Diebold's Mobile Banking Plans for the U.S.

Posted by: Michael Arndt on August 31, 2009

From Venessa Wong, who joined BusinessWeek’s Innovation+Design team in June.

Companies such as Nokia have been cashing in on mobile banking in emerging markets including India, Brazil, and South Africa. The success is in part due to the large number of people in these areas who have mobile phones but do not yet have access to land lines and Internet. Will well-wired American consumers have the same demand for this service?

Diebold believes there is potential. I recently spoke with Keith Lewis, director of marketing for the North Canton (Ohio)-based maker of bank equipment (e.g. ATM) and security products. He said the company plans in September to launch mobile banking services for banks and credit unions in the U.S. Diebold plans to focus on Generation Y generation though it will reach out to other groups. Diebold, which ran into headline-grabbing problems with its voting machines several years ago—it’s since spun off this business—sees mobile banking as one element leading to its next breakthrough: innovating the banking experience.

For the many who have not yet used cell phones and mobile devices for banking, the technology allows consumers to access balance info, transfer funds, and schedule payments and receive alerts among other activities without logging onto the Internet. Users can, for example, send a SMS text message with the letter “B” to their bank and receive a text back with their balance. Diebold is also developing a system for consumers to use their phones to authorize ATM withdrawals which will add a layer of security: when a withdrawal starts, a six-digit PIN is sent to the user’s mobile phone that must be entered during the ATM transaction in order to complete the withdrawal.

At the moment, about 4% of banks and credit unions in the U.S. offer mobile banking, according to research by Aite Group, but Diebold expects the number to grow to about 50% within the next couple of years. Currently, major banks offer mobile web, which allows transactions through the Internet, but the goal is universal adoption, says Lewis. While smart phone penetration has been increasing rapidly, research by the Kelsey Group and ConStat shows it is still less than 20% in the U.S. “This is why having a robust SMS text solution is so critical,” he says. Last year Diebold partnered with ClairMail, which provides a two-way mobile banking platform that supports actionable texting capabilities, mobile web and downloadable applications for mobile phones. Diebold also plans to partner with financial institutions, as a means to help them improve retention rates and reduce call center costs, which average between $6 to $16 per call.

If you use mobile banking in U.S., dear reader, I am curious to hear about the user experience and demands that existing technologies do not yet address.

Reader Comments

Jeffrey

August 31, 2009 3:52 PM

I use e*trade's BlackBerry app and Chase's mobile web banking. Both work perfectly and pretty quickly. They let me make transactions whenever I want, in the (not rare) event I don't remember when I'm in front of a computer.

Ketharaman Swaminathan

September 2, 2009 1:57 AM

Mobile banking and payments can become game changing in well-wired markets of the US and Europe when they offer features that people will find useful while they are on the go. Otherwise, as Jeffrey's case illustrates, their use will get relegated to tasks that they have forgotten to do when they were in front of the computer - which is albeit not a rare event in Jeffrey's case. Generation Y Mobile Payments, or GYMPS as I termed this in my recent blog post, is one such game-changing technology.

David Eads

September 23, 2009 7:38 AM

I have spoken with hundreds of bankers across the US and only a handful aren't planning to do mobile banking.

There are a variety of technologies involved and there aren't yet proven best practices. Diebold is very late to the game, but ClairMail has been a player for a while.

Diebold's deep reach into banks makes this marriage an interesting one to watch.

The offering will have to provide much more than SMS banking because adoption and momentum in the US is moving significantly toward smartphone applications.

I have written about this and similar topics in my blog at http://blog.moblestrategypartners.com

-David Eads
Founder, Mobile Strategy Partners LLC

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