Re: 724 Solutions (SVNX) - Wireless Financial Services Platform
Stock of this Qualcomm partner doing poorly since IP0 but a very interesting company in an emerging industry. Mobile banking is in it's infancy, but all the major banks offerring PC Banking are looking to wireless, and all the majors are partnered with 724.
Company Overview here:
moneycentral.msn.com
Company web site here:
724.com
>> BANKS MULL THE WIRELESS PLUNGE
September 11, 2000
Wireless Week
By Margo McCall
Penny-pinching misers may want to use their wireless phones to check bank balances around the clock, but for most people, it’s sufficient to know how little money they have only once or twice a month when the bills come due.
That’s the challenge facing U.S. financial institutions that only now are dipping their toes into the mobile finance waters, the same waters that brokerage houses have been splashing around in for years.
Luckily for the banks, a trio of software companies is sitting poolside, waiting to help America’s banks take the plunge into online wireless transactions: 724 Solutions, a Toronto company that includes Bank of America, Citigroup and Wells Fargo among its customers; w-Trade Technologies, a privately held business on Wall Street; and S1 Corp. of Atlanta, which got its start in wired online banking.
Harris Bancorp in July became the first U.S. bank to offer customers access to accounts through wireless phones, and Bank of America became the second when it kicked off its trial service in August. Both banks use 724’s Financial Services Platform.
The system for Harris, a Bank of Montreal subsidiary that includes 140 locations in metropolitan Chicago, allows any customer with an Internet-enabled Sprint PCS phone to tap into the wireless banking craze. Although the bank would not say how many customers are actually taking advantage of the service, consultant Chuck Barnett says, We’re very satisfied with the level of customers.
Bank of America, meanwhile, is offering wireless service to customers in Dallas and Fort Worth, Texas; Baltimore; and Washington, D.C. The bank plans to expand the servicewhich will include access to bank transactions, financial markets and investment information to other U.S. markets over the next year.
Banks are in the experimentation phase right now, says Steve Tempini, senior vice president of financial services at e-commerce consulting firm Proxicom. They aren’t threatened by competition from wireless online trading since most banks own at least one brokerage. The main worry is that banks will be frozen out of lucrative m-commerce markets if they don’t dive into wireless quickly.
Mobile banking, Tempini says, can help retain customers and promote financial services, that is, if banks can attract customers in the first place. "Brokerage sites attract people quickly because the transactions are continuous," he says. The banking side has a bigger challenge of developing more value-added services and developing a broader means of touching a client through a multi-channel offering."
How many customers might actually sign up for wireless banking remains the big question. For their part, the software companies are hedging their bets that wireless phones for banking will soon be as commonplace as ATM cards. Jon Buffington, senior product manager for S1 Corp., compares wireless banking to a minivan. Most people say they don’t want one but find it quite convenient once they’re behind the wheel and driving.
Co-founder and President Chris Erickson says 724 tries to focus on the overall customer experience. Bank of Montreal, 724’s first client, is already including m-commerce with its wireless banking service. And trading, news and horoscopes are a routine supplement to most mobile bank sites.
S1’s dip into wireless flowed out of its online banking platform, which was developed in 1994 and is now used by more than 800 financial institutions worldwide. Buffington says the company is working to differentiate itself from the competition by adding the capability to make person-to-person payments. We’d like to replace the checkbook with a mobile phone, he says.
Both w-Trade and 724 were established in 1997. w-Trade now offers 19 mobile applications and boasts 185 employees. 724 has seven large banking customers and more than 400 employees. Both 724 and w-Trade support a variety of handheld devices, including wireless phones, personal digital assistants and Research In Motion pagers.
From what we see of the market maturing, it’s definitely a much more educated audience out there,says Sergey Fradkov, w-Trade’s chief technology officer.
What’s at Stake
American banks, bastions of the Old Economy, must establish a wireless presence if they want a share of future revenue from the m-commerce arena.
The Challenge
Banks and the companies designing software for mobile banking must package their offerings to include value-added services like news headlines and horoscopes to entice users by more than checking account balances.
Who’s Competing
Harris Bank was the first bank in the United States to offer wireless services, followed by Bank of America, which recently launched limited service.
Who Can Help
A trio of young cutting-edge companies, armed with powerful platforms, includes w-Trade, 724 and S1 Corp.
Despite financial institutions’ initial forays into mobile banking, widespread acceptance could be years away. Richard Bell, director of e-banking research with the Needham, Mass.-based Tower Group, notes that only 9 percent of U.S. customers do their banking online. Although ATMs entered the mainstream years ago, one-third of banking customers still prefer getting their cash from human hands instead of snapping it up from a metal slot.
There is an expectation over time that this will be an important distribution channel. The important qualifier there is ‘over time,’ Bell says.
And, over time, mobile banking will either sink or swim. <<
- Eric - |
