Every time it rains, it rains pennies from heaven
Don't you know each cloud contains pennies from heaven
You'll find your fortune fallin’ all over town
Be sure that your umbrella is upside down
To a kid born a decade or two from now, those lyrics are going to require some explaining.
Singapore’s Board of Commissioners of Currency announced in December of last year that it would make e-money legal tender by 2008. That means that every transaction, even one as small as buying a cup of coffee or a newspaper, has to be enabled for what the Board calls the "electronic legal tender system."
It also indicates a global trend towards making all aspects of finance fully mobile. Of course, that makes perfect sense: your wallet goes everywhere with you, and so does your phone. Now the two can be combined, covering everything from banking to stock trading to daily cash transactions.
What’s more, the technology’s already up to it. Singapore may be a little more far-thinking than most, but financial institutions worldwide are all working their way towards the day when a penny will be nothing more than an archaic collector’s item. Start your museum now.
You can bank on it
Basic wireless banking services first appeared in 1997, when the UK’s Cellnet (now BT Cellnet) joined with Barclays Bank, Alcatel and Gemplus to offer wireless access to account information, as well as information services such as weather and news, for Barclays Bank customers. A number of banks throughout Europe and Asia followed soon after.
Of course, due to such issues as the diversity of standards, the US lagged behind. The first bank in North America to offer wireless banking was the Bank of Montreal, which announced its Veev offering in May of 1999. The solution was developed through a partnership with Canada’s 724 Solutions, one of the earliest and most influential movers into the wireless banking space.
Herb Paquette, 724 Solutions’ Vice President of Banking and Brokerage Applications, notes that wireless banking may not yet be universal, but it’s coming steadily: a number of banks now have wireless offerings available, and most banks that aren’t currently offering a wireless solution are in the process of developing one.
"You can get access now through pretty much any wireless channel, so the reach is pretty good," Paquette said. "You can take a look at your balances, you can transfer money, you can pay bills, and you can do some special things like ask for checks." But that’s just the beginning.
Coming next is an increased personalization of the banking experience, adding such services as bill presentment and intelligent alerts. 724 Solutions announced a partnership last summer with CheckFree to offer wireless access to CheckFree’s electronic billing and payment solution for all financial institutions that use both companies’ services. Currently, that includes more than 150 million customers.
"If you’re the average person, I don’t know how compelled you are to whip out your phone on the way home from work and pay a bill," Paquette said. "But when you get a message from your financial institution that tells you you’ve got a bill due tomorrow that you haven’t paid yet, as long as you can make it fairly simple to actually get to the transaction related to it and do something about it, I think you will."
It’s a compelling scenario, and wireless is the perfect solution for it. Of course, for the time being, the current limitations of screen size and bandwidth do apply: CheckFree’s wireless bill presentment is done in text form, rather than a complete image of the bill.
Still, in terms of financial wireless applications, banking is just the beginning.
The luxury of convenience
The stock market was a fun place to be over the last decade, but the ability to get in and out quickly was the key. In February of 1998, w-Trade Technologies, now w-Technologies, launched the world’s first wireless trading system. Soon after, virtually every discount broker leapt on the bandwagon, giving avid market watchers the ability to trade stocks on the golf course.
Wireless trading was boosted by the fact that the potential customers who are active stock traders also tend to be early adopters of new technology: the two go comfortably hand in hand. Time is at a premium for those generally busy and affluent customers, so having the service available whenever and wherever they wanted it was a huge selling point.
And according to Donna Oliva, w-Technologies’ CEO, convenience is what it’s all about. "Investors want to have their fingers on the pulse of the market, no matter what they are doing or where they are," she said. Brokers that have entered the wireless space with w-Technologies’ help include Dreyfus Brokerage Services, Quick & Reilly, Merrill Lynch, and First Trade Securities, among others.
724 Solutions’ Paquette notes that with the current shift in the fortunes of the stock market, the next step for wireless trading is to return some of the power to the full service brokers. The first entrants into the wireless space were self-service discount brokers who were simply handing their customers the tools to trade on the move. Now that making money in the market isn’t quite as easy as it used to be, having a full service broker linked to your PDA is a much more attractive idea.
"The market’s helped: people now are looking for somebody to take responsibility besides themselves," Paquette said. "Brokers are relying back on their advice capability, making tools like proprietary research available. They’ve come a long way."
Key players in the wireless trading market, most of which also offer wireless banking solutions, also include 724 Solutions, Aether Systems, Semotus Solutions and SmartServ.
Put it on my phone
In November of 1997, Telecom Finland, now Sonera, launched its "Pay-by-GSM" mobile phone billing application, which allows users to pay for anything, from soft drinks from a machine to songs on a jukebox, using a mobile phone. It was the first step towards Singapore’s vision of a wireless currency, and it’s just beginning to make its way around the globe.
Similar offerings are now available from Finland’s Nordea for consumer purchases, and Denmark’s METAX for petrol payments. This kind of e-money solution is obviously a much bigger step than wireless banking or brokerage solutions: turning the average consumer’s mobile phone into a carrier of currency is a major shift, and one that will take some time.
And as mobile devices gradually get more and more directly involved in handling your money, security will become increasingly critical. 724 Solutions’ Paquette acknowledges that security remains an issue, but he sees it as a matter of maintaining the right perspective. "My sense is that a lot of financial institutions have taken a reasonable approach to it," he said. "They’ve looked at it from a risk point of view. They’ve clearly identified where the security risks are, and that has factored into the kind of services that they’ve decided to make available."
Missing from those services are high-value commercial banking transactions, which mostly stay clear of even the wired Internet, let alone wireless—and in many ways, that makes sense. If urgency and convenience drive the adoption of mobile technology, then caution and patience are keeping commercial banking away for now. Irreversible wire transfers of large amounts of money simply aren’t worth the risk, no matter how small that risk may be.
In the meantime, providers are doing everything they can to allay the average consumer’s fears. 724 Solutions recently announced an agreement to deploy Nokia’s Activ Signet Solution for its financial applications. And Certicom, Cloakware Corporation, Communication Intelligence Corporation and Neomar last month demonstrated the first-ever biometric-enabled end-to-end wireless PKI security solution, which reads and recognizes a user’s unique handwritten signature.
Cooperation between companies is also leading to improvements in security. In April of 2000, Nokia, Ericsson and Motorola formed the Jeff Goldman is a freelance writer covering a wide range of topics for a number of online journals. He currently writes regular articles for Internet.com's ISP-Planet. Brought up in Belgium, Jeff spent the last decade in New York, Chicago and London; he now lives in Los Angeles.