Banking Goes Mobile
The electronic wallet got one step closer to reality on Monday when Citibank unveiled a cell-phone-based service that lets customers pay bills, check their account balances and transfer funds, regardless of which wireless carrier they use. The free program, Citi Mobile, will be available for customers in Southern California via download this week at Citibank.com and will go nationwide this summer. AT&T, Sprint and Verizon customers can start using the program this week, with other carriers and a Spanish-language version out later this year. "We're changing. Banking is changing," said Citigroup CEO Chuck Prince at the launch event in New York City on Monday morning. "I look forward to the competition trying to keep up with us."
A prime concern for potential users is security, which Citi Mobile protects in three ways. First, each time customers access their account by phone, they must enter a six-digit personal identification number (PIN). Second, no personal data, including account numbers, are ever stored on the phone. And finally, all information sent between the phone and the bank has 128-bit encryption. While a cell phone virus could still circumvent such security in theory, it has yet to happen even in countries where mobile banking is already widely used.
Available for more than two years in Japan and much of Europe, cell-phone banking has been slow to catch on in the U.S., in part because of lack of interest. Wells Fargo shuttered its mobile banking offering in 2002 after only 2500 people had signed up over 18 months. (It plans to launch a new service later this year.) A recent study by Forrester Research found that only 10% of Americans said they would consider mobile banking, versus the 35% or so who already bank online. "It's hard to motivate someone to download something on their phone, and even if they do, it doesn't mean they will use it," says Forrester's Charles Golvin. While 20% of consumers have downloaded new ring tones, for example, less than 10% have done so with mobile games.
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