I recently attended my first Finovate conference, which also happened to be their first in Europe.  The venue was the Business Design Centre in the Islington section of London.  It’s a great format – 35 different vendors, each with a 7 minute demonstration, and some networking slots mixed in.  It covered a lot of ground in a short period of time, while still affording one the luxury of walking away with some salient points still in mind.  That’s about the right amount of time, at least for those of us in the US, as we’re conditioned to a commercial break every 6-8 minutes.

It appears as though 2011 is the year of the online PFM in Europe as there were 6 PFM providers.  The next major topic was social network oriented services such as LiqPay’s Facebook payment solution, Fidor Bank’s “Bank 2.0,” and a number of investment related applications from eToro, Hopee (BNP Paribas), StockTwits and Uniience, some of which are mobile enabled.  It’s certainly worth taking a look at some of these or onles like them if you’re contemplating a refresh of your online presence.

This being the Mobile Manifesto, however, my primary interest was looking at the mobile solutions, which there were a few.  Even some of the aforementioned products included mobile access/support as that increasingly becomes a baseline channel for any customer facing product, and more than ever, employee facing as well.

The product that caught my attention the most, even before I got there from the obligatory, pre-conference vendor solicitations, was an iPad based Financial Advisor tool from Finantix.  Granted, products tend to show well on the iPad, but this one particularly resonated with me because of recent client inquiries.  It was also one of four participants to be voted Best in Show.  The Finantix product really allows an Advisor to interact not only with the application, but their client as well.  Imagine sitting down with your Financial Advisor, having an interactive discussion, passing the tablet back and forth as you walk through an assessment.  The FA can prepackage content to include video presentations to share with their client in a face-to-face meeting, and even let them manipulate criteria to see what the long term effects would be of certain decisions.  It has the potential to make the whole process much more personal and engaging.

Other mobile oriented companies who showed included:

• Tagit, a “Configure Once, Run Many” mobile platform provider demonstrated their mobile banking solution
• IND Group with their online and mobile banking solutions
• eWise (Secure Vault Payments) demonstrated their mobile and online payments capability
• mPower with their mobile POS solution
• VoiceCommerce with their KYC Secure and VoicePay offerings, using voice biometrics
• SolidPass showed their token based authentication solution using a mobile device in lieu of a key fob.

In any event, I look forward to seeing more creativity and ingenuity at FinovateSpring 2011!

Mobile Banking is the primary channel for a growing number of consumers

Mobile banking is becoming the primary channel for interacting with the bank for a growing number of users.

In May 2010 USAA reported that 38% of their mobile banking users considered mobile to be their primary interface with the bank.

Now research firm Novarica has found that 13% of smartphone users consider mobile their primary means to check balances.

Similarly, 9% of smartphone users consider mobile their primary means for transferring funds.

40% of mobile bankers with smartphones use mobile primarily

Studies from Fiserv, Javelin and others have consistently found that 80% or more of mobile banking usage involves balance checking. Transfers usually are the second most popular transaction. Few mobile banking applications offer remote funds deposit or new account opening, so it’s no surprise the responses were low. Not offering a feature is a great way to prevent adoption.

USAA is essentially an online-only bank and their membership contains many highly mobile and highly technical active duty military personnel. Mobile is the ideal medium for them and online is status quo since they’re branchless. So it’s expected that their members would have high mobile adoption rates and strong adoption to the channel.

Roughly a third of smartphone users use mobile banking according to Javelin. So the Novarica study indicates that nearly 40% of mobile bankers with smartphones use mobile primarily. This is important research that I haven’t seen elsewhere. It’s important to understand that mobile is being adopted and used significantly across the industry by a broad base of users.

These results were published in “Consumer Usage of the Mobile Banking Channel”, an executive brief authored by Madi Mantha.

This is a strong trend in mobile that I expect to see continue in other verticals such as Retail, Media, and Healthcare as they mature with mobile.

Mobile Financial Congress 2010 in Miami, FL

I just got back from the 2010 Mobile Financial Services Congress in a surprisingly cold Miami.

I led workshops on Mobile Remote Deposit Capture and Mobile Security. I also hosted a track of sessions on Day 2 where mobile banking and mobile payments professionals from banks in the U.S., Canada, and elsewhere met to discuss the future of mobile banking and the industry.

The many NFC and mobile payments conversations were timely with the announcement of the Google Nexus S phone that will launch with support for NFC contactless payments. This launch is possibly the opening salvo in the mobile payments arms race.

Here are some other items of interest from the show:

• BBVA Compass demonstrated a stunning iPad application, setting the bar high for other banks
• SunTrust is doing a major mobile launch this weekend. Look for mobile web and other major functionality improvements
• Bank of America announced they have 6 million active mobile banking customers (browser and/or application) and 850,000 text bankers (the service just started earlier this year). Text banking supports offline customers (those that don’t use online banking).
• Scotiabank in Canada shared that 10% of OLB customers were using mobile within the first three weeks of launch.

During a panel session, when asked “What do bankers want from vendors?” Lauren van Heerden from TD Bank eloquently said, “Help me, as a banker, to not have to be an expert in every single mobile device and mobile payment technology.”

“Help me, as a banker, to not have to be an expert in every single mobile device and mobile payment technology.”

Wells Fargo’s Amy Johnston also shared a powerful anecdote on the value of commercial banking to corporate treasurers. Before commercial mobile banking, one treasury customer shared that she dedicated the first 30 minutes of every day to dealing with various exceptions and approvals at her desk. She now looks to see if she has any of these issues to deal with when she gets up. If not, she doesn’t have to rush into the office as fast. The customer said, “Amy, you give me 15 more minutes  with my kids in the morning. Thank you.”

“You give me 15 more minutes with my kids in the morning. Thank you.

You don’t have to calculate ROI on that.

There are two things I believe very strongly about the future of mobile commerce:

• • Mobile commerce is here to stay
• • Mobile platform fragmentation will remain a serious challenge throughout the foreseeable future

Since mid-2009 we’ve built a very successful business helping nearly twenty name-brand clients in banking, retail, insurance, fast food and other verticals wrestle with these issues.

We’ve seen the questions change from “WAP vs. App” to bewilderment at the challenge of managing an exploding number mobile product lines while simultaneously managing a flood of customer adoption and increased competition.

The mobile challenge is to develop a roadmap of continual product improvements without knowing the exact technology mix that will be in users’ hands.

Fragmentation persists because of creative destruction. The iPhone created the industry. Then, Google eclipsed the iPhone with Android devices from a variety of OEM manufacturers. Apple did it again with the iPad. Now tablet salvos from Dell, RIM, Samsung, and others are incoming. Arguably, we’ve also already seen the rise and fall of many technologies like WAP, Palm, J2ME, Blackberry, and Symbian, just to name a few.

Organizations must support the mobile devices their customers have. As customers flock to the next great innovation, companies must reach their customers on the device they have right now — and in the way that works best for them.

The days are long gone where IT picks the technologies they’ll allow their customers to use. So, the mobile challenge is to develop a roadmap of continual product improvements without knowing the exact technology mix in users’ hands at rollout, versions 1.2, 1.3, and beyond.

Companies are burning resources porting to new platforms instead of innovating and staying ahead of the competition

Most companies are rolling out their first mobile product and in some cases extending variations to other platforms. Few companies have had to manage complex product lifecycles for the mobile channel. As new platforms are emerging, companies are burning resources porting to new platforms instead of innovating and staying ahead of the competition.

Few companies have the resources to manually manage multiyear product lines across a number of platforms including product management, revision control and infrastructure, quality assurance, and development.

Organizations won’t be successful picking and choosing platforms either. It’s not enough to only support iPhone or Android (or SMS, mobile web, RIM, Windows Phone 7, iPad, etc.). The playing field is changing too dramatically and too often. Companies picking and choosing platforms may find themselves investing in a dead-end product with few customers after a release or two (or even at the first release). Two years ago RIM seemed to rule the world. Five years ago Palm ruled the smartphone world.

Browsers aren’t a panacea either. Major mobile innovation is happening with native and hybrid application technology. HTML5 solves some problems but will not make native applications obsolete. Exposing native resources through the browser create unacceptable security risks in many situations (along the lines of Java applets and Active X). Furthermore, variations in HTML5 implementations likely will continue the testing nightmare that exists with the mobile browser, where tens of thousands of browser permutations exist.

Every company interested in mobile commerce has to face the device fragmentation issue and I don’t see it going away any time soon. In fact, it usually just gets worse. We just have to deal with it.

I’m going to be spending a lot of my time addressing these issues in the future.

Mobile and electronic payments are important to us. Checks are inconvenient, expensive, and take longer to move around. Checks invite fraud as well. Bankers justify many internal business initiatives using these facts.

So when I founded this company, I made a point to use electronic payments whenever possible. Ironically, almost all our bank clients pay with paper checks. Banks are going to great lengths to reduce the number of checks, yet they cling to checks themselves, despite arguably having more expertise and infrastructure to handle electronic payments than any other industry.

What follows is a sordid and cautionary tale for bankers:

[Note: Skip ahead to avoid the whining about bank customer service]

We have two primary banking relationships (which the banks will thank us for not disclosing). One bank is a megabank. The other bank is a regional bank. We considered a number of community banks and credit unions but neither had the necessary infrastructure to support us (nearby branches, ATM network, mobile banking, online banking, billpay, etc.).

We went to both our banks to discuss payment options. Neither bank bill payment option worked for us. We couldn’t setup small vendors (like consultants) as payees without long payment delays and expensive fees — if it was offered at all.

We tried setting up treasury services. We understand wires and ACH payments. Ultimately it took two months of back-and-forth with both banks for them to give us the pricing and functionality available (we need international capabilities too). No one customer-facing bank employee knew the options or the pricing. Many simply didn’t return calls or even show up for meetings.

When we did select which bank to use for treasury services, it ultimately took another two months to go live. Despite good credit, the bank insisted we provide tax returns for the past two years. Once we were approved, the bank also required signatures from a number of internal employees to move forward. It took nearly a month, many emails, and six unreturned voicemails to get one manager to sign the form.

Once we got the welcome packet via FedEx, we waited another week for tokens that never came. We made another round of unreturned voicemails and phone calls to get tokens. After escalating the issue, two separate packages were overnighted on two separate days.

It also turns out that the treasury services web site is written so it will only work in Internet Explorer on Windows computers (we’re all Mac here). Furthermore it wasn’t that the web site doesn’t support Macs, it simply won’t work at all. With 10 years of software development experience, I can say it takes effort to make a web site this incompatible. But no worries, we found a software workaround to make it work.

[Note: It's safe now. The whining is over.]

So, months later we were finally ready to send our first payment!

It turns out the international ACH capabilities the bank said they had aren’t really there. It also turns out the recipient’s bank charges $15 for incoming wires.

Add in the $30 outgoing international wire fee my bank charges and the monthly fees become far more expensive than the $35 I’d been paying in the interim to FedEx a paper check.

Meanwhile, PayPal removed all fees for bank-account funded P2P transactions.

I pulled out my phone and sent the money instantly for no charge while sitting in the parking lot.

I pulled out my phone and sent the money instantly for no charge while sitting in the parking lot.

P2P and mobile technology are becoming hugely disruptive. Banks need to rethink how they help customers move money around if they want to protect treasury revenue. Giant corporations will continue to pay the high fees for a while, but soon they’re going to start wondering what they’re getting for their money.

Banks have the opportunity to lead this transformation and attract highly profitable customers. If they don’t, banks risk everything.