Monday, April 2, 2007

Can Cell Phone Banking Possibly Be a Good Idea?

I generally try to find things that may be potentially helpful to readers and discuss them here in on The Golden Parachute. Tonight I'm going to discuss a service that I can't see as having much redeeming value - banking by cell phone.

The service will be initially rolled out in California - which makes sense based on the high level of tech acceptance there in many places. Users will be able to transfer funds, check balances, and view statements from their handsets. The service promises encryption and that the service will only work from the handset that is "registered" with the service. Users who lose their phone can call to have the phone deactivated much like a typical credit card.

Now on to why I can't see this taking off given the technology and abysmal wireless market in the United States.

  1. Although the service makes users download an application that encrypts transmissions, most users don't know how to properly secure their phones. Every time a celebrity has their cell phone pictures make it to the web this point is reinforced. Common accessories like BlueTooth (when turned on) can leave hardware vulnerable to malicious individuals. Hackers are always one step ahead which is why DRM and virus scanning companies have healthy balance sheets. It is only a matter of time till people figure out a way to spoof phones, control other handsets, or unleash viruses targeting this sort of application.

  2. People tend not to secure their phones because it cuts down on the convenience they provide. Many people also save passwords on their computers for often visited sites. This could potentially cause a problem for people who lose their handset.

  3. There is a very small market for this product. Tech savvy people who are most likely to use cell phone banking more than likely carry a BlackBerry, Palm, or other smart phone that can easily access the internet. Why not access the bank's website over your device's internet connection and do your banking over an encrypted SSL connection? I'm not a well versed in the processing of financial transactions or software that facilitates this, but I think that would be the easier solution. A wild guess tells me that this is a strategy to get people to stay loyal to Citi (through using the application), rather than telling people they can access Citi's website and do the same thing.
Would you use the service? Do you think it will take off? I'm interested in your comments.

Citi Introduces Cell Phone Banking