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U.S. Brokerages and Banks Push to Close Wireless Cash Gap
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January 15, 2001 (Computerworld) -- The number of people around the world who transfer money using wireless devices is expected to jump from 4.6 million today to 60 million by 2004, according to a new report that was published last week by Celent Communications LLC. But the number of mobile payers in the U.S. is expected to grow to only 2.5 million by then.
The reason for the disparity?
"There are more financial institutions in Europe and Asia that offer these services," said Octavio Marenzi, managing director at Cambridge, Mass.-based Celent.
The proliferation of mobile financial services has been spurred by the push among countries in these regions to standardize on certain types of devices, he added. In addition, he said, a higher percentage of Europeans use digital phones - there are virtually no analog cell phones left there. By contrast, 40% of the mobile phones used in the U.S. are analog.
With a large market of potential customers that's been virtually untapped, a number of U.S. banks and brokerages are trying to close that gap with wireless payment services for consumers and business customers.
For example, Bank of America Corp. will soon be rolling out a national online bill payment platform that will eventually include a wireless component, said Mark Williams, a spokesman at the Charlotte, N.C.-based bank.
"That's high on our list of something that our users are going to want and we will be developing," he said, although he declined to give a time line. Bank of America, which passed the 3 million mark for online customers last week, has the largest base of online banking users in the country.
Online brokerages, such as San Francisco-based Charles Schwab & Co., have been offering wireless services to their customers since last summer.
Given the proliferation of wireless devices, such as cell phones, pagers and personal digital assistants, these companies usually go through a third party to link with customers through different telecommunication companies.
Toronto-based 724 Solutions Inc. is one of the market leaders in this field, with a core platform used by banking and brokerage services that is now moving into mobile e-commerce.
Easy Payments
For example, a customer at Bank of Montreal - one of 724's clients - can visit a shopping site affiliated with the bank through the bank's e-commerce portal. The customer can then select a product and pay for it using an automated process that fills in the required fields.
Bank of Montreal supports more than 70 different devices and already offers other connectivity tools, such as third-party electronic wallets, according to Chris Jarman, 724's executive vice president for mobile commerce.
Another start-up, Bellevue, Wash.-based CheckSpace Inc. already lets business users send money to an e-mail address - via the Internet and through the use of wireless devices. Palo Alto, Calif.-based X.com's PayPal lets individuals send money to each other in a similar way.
The key to ensuring success in the U.S. wireless payments industry, according to Marenzi, is for the major players - including financial institutions, telecommunications carriers and merchants - to partner with one another. Those firms seeking to set up closed, proprietary wireless payment systems "are unlikely to succeed," he added.
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