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.

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!

HSN iPhone mobile commerce application featuring shake2shop

Mobile Commerce is starting be, well… commerce. Home Shopping Network (HSN) announced their new iPhone application that among other things let’s you buy stuff.

So far much of the hype around mobile commerce and mobile advertising has brought back painful memories of the Dot-com days before the bust. Back then it seemed everyone built their business model on ad revenue and the glory of first mover advantage. Today’s conversations on mobile ad revenue and “stickier”, more loyal customers seems to be the same deja vu all over again.

Now we have another great example of a company using their ecommerce expertise to find another way to connect with their consumers and convert eyeballs into revenue. Hallelujah.

Modern consumers use their phone when they’re bored. Look around. Almost everywhere you’ll find someone staring at their phone: in the breakroom, at the DMV, waiting for a plane, sitting on a bus, even standing in line at the checkout. There are lots of places without computers and that are not your retail store. All these other places are opportunities to connect with your customer and create new sales.

“This is another valuable tool for us to reach both existing and new customers with the compelling lifestyle content we offer via HSN TV as well as the broad array of quality products available at hsn.com,” says Brian Bradley, executive vice president/general manager of online and advanced services at HSN. HSN points out that this is possibly the first case of a Live Video “Third Screen”, referring to simultaneous live video on television, computers and now mobile phones.

However, the focus on booking sales in the mobile channel is arguably far more important to the overall mobile commerce industry.

Ecommerce companies are struggling with how best to adapt the web shopping cart metaphor to mobile commerce. Doing business on mobile phones adds additional difficulty because of the fragmentation of technologies (like SMS, browsers & applications) and devices (iPhone, Android, etc.). The successes and failures of the HSN application and others like it will be useful to the industry as a whole.

Industry best practices are still in the incubation stage. Organizations going it alone generally must figure out all the details using trial and error and often with very little objective data or mobile experience as a guide.

This challenge is why more organizations will seek help from outside experts like my firm Mobile Strategy Partners. At least for now, Mobile Commerce is more complicated than ecommerce was in the 1990s. As a veteran of ecommerce and now mobile commerce, I have seen the organizational struggles and the expensive mistakes that could have been prevented.

Mobile Commerce is evolving faster than ecommerce did. More and more organizations are looking for help in getting the product mix right earlier and get to ROI faster.

They’re doing it because if they don’t, their competitors will.

Mobile User Experience matters, and most organizations are getting it wrong.

Like marketing, the look, feel, flow, and functionality of an any application is an intangible that organizations are tempted to skimp on when pressed for time, budget, or both. Similarly, a flawed user experience is likely to be as bad for business as a flawed (or absent) marketing plan. Also like marketing, user experience can be measured but the results sometimes are dismissed.

“The Mobile User Experience is Miserable” says Jakob Nielsen a respected Mobile User Experience expert in a July 2009 study, “It’s neither easy nor pleasant to use the Web on mobile devices. Observing user suffering during our sessions reminded us of the very first usability studies we did with traditional websites in 1994. It was that bad.”

Executives, Programmers, and project managers all tend to focus on reducing scope and getting the product out the door. Many of us wrap ourselves in constraints (read: excuses) as to why suggested user interface changes won’t work. The code technically works, we’re behind schedule, and we’re losing money. Ship it!

So, the fundamental question to executives is “Do you want mobile to make you money?”

If the answer is “yes”, then it requires discipline like any other business initiative. The fundamental business goals must be defined. The user experience must be well designed and well tested. The marketing plan must address the right demographics.

If we slap together a clone of the site designed for a PC, which isn’t anything like a phone, we almost guarantee failure. In fact, when Nielsen tested WAP sites in the same study, he found that tasks took users 38% longer in 2009 than in 2000! Phones are faster but perhaps we’re trying to do more and ultimately slowing ourselves down.

Nielsen says, “almost every design decision must be made in the context of the [mobile internet] site being designed, and what works for [one] site may not work for another.” The complexity of phone capabilities, application features, differing contexts, user skill variations and multiplying platforms and technologies often requires professional help in each specialized discipline.

Doing it right means budgeting time and money properly. Cutting corners risks delaying projects even further, damage to your brand, and the expense of convincing customers to give you a second chance when you get your act together.

Look for upcoming announcements for my webcast addressing this and other mobile strategy issues.

In the last week or so two studies have come out saying, among other things, that organizations:

• a) Need a mobile strategy now
• b) Lack key resources to develop a mobile strategy
• c) Must be very careful

Today, IDC Financial Insights released a report saying that as the recovery continues, banks will face increasing pressure to offer mobile services. Furthermore, banks need to proceed very carefully and “take a more strategic look at mobile banking rather than view it as simply an extension of online banking and bill payment.”

Similarly, a UK survey found that in 86% of organizations, IT groups were in charge of developing a mobile strategy. However, nearly half said they lacked necessary skills to develop a successful mobile strategy.

This is why I’m in business. I have seen this first hand in hundreds of organizations. Even if a successful mobile strategy was as simple as picking a product (which it definitely isn’t), the ever changing combination of technologies and vendors makes it extremely difficult alone to come up with a plan that is reasonably likely to succeed.

I have seen what hundreds of organizations have done with mobile. Most bankers faced with making a decision are stuck with what vendors tell them and the dribbles of vague information on the Internet.

I’m here to help increase the odds of success and make your mobile strategy more than just a product selection. Every organization has a different culture, faces different competition, and has different integration and security needs. Bankers need a strategy that helps them differentiate, continue serving their customers according to their existing culture, and supports the continual search for revenue opportunities.