The UK's high street banks and telecoms companies are locked on a
collision course over the costs of running next-generation mobile
services.
The need to support emerging mobile phone services could inflate IT
running costs for the high street banks, without necessarily
generating extra profit, said Kevin Lloyd, group chief technology
officer at Barclays Bank. The dispute could see the extra charges
passed on to customers.
With the mobile phone handset market nearing saturation, operators
are keen to increase their revenues by offering data services such
as content and account aggregation. This involves delivering
automated and real-time updates on customers' financial
transactions to mobile devices.
Analysts believe the emerging market will be boosted when third
generation (3G) mobile network technology hits the market in the
next few years. But the unpredictable Web traffic likely to be
generated by these services will place extra strain on the banks'
back-office systems, which record each transaction or information
request, Lloyd warned.
Banks will need to secure more bandwidth for their networks and
additional data storage to support proliferating mobile services,
he added.
"It means more transactions for the bank in our back office," said
Lloyd. "Although it is a great idea, what are the physical
implications of an extra 300,000 hits per day [on banks' IT
systems]? Will the customer, the mobile operator or the bank pay
for this?"
IT directors will also have to justify increased technology costs
to their company boards at a time when most are looking to trim IT
spending.
Analysts agreed that the new breed of mobile services are likely to
entail extra costs for banks but argued that banks risk losing
customers if they do not support these services.
"If in a few years' time the majority of your competitors are
offering always-on access to banking details then it could start to
be a competitive differentiator," said Richard Anson, manager at
KPMG's advisory services.
"I would see content aggregation positively as a way for banks to
attract new customers."
But banks and telecoms companies still have to decide whether and
how they will charge customers for the mobile services.
"Banks could decide to charge customers a subscription service fee
for accessing information from their mobile device but they will
have to consider the customers' reaction to paying for this," said
Anson.
Concerns about the viability of certain mobile services comes at a
sensitive time for mobile operators.
Earlier this month Vodafone launched a new payment service that
allows customers to pay for digital content valued at £5 or less.
The service runs on Vodafone's own network and does not require any
technical support form the banks.
A spokesman for MM02, which recently demerged from the mobile arm
of BT, said it is planning to introduce a range of m-commerce
services in the UK.