Mobile banking reality check

If last year was the year of overblown expectations for mobile financial services, then 2008 will be a year of the inked deal but still little progress on consumer uptake, according to senior analyst Emmet Higdon of Forrester Research. Mobile banking and mobile payments are still technologies in search of a problem, which could be just what the industry players are looking to figure out at next week's Mobile World Congress. "People expected mobile banking to take off much more quickly than it has," Higdon said. "People are trying mobile banking services and discovering that it's kind of neat, but it's hard to read transactions on that little, tiny screen."

Carriers and financial institutions are still trying to figure out what consumers are interested in doing financially on their mobile phones. Forrester's polling suggests that customers, themselves, aren't really sure what they want to do with mobile banking. The problem could be a lack of imagination. Right now, U.S. banks are encouraging users to use the exact same services on their mobiles that they can already use online. "That's fine," Higdon cautions. "But it doesn't make it compelling enough to make a large percentage of their customers to try or adopt these mobile solutions. We are still waiting to see how that experience on the mobile could be different. We are still waiting on that killer app for mobile banking."

Of course, European carriers may have a head start when it comes to rolling out mobile financial services. The fragmented carrier market in the U.S. has so far made it near impossible for the financial institutions and carriers to agree on standards for mobile payments and near field communications technology, according to Higdon. Some carriers want to use SMS as the backbone of financial apps while others are pushing downloadable applications and still others WAP.

Technicalities aside: What is that yet undiscovered financial application that will be so compelling that it drives users to the mobile handset? Mitek CEO James DeBello thinks his company's remote deposit application could be just the ticket. Three years ago the U.S. government passed legislation that allows banks to accept an image of a check instead of the paper check itself to transact the payment or deposit. Mitek took that concept and ran with it: Mitek's software allows users to take pictures of checks with their camera phones (if they are 2 megapixels or higher) and send those images to the banks for deposit.

Look for Mitek's representatives and other financial application developers seeking to crack the mobile banking code at Mobile World Congress next week. -Brian