Firm Predicts That More Than 7 Million Consumers Will Use Wireless Banking Services by 2005

Wayne N. Kawamoto
Managing Editor, www.smallbusinesscomputing.com

GartnerG2, a research service from Gartner, Inc., predicts that 1.2 million U.S. consumers will be using wireless financial services in 2002, and the number of users will grow to 2.6 million in 2003. As a result, wireless financial services should become intertwined with various types of wireless transactions. Consumers will routinely use wireless financial services to receive and pay bills, make cashless purchases, apply for credit or services that require identity validation, and get cash from an ATM or live teller. According to the firm, U.S. consumers using wireless banking services on a regular basis will total more than 7 million by 2005, up from 500,000 in 2001.

“Compared to many other countries, U.S. consumer demand for wireless financial services is immature, but it’s evolving rapidly,” said Brad Adrian, research analyst for GartnerG2. “Because of the historic lack of reliance upon PC-based Internet connectivity, consumers in Western Europe and Japan have rapidly adopted the use of wireless devices for accessing Internet information. Wireless device placements are reaching ‘critical mass,’ and U.S. consumers will gradually begin to adopt wireless financial services.”

The firm says that currently, few financial service providers have launched wireless offerings, and only the largest brokerages – and about 8 percent of midsize and large banks – have taken the wireless plunge. By 2003, GartnerG2 predicts that Americans’ expectations about wireless services will begin to be more adequately fulfilled, rapidly accelerating customer adoption. By 2004, the services consumers expect and the functionality financial service providers offer will synchronize.

The volume of Internet data being exchanged via digital handsets increased between 2000 and 2001, but the use of wireless application protocol interfaces is still very low. GartnerG2 research found that only 15 percent of consumers that use wireless application protocols feel the interaction is satisfactory.

“Financial service providers need to anticipate what services consumers will most likely use and how quickly a viable market will develop for such services,” Adrian said. “These providers need to anticipate evolving consumer demand to ensure long-term viability of their wireless offerings. They also need to build wireless systems to be flexible, to be readily modifiable and to fit well within their overall channel strategy. The companies must design wireless offerings to enhance CRM and self-service, not just to generate fees.”