has hired mFoundry to build a ground-up mobile banking platform. MFoundry has already optimized the service for 100 different handsets, and Citibank plans to make the application available for downloading to any customer, regardless of carrier.

Steven Kietz, business manager for e-commerce retail distribution in North America for Citibank, said it is not discounting future carrier partnerships, but it felt it needed to launch its own carrier-independent service initially.