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Developers, not phones, driving mobile banking apps

Lucas Mearian, Computerworld | April 14, 2011
Banks must embrace mobile applications if they're to keep up with the hot trend in smartphones right now. And no phone is hotter for those applications than Apple's iPhone, even if it comes in third behind Android and BlackBerry phones.

One mobile application that's been having difficulties catching on is contactless payments, where a cell phone with an RFID chip can be swiped across a point of scale terminal in a retail store and money will automatically be deducted from the phone owner's account.

Schmidt went on to say that "very few banking applications" support the BlackBerry.

Schmidt urged financial service firms to not be "fast followers" when it comes to embracing mobile applications because the institutions that do may find themselves losing customers.

He also cautioned against charging fees for those services, as financial services firms either don't know or will soon choose not to in order to build a "critical mass" of adoption. "You'll lose market share to organizations giving it away for free," he said.

Of about 200 conference attendees who were polled during Schmidt's breakout session about whether they were offering mobile bill pay and mobile gift cards, 56% indicated they had neither. Another 30% said they had mobile bill pay, 7% said they used both, and 7% said they only used mobile gift cards.

"I'd encourage you to at least go the mobile bill pay route so customers can manage their affairs when they want to, but also because you can save on your costs as opposed to having them call you in to solve some of their issues," Schmidt said. "Bill pay is currently in pilot, but it's expected to be commercially available by the end of the year."

About 60% of phone purchases this year will be completed on a smartphone, Schmidt said. Combine that with $91 billion spent on retail store gift cards over 2010, and you've got the potential for another popular mobile app: mobile gift cards.

Mobile gift cards are being offered by retailers in cooperation with credit card companies and financial services firms, who offer points for purchases that can be used toward future physical store or online purchases.

For example, in December JPMorgan Chase began piloting its GiftShel electronic gift card with more than 20 participating merchants, including Home Depot, CVS, The Gap, and Pizzeria Uno.

One mobile application that's been having difficulties catching on is contactless payments, where a cell phone with an RFID chip can be swiped across a point of scale terminal in a retail store and money will automatically be deducted from the phone owner's account.

 

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