While transaction banking has lagged behind retail banking operations and the consumer world in the provision of mobile services, things are changing fast.

For a large chunk of the world, a mobile phone is becoming an indispensable part of life. According to the World Bank, about 75% of the global population now has access to a mobile phone, while subscriptions have climbed from 1 billion in 2000, to more than 6 billion today, and are forecast to actually exceed the human population in the near future.

For banks, the ability to connect with clients and clients of clients via mobile channels holds obvious appeal, and the ability to check balances or make transfers on the go has led to a massive upsurge in the provision of mobile services, particularly when it comes to consumer banking. In the US, for example, mobile banking services will reach 108 million users in 2017, or about 46% of all account holders in the country, according to Forrester Research.

Among business users, things have been somewhat slower to pick up, however. This is not hugely surprising. The operational and protocol restraints typically found within most firms means that new technology is often regarded with some degree of trepidation. Reticence is understandable; the need for exhaustive security provisions is rather more pressing when it comes to authorising million-dollar payments to suppliers than when purchasing a can of soft drink. Security aside, the need to conform with regulation, sometimes across multiple jurisdictions, as well as an all-encompassing focus on privacy, further complicates matters.

Consumer influence

Lloyd O’Connor, managing director, product executive with JPMorgan Treasury Services, says business concerns around mobile usage mirror the gradual acceptance of the World Wide Web. “Mobile is now facing the same challenges as internet when it first arrived – people want it, but they’re afraid as well from a security perspective,” he says. “We’re seeing that act itself out in the mobile space with a lot of our large corporate clients.”

Gautam Jain, global head of client access with Standard Chartered, adds that the cycle of adoption is likely to be faster this time around, partly because treasurers and CFOs are likely to be intimately familiar with mobile technology in their consumer lives, where smartphones and tablet computers are ubiquitous. "Most individuals are comfortable doing stuff on mobile devices in their personal lives, and are now asking why they can't do that in their professional activities, too," says Mr Jain. “Corporate treasurers are so happy using mobile technology in their personal life, that when they walk into the office and put on their professional hat, they expect their banks to provide the same facilities.”

obile is now facing the same challenges as internet when it first arrived – people want it, but they’re afraid as well from a security perspective

Lloyd O’Connor

And indeed this is starting to happen, according to David Wills, head of merchant services in Lloyds Bank's wholesale banking and markets division. “We are seeing that products that have been pioneered in the retail banking arena are entering the business-to-business market; corporates are beginning to understand the efficiency savings, added value and flexibility of mobile technology,” he says.

Information distribution

Initially, this trend has concentrated mainly around the provision of information to treasurers or chief financial officers, allowing them to view accounts and check high-level balance information on the go. Things are now progressing, however, allowing users to act on information and alerts pushed to their mobile devices.

Bank of America, for example, operates its corporate mobile banking tools as an extension of online capabilities, says Cindy Murray, head of global treasury product infrastructure, platforms and e-commerce with Bank of America. “Based on the feedback we’ve received from our customer advisory board, they want to be mobile, to be able to do actionable things on the smartphone or mobile device. So that means pushing alerts to our client when they need to do things such as approve payments or disposition any payment exceptions.”

In the US, for example, automated fraud detection tool PositivePay might require a pay or no-pay decision from a treasurer, she says, so a mobile platform can send a text or e-mail to a treasurer’s smartphone allowing it to link to an application where a decision can be made.

The practical ramifications of this usage can be huge, says Mr O’Connor, not least from a counterparty risk point of view, so that a treasurer can ensure a certain amount of money has been received from a supplier before releasing another payment. “Our clients are able to receive information through a mobile device, allowing them to view and measure their company's in- and out-flows and make rapid decisions on whether they’re running a currency or counterparty exposure, for example… Beyond information is knowledge, and by applying that knowledge, our clients can be far wiser about the actions they take.”

Smaller roles

Visibility extends to admin roles, too, adds Mr O’Connor, including being able to see which users have permissions to which account, or even deleting users or resetting a password.

The nature of the medium means that tasks such as these, which do not require a large amount of data input, will be more successful on mobile devices than more cumbersome processes such as entering a cross-border payment, which requires the completion of a number of different fields. However, consumer technology may offer a few valuable lessons here, too. Some retail-focused mobile applications offer predictive technology, which learns what can and cannot be entered in certain fields. If that know-how was extended to corporate messaging standards and security issues resolved, it could prove very useful, says Mr Jain. “Apply that predictive technology to a Swift MT103 message input, and you’ll have a winning combination… and the initiation part of mobile transaction banking will become quite successful.”

Nevertheless, few would predict that corporations will one day perform all primary banking functions through a mobile platform. However, this may be more likely for less sizeable firms, says George Ravich, executive vice-president and chief marketing officer at Fundtech. “If you look at a small business, then you have someone who may not have an office and would find it very convenient, useful and productive if they could do all of their banking from a mobile device.”

And mobile technology offers more than just the opportunity to access existing services on the go, and can actually unlock new possibilities, says Tomasz Smilowicz, global head of mobile solutions with Citi Transaction Services. For example, in response to issues that many of the bank’s larger clients have in being paid in cash when delivering goods directly to stores, Citi created a new mobile settlement solution. It enables the delivery driver to transport goods to a store, then send a simplified invoice from a cell phone to the store owner, who then sends a confirmation authorising the transaction, which, in turn, results in money being transferred from the store owner’s account to the business's account.

Delivery dilemma

Precisely how this range of services is delivered depends on a number of variables. In the US, where smartphone penetration is about 50%, catering for Apple’s iOS and Google’s Android operating systems may be enough to satisfy a large majority of customers. However, for those with more international operations, this may not be enough. “Banks with a wider geographical range have to cater for a variety of platforms,” says Olivier Denis, senior product manager, banking markets, with Swift. “The challenge for global banks is making the right choice in terms of technology and platform in serving the customer.”

If you look at a small business, then you have someone who may not have an office and would find it very convenient, useful and productive if they could do all of their banking from a mobile device

George Ravich

As a result, different banks are taking different approaches in delivering their transaction banking services to customers on the go. Some, such as Citi, opt for a browser-based portal that optimises itself for different devices. “We didn’t go for an iPhone or Android app because this would be limiting,” says Mr Smilowicz. “Of course there are some countries where Apple’s iPhone or Android devices are predominant, but there are many others around the world where there is a huge variety of handsets, and many where people just buy cheaper phones. We went with a browser approach where the system can be accessed by any type of smartphone. It’s a very important part of our strategy.”

Others prefer to focus on applications developed for specific platforms. The latest version of Standard Chartered’s business banking portal, for example, will be launched first on iOS, followed rapidly by Android and Research In Motion’s Blackberry, says Mr Jain.

There are advantages and disadvantages inherent to both approaches. It is undoubtedly more work to develop for multiple platforms, but platform-specific apps allow banks to create tools with a style and user interface that will be familiar to users of the device, and stylistically inkeeping.

“You need to have apps for two key reasons,” says Mr Ravich. “One is user experience – when you use an iPhone it should work like every other iPhone app, not an Android app. Moreover, a native app will be more secure and also be able to take advantage of a lot of resources that a specific phone has, such as geolocation. There has been a lot of argument, but I think there is no doubt that you have to create for each operating system.”

Rise of the tablet

Nevertheless, Mr Smilowicz does not feel Citi had to compromise on quality by providing browser-based services on phones. However, he adds that when it comes to solutions created for tablets, specific applications are necessary to make the most of the devices’ capabilities. “Once you go to tablet, where Apple's iPad continues to be a dominant device in most markets, a specific app for the iPad would be of much higher quality, and have many functionalities which a browser would not allow.”

There is no doubt that tablets are the rising star of the mobile world. According to Javelin research, 34 million US adults will own a tablet by the end of 2012 and the figure will rocket to 87 million by 2016. Mr Jain describes their introduction as a “game changer”, bridging the gap between phones and more traditional forms of computing. “The introduction of tablets creates a totally different dimension in terms of mobile technology for banking,” he says. “Suddenly customers have the flexibility of a mobile phone and the real estate of a laptop. That’s driving some very exciting revolutionary mobile development in organisations such as ours.”

Ms Murray adds that tablet usage will make functions such as moving money between accounts or searching for a specific transaction, which are often too clunky on a phone, far easier.

Eventually, most envisage phone, tablet and more traditional computing platforms as working together synergistically, with desktop computing used for data-rich applications and repetitive activities such as payroll number crunching, tablets for those who require less data and activities but a pretty rich experience, and the phone for alerts, look-ups and approvals. “One of the things we are conceptualising is moving seamlessly between devices,” says Mr Jain. “It isn’t currently as seamless as we would like. I want to make my platforms device agnostic while leveraging the native features of each device.”

Ready to go

But how ready are business customers to make use of these features? The security concerns that have slowed much uptake are being assuaged with measures such as one-time passwords, tokens, device registration and multiple layers of security authentication. And new technologies should help provide yet more reassurance, says Mr O’Connor. Biometrics in particular could prove useful, he says, adding that JPMorgan is currently in the advanced testing phase with several such technologies.

And usage is certainly on the up. Standard Chartered’s Mr Jain says the bank has seen a 40% growth in mobile authorisations from the first half of 2011 to the same period this year. At Citi, meanwhile, customers had doubled the bank’s 2012 target for money sent through the system by just halfway through the year, according to Mr Smilowicz.

Nevertheless, mobile tech has not reached deal-breaker status for business clients, says Mr O’Connor. “It’s more nascent than that. Customers won’t discount you from the bid if they don’t have it… but executive officers are expecting you to have it.” The trend is certainly clear. As time progresses, the effective provision of mobile services to business customers from local concerns through to small and medium-sized enterprises, multinational corporates and other financial institutions, will become a necessity. Soon, transaction banking clients will expect the provision of a full range of mobile services, and institutions that have failed to keep up may pay a high price.

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