It's all about iPhone 5

Apple has now announced release of the updated version of its paradigm-shattering smartphone – mark your calendar for product release on Sept. 21 (pre-orders start Friday, Sept. 14) – and the big question has to be exactly what impacts will the device have on mobile banking and mobile payments?

For starters: unlike with last year's release of the phone that was named the 4S, there were no advance rumors (at least not from credible sources) that this year's iPhone 5 would have NFC (Near Field Communications) to turn the phone into a genuine digital wallet.

The 4S disappointed some by shipping without NFC. And the new phone also does not have NFC. That technology apparently just isn't ready for Cupertino prime time.

But don't think the latest Phone is a yawner for financial services. Analysts in fact see immense ripple impacts of the device that just may shape how credit unions interact digitally with their mobile customers.

Novantas ' Ethan Teas, in an interview, said that to his eyes the biggest impacts will come from the “downstream impacts of other iPhone models.” HIs point: if the analysts are right and more than 10 million iPhone 5s sell in Q4 in the U.S. alone, this may put lots of used, older iPhones on the market, cheap, and Apple is also slashing prices on old iPhones ($99 for the one year-old 4S; the two year old 4 will be free, with a two year contract).

This will put downward pressures on pricing of smartphones other than iPhone (and Samsung Galaxy 3, an Android device that is keeping pace with the iPhone). Motorola, Nokia, HTC and the others may have to start offering tasty discounts to lure buyers away from the glitter twins atop the smartphone sales charts.

The upshot: an ever-increasing number of members will own smartphones and they will want apps for the banking.

Current numbers place smartphone ownership in the U.S. at 55% — but watch that move nearer to two in three early in 2013 as iPhone 5 mania sweeps the nation.

The pressures on financial institutions to provide beefy apps – ones that permit bill pay along with balance checking – will intensify as more Americans pack smartphones in their pockets.

Meantime, Gene Signorini, a vice president at Mobiquity, said that Passbook – a kind of digital wallet integrated into the next generation mobile operating system from Apple, iOS 6, which will be central to iPhone 5 and apparently will also be available for some earlier models of iPhone and iPad – may have disappointed some observers for what it isn't (it isn't a tap-and-go-enabled payment tool).

But, said Signorini, “Passbook is a Trojan horse that will get Apple into payments. It also is an important first step for getting consumers into mobile payments.”

As announced, Passbook is a tool for storing loyalty cards, movie tickets, even airline tickets, in a single app on the iPhone. But, from there, it may be a fast hop into implementing barcode-driven mobile payments and Apple certainly has that on its mind.

But whether Apple goes there, or not, Signorini's bigger point is that Apple, traditionally, has avoided bleeding-edge technologies. Its comfort zone is around improving technologies that are already proven (such as the MP3 music file format which Apple figured out how to monetize with iTunes). That's exactly what it is doing with Passbook.

“Passbook will be easy to use out of the box. It will get people thinking about the phone in connection with transactions,” said Signorini.

Sam Lakkundi, chief mobile officer at Kony, also sees nothing but pluses for mobile banking in the iPhone 5. He said Apple has indicated that it is providing tools that will allow developers to beef up security and that, he said, will help reassure members who still cite security worries as a primary reason for not using mobile banking tools.

Lakkundi also pointed to the sharper, larger screen on the iPhone 5 as a draw for older members in particular.

Bottom Line: iPhone 5 may not have delivered what some had hoped for (notably, no NFC) but experts believe the smartphone revolution may be kicking into a higher gear and that is a message no credit union can ignore.

Instant Insights /

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