Mobile Banking

Talk About A Paradigm Change…

How About a Redesign?

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AT&T, T-Mobile, Verizon Wireless Introduce “Isis” and Bloomberg News report that that a new mobile wallet payment system is rolling out as a joint venture between the nation’s three largest mobile phone service providers.  Isis, the mobile wallet service from AT&T, T-Mobile, and Verizon Wireless, will pilot in Austin, Texas, and Salt Lake City, Utah in September, 2012.  The NFC-based (Near Field Communications) mobile payment system was created by Verizon, T-mobile and AT&T to try and make mobile payments a common practice.

  • Near field communication (NFC) is a set of standards for smartphones and similar devices to establish radio communication with each other by touching them together or bringing them into close proximity, usually no more than a few centimeters for applications including contactless transactions and data exchange.

The Isis mobile wallet app that will be available to more than 100 million United States Credit Card holders and compete with Google Wallet and Opera, offering a secure and convenient way to use a mobile phone to pay with a credit card.

Chase, Capitol One, and Barclay were the first to sign up for the service. Isis added a batch of new financial partners earlier this year, including American Express’ various credit card offerings  (including the company’s own mobile-linked Serve cards), which will let users of those cards load them into the Isis app and make payments with their NFC-equipped smartphone. While American Express had already signed on as an Isis partner last year, this is the first time that the company has committed to tying its cards to the platform.

A simple UI lists your current payment options. At the bottom is “Isis Feed” which is likely a payment history page, “Directory” which is a list of shopping outlets that will accept the Isis payment system, and “More” (settings).

The pilot was delayed since late last year because Isis decided to use a different method for processing payments than originally planned. The original plan involved having the phone companies behind Isis process all the payments made with the program, but instead, credit card payment processors will process the payments to increase the security of transactions for both consumers and businesses.

Bloomberg reports that another possible reason for the delay is that there are currently still very few smartphones on the market capable of handling such a transaction. T-Mobile has just four smartphones equipped with the near-field communications that Isis runs on that are compatible with its network. Verizon came under fire late last year when it was discovered that Google Wallet was not supported on their version of the Galaxy Nexus phone.

Many believe that Isis has a far better chance of catching on with consumers than some of the other mobile wallet programs available now, such as Google Wallet, or in development because of the perceived value for consumers whose phone companies’ products and services they already use every day, which will make for a seamless mobile wallet entry.

Click on the image to see videos of Google Wallet in action

Mobile wallet adoption could become the norm within the next few years, as many consumers become convinced of its safety and convenience. For more information on ISIS, see their website at

Related Article:

Google Wallet Leads the Way


Check tomorrow for a post on a revolutionary new mobile payment system debuting shortly.


According to Berg Insight, the total number of users of mobile banking worldwide doubled to 55 million between 2008 and 2009, and again doubled in 2010.

The major banks (Citibank, Wells Fargo, Bank of America, etc.) already have a substantive mobile presence, with even community banks on their heels. But breakthroughs aren’t found in repetition, but in meaningful innovation that’s value-added.

Mobile Disconnect

May 2011 study from Foresee shows mobile banking is lagging far behind other channels in customer satisfaction, with only 2% of retail banking consumers preferring it to online and branch banking. Why the disconnect? Rowland of Introduce The New believes that it’s because the mobile banking features offered aren’t new functions, but what customers already expect from their bank and can already get online. However, the few institutions that go beyond this cost of entry position by designing bold user experiences in ways that reaches beyond what’s already available online or at bank branches have an opportunity to succeed at attracting customers. Banks aren’t just competing with each other on the mobile app market, but with every other app that’s available.  “Non-bank thinking”  is needed to allow customers to use the mobile platform in striking, new ways.

He sites these examples of extraordinary mobile banking apps:

1. Bump-to-Pay / Wave-to-Pay

In March, PayPal unveiled its Bump to Pay mobile app feature which allows users to transfer funds between each other by entering a dollar amount into the app and then “bumping” their phones together, which  makes transferring between customers fun, interesting and distinctively mobile.

Companies like Google and Payfone are rolling out Near Field Communications technology will allow consumers to make point-of-sale purchases by waving their phones over a sensor instead of swiping their credit cards.

2. Click-to-Deposit

USAA released the first mobile app to offer remote deposit in 2009 —  the ability to deposit checks by snapping pictures of them using a smartphone camera, receiving high tribute in the New York Times. Only Chase presently offers remote deposit, released almost a year later. A research study conducted by financial services strategy firm Mercatus showed 43% of mobile banking customers cited remote deposit as the mobile banking feature that would most likely encourage them to switch primary banks.

Thinking Outside the Bank: 5 Factors in Increasing Mobile Adoptation

John Moon, manager of mobile adoption marketing at Fiserv, writes in American Banker about 5 factors that will bring all financial institutions to recognize the benefits the mobile channel offers. Those benefits:

  • Lower cost to serve.
  • Increased customer satisfaction.
  • Retention.
  • Higher return on investment.

However, he notes that many financial institutions attract early adopters within a year of offering the service, but progress then stagnates to include just a small additional percentage of adopters over the next two years. He states that financial service providers need to leverage key drivers of consumer adoption to establish mobile financial services as the norm. There are five factors of consumer acceptance are these: Consumers must decide if mobile financial services are 1) useful, 2) accessible, 3) secure, 4) familiar and 5) easy to use. Here is a more detailed discussion of these five factors of adoption.

1. Make the Case That Mobile Is Useful.

Knowing what customers find useful can enable financial service providers to develop marketing messaging that will resonate with potential adopters. To accelerate broad adoption, providers need to offer compelling answers to the question, “Why do I need to transact through the mobile channel?”

2. Provide Access to Mobile Through All Devices.

Simply put, the more accessible a product, service or technology is, the greater the opportunity to use it. To break through the glass ceiling and attract additional users and transactional activity, the mobile channel must be made more attractive and accessible. Providers should ensure mobile accessibility for as many customers as possible and support multiple platforms and devices, including tablets, to tap into a broader customer base.

3. Help consumers overcome security concerns.

The perception that mobile transactions are less secure than a desktop computer, laptop or card-based transactions is a big factor to overcome in turning skeptics into users. To convert a greater share of the mass market, perceptions about mobile security must be properly addressed.

4. Familiarity creates a natural transition across channels.

Consistency in branding and experience across channels allow for an easier and more comfortable transition from one channel to another. Facebook, for example, does an excellent job of providing consistency. Consumers enjoy a consistent experience when they access their Facebook accounts, no matter what channel, platform or device they use. If a mobile offering is consistent with what is presented in other channels, consumers will recognize and feel comfortable with the service.

5. Mobile services must be easy to use.

Technology is intended to make life easier, but if it’s not easy to use, only early adopters or tech-savvy consumers will continue to use the technology. In a market where new technologies and feature sets are rapidly developed and promoted as differentiators, providers need to understand the importance of balancing the sophistication of the technology with simplicity for the consumer.

To ensure mobile services are easy to use, providers should deliver an intuitive user experience that eliminates the need for training prior to conducting simple activities. Communication with customers via posts and collateral about the benefits and ease of mobile use will also be effective.

To extend the benefits of the mobile channel to the broadest possible range of customers, banks must think outside the bank.


Related American Banker Content

Worldwide Survey Provides Valuable Customer Insights

An Ernst & Young study of retail banking customers around the world examines the views of more than 28,500 banking customers in 35 countries, gathered in March 2012. The 62-page survey which can be  downloaded here  provides insights into bank customer behaviors, including:

  • How many consumers have switched?
  • How many customers plan to switch and why?
  • Why are US customers they switching?
  • How many banks do they use?
  • What kind of banks do they use for different purposes?
  • Are they really satisfied and trusting of their banks?

How Many Have Switched Banking Providers?

  • 34% of customers worldwide have changed their main banking provider
  • 74% have done so in the last 10 years (marginally lower than in 2011.)
  • In the US and Canada, the number increased from 38% in 2011 to 45% in 2012.

How Many Plan to Switch and Why?

Customers planning to change banks worldwide since 2011:

  • increased from 7% to 12%.
  • 50% cite high fees and charges as the primary reason.
  • high fees or rates on deposits is the primary reason most switch primary banks.
  • Poor rates on accounts is an important factor for U.S., Canadian and European customers.

Top 10 Reasons U.S. Consumers Are Switching

Customers want more than a better deal and moreover, want the flexibility to shape the relationship, contacting their bank whenever and however they choose. They may prefer online channels for simple transactions, but demand high-quality, personalized services for more complex transactions.

  1. High fees.
  2. Poor account rates.
  3. Poor branch experience.
  4. Proximity of branches.
  5. Service failings.
  6. Lack of personalized contact.
  7. Poor call center experience and range of products.
  8. Poor internet/mobile experience.
  9. Poor brand image
  10. Poor adviser competency

How Many Banks Do Consumers Use?

Banking consumers are diversifying their relationships since 2011— spreading their money around.

  • Customers using only one bank dropped from 41% to 31%.
  • Those with three or more have increased from 21% to 32%.

Which Institutions Consumers Use For Specific Products

Customers tend to:

  • use their main bank primarily for checking, savings, credit cards,
  • diversify more for investments, retirement, insurance, mortgage, personal loans and car loans.

Are They Really Satisfied and Trusting?

Satisfaction High, Trust Low: Ernst & Young found that overall satisfaction remains high. However, trust levels remain low.

  • Consumer confidence dropped 40% globally.
  • In Europe’s more beleaguered countries it’s nearly double:
    • a 72% drop in Italy and 76% in Spain.
  • In the U.S., 50% say confidence in the banking sector has decreased over last year.
    • 9% say they are more confident.
    • 40% say there’s been no change in their feelings.

Bottom Line: What Should Banks Do?

Banks need to focus on providing a better customer experience to reduce churn and attrition rates. Ernst & Young researchers say that in order to retain their customers, banks must adapt their business models to cater to increased demands and also accommodate a wide range of customized services and products.

In contrast, the 3 models most commonly pursued by banks are based primarily on:

  • low-cost competition, or
  • high-touch service and/or
  • accessibility.

The Ernst & Young report offers this advice:

  • Make low-cost digital channels customers’ preferred choice. Banks should encourage customers to use digital channels whenever possible by using price incentives.
  • Make pricing and service promises transparent. Pricing is critical to customer satisfaction, but most customers have no idea how much they pay each year. Transparency over pricing and service promises is vital if banks are to deliver something customers value.
  • Offer tiered levels of customer experience. Customers should have the option to buy into certain products and services, and the ability to earn upgrades through loyalty, whether in terms of longevity or the share of wallet handled by a particular bank.
  • Encourage customer self service. Banks needs to improve the way they provide information and advice to interest and convince self-directed customers, including financial planning tools, ranges of product and pricing bundles.

Large, full-service banks need to defend market share against new entrants which offer greater specialization, while retaining the ability to meet a wide range of needs and sustain profitability.

Leading the Pack: Google’s early entry into the mobile wallet field has allowed it to focus more on expanding the system’s capabilities.

Google Wallet, available for use on six smartphones and a tablet, and accepted at over 200,000 locations nationwide, is expanding its capabilities with a new innovation that allows it to be used in conjunction with any credit or debit card issued by payment processors Visa, MasterCard, American Express and Discover.

User Friendly:  To add a new card to the Google Wallet, a user needs only enter the card number in the Google app. Then the card can be used to make any type of purchase, which is added to the transaction record listed on the phone, alongside merchant name and dollar amount.

Secure: If the mobile device is lost or stolen, users can remotely disable the app from their online Google Wallet account. The account can also be locked, requiring a PIN code to reactivate. Robin Dua, Google Wallet’s head of product management, wrote on Google Commerce’s official blog:

If you lose your phone, just visit the ‘Devices’ section in the online wallet and select the phone with the mobile wallet you wish to disable. When you successfully disable your wallet on a device, Google Wallet will not authorize any transactions attempted with that device. If the Google Wallet online service can establish a connection to your device, it will remotely reset your mobile wallet, clearing it of card and transaction data.

Once using an internet connection to change the card they’re currently using, or enter a new one, users can make purchases offline using the card they currently have selected.

Near-field communications-enabled mobile payment systems are expected to receive much more competition in the near future.


Click. Game Over!

The FBI’s warning a spam email scheme using malware called “Gameover” in January, 2012, is a good indication of where theft has gone.  This scheme involves fake emails from the National Automated Clearing House Association, the Federal Reserve or the FDIC which  attempt to trick you into clicking on a link to resolve some type of issue with your account or a recent ACH transaction. Once you click on the link, Gameover takes over your computer, and thieves can steal usernames, passwords and your money. Criminal hacking expertise has evolved to the point that online theives can navigate around common user authentication methods used to verify your identity, including personal questions, birth dates and other private information intended to provide an extra layer of security. This it is a timely reminder that it’s important to remember that your smartphone is also susceptible to hacking.

Sophisticated Mobile Scams Target YOU

Targeting a Burgeoning Market:One of every 5 U.S. consumers used a mobile phone to access a bank, or other financial account in 2011, according to a  survey of nearly 2,300 people by Knowledge Networks – and another 1 of every 5  consumers plan to do so in the future. A Federal Reserve statement about the survey  suggests that mobile banking is poised to expand further with usage possibly increasing to 1 of every 3 mobile phone users by next year. This means mobile banking is crossing the tipping point from a nice‐to‐have to a must‐have investment for financial institutions. A recent report by market research firm First Annapolis found that 54% of the top 100 financial institutions surveyed in the US offer some form of mobile banking. A recent Javelin Research new report cites massive growth in mobile banking in the past year:

  • In 2o11, the number of consumers conducting mobile banking rose dramatically from 19%  to 30%of mobile consumers.
  • Those conducting mobile banking in the most recent seven days increased 50%, from 12% in 2010 to 18% in 2011.
  • Mobile banking vendors in 2010 only had a few of banks live, but the average in 2011 is 173 live – a huge increase.
  • A “smartphone adoption crossover” is in occurring – when more Americans will own smartphones than will own regular phones. Now smartphone adoption is at 45% percent, so we’re just about at that crossover point.
  • Half of smartphone owners conducted mobile banking last year.

Mobile banking use is highly correlated with age, with people in the 18-to-29-year-old age group accounting for 44% of  users, while they are only 22% of all mobile phone users (people ages 60 or older accounted for only 6%of all mobile banking users although they comprise fully 24% of mobile phone users.) Checking an account balance and monitoring recent transactions were the most commonly reported mobile banking activities.

Targeting the Savvy: A large number of mobile phone owners who didn’t use mobile banking expressed security concerns – security is the No. 1 reason consumers fear using mobile banking, with two out of three consumers believe that transacting on a mobile phone is ‘much less secure’ than on a computer or laptop, according to a Javelin Research report.

However, mobile banking users were much less skeptical about how secure the technology was. So those who might consider themselves savvy consumers are likely targets. What this means is that those who are young and technologically savvy and used to mobile computing may be underestimating the threat.

Cyber theft and false bank alerts are becoming increasingly sophisticated.  Because you have no spam filter for text messages, and they simply appear in the same folder that holds notes your friends and colleagues, notifications about your debit card are likely to immediately catch my attention.SMiShing s term is used to describe identity theft attempts via SMS text messages.

Recent Mobile Banking Scams: SMiShing

SMiShing scams have recently targeted some account holders at Fifth Third Bank.  Here are a few examples of what’s been popping up on mobile devices:

  • Fifth Third Bank alert. Debit card locked. Call XXX-XXX-XXXX to unlock.
  • FifthThirdB MJVA alert 119471. Please call (XXX)XXX-XXXX.
  • Fifth Third B. Message. Your card has been locked. Call XXX-XXX-XXXX to unlock.

Fifth Third advises account holders that it will never contact them by email, phone or text to request or verify information. In any case like this, it’s best to call the number directly on the back of your debit card.The FDIC recently issued new warnings about the risks of transmitting account information via mobile phones. As banks continue to develop new tools and technologies, you can be sure that identity thieves will race to develop new strategies for outsmarting them.

The new game is to send out thousands texts to local phone numbers in the same area code as local banks, and hope many are members of that bank and fall for the scam.  On  February 10, 2012, SMiShing scams were reported in Tampa, Fla., where a radio show received a text message from an unverified sender with a 917 area code. It contained an alert from “Tampa Bay Federal Credit Union” that urged him to call a number with a 530 area code. When Schnitt called, an automated voice told him his bank card was deactivated and to enter his card number to reactivate it. He played along and entered a fake card number and expiration date. Finally, he was prompted for his PIN and then informed his card had been verified and re-activated.  “Watch out,” he told his listeners, “you’ve just given them your card number, expiration date and (personal identification number), so they can wipe out your account.” Hurricane, another radio show personality and Tampa resident, says he received the same text message, and knew it was a scam because he doesn’t bank at Tampa Bay Federal Credit Union.

Marie Baskerville, member solutions representative at Tampa Bay Federal Credit Union, said,”We do use a third party to track transactions for evidence of fraud or suspicious activity. They will contact you by phone, never a text message or an email, so you can verify that phone number before calling back.” She further explained when you call, you may or not be prompted by automated messages to input your account number. If so, you will be transferred to a real person. “We will never ask you for the expiration date or PIN associated with your card, as we already have that information. We will ask you to list some recent transactions to verify that you are the cardholder and that you made those transactions.”

A recent TV newscast from January alerted local residents in Batesville, Ind., to watch out for fake alert texts from Indiana Bank and Trust.

Tip offs to A Mobile Banking Scam

  • Unrecognizable phone number or strange area code.
  • Urgent text message or alert.
  • Request for personal information beyond the card number.
  • Completely automated system.
  • You are not a member of the bank contacting you.

Crucial Steps to Avoid Falling Victim

  • Update your computer and mobile device  with the newest versions of anti-virus software.
  • Do not click on any embedded links and maintain a healthy suspicion about all email senders’ authenticity,
  • Remember, banks never request any personal information via email!
  • Be vigilant about checking your account balances. The sooner you notice and report any type of fraudulent activity, the more likely you’ll be able to be reimbursed for any missing funds.
  •  Download your bank’s official app for your mobile banking needs, because that’s most secure.
  • The Federal Bureau of Investigation and Federal Deposit Insurance Corp. offer the same identity theft protection warning: If you did not initiate the communication, don’t provide any information. If you believe the contact is legitimate, call the financial institution yourself at the main number listed on your card or the company’s website, never from a link provided in an email or number provided in a text message.

Steps to Prevent Mobile Phone Theft

The lack of encryption for SMS message banking means that a banking institution must continually review its security policies. In addition,  financial institutions need to educate account holders on ways to keep their information secure, including:

  • Avoid public wireless networks for banking activities.
  • Run security software on mobile devices.
  • Protect devices with strong passwords.

Has It Happened to You?

If you’ve ever fallen victim attack, I’d be interested in hearing more about your experience and any tips to avoid the problem.

Snap principle of mobile banking security:
Institutions need to:
  • lock down mobile apps, 
  • aggressively educate customers on identity theft, 
  • work to overcome consumer fears, and 
  • establish a relatively clean safety record to settle some consumer fears.

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