Temenos, one the leading fintech players, announced last
month it had formed a partnership with UK m-banking specialist
FE-Mobile in an effort to capitalise on the growing demand for
m-banking products. RBI talks to Mark Gunning, group
strategy director, and Barrie Neill, a retail banking specialist,
at Temenos.

Mobile phone banking (m-banking) – functional, transactional
banking via a mobile handset – became a mainstream distribution
channel in 2007. It is undoubtedly early days, but the momentum
from banks is now high and demand from consumers is growing. A
report from VRL KnowledgeBank published last month concluded that
while adoption is still low – m-banking usage does not exceed 1
percent of banking customers in most markets – the channel is now
growing strongly in both developed and, in particular, emerging
economies (see RBI 579).

A flurry of other reports published recently, all
regarding the US market, have been very positive about m-banking
uptake: only a lone study from JupiterResearch, published in April,
was negative, concluding that despite m-banking launches from a
host of major US banks, just 8 percent of US consumers who own a
mobile phone are interested in using mobile browsing to check
account balances.

A direct consequence of the m-banking surge has been the huge
interest from the global IT vendor market. Not all banks have opted
to buy in systems from fintech specialists: Wachovia, the
fourth-largest US bank, used in-house staff to build its m-banking
platform based on industry-standard software from Microsoft
(see RBI 565).

One of the biggest vendor announcements came last month when the
Swiss player Temenos said it had joined forces with the FE-Mobile,
a UK-based provider of mobile banking applications, to deliver
mobile banking functionality within Temenos ARC (ARC stands for
Acquire, Retail and Cross-sell), Temenos T24’s integral
front-office suite.

Talking to RBI, Mark Gunning, group strategy director at
Temenos, said: “About a year and a half ago we decided to invest
very heavily in a new front end for T24 which we call ARC. That was
a major investment. And we decided that the first channel that we
should actively add to the solution was mobile, because that’s by
far the most exciting channel.”

Asked about problems and concerns regarding the wide variety of
mobile handsets across the world, Gunning said: “We looked at the
mobile channel and found that in terms of technology, it’s a
relatively immature market. Temenos is in about 110 different
countries, so by definition many of those are in the developing
world, the handsets are older, less expensive. That’s what
FE-Mobile brought. They bring a very tidy, light, very standard
little Java applet that can run on the vast majority of

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Similarly, the mobile banking and mobile payments market is
restricted to a degree by a lack of network and systems
standardisation both locally and globally, with a range of
competing applications vying for superiority. Is this variety
hampering the development of the m-banking industry? Barrie Neill,
a retail banking specialist at Temenos, said: “Absolutely. One bank
recently did a tie-up with a telcoms firm, so it’s a SIM card-based
product. You’re restricting the market immediately to that
particular telco. If you’re not careful, you end up comparing
apples and pears. Some people might talk about internet banking
delivered on their handset, but I wouldn’t call that mobile banking
and the user experience is not usually a good one.

“If the banks aren’t careful, they’ll find that some of their
traditional revenue streams will be used up or taken over by what I
call ‘bank telcos’. Traditional payments and transactions revenue
streams, you could see the telcos start moving into that space. The
threat is that some banks, they won’t be able to convey to the
customer base the difference between that and, say a SIM card based
solution offered by one particular provider. There will be a lot of
noise in the market, but I think it’s about getting the clarity
about what are the preferred solutions out there, and what a bank
should be providing to its customer base.”

Ultimately, said Gunning, the mobile channel should integrate
seamlessly into branch and online ones, and offer retail banking
customers the full range of products and services such as mortgage
applications and brokerage. “One of the unique things about our ARC
approach is that… we are channel neutral. In particular we are
moving very quickly towards things like mobile brokerage, mobile
fund management, services like that,” he said.

“It doesn’t take long before someone gets used to the mobile
channel and says, ‘I can do balance, but why can’t I approve my
mortgage or see the status of my mortgage application’. That is
something that we believe is important as channels become
mainstream and commoditised, that you should be able to offer