Internet service providers (ISPs) are set to dominate the
lucrative wireless banking market at the expense of high-street
banks.
That was the banking industry wake-up call issued by Gartner
Group. Gartner predicted telecom ISPs will pose a 26% greater
threat to retail banks in 2003 than they do today.
The threat will ride on the back of an explosive growth in
mobile banking and wireless devices. By 2003, the number of mobile
banking users in Western Europe will outstrip the number of
Internet banking customers, Gartner claimed.
And by 2003 more than two-thirds of the European population will
also have data-enabled mobile phones, Gartner forecast.
As traditional banks no longer have first-mover advantage, ISPs
will attack the new wireless banking market by taking advantage of
their technology infrastructure and customer loyalty, according to
Gartner.
Gartner analyst Laura Starita said, "The established banks will
keep their core competencies of high-end risk management, portfolio
management and regulatory compliance.
"However, the portals have big opportunities to provide
micro-payments, authorisation, low-end risk management and
transaction processing.
"This could make them the preferred point of contact for
existing traditional bank customers."
She added that ISPs could cut banking charges and overheads by
charging customers for goods, based on the price of the call, plus
a charge for processing payments.
ISPs could also run credit lines and offer personal loans using
this charging method, conference delegates heard. It was stressed,
however, that banks are aware of the threat to their market and are
partnering with some of the major ISPs.
Deutschebank and AOL, for instance, are developing wireless
banking in Europe while ABN-AMRO has entered a joint venture with
KPN to develop a pan-European banking portal.
But Starita warned that the wireless banking revolution does
face obstacles. She cited establishing a common infrastructure for
processing customers' micro-payments as one example.