When Will Banks Wake Up To Mobile Payments?

Let me start off by saying that I have a client, Obopay, in this area so I am prejudiced up to a point. And yet, recent coverage by Bloomberg about the possible carrier consortium led by AT&T, Verizon and T-Mobile in conjunction with the Discovery card network and Barclay’s bank—and a new study out by Sybase 365-- would seem to be a wakeup call.

In the Sybase 365 survey, for example, a third of respondents say they are interested in buying goods and services using their mobile phone, and they say they would be prepared to pay for more those sophisticated services. And most important, 44% would consider swapping their financial institution if m-banking were offered for free.

I can understand certain reluctance on the part of banks is based on their experience with on-line banking. It was tough to integrate, took forever, and was extremely costly. But the ability to get up and active with a mobile payment solution can now be handled inexpensively and in as few as 30 days.

Of course, it’s not like the carriers will have their solution to market any time soon. The hardware infrastructure will take considerable time to implement, and the Japanese implementation referred to in the Bloomberg article took nearly a decade to gain widespread adoption. Nevertheless, it is recognition that mobile payments are reaching a “tipping point” in the U.S. As Will Wade says in his article in American Banker, “While analysts agreed that a payments network driven by phone companies would pose a significant threat to banks and card companies, they also said that such a system would increase consumer interest in the technology, and that once the hardware is widely available, financial companies also could find ways to take advantage of it.”

By that time, however, it may too late for banks that may have lost the opportunity to dominate this new revenue stream.

Like most people, I would prefer to have any mobile payment solution on my cell phone connected to my bank. But if AT&T comes along with a solution where I can pay for dinner, get the charges on my phone bill, and maybe even cover the cost of dinner with rollover minutes—hey, I would be eager to do that. I’ll bet you would be too.

So, I hope the banks can get into the battle before they lose the war.