(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.

Canadian Flag by Matt Bondy

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.

For example:

• 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:

georgewenzel @RBC Any chance of you guys getting an iPhone-optimized mobile online banking site up and running? The current mobi site sucks on an iPhone.

stephenweppler @RBC any news on a iPhone app from RBC, the mobile banking site is horrible….?

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.

Mobile Banking Requires a Long-Term Strategy. Canada is ready.

The call for strategic mobile banking is increasing and two recent articles are absolute must-reads.

First, Mobile Financial nicely sums up the challenges of mobile banking. Mobile Banking is not a simple add-on to an existing product. Mobile provides new ways to connect with your customer, strengthen loyalty, and deliver better services at a lower cost.

Mobile poses significant risks and technical challenges. Making a prudent decision on mobile banking requires three key “legs of a stool” a) deep collaboration between the business executives who know the long term goals for the organization, and b) the technology team who knows the intricacies of the current environment, and c) deep mobile expertise, which is often missing from most organizations.

Success requires all three legs of the stool and moving forward without all three almost certainly will result in failure (although some banks have set the bar extremely low so they can claim success, regardless). Mobile banking efforts now should be a base to build upon in the future. Doing it wrong now and having to start over puts you behind your competitors who did it right.

Secondly, Jose Colucci writes a manifesto (or offers a 12 step program) on why Canadian banks should offer mobile banking now. The Canadian market is ready. Canada is the land of the RIM and increasingly the iPhone. Canada has the technology, the infrastructure, the resources, and the demand for mobile banking to completely explode (in a good way) and be an example of success for the developed world.

I predict that when the first bank makes a bold move, the entire industry will follow. Canadian mobile banking will happen in a breathtaking, large rush.

In fact, in doing some Search Engine Optimization last week, I discovered one of the most searched terms related to mobile banking in Canada is “TD Mobile Banking.” Like most other Canadian banks, TD has a mobile web site that is keeping the proverbial light on for mobile. But like most WAP interfaces,  the TD site has some usability challenges which are almost certainly preventing widespread adoption.

And the point is that despite the usability challenges and lack of promotion, there is considerable demand for the product.

Canadian customers like Jose are clamoring for mobile banking.

C’mon CIBC, BMO, Desjardins, Laurentian, National, TD, and RBC. Let’s have it!