Now Banking Goes WAP  Bryan O'Connell specialises in providing strategic consultancy services to the banking and finance industry. He has more than 16 years experience in the industry, and has been a banking lawyer. He has acted for major Australian and international financial institutions and corporations.

While the jury remains out on the future viability of stand-alone Internet banks, there is little doubt that many banks are adapting rapidly and are keen to roll out their Internet banking capabilities as part of their multi-channel offerings to customers. In Scandinavia, MeritaNordbanken, one of the biggest banks operating in that region, has 1.4 million Internet banking customers; Wells Fargo in the United States has 1.5 million Internet customers; Egg, the 18-month old banking subsidiary of Prudential (Britain's largest life insurance company), has more than 700,00 Internet customers; and in Brazil, Banco Bradesco is reported to have 850,000 on the Net.  

Banks in Australia have enjoyed a very swift customer transition to Internet banking, and the take-up rate is accelerating. In total, the four major Australian banks plus St George and SunCorp Metway now have well over 1.2 million Internet banking customers - remarkable growth, considering the total number of Internet banking customers just two years ago was barely 100,000.  

With the level of Internet penetration among households accelerating further - some estimates suggest Internet usage rates may be doubling every 18 months - further sharp growth in online banking lies ahead. Forrester Research estimates that 4.8 million of the US's 103 million households use online banking now, and this is tipped to almost quadruple to 18.5 million households by the end of 2003. Other highly regarded research houses present a similar picture.  

Mobile Phones and WAP  

Information technology groups such as IBM believe that global economies are entering an era of ubiquitous and pervasive computing, and that devices such as the mobile telephone will greatly accelerate this phenomenon.  

To back its forecasts, IBM has created a Pervasive Computing division, and one of its roles is to help businesses with wireless applications to the grow their electronic commerce businesses.  

Mark Bregman, general manager of IBM's Pervasive Computing, says wireless is an extension of existing e-commerce systems, and will help drive new revenues streams. He argues that in the next few years there will be a proliferation of new network access devices beyond the personal computer and traditional mobile phone and wireless handsets. 

''Soon set-top boxes, gaming machines, medical devices, automobiles and everyday household appliances will be embedded with intelligence and capable of connecting to content and commerce on the Web,'' Bregman contends. 

In Australia, the number of households using PCs has been growing very strongly: officially, about 28 per cent of households were connected at February this year compared with just 13 per cent two years previously. Yet mobile phones are being viewed as the next medium for banking via the Internet. Why?  

According to the research company Yankee Group, one billion wireless Internet access devices will be in use around the world by 2003. Nokia's estimates also support this. 

IBM's Bregman estimates that while Internet access is growing at 29 per cent a year, the number of wireless users is growing at 54 per cent worldwide.  
 

Growth is particularly strong in Asia. In China, more than a million wireless subscribers are signed up each month. In Japan, NTT DoCoMo's i-Mode division has attracted more than 5.5 million subscribers in a year, or about 200,000 new subscribers a month. Even in the US, where mobile penetration is low, wireless usage rates are expected to more than double to nearly 62 percent by 2005. And according to a recent poll in Information Week - more than 40 per cent of enterprises plan to buy wireless technology products this year;  

The impact of mobile phones may be far greater than customer numbers suggest. Nokia, the world's biggest producer of mobile phone handsets, contend that one of the most significant changes for business has been the growing demand for mobility, which allows customers, partners and employees to access information resources and services of their company wherever they might be and whenever they want. 

Nokia predicts that alongside the explosion in customer numbers, there will be consistent growth in the number of mobile phone services. Phones will be used like media tools, enabling the user to make calls, pay bills, buy tickets, check e-mail and manage appointments.  

WAP  

WAP is short for Wireless Application Protocol, an Internet platform for mobile phones. It provides an open universal standard for bringing limited Internet content and advanced services to mobile phones and other wireless devices. WAP is a global specification that brings mobile phone customers instant Internet access, information and interactive services. Key members of the WAP forum include Nokia, IBM and Ericsson.  

Customers wanting to bank on the Internet on the run will need WAP-enabled devices, whether it be a hand-held Palm pilot device or a more traditional-style, voice-based, WAP mobile phone. While the new devices can be costly, some banks already are offering free phones - Egg and British Telecom's Cellnet recently announced they will offer all new and existing customers a free WAP-enabled mobile phone for Internet access. Other banks are expected to follow but so far there have been no announcements by Australian banks. 

Drivers of Mobile Usage in Internet Banking 

The banking industry's shift to mobile devices, and mobile phones in particular, appears driven by several factors:  

• Mobile phones are becoming an embedded part of our lifestyle, and they have the potential to provide convenient and easy interaction with the Web for information such as stock reports (including messages from stockbrokers), news, corporate details and online grocery delivery services; 
• WAP phones are cheaper than PCs. While the small screens appear a hindrance at first, new WAP phones will have larger screens and wireless transmission speeds are increasing; 
• In future, users will be able to connect to the Web using voice commands, rather than manual contact. Voice technology is already being used by British bank Lloyds TSB, which now has about 600,000 customers using speech recognition technology to do their telephone banking;
• Unlike a PC, wireless and mobile devices do not require cables, and customer do not need to dial up to connect. WAP devices will be ''always on'' whenever the mobile phone is switched on. So they fit the consumer needs of anywhere-anytime banking services. 

Nokia maintains that WAP inevitably will increase employee productivity and business performance by connecting employees to corporate intranets and extranets.  

Constraints 

There has been a lot of hype with WAP and mobile phones, and shortcomings are emerging. However, WAP is still only in its embryonic phase. Remember the Internet had its own set of problems when it was launched, but its power and success is now entrenched.  

There are some significant constraints with WAP just now. The first is the limited availability of WAP phones. No doubt this will eventually be righted, but demand is there and orders cannot be filled.  

The second is the comparative cost of using mobile phones and teething problems with the technology. Complaints include the slow circuit-switched system used by WAP phones in some areas, and problems with wireless data transmission rates. These should improve with the faster transmission service under GPRS (General Packet Radio Service), which is a technology to boost GSM (Global System for Mobile) wireless networks.  

So far, customers appear to have been slow in taking up WAP banking services. MeritaNordbanken claims that it was the first bank in the world to offer mobile banking services in October 1999. However, Merita is reported to have gained only a very small number of customers since its launch.  

Other reports from Europe suggest that consumers so far see no compelling reason to use WAP services regularly, at least until some of the early launch problems are resolved. Other banks that have launched mobile, Internet banking services include Banesto in Spain, Handlesbanken in Sweden and Bank of Scotland. No figures are available yet on usage, but some innovative services are emerging: Bank of Scotland provides a warning via the mobile phone when a limit on an overdraft account is getting close. 

Conclusion 

Banks worldwide are pursuing Internet banking with vigour. New access devices, such as mobile phones and WAP-enabled devices, have the potential to accelerate this growth and add a new dimension to the concept of pervasiness in computing, notwithstanding current constraints.