Banks roll out smart-phone banking for business

REGION

Just like consumers, busy executives want to be able to manage their money at any time, anywhere.

In response, banks are rolling out extensions of their online business platforms for mobile devices. Like retail bankingbefore it, business banking is coming to the smart phone.

Just 5 percent of small business owners have used a smart phone for banking functions such as paying bills, but a majority express interest in doing so, said Christine Barry, a research director at Aite Group, an industry research and advisory firm based in Boston.

Even fewer large corporations have tried mobile banking, but interest there is high, too, she said.

"A big opportunity exists in the market," she said.

PNC Bank and Citizens Bank both announced new corporate banking applications for smart phones last week.

Citizens, the Providence, R.I.-based parent of Citizens Bank of Pennsylvania, which has 27 midstate branches, unveiled accessMOBILE, an iPhone app designed for senior executives at large corporations. It lets users view account balances and transactions, shift funds among accounts and release certain payments, such as wire transfers.

PNC, meanwhile, released Pinacle Mobile, which offers access by smart phone to Pinacle, PNCs corporate online banking portal.

"The main thing Pinacle does is offer convenience for decision-makers," said Donald Jenkins, vice president and senior product manager at the Pittsburgh-based bank, which has 75 midstate branches.

Like accessMOBILE, Pinacle Mobile offers account oversight and transaction capabilities.

Mobile services are handy in general, and especially when transactions require dual approval, Barry said. Such cases typically require a senior executive to sign off on transactions prepared by lower-level employees.

With mobile banking, an alert can be sent to the executive's mobile device when a transaction is ready for review. That means he or she can be elsewhere handling other matters without the risk of delaying an important transfer of funds, Barry said.

According to an Aite Group survey last month of more than 300 senior corporate financial executives worldwide, 65 percent said they were somewhat to very likely to use mobile banking for basic functions if their bank offered it in the next year, and 56 percent were interested in using it for advanced functions, such as approving transactions and making payments.

"A strong business case exists for banks to provide these services," Barry said in a statement accompanying the release of the survey. Itwas sponsored by Fundtech, aglobal banking software provider based in Iersey City, NJ.

Right now, the largest banks such as PNC are the ones taking the lead on mobile corporate banking.

"Only a handful of banks are currently live with this," Barry said.

Most community banks haven't yet followed the lead of their larger brethren, but those that do so soon may gain an advantage over their peers, Barry said.

Millersburg-based Mid Penn Bank plans to add mobile banking to its online business banking shortly, said fanna Passamonte, vice president and deposit operations manager.

The service will offer account review, transaction history and money transfer functions, she said.

The bank hopes the mobile product will help it increase its base of commercial customers, she said.

PNC has offered a mobile app for small-business clients since May 2008, said Tom Trebilcock, senior product manager for PNCs e-business and payments.

Small business owners are a natural market for mobile banking because of the convenience factor, Trebilcock said. They have so many responsibilities to juggle that quick, easy banking becomes an important priority.

Smaller banks such as Mid Penn typically outsource their IT development to a third-party vendor, while a large bank like PNC can also develop proprietary applications in house, Trebilcock said.

Vendors typically charge per-user fees, which keeps costs manageable for community banks, he and Barry said.

Many potential clients naturally worry about transaction security, but those concerns are unwarranted, Barry said.

"The technology is secure," she said.

Mobile banking security is simply a matter of extending the strong protections already developed for online banking to a new platform, Ienkins said.

Small-business platforms typically use password protection, the same standard used in retail banking. Additional security features are used in products designed for corporate treasury management.

PNCs Pinacle and Pinacle Mobile use token authentication and account masking, Ienkins said. Token authentication involves issuing users a small digital device that generates a unique new security code at regular intervals. Users must enter the code as well as their login and password to access the system.

Account masking blocks users from seeing full account numbers.

Pinacle Mobile never stores data on the mobile device, and sessions time out after five minutes to minimize the chance of unauthorized access from a lost or stolen phone. Jenkins said.

For executives, mobile banking offers convenience. Forbanks, corporate mobile banking offers an attractive advantage compared to retail - the potential to charge fees.

Retail customers have come to expect free online and mobile services. Basic corporate banking will likely be free as well, but research indicates corporate customers may be willing to pay for advanced functions, Barry said.

At present, mobile banking "is mostly a retention tool," Barry said. Business customers aren't likely to choose a bank just because it offers mobile banking, although in a couple of years they may abandon banks that don't, she said.

Businesses planning to use mobile banking should chose an integrated platform, Barry said - one in which the online and mobile components form a seamless whole. Information entered online should flow to the mobile portal automatically and vice versa, she said.

Companies beginning to use mobile banking should set up a policy with "strong entitlements," she said. That means deciding who can view which information and who can authorize transfers, as well as setting limits to the size and number of online transactions permitted.

Mobile banking enhances executives' productivity and improves quality of life, Jenkins said. Managers need no longer be "tethered to their desks" to deal with financial information, he said.

Trebilcock said retail and corporate mobile banking will probably follow a path similar to online banking, which went from an experimental fringe service to a core product in the course of a fewyears.

In the same way, mobile banking will achieve broad acceptance over the next fewyears, he said.

"The technology is not going away," he said.

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"The technology is not going away."

Tom Trebilcock, PNC Bank

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[Author Affiliation]

BY TIM STUHLDREHER

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