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.
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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.