Delivery Decisions

One reason Wells Fargo is so confident in the mobile banking model is that recent history is on its side. When the Internet was in its infancy, some Wall Street analysts didn't believe there would ever be a business rationale for online banking: People simply didn't need to interact with their banks that often. Customers would not be confident their online transactions were completed properly. Security would be terrible. These are all the same arguments now being made against the mobile banking model.

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In addition, the folks at Wells Fargo are smart enough to know that they don't know how the mobile banking model will evolve. "When we first started with Internet banking, a lot of the work we did was migrating simple functions online: checking balances, transferring funds," Smith says. "That drove the initial wave of growth. But over time customer expectations changed, and that drove a second wave of initiatives. First it was seeing their balances, then it was 'why are you sending me paper statements' and 'can you categorize and provide insight into my spending habits and how I manage my finances?'"

Smith expects that with mobile banking the same phenomenon will take place, and he doesn't even try to predict what it will look like this time. To capture customer feedback, Wells Fargo uses a number of techniques, including a program it calls the Voice of the Customer, which combines feedback from phone and e-mail survey data. It also conducts other user and market research, and convenes a customer advisory council 18 times a year. "When customers start interacting with you in a new way, their expectations will shift," Smith says. "We understand some things, but we can't figure them all out up front."

What Wells Fargo has to figure out, however, is how to deliver its mobile services to customers. Text messaging seems too rudimentary; mobile browsing can be slow; and downloadable applications put the bank in the software business. That's why the company is testing all three possibilities. "We are in the discovery phase on downloadable apps, but we have concerns," Smith says. "But we are starting from the hypothesis that a combination of browser and text will be sufficient."

Wells Fargo uses service provider ClairMail, Inc., to broker text messages between customers and the bank. After customers register their mobile devices at WellsFargo.com for authentication purposes, they can send simple text messages with a transaction code to the bank. In return they get messages back with the information requested or the go-ahead to transfer funds. It's not terribly sophisticated, and for those comfortable with online banking, it feels a bit backward. "Because of the limitations of text messaging, we didn't expect a lot of people to use the service," says Smith, who won't share how many customers use the service, and notes the program is still in the pilot stages. "But customers are finding it incredibly valuable while traveling."

Browser-based banking shows more potential and can mirror the online banking experience. It also targets users of BlackBerries and Treos, who have more sophisticated browsers and bigger screens. But speed is an issue here, and the multiple form factors are an additional aggravation for Wells Fargo. "For the browser solution, you have to be able to tell what kind of phone [the customer uses] and deliver an experience specifically for that device," says Smith. "That means that each time they interact with us, we have to verify the device, so you have to build a tremendous amount of flexibility into your mobile banking platform."

That's the advantage of downloadable applications. With an application that customers download onto any device, they could have a consistent experience no matter what phone they use. But the applications would require constant development and updating as new services are rolled out, not to mention support from the bank itself. "We're shying away from that, because the concern we have is getting into the software distribution business and the support model associated with it," Smith says.

Gartner's Newton strongly recommends to his clients in the banking industry that they use existing delivery channels when extending their services to the mobile platform. In other words, go with the Web. "We believe that banks entering this market should proceed with extreme caution," Newton says. "You don't want to go out and offer a completely new channel. It's too expensive. Too risky." Newton points out that European banks tried to roll out mobile banking in the 1990s and were met with disastrous results. But the services back then were less sophisticated than they are now. And with the evolution of mobile browsers, there is more potential for customer adoption today.