There's No Money in Mobile Banking
First, read my thumbs. I don't text; I don't own an i-anything; nothing's attached to my ears; both hands are on the steering wheel; my cell phone still works for away-from-office calls; my laptop does everything I need to do; I don't need to be a mobile banking user; and most of all, I am one very happy camper. But I certainly don't represent the mainstream of bank user population.
Now, let's get down to business. Most banking activities and transactions are scheduled and predictable. Rarely does anything ever happen in consumer banking that requires instant attention. That's why batch processing survived for so long. And real-time processing really means do it once and do it before the close of business. So to offer a bit of balance from the other side of hype, let me say mobile banking is not everyone's cup of tea. In remote villages of India it won't give any bank tech vendor the spike to bolster fresh revenue that has been scarce in the past four or five years. And internet banking customers, who occasionally invoke a transaction on-the-fly with their cell phone, won't pay any bank extra to do that.
How much revenue from mobile banking will a $4 and $5 billion dollar tech company earn? I'll let the CFOs of Fiserv and FIS answer that question even though one of my algorithms has the answer. It's paltry. This 14-year-old technology (yes, it didn't just happen last year) hasn't made anyone rich (except for a couple of early vendors who sold their company), and it won't because it's an alternative channel. What a consumer does on a cell phone, he/she was doing on a desk phone, or ATM, or card reader, or computer, or the still-popular in-the-flesh tellers at branches. So wherever you don't find these five resources, mobile banking is indeed an innovation. It's classified as a need of the niche variety, for two specialized groups -- the existing banking population that's constantly on the move, and where banking of any kind had not existed.
Mobile banking, in my opinion, is a little bit of a good thing. The press attention it has received is, in my opinion, over the top. Google Alerts sends me articles daily that were published all over the world with headlines that are hard to believe. Every investor I work for is aware of mobile banking as the hottest new technology, and investors expect it to be the proverbial shot in the arm for bank tech vendors. That's a little bit like 10% ethanol in my gas tank will solve the global warming problem.
Bank tech vendors like FIS, Fiserv, Jack Henry and Harland Financial Solutions deliver integrated suites of applications. The operative word is "integrated" and therefore a single application is only a small fraction of their success. Banks and credit unions have followed their lead supplying consumers and businesses with the whole solution. No vendor or financial institution will make its fortunes on just one application. But let no meaningful application be left behind. Tech suppliers and financial institutions should be ready to turn on any of the 132 applications that make up a bank system. However, those in search of new revenue from mobile banking will be disappointed.
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