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Multichannel Mobility

By: Michael Scheibach

Just when banks have mastered the basics of mobile banking — offering customers the ability to check balances, transfer money and receive alerts — the mobile ecosystem is changing again, this time with the emergence of the tablet market, lead by iPad, and the long-anticipated arrival of mobile payments and mobile commerce in the U.S. marketplace.

Both developments present new challenges to banks. Not only must banks meet customers’ demands for seamless services regardless of the channel being used; they also must continue to invest in mobile transaction technology to protect their shares of the payments marketplace, which they no longer control.

Research company Nielsen reports that more than 50 percent of the U.S. adult population will own smartphones by year-end. According to some sources, iPhone and Android-enabled devices control 90 percent of the U.S. mobile market, which now numbers more than 70 million smartphones. And with each new enhancement — such as 4G networks and built-in NFC (near-field communication) chips — this mobile market not only expands in number but also in capabilities.

Adding to the number of smartphones is the exponential growth of tablets. Sales of iPads are estimated at 25 million; and sales of other tablets, including Android-powered devices, are expanding rapidly. Gartner Inc., an information technology research and advisory company, predicts 55 million tablets will be sold worldwide by the end of 2011, with more than 200 million in use worldwide by 2014. Banks that have focused primarily on smartphones must now confront the myriad challenges presented by tablets, including such basic issues as whether to optimize their websites or to create apps for tablets.

Concerning mobile payments, the major issue now is what steps banks need to take to protect their shares of payment transactions. Patricia Sahm, managing director of Auriemma Consulting Group, believes banks are in a strong position to offer mobile payments. Speaking at the Mobile Banking and Emerging Applications Summit in June, she said, “The mobile channel can deepen relationships and can be monetized. Mobile banking is a perfect platform for encouraging customers to build a mobile wallet and engage in mobile payments.”

For banks to succeed, however, they must staff their mobile channels with expertise in marketing, fraud, payments and customer experience/service. “Without this investment in personnel,” Sahm said, “the investment in technology will not be enough.”

Mobile commerce (m-commerce), defined as marketing and selling products or services via a mobile device, is the next step. Much attention has been placed on Starbucks’ decision to bypass NFC technology and use a bar code linked to a reloadable prepaid account. Yet even though more than 3 million people have used the bar code, this is still a small sample. More impressive is PayPal, which is processing $6 million in mobile transactions daily. Speaking at the recent Prepaid Cards and Mobile Commerce Conference, Avin Arumugam, PayPal’s director of emerging mobile payments, estimated overall U.S. m-commerce sales will hit $5 billion this year. “More important,” he said, “m-commerce is a $1 trillion opportunity, when considering mobile’s role in multichannel sales.”

M-commerce will, indeed, continue to expand, as Starbucks and PayPal have demonstrated. Moreover, Karen Webster, president of, reports that 74 million Americans already shop from mobile devices and, more significant, approximately 75 percent of merchants plan to invest in mobile initiatives (e.g., NFC-enabled scanners) this year.

Thus, it is a safe bet that many Americans will soon be using their mobile devices, whether smartphones or tablets, for mobile banking, mobile payments and m-commerce. Banks need to be ready for this inevitability. If they are, the payoff, as Arumugam suggests, will be significant.

Michael Scheibach is executive editor of BankNews.

Copyright © August 2011 BankNews Media