LAS VEGAS – A panel at CTIA discussed trends in mobile banking, payments and other financial services, agreeing that it is all about providing convenience to customers.

Moderated by Jacqueline Chilton, partner at Glenbrook Partners, the panel gave the perspective of two banks, Western Union and Fiserv on mobile financial services, including NFC contactless payments. One contentious topic that came up was potential revenue-sharing models between financial institutions and carriers for mobile payments, in which the banks demonstrated little interest.

“The big difference in the points of view is really monumental,” said Peter Ho, vice president and product manager at Wells Fargo. “Understanding the two sides is important—until both sides get together and start understanding that a bit better, it’s difficult to move forward.

“The rev share numbers are still far apart,” he said. “There are so many different ways to cut up what a wallet looks like, and we have our interest, carriers have their interest.

“Before we talk about a per-transaction revenue share, how do we validate that revenue share?”

Mr. Ho cited trust issues and privacy concerns as stumbling blocks.

“Negotiating with carriers, say we’re going to share some piece of our revenue with you, you have to open up all transactions that occur on a phone and share that with a carrier,” Mr. Ho said. “From a privacy perspective, that a third-party share, so the consumer has to opt in and agree to share that sensitive information with a third-party.

“Is that something a customer is going to be up for?” he said. “I don’t know.”

Mr. Ho said he believes a gradual approach is necessary to educate consumers about mobile financial services, starting with simple mobile banking before moving onto more sophisticated features.

“We’re still pretty far away from true NFC payments capability,” Mr. Ho said. “How do we get our customers to be more familiar with their mobile device?

“Let’s get them comfortable with alerts first—we’re piloting the Visa Alerts product—then move slowly towards NFC,” he said. “I definitely see the use case for NFC, and conceptually everyone likes the idea, but how do you get them to actually use it?

“It’s a bit of a challenge.”

Wells Fargo recently announced the availability of text banking targeting both online bankers and customers that do not have an online banking relationship.

Mr. Ho also said that NFC will be extremely useful from customer relationship management perspective.

“The reason NFC payments is important, you can put other services on that chip, you can send a mobile offer,” Mr. Ho said. “If you do the right back-end integration, you can integrate grocery club cards and become a one-stop shop, which is a lot more powerful than just a regular contactless card.

“There are plenty of different use cases for NFC,” he said.

In Sun We Trust
SunTrust Banks Inc. is an American bank holding company headquartered in Atlanta. The largest subsidiary is SunTrust Bank.

SunTrust operates approximately 1,700 bank branches across Southern states, including Alabama, Arkansas, Florida, Georgia, Maryland, Mississippi, North Carolina, South Carolina, Tennessee, Virginia, West Virginia and Washington, DC.

The company has made mobile financial services a priority.

“We definitely see mobile as a separate new channel but we want to leverage our existing technology for the mobile channel,” said Sarah Overcash, vice president and mobile banking channel manager at SunTrust Banks. “We have location-based offers, alerts and mobile deposit capture to leverage mobile services using Fiserv’s mobile money product.

“In terms of target audience, we’re targeting both online banking clients and offline clients as well,” she said. “Mobile banking is trying to make it easy and convenient for our customers to manage their accounts, and consumer is education important.”

SunTrust learned that first hand when the mobile team went to a game at Turner Field, home of MLB’s Atlanta Braves, and asked consumers what they thought mobile banking was.

Some of the quotes included “Is that when the bank comes to your house?” and “A bank in a car?”

“There is still some education to do in the market place,” Ms. Overcash said.

SunTrust ran an analytics study with Firethorn, and found that the data for mobile banking looks even better than expected.

“The profitability of mobile banking even stronger now than it was, and mobile banking customers are 32 percent more profitable than online banking customers, and there’s less attrition,” Ms. Overcash said. “In fact, mobile banking reduces attrition by 40 percent—it offers huge benefits to the banks.”

Fiserv and protect
Fiserv Inc. is a Fortune 500 company that provides information management systems and services to the financial and insurance industries. It specializes in transaction processing, outsourcing, business process outsourcing (BPO), software and systems products.

Fiserv claims to be the largest provider of information technology services to the financial services industry worldwide.

“Convenience drives consumer behavior, and a mobile service has to be something that makes sense, it has to be something you can do better now using mobile,” said Tim Ruhe, vice president of mobile at Fiserv. “The mobile channel is excellent at that in many ways, which is why we’re seeing such strong adoption.

“Consumers are using their handsets to check balances, get alerts, make payments, bill pay a little bit, but it’s more about ‘Oh I forgot got to do this let’s take care of it right now,’” he said. “Places that the phone has some real advantages include authorizations, location-based offers, payments for small businesses, sending money, expediting bill pay, P2P payments and the built-in camera lets consumers use the phone to deposit a check.

“Those are all ways that the mobile phone is going to be better than other channels—others are not going away, but financial institutions should use them together to provide excellent customer service.”

Western Union
Money-transfer giant the Western Union Co. recently extended the reach and accessibility of its money-transfer services with mobile finance initiatives in Latin America, Africa, the Middle East and Asia (see story).

“Over 80 percent of activity happening with mobile money is happening in emerging markets as opposed to developed countries,” said Rebecca Loevenguth, director of mobile strategic alliances at Western Union. “In emerging markets like Kenya there is a lack of card infrastructure, a lack of bank penetration, a lack of financial services, so it’s really useful to have an app on their phone that allows them to save money and pay for goods and services.

“In emerging markets, mobile payments is absolutely transformational, because the only financial services they have access to in some cases is via their phone,” she said.