FIs Are About To Be Blindsided…Again


I’m not sure if you heard, but this little tech company out in California has a couple of neat devices called the iPhone and iPad.  So far, banks and credit unions have been holding back from jumping into the mobile banking space.  But I believe momentum will grow exponentially over the next two years.

The problem is it might just be too late.  One of the main reason FIs haven’t jumped into the mobile space is because there is no clear ROI.  Instead, they mostly hear about the cost savings in other areas like the call center.  No one is charging for mobile banking in the United States.  And until Bank of America, Wells Fargo or Citibank does, I don’t think anyone will.

One idea I have heard floated for income is charging commercial customers.  The reason being companies are typically charged for using cash management services.  Another one is getting transaction income from mobile payments. Make no mistake, mobile is the biggest growth area for financial services.  I believe that within five years, customers will access their account information mostly from a mobile device.  The iPad and other “tablet” computers will only accelerate this growth.

Fiserv’s iPad demo at Finovate Spring 2010 is just a sample of what’s to come.  But what no one is noticing are the companies that are going around banks and credit unions.  Square’s apps for the iPhone and iPad will take away from those lucrative merchant accounts that customers normally get through their FI.

The biggest threat is the new Transaction app that Apple is working on.  Basically, Apple will turn your iPhone into a credit card by using NFC.  So just like PayPal became the standard for online transactions, it looks like Apple could become the standard for mobile transactions.  And if everything is going mobile, where exactly does that leave your FI?

0 thoughts on “FIs Are About To Be Blindsided…Again

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  2. @Trey Apple is already testing their Transaction app. I really wonder if there is a NFC chip in the new hardware that’s coming out this summer. Also, a lot of people think Apple could really push mobile payments into the mainstream. I give it 1-2 years.

  3. Good article. We have seen much the same thing. Banks need a way to monetize mobile banking so it is a revenue opportunity rather then a cost center, and they need to act fast or they will be dis-intermediated. This is not so different from how online banking evolved, where it was a cost center until people had a reason to go online a transact in a more interactive way when billpay became a part of online banking. However, mobile moves much more quickly with exponential growth potential. Banks need to act fast!

    Obopay announced a new offering, Mobile Money for Banks (http://ht.ly/1JHtg), that lets banks quickly easily and inexpensively deploy bank branded mobile money services that make their account the anchor for mobile transactions. This type of offering enables banks to address the issues raised in the article.

    I look forward to the continued discussion.

    Cheers,
    David
    Head of Product & Corporate Marketing, Obopay
    dschwartz@obopay.com
    http://banks.obopay.com

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