The evolution of services offered by the banking industry has always been reliant on available technology and the creative methods that institutions use to implement it into their products. The consumer banking industry is full of monotonous offerings of comparable services so being the first to phase in new technology is often the key to one institution setting itself apart. Visa has been in the press lately for its interest and research in incorporating the expanding capabilities of mobile devices into its consumer product offerings. Other banks have also set their sights on the potential that this field has on increasing consumer demand for mobile banking but they all face the same challenge of the implementation.
Elizabeth Buse, the Head of Product at Visa, announced last month that said company has analyzed the practicality of various mobile banking solutions in several markets, weighing the advantages of using mobile devices as a replacement for debit or credit cards against using them as a supplement to the existing card infrastructure. They announced that in the United States, because the card system is already so vastly implemented in retail locations, it will focus on creating applications to bring up-to-date information to consumers that will not include “contactless payment capabilities.” Visa, US Bancorp, and other financial institutions have said that they are working with Google to bring such applications to the Android mobile operating system (recently introduced and currently only available on the US T-Mobile network) because of its relatively open system for developers.
The applications give consumers the ability to subscribe to alerts concerning their accounts, locate banking centers and ATMs in the vicinity, and to subscribe to offers from participating retailers that they may come into contact with. Some banks have begun offering these abilities. Personally, I am a customer of Bank of America, which has already developed applications for my phone that allow me to do these things and more.
I think that given the situation of the economy right now, these are useful additions. Mobile alerts will prevent consumer credit from getting out of hand by sending notifications when spending exceeds a given amount. Instant fund transfers from any location on a mobile device will allow people to mobilize and better manage their spending. With more than a quarter of a billion mobile subscribers in the US, mobile banking technology is bound to attract customers and we will continue to see developments. After the industry settles down and the rapid buying and selling of banks slows (and the Wachovia tug-of-war ends, etc.), we will have banks once again looking to technology to stand out and attract crowds.
Jackson, Ben. "Visa Questions Phones as Payment Tools" American Banker [New York, N.Y.] 8 Oct. 2008.
3 comments:
I agree that mobile alerts are very practical. There have been many times that I wanted to charge something onto my debit card, but wasn't sure if I had a sufficent amount of funds to cover the purchase. And I will admit sometimes I do it anyway without knowing how much is there. I've been lucky because I've never gone over, but I'm sure many people that do the same thing haven't been as lucky. Although I think mobile credit alerts are great, I'm a little skeptical. It seems like people already have access to their statements if the have internet capabilities on their phones. Also, it seems dangerous to have personal messages stored on your phone. The information can easily be stolen or lost.
I've read similar articles that discuss how some countries have vending machines that accept payments through a cellphone. I think being able to pay through your phone is a great service, however, it seems very risky. If your phone is stolen or lost you run the risk of racking up an overabundance of charges before being able to report the issue and cancel service. There would definately be a market for such a service; maybe not in the current economy, but definately in the future. They would need to work on safeguards to entice more consumers to subscribe.
It is great that cell phones have revolutionized the way we live and do business. Giving us the power to stay connected almost 24/7 enables us to stay in touch with those who need us while on the go. With the ability to play music, download scores, send email and text, and check the stock prices in one sitting makes technology evergreen. Even now, the idea of cellular banking will very soon be replacing our wallets for making payments on the go.
I agree with Stetson that by being able to have cellular banking boosts technology. It will increase consumer loyalty for credit card issuers. For cell carriers, it will instill a lucrative opportunity to cop a share as well. This will allow for more timely payments without expensive equipment changes and for the busy businessperson on the go is a great way for them to always be on time.
I think that while the idea in general is a good one, I question whether or not the system is really practical. We already have online statements that are sent directly through email, and mobile alerts just seem to open the door for abuse. Just imagine if people lost their cell phones at the same rate that they are lost in the status quo while these alerts are put into place. The opportunities for stolen information seem to be very lucrative and would give even more of an incentive for theft. So, I definitely agree with Karina's analysis concerning the potential security concerns.
Additionally, I read in express this morning on my way to work about new viruses specifically attacking mobile phone usage. This would add a significant risk to implementing this idea.
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