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Show Me The Money

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16 February 2010
I am currently working on research that looks at the near-term (next 2 years or so) future of mobile banking in the U.S. No doubt, a lot of reports have been written about this subject, so I am taking a slightly different approach, comparing the views of the banking industry with the views of mobile technology vendor industry. One area I'm researching is new front-end (consumer-facing) technology that is expected to be increasingly offered. In terms of responses, both industries are pretty consistent in thinking that 3 front-end functionalities will soon gain traction; P2p payments, expedited payments and mobile RDC (remote deposit capture). When I ask research interviewees about which of these functionalities will be directly monetized (i.e., gain fee revenue), the answers are far less consistent (stay tuned for the report to find out who said what...). However, no matter how the two industries envision monetization, as we may already know how monetization will turn out in the U.S. This is because there are already a few examples of the above 3 functionalities in-market:
  • P2P payments: Mercantile Bank of Michigan is planning to launch a mobile P2P service (powered by S1 and PayPal) sometime in Q2 this year, for free.
  • Expedited payments. M&I Bank already offers mobile expedited payments, at $4.99 per transaction.
  • Mobile RDC: Three FIs (USAA, San Antonio CU, Randolph-Brooks FCU) already offer (or are planning to offer) mobile RDC, for free.
That both P2P and mobile RDC are offered for free is not surprising, if one looks at them (from a bank perspective) as replacements for paper checks. It's probably quite fair to assume that most banks' check processing costs are multiples of their electronic transaction processing costs. As such, banks should be very interested in migrating consumers from checks to P2P and/or mobile RDC -- to do so, offering these two functionalities for free might not be a bad idea.

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