Personal finance – Customers get the chance to go mobile.

This week the Woolwich Bank offered brand new Nokia 7110 mobile phones free to its customers. Within months many of its competitors may be giving away mobiles, or thinking of doing so. Woolwich customers can now do their banking on the move and will be offered some useful incentives to persuade them to do so, weaning them away from those expensive branches. Although this is just a pilot scheme at the moment, all being well it will be available to all customers – though probably without the free Nokia – in April. The Woolwich hopes that if other banks are slow to copy them, the offer will give them a real competitive advantage. Mobile phone banking is predicted to take-off in a big way in the next few months. When the Bank of Montreal – one of North America’s largest – asked for 500 customers to volunteer for a trial it was flooded with 100,000 responses. There are now 370 million mobile phones in use worldwide (with the United States and China the largest markets) and there should be 50 million of the new Internet-capable mobiles in consumers’ hands by the end of next year. The time has come for mobile phone banking because the technology is now in place. This year will see WAP – wireless application protocol – phones hit the market in a big way. WAP phones will initially be confined to operating on existing digital networks, but following the award of third-generation mobile licences – this year in the UK – they are predicted by Nokia to become the most common means of accessing the Internet. It will take another couple of years before WAP phones and their cousins, WAP palmtops, are generally usable through 3G networks because of the delay after the licenses are awarded in creating the new telecoms infrastructure. But even in the next few months they may begin to transform the way we use mobiles because of their capacity to cram a ten-fold increase in data transmission from existing digital messages. SMS – short messaging services – may not be so short in the future. Indeed, those banks that offer mobile phone banking are already turning themselves into information providers, as well as financial service operators. In the Bank of Montreal scheme, the phone rings when any of your stocks move beyond a pre-set price. With the American Express Bank in Hong Kong, customers are alerted if a cheque bounces or when there is a large withdrawal, as well as regularly receiving statements of account. The Commonwealth Bank of Australia will tell you when your salary cheque is cleared. And with the pilot operation run by Harris Bank in the US – part of the Montreal group – there is even a general news and weather service available. Woolwich is not the first bank in the UK to offer mobile phone banking. The two biggest telephone bankers in the country, the Co-operative and First Direct, already allow customers to conduct business over their mobiles, along with obtaining account information on their screens. But the Woolwich is taking the service to new levels, courtesy of WAP. With the Woolwich, customers will phone into the bank’s website to conduct transactions (which the bank promises will be completely secure). Through this they will obtain latest information on all their accounts – mortgage as well as current and loan accounts. They can pay bills, check on investments and switch money between accounts. Share dealing by mobile will be offered by other banks when they enter the market. The Woolwich has been approached by several mobile networks to try and tie-in cheap phone services alongside the mobile banking. This fits with the combined services available from other banks that have tried it before. First Direct provides free account information, provided customers purchase the mobiles from them. The Co-op gives Orbitel 905 handsets to preferred clients. Free mobiles can be effective not just in buying customer loyalty, but also in building up customer knowledge. It is the longer game plan that is most interesting. WAP phones will be capable of functions that most consumers have not even dreamed of. They may be used as barcode readers to assist shoppers phone through grocery orders for home delivery. But they may also become wallets. Banks are keen for us to dump our obsession with cash, and move to clean and secure fully electronic transactions. As the Mondex experience in Swindon showed, the public is less enthusiastic. But banks hope that WAP phones will be the dawn of ‘new money’. These phones can carry an electronic purse in their memory, for recharge through a call to the bank. Spending the electronic pound or euro will be as easy as passing the mobile across the side of the till. Vodafone’s takeover of Mannesman means, the future may no longer be Orange. But the future looks as if it will be digital, and will be Internet enabled. – Paul Gosling is a regular contributor to the Independent and Express newspapers and author of Changing Money. ?:

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