Aug. 17 2010 12:00 AM

In North America and the European Union, mobile banking has made great strides in the past three years. The largest of banks down to the smallest of credit unions now offer it. Originally offered as one modality (i.e., text, mobile web, app), it is now commonly offered by financial institutions in all three modalities. Functionality that was considered innovative in 2007 has been commoditized. On a seemingly weekly basis, banks and technology vendors alike compete with each other to make announcements about offering the most advanced mobile banking services.

But what truly is the definition of "advanced" mobile banking in 2010?

The answer depends on what side of mobile banking one examines. In terms of front end, customer-facing functionality in North America and the EU, state-of-the-art features include mobile remote deposit capture, person-to-person payments and real time transactional alerts. Although mobile payments are beginning to emerge, they are limited to pilots, with years to go before commercial rollout.

On the back end, the definition of advanced systems configuration is connectivity between the mobile front end and multiple core and ancillary systems. This allows bank customers to have a view of all their accounts, such as checking, savings, loans, mortgages, credit cards, etc.

However, this definition will need to change if banks are to fully leverage the mobile channel and its use cases. The problem with current "advanced" back end systems configuration is that it is largely static; it either waits for the bank customer to interact with it (e.g., balance inquiry) or it presents data that is the same as in any other channel (e.g., online, ATM). To be truly advanced, back end systems must be configured in a dynamic way that no other bank channel can mimic and that leads to beneficial changes in customer behavior or the use of a new bank product. Ultimately, these customer behavior changes or new product usage must lead to either reduced bank costs or increased bank revenues.

To do so, core and ancillary back end systems must be configured in a way that intelligently and seamlessly navigates customers among them. For example, upon a large check being cleared, DDA and checking imaging systems would work in concert to send a real time transaction mobile alert to a bank customer, with a link to the check image. This alert would ask the customer to text back "N" if she does not recognize the transaction. Should the customer do so, the intelligence would exist to forward the information to a CRM system, which would in turn initiate a customer service call.

In Celent's view, this is what advanced mobile banking looks like. Unfortunately, most North American and EU banks' systems do not orchestrate like this today. To find an excellent example of advanced mobile banking, one must turn to Japan, a historically advanced market in terms of mobile services.

A meaningful case study is that of Jibun Bank, a mobile-centric bank with the right pedigree; it is owned by a financial institution (the Bank of Tokyo Mitsubishi UFJ) and a mobile carrier (KDDI). Jibun Bank offers a number of mobile front end features (e.g., ATM lock) that would be the envy of any North American or European bank. However, what makes Jibun Bank's offering especially amazing is that it also offers new products (account opening, loan origination, FX transactions) with direct revenue impact, entirely within the mobile channel.

These key products would in no way be possible if Jibun Bank's back end systems did not work in a collaborative manner. In the case of mobile account opening alone, AML, KYC, CIF, transactional account, card processing and CRM systems are integrated with each other. Jibun Bank was able to accomplish its offerings through the use of both Oracle's FLEXCUBE banking platforms and a series of business alliances.

Jibun Bank provides a map toward truly advanced mobile banking. If North American and European banks are to offer mobile banking with the ability to either change customer behavior or sell-in new products, the Jibun Bank lesson is clear; banks must move away from their current siloed configurations, whose only ability to fuse back end systems is to present data within a front end user interface.

RED GILLEN is a senior analyst in Celent's Banking group, a research and consulting firm focused on the application of information technology in the global financial services industry. For the full case study of Jibun Bank and its advanced mobile banking, please contact


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