Mobile Banking In Canada (Reason 3): Technology Is NOT An Obstacle
(This is a cross-post of the guest blog I wrote over at Jose HC’s “Mobile Strategy… understanding and navigating the mobile ecosystem” blog.)
Canada is still waiting for mobile financial services. Technology isn’t the problem.
Most of the big banks have offered mobile web based banking at one point or another. There have also been a number of mobile payment pilots, most notably at RBC. So far, long after the pilots complete, we’re still waiting for announcements of a broader rollout.
Canada has all the infrastructure in place. In many ways, Canada’s infrastructure is better suited to mobile financial services that in the United States, where mobile financial services is flourishing.
- Canada’s Interac Association provides a single, straightforward mechanism to connect financial institutions to merchant point-of-sale systems.
- Enstream is a consortium created by Rogers, Bell, and TELUS specifically to facilitate mobile financial services in Canada.
- Unlike the U.S., open lines of communication generally exist between the banks and wireless carriers. Nadir Mohamed, the CEO of Rogers, sits on the board of TD Bank Financial Group. George Cope the CEO of Bell Canada and the former CEO of TELUS is on the board at BMO.
- Canada leads the world in Blackberry smartphone ownership. Blackberry devices are well suited for mobile applications like financial services. In fact, Facebook just announced it has 12 million mobile users in Canada. Facebook usage is technically similar to mobile financial services.
So, why are we still waiting?
I personally think the market dominance of a few large banks is a major contributing factor.
Canadian banking is dominated by five large institutions: RBC, TD, BMO, CIBC, and Desjardins. In the U.S., there is more market fragmentation that encourages more competition. The U.S. behemoths like Bank of America, Wells Fargo, and Citibank must use their size to perform a preemptive strike on regional banks like M&T, PNC, and Huntington. Community banks and credit unions like Delta Community Credit Union with assets as small as US$1bn have announced plans for mobile banking. In Canada, the banks have the option to watch a handful of other banks and play wait-and-see.
Secondly, I think the iPhone delay is another major factor.
The long wait for the iPhone in Canada, the concern about data plans afterward, and Rogers-exclusivity, have also slowed the adoption of mobile applications. Mobile commerce consistently shows 2/3 of all usage coming from iPhones. First Canadians had to wait for the iPhone and now limiting iPhone usage to only Rogers subscribers limits the market to roughly 1/3 of the Canadian market at best.
iPhone users have a history of demanding what they want (like opening the iPhone to applications). The delay of iPhones in Canada simply put off the inevitable demands by consumers to their institutions.
The customer requests are visible on Twitter:
fuzzylion Dear TD Bank – it’s seriously about time that you get a mobile app or at least a WAP version of your online banking website.
As the demands increase, banks will respond. And if the past is any indication of the future, once one bank releases a well-liked mobile application the rest of the banks will follow. Other financial institutions will join in once the market is tested and the benefits are proven.
Unfortunately, organizations that wait risk losing customers forever to the leaders.
Furthermore, followers that rush their efforts risk releasing failed applications which will likely result in:
- Further accelerating customer churn to their competitors
- Exponentially increase the difficulty and costs of adoption in the future; users that have had a bad experience are probably reluctant to try it again
- Costs associated with the having to do the work again (and again) and the lost opportunity.
These folks are smart people. I suspect we’ll see mobile offerings from these institutions soon.