AT&T: 10 Million Phones Will Be Preloaded for Banking by End of ’08

AT&T Inc., which on Tuesday announced it is launching a nationwide mobile-banking service, expects to have 500,000 mobile phones preloaded with the software necessary for the service by the end of the year and 10 million handsets so equipped by the close of 2008, according to a senior executive with the company who spoke today at a breakfast held to announce the launch.. Experts say getting phones into the market already featuring a mobile-banking application is critical for banking via cell phones to become popular among consumers, many of whom are reluctant to download software to their phones. “Preload is where you get mass adoption,” Mark Collins, vice president for consumer data at AT&T Mobility, AT&T's wireless unit, told a group of press representatives attending the breakfast in Las Vegas. Although Collins said preloading the software is preferred, it can be downloaded to as many as 30 million phones on AT&T's network. Collins also said mobile banking is a prelude to a point-of-sale payment service based on near-field communication (NFC) technology. An NFC service, he predicted, could be launched within two years. “There'll be an array of products and services in the next 12 to 24 months,” he said. With NFC, mobile phones can be equipped with chips that allow the devices to make contactless payments as well as download digital content from posters and other media also equipped with NFC chips. Even so, he cautioned that any widespread launch of NFC will depend on making the economics work for AT&T. So far, the company hasn't found a way to recoup the $15 to $40 the technology adds per phone. “”We're looking at how to make that pay back,” he said. “There's no business model yet.” Speaking to Digital Transactions News, Collins said one avenue of exploration could involve a biometric authentication service that would allow the carrier to charge a fee to authenticate handset users. AT&T's new banking service has been adopted by two banks with national coverage and millions of potential consumer users, Wachovia Corp. and SunTrust Banks Inc. Three regional institutions, Bancorp South, Synovus Corp., and FirstBank, have also implemented the service, which allows consumers to use their handsets to check balances, transfer funds among accounts, and pay bills. Regions Financial Corp., America West Credit Union, Arvest Bank Group, and USAA Bank have agreed to adopt the AT&T offering, with the USAA agreement having been announced Tuesday. AT&T is using specialized software from Atlanta.-based startup Firethorn Holdings LLC, which has arranged with Norcross, Ga.-based processor CheckFree Corp. to handle bill payments. AT&T rival Verizon Wireless has also agreed to adopt the Firethorn application, which means the nation's two largest wireless carriers as measured by subscribers have implemented it. Firethorn, AT&T, and CheckFree announced their collaboration a year ago (Digital Transactions News, Nov. 16, 2006). Separately, CheckFree on Tuesday announced it will now support mobile banking via short-message-service (SMS) transmissions and the mobile Internet as well as through customized software applications like Firethorn's. Alex Hart, executive vice president and general manager at CheckFree's electronic banking services division, tells Digital Transactions News a large bank client has already started using the processor to support mobile banking with SMS or via the mobile Internet through the Wireless Application Protocol (WAP). Others are in the pipeline. He says it's too early to project how many financial institutions will adopt the non-software alternatives in the first year. “We have existing large clients that want us to support [SMS or WAP],” says Hart. “We're getting to a tipping point. Look how many people use their phones as a text-messaging device or to look up movies. That's only going to increase.”