Mobile banking gets a boost with AT&T service

Wachovia adds AT&T's banking app for mobile devices

Mobile banking in the U.S. might finally get the kick in the pants it needs to catch up with European and Asian mobile banking customers.

Wachovia Corp. plans in the fourth quarter to launch a third-party mobile banking application with AT&T Inc. wireless customers, a Wachovia spokesman said today. The news comes one day after AT&T announced that it had activated mobile banking with BancorpSouth Inc.

Charlotte, N.C.-based Wachovia, which has 15 million residential and business customers, launched in September its own Wachovia Mobile application that can be used on any wireless network, a spokesman said.

But the new application, using AT&T's wireless network and built by Firethorn Holdings LLC, will be simpler to use and will allow bill payment, which isn't available with the Wachovia application, the spokesman added.

Atlanta-based Firethorn said it launched its mobile banking application yesterday with Tupelo, Miss.-based BancorpSouth. In addition to Wachovia, SunTrust Banks Inc. and Regional Financial Corp. have also selected Firethorn's mobile banking and payments system.

Wachovia, with $707 billion in assets, is the largest of the U.S. banks to announce the mobile service that uses Firethorn and AT&T.

Matthew Wadley, a Wachovia spokesman, said the bank has been interested in mobile banking for a long time and has adapted its Wachovia Mobile application to allow access by more devices since introducing it last September. The application gets as many as 12,000 users a day, although in the first month of service, there were 250,000 unique user sessions. "We did that without any marketing," he said.

Still, interest in mobile banking has grown slowly in the U.S. over the past decade, Wadley said. "Mobile banking has caught on slowly, and Wachovia is the first major U.S. bank to offer it," he said. "It had pretty quick uptake in Europe, and Asia has been ahead a long time."

Wadley speculated about the reasons for the delay, noting that Americans have traditionally been concerned with security over some networks. "It was the early '90s when everybody in the U.S. said mobile banking would jump to the forefront," he said. "But there was not the demand then, with worries over technology and security. But now, as Americans get used to using the cell phone for everything else, there's a natural progression to access banking information that way as well."

Independent analyst Jeff Kagan noted that security will still be a concern, that customers will probably take a slow approach, using accounts with a few hundred dollars at first. But he added that "all banks and carriers will follow during the next few months and years."

Mark Siegel, an AT&T spokesman, said the Firethorn application requires a password and will send only encrypted data over the air.

"I think people have a legitimate concern that their information and their money will be safe and secure, but this approach addresses security well with password protection and encryption," he said.

The survey results from trial customers at BancorpSouth were "very positive," Siegel noted. The 200 trial customers said mobile banking was second to online banking as their preferred channel for banking, and about 30% said they would pay all of their bills using mobile banking.

"We went into this thinking security would be a big concern, so we were ready," said Michael Lindsey, senior vice president and manager of alternative delivery services at BancorpSouth. To handle such worries, the bank allows the user, the bank's call center or AT&T to disable the application if a user loses the device. Also, no customer accounts are ever stored on the device, and they are only kept in the bank's secure servers, accessible with a user name and a six-digit personal identification number from the device, Lindsey said.

Hundred of users began using the BancorpSouth service as of its first day yesterday, and many of the bank's 160,000 online customers are expected to try it, Lindsey said. About half of the bank's residential customers use online banking, which the bank started in 1994 with a PC dial-up system that quickly evolved into Internet banking in 1998, he added.

The bill payment portion of Firethorn's mobile banking technology uses an application from CheckFree Corp., according to a statement.

The security on the existing and the AT&T mobile banking application at Wachovia will be the same level of protection a user gets while banking from a desktop computer, Wadley said. "You'll not be compromised using a mobile device," he said.

At Wachovia, the bill payment functionality using AT&T's network and Firethorn will give Wachovia customers an advantage over the Wachovia Mobile application, but Wadley said it's likely that bill payment will eventually become part of Wachovia Mobile as well.

With AT&T and Firethorn, users can open the banking application directly from the mobile device without opening a browser first, which simplifies the process over Wachovia Mobile, Wadley said. He said he expects the AT&T application to be free, since it is a free service now with Wachovia Mobile.

AT&T will not charge for the mobile banking application, but it will collect air-time charges while the application is used, Siegel explained.

Siegel said AT&T believes mobile banking will "start small and really go from there," which is how text messaging and wireless phone pictures grew. "With text messaging, nobody thought much about it at first, but now it is sort of woven into the cultural DNA with billions of messages," he said.

"Down the road, it will be the norm for people to use the cell phone for banking," Wadley added.

Copyright © 2007 IDG Communications, Inc.

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