Mobile Banking Today
In the U.S market today, retail banks offer a standardized mobile banking application. They enable their customers to monitor expenses, transfer funds and pay bills. This provides the convenience and ease of banking for the “on the go” customer.
In general, mobile banking is an expanding market and has changed the way customers manage their funds. However, it is arguable that the user experience of each of the retail banks applications is similar. The application allows the end user to view their account balance, transfer funds and pay a multitude of bills.
None of them have differentiating factors and many would argue that these mobile applications although convenient, still have room for improvement. This begs the question, what technology can banks harness to differentiate themselves?
The next wave of technology
A recent piece of technology that appears to be answering that very question is Near Field Communication. “Near Field Communication or NFC is a set of standards that enable smartphones and other devices to communicate via radio signals when they are held in close proximity.” Mobile devices that are equipped with NFC allow for contactless transactions and data exchange between other NFC devices.
Devices using NFC are either active or passive. Active devices have the ability to both read and send information. These devices are typically smartphones containing a SIM card or NFC tag. Passive devices containing NFC tags are able to send information but not read it. The communication between these devices is controlled through a secure channel. This communication with encryptions allows for immediate exchange of payment information such as a credit card number.
How is it being used today?
One company that is leading the charge of NFC and mobile banking is not a bank whatsoever. Google is steadily penetrating this market with its new services called Google Wallet. Google Wallet enables Android devices to act as a virtual wallet. Users can carry all credit cards, debit cards and offers on their phone.
In stores, customers simply tap their phone to the NFC terminal and checkout using whichever credit card or debit card they select. This is the future of mobile banking, however, the market is new and no single company has quite figured out how to successfully harness this technology.
There are a several international banks that are embracing NFC and collaborating with retailers and mobile providers explore this new market. The Canadian debit network Interac, Royal Bank of Canada, an SAP customer, partnered with McDonald’s and Blackberry to demonstrate a contactless application on an embedded chip in a blackberry devise. RBC is expected to roll out this application in the near future.
In the same time frame, five Taiwanese banks are to receive approval from regulators to distribute mobile credit cards that are downloaded over the air via SIM cards in NFC mobile phones. These trials and similar demonstrations are popping up around the world.
Near Field Communication for Mobile Banking in the U.S
The only region that appears to have the least amount of experimental activity with NFC technology is the United States. Our retail banks have the opportunity to step up to the plate and collaborate with mobile providers, SAP and retailers to create a seamless purchasing experience for the end user.
Successfully taking mobile banking to a place that enables customers to pay on the go, manage their expenses and stay with their current bank is the next strategic step banks must take in order to ensure customer loyalty and satisfaction. Without this push, we may see Google Wallet become the leading and only provider of NFC banking in the U.S.