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SAN DIEGO – It didn’t take long for credit unions, banks, brokerages and anyone else who tried it to realize that wireless Web banking isn’t the killer app they thought it could be, but there may be hope for another shade of wireless banking. The main problem with wireless banking so far has been consumer demand. When it was first rolled out financials painted a picture of a consumer on line at a store waiting to make a purchase, wondering if enough funds were available in their account. The consumer could then log on via wireless banking to see their balance, and initiate a transfer if necessary. That potential scenario was not enough to lure the average consumer to wireless banking, and more importantly consumers could achieve the same result with old-fashioned telephone banking, which most financials offer. “Most of the companies that unveiled it big and small put them back under wraps. It wasn’t compelling enough. Using your cell phone to transfer money to another account is not a big deal, and the technology can be really hard to implement,” said Susan Landry, research director with consulting firm Gartner Group. Landry said the upside of wireless banking isn’t enough for financials, especially profit-driven ones, to stick with it. The number of consumers that will join a financial because of wireless banking is miniscule, she said. However, with more consumers concerned about fraud and identity theft, the ability to instantly alert consumers about a transaction that may be fraudulent could generate interest. Enter text messaging, something just about all cell phones can accommodate. Text messaging could have some value in the financial sector says Ed Kountz, a senior analyst with consulting firm Tower Group. “The use of automated alerting with a cell phone is on the rise especially with credit unions and small community banks,” said Kountz, who believes for now the technology is more suitable to smaller institutions. “Do the super regional banks really know their customers well enough to know what the demand is? Smaller credit unions and banks do and would be good examples of financials that could at least generate a portion of their customer base to use it,” said Kountz. SMS Makes Sense Dale Gonzalez, Chief Technology Officer with Atlanta-based Air2Web, a firm offering wireless services to financials, says the Short Message Service technology needed to send a message to a cell phone is now widespread enough in the U.S. (it first took off in Europe in the `90s) to give CUs the faith that most of their members with cell phones could take advantage of text messaging. With wireless banking, financials first needed customers to have Web-enabled phones, which are more common now, but not when wireless banking was first rolled out. SMS’ simplicity was highlighted with the popular television show American Idol, where viewers could vote for their idol choice using text messaging. It’s also used to deliver stock quotes, sports scores and even eBay auction alerts to cell phone users. So the technology is there, but what about the consumer need? “What makes for a good SMS application is delivery of real-time data of critical interest of a particular person,” said Gonzalez. Sending an alert to a consumer’s cell phone that their credit card was just charged could help thwart fraud said Gonzalez and is something consumers will want in real-time wherever they may be. “Alerts sent to an e-mail account aren’t read until a person happens to be in front of their PC. So you check your e-mail in the evening, and guess what you’ve been a victim of fraud. But no matter where you are, most people carry their cell phone around with them,” said Gonzalez. Gonzalez said the great thing about financial services is the data needed to be transmitted to a cell phone is reasonably terse, whether it be a balance or the latest credit card charge. As a vendor for wireless, Air2Web has some interest in pushing wireless services, but even Gonzalez admits that full-fledged wireless banking, which his firm supports with technology, isn’t being demanded by consumers. “People aren’t interested in full-service online banking. It’s not worth the trouble. Interest is on the rise for text messaging for fraud alerts or very point targeted transactions. These are extremely well-received,” said Gonzalez. Kountz believes the future is not just in cell phone text-messaging, but multi-channel messaging where a credit union will not only send text alerts to a cell phone, but also to e-mail accounts and voice mail systems -all at the same time. “It can’t be just mobile phone alerting,” said Kountz. E-mail alerts are already fairly popular with credit unions, he noted. The $800 million Premier America Credit Union, Chatsworth, Calif., has been offering SMS messaging to its members since May of last year. “We tried to really get across that you don’t have to have a fancy Web enabled device to use this. Any one who has a cell phone that is text message enabled can use some of the features. They can get alerts daily, weekly, monthly, yearly. If they are expecting a direct deposit they can get alerted to that,” said Shelly Hawthorne, e-services manager for Premier America CU. So far balance thresholds have been the most popular alerts among Premier America members. Interestingly the system also allows members to type in their own unique alerts ahead of time to be sent to their cell phones at a certain time. For example a birthday reminder, an anniversary reminder, a reminder to pay a particular bill, etc., can all be set up by the member. Now about eight months into offering the service Premier America has 181 members using it, not bad, but a small number given that it has 71,000 members and 15,000 of them are regular home banking users. Premier America is not yet offering credit card alerts, which Gonzalez believes make the product more of a must have for consumers since they can be marketed as a way to thwart fraud. Hawthorne said the CU isn’t expecting too much in terms of adoption, but hopes it keeps some of its tecchie members satisfied. “Some of the feedback we hear from members is that `it’s great but I could have just called your 800 number and got the information.’ True, I look at it as an alternative state for those that want it,” Hawthorne said. She said credit unions should look into it given the low cost. Premier pays a monthly fee of under $300 to its home banking provider, Digital Insight. Any CU client of DI can get text messaging. Gonzalez said fraud alerts, balance inquiries, and transaction messages aren’t the only viable uses for SMS in the financial sector. Air2Web is currently in development on a product that would allow a customer to enter a Vehicle Identification Number via their phone to help a credit union make a determination on a loan. “You walk onto a car lot, enter a VIN and have your credit union approve or deny you. That is compelling, it’s a very point targeted transaction. It has that `I’m away from my computer’ component,” said Gonzalez. “The nice thing is it adds to the differentiators for credit unions. They can’t compete by number of branches and no-fee ATMs, so they have to have that friendly responsiveness and high-touch service,” he said. [email protected]

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