Banking on Wireless

Financial services companies have big plans for wireless deployments -- both internally to support their own users and specialized applications, and externally as a means to deliver new products and pump up their electronic payment services.

“Wireless is a new distribution channel for banking that will help us introduce products like cash replacement, micro-payments, and transit access,” said Ken Chrisman, an executive vice president for Wells Fargo & Co., San Francisco, speaking at an industry event on Tuesday.

Financial institutions are working equally hard on fixed-mobile convergence, explained Stephen Benson, vice president of global corporate technology strategy at GMAC Commercial Mortgage Corp. in Horsham, Pa. “Where we see a leveling of the playing field is to be able to peer between our private infrastructure and the public infrastructure. That’s where we want to take the user experience and make it all the same, regardless of their location.”

Chrisman and Benson spoke yesterday in Los Angeles at the CIO Forum, sponsored by the Wireless Internet for Mobile Enterprise Consortium (WINMEC). Carrying out the financial industry's ambitious plans for wireless will require reaching beyond traditional partners, they said.

“Alliances will be crucial,” Chrisman told the WINMEC audience. “We will need a carrier, a device manufacturer, and a contact-less technology partner.” Meaning: a vendor or a VAR that’s expert in RFID technology.

Banks are also going to need assistance from applications developers and standards bodies. Chrisman and Benson acknowledged the need to cooperate with other industry verticals, such as transportation, retail, and energy. And, of course, as companies moving billions each day, they’re also going to need plenty of security.

That means segregated sub-networks, where incoming laptops and handheld computers can be scanned for viruses and appropriate patches, and then authenticate users based on their location or department and allow them access only to specific enterprise resources. “More mobility has a downside: the vulnerability to spyware and malware, whether a device has the right level of protection, and what controls your enterprise has around it,” commented Benson.

Banks are watching alternative payment providers like eBay Inc. (Nasdaq: EBAY)'s electronic payment subsidiary Paypal with a mixture of envy and fear -- at last count, Paypal was servicing more than 70 million accounts. But as Chrisman noted, Paypal’s done a lot of pioneering work on the technology and customer awareness of “cash replacement” products that are expected to handle hundreds of billions in electronic transactions by 2008. Consumer awareness of the concept is already high, he notes, and Wells Fargo and others want a piece of this emerging market.

“Our goal is to capture more ‘wallet-share’ by capturing more opportunistic transactions with wireless,” Chrisman added. While PDA-like devices may be today’s preferred form factor, he predicted lots of changes on the interface front -- watches, rings, and other baubles. “We really view this as the end game of a personal communicator -- a cellphone with a chip with debit cards and multiple credit cards installed on it. We have a lot of internal obstacles to overcome with competitors’ cards on them as well as ours.” But banks will lose out if they wait to have the field to themselves.

— Terry Sweeney, Editor in Chief, Unstrung