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.

Scotiabank announced mobile banking in Spring 2010

Mobile Banking in Canada has seemed poised for explosive growth for years now, yet very little ever seems to actually materialize for Canadian consumers.

The latest reason for hope is Scotiabank’s announcement that they have selected MCOM to provide mobile banking services. New Zealand-founded but Atlanta headquartered MCOM has been providing mobile banking since 2000, but has only made a signifcant push into North American markets this year through its partnerships with Fiserv and Microsoft. MCOM’s historical strength has been in SMS and mobile web mobile banking, although they now offer native application technology as well.

So, is the Scotiabank announcement the catalyst that finally breaks the Canadian mobile banking logjam? One could argue that Scotiabank is just catching up to what RBC, TD, & CIBC already have.Canadian banks have had mobile-web based mobile banking implementations on-and-off since 2000 — which consumers have generally ignored.

Scotiabank’s announcement was vague about what kind of offering they would provide, only saying:

Scotiabank’s mobile banking service will provide personal and small business customers with easy access to their Scotiabank accounts from their mobile device, regardless of their mobile service provider. Customers will be able to view balances and transaction history, pay bills and make transfers.

If Scotiabank only offers up mobile web, it’s not a step forward for Canada. Canadian banks already have mobile-web based mobile banking, and like everywhere else, the impact is minimal. Many smartphone customers will try Scotiabank’s mobile banking, but only a select collection of hard-core users will use it repeatedly.

On the other hand, Scotiabank can disrupt the entire Canadian banking status quo by offering a number of mobile banking offerings at once (mobile web, SMS, native iPhone application, native Blackberry application, etc.). Bank of America has seen tremendous success (3.5 M customers and counting) by offering a variety of technology options so consumers can interact in the mode that suits them best. Javelin Strategy’s recent 2009 Mobile Banking Scorecard recommends this approach as well.

Scotiabank and MCOM on paper have the capability for a bold move. However, by omitting specifics from the announcement they have muted the impact. The consensus among Canadian bankers is that they have time to sit back, watch and wait.

Scotiabank missed an opportunity to knock their competitors out of their chairs.

UPDATE (12/2/09):

Scotiabank issued a clarifying press release specificially saying they’re offering Alerts and native iPhone applications. This announcement shakes things up in Canada!

(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!