Wireless Banking Takes Flight

Even though the old adage says the customer is always right, that isn’t always the case. Often customers don’t even know what they want until it is put in their hands.

“Big companies, really smart companies, tend to listen to their customers too much,” explains Mark Dickelman, vice-president of wireless and mobile initiatives at the Bank of Montreal, “rather than focusing on new technology and what the new technology is going to do to create new markets and opportunities.”

Dickelman says when banks began to ask their customers what they thought about using wireless access methods to conduct their on-line banking, all the financial institutions were told the customers weren’t interested.

“Our customers told us the same thing, but that didn’t matter. Sometimes you just have to show it to them,” he says.

Wireless banking, according to Dickelman, is a technology just slightly ahead of its time, which means that now is exactly the right time for the bank to be involved in its development.

“I think that in many regards, wireless financial services have all the characteristics of being a disruptive technology, and disruptive technologies don’t come along too often in the financial services industry,” he says.

“Every time we have a fundamental change in technology there is a lag before customers know what to do with it.”

Working in conjunction with Toronto-based 724 Solutions Inc. and Bell Mobility, the bank has expanded its list of available wireless services, which were first introduced in May 1999, and it now permits customers to trade stocks over their browser-equipped phones.

Giving customers trading ability means giving them more personalized service, which is what wireless banking proponents believe will drive the adoption of the technology.

“Personalization is so important. Right now technology is too hard,” says Alistair Rennie, senior vice-president of marketing at 724 Solutions. “You have to give people control. You have to have the ability to filter what you want into an easy-to-use format.”

Giving Customers Choice

Of course, the more personalization options and choices customers are given, the more work for providers of the service. Rennie says it isn’t enough to deliver information in the same, lowest common denominator fashion to every customer on every device. A Palm device can display much more complex information than a mobile phone browser, and there are even vast differences between the capacities of the various phone browsers available. In addition, as wireless services begin to grow, consumers will demand more choice in their hardware — two-way pagers, set-top boxes and assorted PDAs.

For banks and financial institutions that will mean supporting a growing number of devices and formats. And for Bank of Montreal, its American subsidiary Harris Bank, and U.S.-based Citibank and Bank of America, which also use 724’s Veev wireless banking technology and its Financial Services Platform, it will become a matter of defining new presentation styles.

The system which permits wireless access is based on a series of gateways. The first gateway, a transaction content gateway, accesses the bank’s financial systems and pulls the information requested by the consumer. Information is tagged in the OFX (Open Financial Exchange) format (although XML can be used as well), which extracts the raw information in a neutral format. On the other end of the network is the device network gateway, which can detect which type of wireless device is being used to gain access. (OFX is also the same standard used in the bank’s Web-based banking system.) In between the two gateways are the applications which handle the flow of information.

Once the access device has been identified, it is matched to a corresponding set of categories. Each category has a set of style sheets created in Extensible Style Sheet Language (XSL). The sheets are paired with the applications (which check account balances or pay bills or perform whatever actions the customer requests) and the appropriate information is formatted on-the-fly and delivered, in an encrypted format, to the customer’s device.

Under this structure, financial institutions will still control which devices can be used to obtain access, which means time can be spent developing usable interfaces.

“There is a difference between how somebody uses a mobile phone or a Palm than how they use a PC,” Rennie says. On phones, users want one- or two-button access to activate applications.

The challenge of proliferating devices is one that U.S. institutions are going to have to face sooner than their Canadian counterparts. Even now, Americans have much broader choice in the types and styles of devices than Canadians, but even U.S. choices are limited compared to European offerings. In Sweden, for example, Rennie says there are phones that act as digital wallets and transactions can be conducted by simply pointing phones at an IR port on a pop machine or a car wash.

Looking Toward the Future

The inclusion of digital certificate capability in phones is also another very real possibility in the near future. That would ensure only the owner, who would be issued a secret PIN number, would be able to use the phone to access sensitive applications such as wireless banking.

Hardware developments are far from what will be driving the growth of wireless applications such as banking. Instead, increases in bandwidth will drive the wireless application market. Within the next year to 18 months, Rennie predicts, we will see devices and applications which take advantage of GPRS (General Packet Radio Service), which is an enhancement of the exiting GSM mobile phone standard, providing a speed of 184Kbps.

Beyond that, in the three- to five-year timeframe, third-generation (3G) networks will be able to deliver “much more highly sophisticated kinds of services,” Rennie says. For example, he sees the day when a phone user could call up a stock broker and conduct a full-motion videoconference before making a trade.

Bank of Montreal’s Dickelman also sees a future that brings video into telephones, but he sees something a little simpler as well.

“What I’ve seen is that banking has become such an integral part of our daily affairs that we tend to ignore it — cash and cash machines, credit cards, debit cards and chequebooks.”

The movement toward wireless banking is only going to increase that trend.

“Since our phones are already on, we are going to get addicted to having all that [information about and access to our financial accounts] instantly available.”

Carolyn Gruske is a Toronto-based freelance writer who specializes in IT reporting.