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Show Me the Money

By: Michael Scheibach

All fans of the movie Jerry Maguire can hear Cuba Gooding Jr. shouting over the phone to Tom Cruise, “Show me the money! Show me the money!” Well, that indelible refrain may soon be heard among bank executives who have made a sizable investment in mobile banking. Unfortunately, there may not be much money to show if the bank’s mobile banking consists of account status, transfers and alerts. The real money is in next-generation services such as remote deposit capture, social media notifications and especially payments.

“Mobile banking is not necessarily part of payments; rather, it fits into the information/transactional component,” said Jose Magana, a senior consultant with Pyramid Research, headquartered in Cambridge, Mass. “Financially speaking, mobile banking offers limited revenue opportunities for participants and is mostly an extension of desktop web for banks. Mobile commerce allows banks to capture customers who may be unprofitable under traditional channels, as well as open new revenue-generating services such as insurance, loans and savings.”

According to a report by Pyramid Research, mobile commerce/payments will “top hundreds of billions of dollars” worldwide in five years. Mobile commerce via smartphones is already significant in the U.S. — estimated to be $25 billion this year. The tablet is gaining ground, as well, with expecting an increase of nearly 200 percent in tablet m-commerce revenue in 2012 compared to 2011.

PwC, a research firm based in England, recently released “The New Digital Tipping Point,” which finds consumers not only want innovative digital services but, more significant, are willing to pay for these services — up to $15 a month. According to the report, customers want innovative digital services, such as social media notifications, e-wallet loyalty cards and personal financial management tools. The report says that banks need to brace themselves because the tipping point for digital banking is almost upon us.

“Banks have generally been slow to embrace the digital innovation customers now expect from other industries, such as retail or travel,” said Stephen Whitehouse, retail and commercial banking partner at PwC. “This needs to improve if banks are to hold on to their existing customers and attract the next generation, as the quality of a bank’s digital offerings will become an increasingly important factor for consumers.”

Pyramid Research ( offers a Mobile Commerce Landscape Insight Pack with current trends and best practices in mobile payments, plus analyses of initiatives in the emerging mobile payment ecosystem — encompassing consumers, merchants, mobile operators and financial institutions. Magana lists four best practices banks should implement to take full advantage of the new world of m-commerce:

Partner with mobile operators — The conduit to such a partnership is through vendor partners or companies such as Sprint and Isis (a joint venture of AT&T, Verizon and T-Mobile) that are heavily invested in e-wallet technology.

Consider the merchant — Merchants with smartphone scanners will be the beneficiaries of m-commerce, and banks would be wise to work closely with them.

Participate in the development of the regulatory framework — It will pay real dividends if the banking industry becomes a major player in the development of mobile commerce. Said Magana, “Regulation could boost or kill mobile banking and mobile payments.”

Be open to new business models — Banks need to envision a future of multi-portal banking that serves current customers and attracts new, more non-traditional customers, including the millions of unbanked and underbanked people in the United States.

As both Magana and Whitehouse point out, mobile banking is the foundation to digital banking, but the real money will come from charging for expanded mobile-based services and securing a share of m-commerce revenue. 

Michael Scheibach is executive editor of BankNews.

Copyright (c) March 2012 by BankNews Media