Challenges Ahead for Mobile Banking

The event, moderated by Aite Group senior analyst Nick Holland, assembled a panel of leading mobile banking experts, including Michael Lindsay, senior vice president and manager of Electronic Delivery Services of BancorpSouth; Brandon McGee, vice president and senior product manager of Huntington Bank; Joram Borenstein, senior product marketing manager of RSA; Mustafa Patni vice president, online strategy, of Washington Mutual; and M. Leland Dill, general manager of Western Union Mobile. The panel's key findings include:

• While earlier attempts to bring mobile banking to market have failed, a new mobile market landscape offering improved device capability and network capacity means that the technology is in place to provide the service. What remains unknown is the degree of end-user uptake that will be required to make such an offering succeed.
• Views differ on how the relationship between banks and mobile operators, including who owns the end user, will play out. Representatives from the financial services community would like to claim ownership, as they will have been the primary drivers of end-user adoption. However, in mature markets, such as the European market, mobile operators tend to claim end-user ownership, especially once mobile banking services evolve to include transaction services.
• Mobile banking could play a strong role in the provision of services to the unbanked and underbanked. Given the extremely high penetration of mobile handsets globally, transaction services that are executed over mobile channels could provide a significant means of extending financial services to individuals who have been geographically or demographically disconnected.
• There is a general consensus that security attacks will be inevitable over mobile devices in the next few years, particularly given the desire for financial institutions to layer in transaction-based services and due to the ubiquitous nature of handheld devices. The most likely forms of attack will echo phishing and other forms of social engineering attacks that have plagued the online space, with the extra challenge of lack of device consistency and the opportunity for multiple vectors of attack such as SMS, e-mail, Instant Messaging and Bluetooth.
• The panelists agree that offering mobile banking is not a final destination for banks, but rather the first step in a long journey toward providing mobile payments and mobile commerce.
• Looking forward, the panel firmly believes that mobile banking will continue to develop over the next 24 months, with enhanced payment capabilities being brought online. It is anticipated that at least one major U.S. carrier and one major U.S. bank will jointly deploy a mobile banking/payment service, accelerating other mobile operators and financial institutions to do the same. Contactless payments using NFC technology are also seen as likely, but with commercial deployments outside of the 24 month timeframe.