Mobile solutions – ready or not, here they come

By: Staci Baker

According to Wikipedia, mobile banking is defined as, “a term used for performing balance checks, account transactions, payments, credit applications, etc. via a mobile device such as a mobile phone or Personal Digital Assistant (PDA).” However, as several large lenders and phone carriers test mobile banking and mobile payments, there is still much to be deciphered. Will it help businesses compete? Is it safe for a consumer? Should a bank offer a mobile solution; and if so, what precautions will they need to take to ensure their customer’s information, i.e. fraud, consumer identity?

Peter Garuccio, spokesman for the American Bankers Association in Washington D.C., noted that “various experts predict that some 20 million people may be banking via cell phone this year, and that number is projected to skyrocket to 50 million by 2013.” And, according to a mobile payment study by Juniper Research ,“Combined market for all types of mobile payments is expected to reach more than $630B globally by 2014.”

For the purpose of this blog, I will focus on the mobile banking solution, and questions to consider before entering into the mobile banking arena.

Mobile banking today is akin to online banking a few years ago. It’s new, getting a lot of press, late adopters want more information, while the early adopters are already participating and it appears to be on the verge of taking over more conventional banking and payments.

Before entering into the world of mobile solutions, there are a few things to consider:

  • How will new regulations, such as the Durbin Amendment to the Frank-Dodd Act (a new Interchange fee proposal), affect implementation and usage?
The current average interchange fee is between $1 and $1.30, the new cap at $.12 will reduce the charges by up to 90%.While the interchange fee proposal will not be finalized until after February, it is not known how the new “swipe fee” legislation will affect mobile solutions. If the new amendment directly affects debit cards only, mobile solutions can become a new revenue stream for many lenders. As more information becomes available regarding the Durbin Amendment, I will relay additional details and implications.
Fraud is an issue in all industries; therefore utilizing fraud best practices specific to your market, or identifying fraud trends is essential in keeping retailers, consumers and your company safe.
  • As consumers replace the need for a wallet with a phone, identity theft can become an issue.
This is especially true of phones with minimal security, or if their phone gets into the hands of a hacker. Therefore companies can initiate an identity theft prevention program to raise awareness in consumers and retailers. As well as implement new internal processes and requirements.

As we delve further into an IT-led economy, businesses will continually need to adjust how they do business in order to meet consumer demand, as well as finding new revenue streams. I am curious, how many businesses have already begun to implement a mobile solution, and what issues or results have you already seen? If you have not already implemented a mobile solution, is this in your planning for the upcoming year?