Banks opt for hosted mobile services says Celent
As Banking 3.0 continues its inexorable rise, banks are increasingly turning to hosted mobile services developed with vendors – but there is still more work to be done before mobile banking becomes mainstream, according to a new report by analyst firm Celent.
The Celent research, Mobile Banking Vendor Solutions, found that while most of the top US banks have begun to offer mobile services, one-third had not. The most common use for mobile banking services was paying bills, according to the research. Some 14 of the 20 vendors in the report said that mobile systems they had developed were already being used for this purpose, with 80% of financial institutions reporting that their mobile bill payment services are live. In addition, nine vendors have live P2P deployments and 14 have customers live on mobile remote desktop services.
Vendors prioritised Apple iOS and Android, with Windows 8 not far behind; over 80% of firms had Windows 8 products in development, whereas over 50% had no plans for Blackberry. More than 50% of vendors already have iOS products available for sale or in production.
“Most projections are bullish about the adoption of mobile banking over the next five to ten years, often over 50%,” said Stephen Greer, analyst at Celent’s banking group and co-author of the report. “But Celent doesn’t consider it to be a mainstream channel yet, at least in the minds of the users. Customers are often misinformed about banking from a mobile device, citing security and reliability as two of the most common hindrances to adoption.”
Shocks such as the Eurograbber attack in December, in which criminals stole £30 million from 30,000 accounts in four European countries, have not helped consumer perceptions of the safety of mobile banking. Other incidents, such as an attack using UK bank NatWest’s mobile banking app in September, were smaller but also widely reported.
Despite the widespread recognition of the importance of adopting mobile technology, few institutions have the capacity to develop and roll out mobile solutions to their retail customers by themselves, according to Celent. Instead, vendors such as Harland Financial Solutions, FIS, Intuit, mFoundry, NCR and ORCC Advantage provide banks with hosted solutions, in which the vendor looks after the hardware and software, installation and maintenance on behalf of the bank.
Hosting is not universal – Temenos, Oracle, JHA, Infosys, Jwaala, Kony and Wipro provide on-premise solutions. However, Celent reports that it is seeing institutions of all sizes opt for hosted models because of their lower total cost of ownership and reduced implementation complexity.
As banks increasingly focus on attracting Generation Y customers, Celent warns that it is “no longer sufficient to have tablet offerings that are simply souped-up versions” of handset apps.
“Although many banks have been slow to respond with tablet apps, robust and attractive offerings are making their way into the marketplace,” read the document. “What this means for financial institutions is that it’s no longer viable to silo each channel technology. Banks and vendors must think holistically about how they implement and design their strategies.”
Despite mainstream consumer concerns over the safety of mobile banking, at the IPS conference in London earlier this week, several speakers including Stephen Ellis, EVP, group head of wholesale services at Wells Fargo, insisted that mobile is in fact safer than any other form of payment, including card payments. This argument has also been voiced by Ben Knieff, head of fraud at financial crime and technology specialist NICE Actimize, who believes that biometric technology such as GPS that tracks the user’s location, front-facing cameras that can be used for face-recognition, voice recognition and fingerprinting provide the means to make mobile the safest form of payment.