COLUMBIA, S.C. – When it comes to wireless banking, one man's cool is another man's goofy. "We've got some really cool stuff coming, including end-to-end, Web-based wireless lending capability," says Marshal Kipp, Virtual Branch program manager at EDS ( in Plano, Texas. "I can envision in the very near future the ability for a member to submit a loan application to a credit union over a handheld device and, with a digital signature, get instant approval with the funds then disbursed into the right account," Kipp says. Then there's Keith Nolan, president of NAFCU Services Corp. (, the value-added services arm of the Washington, D.C., trade group. "Technically, you can do it," Nolan says. "But for me to fill out an auto loan app while sitting on a beach on vacation is just goofy. And I don't think not offering that is going to cost me that many chances at business." Meanwhile, EDS is so confident in the future of wireless banking that it's offering its Virtual Branch Wireless service free to its existing Virtual Branch customers. "We expect the growth of wireless devices to catch up with if not pass wired devices," Kipp says. "I enjoy technology and try to keep up as much as possible with what's going on in the Internet world," Nolan says. "But I have never once found myself sitting in a car, airplane or train, saying, `Darn, I wish I could transfer money from my savings account to my checking account' or had this burning desire to make a trade." That `burning desire' could help explain why brokerage wireless use has taken off so much faster than wireless banking. This year, there are an estimated 2.8 million users of wireless brokerage services, compared with a mere 16,300 wireless banking users, according to IDC, ( a research firm in Framingham, Mass. Those numbers are expected to grow, to 1.34 million wireless banking users in 2004 and about 3.8 million in 2005, a penetration rate of 2% to about 5% among the total number of U.S. mobile device users. "Mobile access does not hold the same synergy for banks and credit unions as for investment firms," says Ian Rubin, IDC's director of online financial services advisory programs. "In fact, few consumer mobile banking features will actually offer additional value to the customer because the services banks and credit unions offer are rarely time critical. Instead, consumer adoption of mobile banking will begin slowly because the ability to bank on a mobile device won't be one of the compelling features driving mobile Internet adoption." NICHES AND FRAGMENTS "It's a niche market, but it's a niche market that's starting to expand quite a bit," says Gary Bernard, vice president of member services at Motorola Employees Credit Union-West (, a $500 million, 58,000-member CU based in Scottsdale, Ariz. His credit union, a Digital Insight client, has 33% of its membership already using Internet banking and about 1% using wireless since the March 1 launch. MECU-West offers the typical range of wireless services: account balances, transaction histories (up to three), fund transfers, and is looking to add more, such as branch and ATM location information and account-balance alert capabilities. While wireless use is far higher in several other countries, notably Japan and Sweden, among others, the U.S. market, is much more fragmented and competition driven. Right now, standards for wireless access include WAP (wireless application protocol) and SMS (short messaging services) that have size and speed limitations that can make wireless banking awkward if not difficult. That's somewhat less a factor with Palm Pilots and similar larger-screen handhelds, but wireless support for them is just now following the others. Meanwhile, in Japan, the DoCoMo I-Mode wireless service owned by the Japanese telcom giant NTT has hit the 23 million-user mark and is now eyeing the U.S. market. Jennifer Schmidt, an analyst with Meridien Research ( in Boston, notes that NTT has been investing in U.S. telecom operators, including AT&T Wireless. Compatibility and connectivity problems will have to be overcome, Schmidt notes. For one, at the moment there are no handsets in the U.S. that support I-Mode. That system runs on a packet-switched base, not a circuit base, so the connection is constant. What will drive the next explosion in wireless Internet use (including banking numbers) here and abroad will be the much-anticipated 3G level of wireless connectivity. That would be the third generation of General Packet Radio Service, a technology that would offer broadband speed to wireless users across the United States and the world. It's expected to become available in the next few years. Until then, many observers don't expect the U.S. market to widely embrace wireless Internet banking. NO PROBLEM WITH PROTOCOLS But the technology is coming and vendors are preparing for it. "Wireless today is where Internet banking was two years ago, which is where audio-response systems were two years before that," says Kipp at EDS. "People want to use all these channels." Most of the major providers of wireless banking already offer Internet banking and, if they don't already support all the major standards and protocols, they say they plan to soon. Vendors and credit unions also agree that once an Internet banking system is in place, adding wireless functionality is not all that difficult, especially if it's with the same vendor. "There is a tremendous benefit for institutions who connect their wireless service directly through their present Internet banking and bill pay system," says Dan Sanders, chief technical officer at VIFI (, a financial technology provider in Indianapolis. "With no third-party wireless service involved, there is much less risk the end user will experience errors and down times, and initial implementations and `time to live' is reduced as well." VIFI, Digital Insight and EDS all say they can have their credit union customers' wireless banking services up and running with a week or two without major investment or changes to systems already in place. "That's the overall strategy of Virtual Branch," says Dana Rowlett, EDS' division president for credit unions. "We're in the business of helping credit unions serve members. We want it to be a seamless option, to go from audio response to Web to wireless, so they can focus on products and features and not worry about how to implement new technology." But with a penetration rate of 2%, why bother? "One thing to recognize is that wireless is in its infancy," says John Gunn, product manager for alternative delivery channels at Digital Insight ( in Calabasas, Calif. "This is not about ROI (return on investment). It's about giving customers what they want. Consumers are driving this market," Gunn says. Digital Insight says it can implement its AXIS Wireless Banking for $2,000 to $5,000, compared with hundreds of thousands for credit unions who want to do it themselves. Of its 1,300 clients, nearly 1,100 have signed up for Internet banking, says Rebecca Hull, Digital Insight's director of marketing. About half of its clients are credit unions and about 25 of them have signed up for wireless banking. As for it being a niche market, Hull says, "It is a supplemental service, primarily targeted at the mobile professionals who now use Internet banking on the road. If you're interfaced with Internet banking, you can have wireless. It's that easy." KNOW THY MEMBERS "I think technology decisions need to be made based on the membership and what their needs are," says Bill Cheney, president/CEO of Xerox FCU ( in El Segundo, Calif. "There are plenty of credit unions with memberships very different than ours. Everyone has to evaluate those decisions based on their own membership," says Cheney, a VIFI client whose $504 million organization has 74,000 members served by 17 branches in nine states. "It's not expensive," he adds. "You pay by usage. Setup fees were nominal, especially when you look at the big picture of what we pay for e-commerce here." As with any service, what makes wireless Internet banking a must for some credit unions might not meet much demand at others. "What I would recommend to any credit union is that you ask your members, do a survey," says Nolan at NAFCU Services Corp. "That's because depending on your FOM, some of them are going to be really interested, particularly a tech-based SEG, versus a more rural credit union whose members may have no interest in wireless banking." Lenore Froehlich, vice president of marketing and training at MECU-West, echoed his thoughts. "You need to keep a finger on the pulse of your membership," she says. "Find out what they want and go from there." -

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