Overcoming Security Barriers Is Key To Mobile Success

PORTLAND, Ore.-Mobile banking may one day be the channel of choice for members, but OnPoint Community CU here must battle infrastructure issues and perceptions of inadequate security before that happens.

"Mobile banking is important enough that cost accounting hasn't been a priority," according to Jim Armstrong, SVP of technology and HR. "Handheld devices will be the primary device over the years. So mobile access is critical, and mobile banking could become the primary channel."

At present, few OnPoint members actually use mobile banking. Just 2% of the CU's 208,000 members are banking by handheld device since mobile banking was offered in November, said Armstrong. Approximately 45% of members use Internet banking. "I don't believe mobile banking is a splash kind of product where people en masse sign up for it," he added. "It will grow over time."

Security perceptions are a major barrier, suggested Armstrong. "Our biggest issue with adoption is getting people comfortable with the security on their phone. They don't understand that the data in the airwaves are secure. People seem to be more comfortable with their personal computers."

The $2.8-billion CU markets mobile banking as a state-of-the-art secure channel with password-protected transactions, but "members who don't sign-up for mobile banking say they're concerned about security," Armstrong said.

3 Modes Of Mobile Banking

OnPoint's three modes of mobile banking-Web, text (SMS) and downloadable application-are secured much the same way as Internet banking, according to Carol Grunberg, director, marketing, at Tyfone, which provides mobile banking to the CU.

Authentication and account credentials are not stored on user devices; transactions are transmitted end-to-end with advanced encryption standard and secure sockets layer (SSL) encryption; and the device and the server mutually authenticate each other, said Grunberg.

OnPoint also restricts the types of transactions based on the relative security of the banking mode. For example, funds transfers aren't permitted via SMS because authentication and encryption are weak and the mode may be spoofed by hackers, said Grunberg.

More members will move to mobile banking when mobile payment services are available, continued Armstrong. Due to infrastructure issues, however, OnPoint won't offer mobile payments for at least one year, he said.

Merchants Slow To Add Technology

Though Tyfone offers mobile contactless payment capabilities via a memory card with smart chip that fits into any standard mobile card slot, merchants have been slow to install the readers, said Grunberg. Visa and MasterCard are working to convert all merchants to contactless readers, but the process will take at least one year, she said. Mobile payments will probably result in consumers spending more money on average and less time at the check-out counter, she said.

OnPoint mobile banking will be more attractive in the next few months when the CU rolls out mobile alerts and bill pay after infrastructure issues are resolved, said Armstrong.

In the meantime, mobile members perform an impressive average of nine transactions per month, more than non-mobile members, Armstrong said. Armstrong said he is not able to provide the number of average transactions for non-mobile members.

OnPoint's most successful marketing campaign for on-the-go banking was a television advertisement of a woman shopping, followed by a shot of mobile banking displayed on her mobile device, Armstrong said. "Lots of people called to ask us if we had mobile banking, and I think that helped with adoption."

About 50% of OnPoint mobile bankers uses mobile Web banking; 25% uses SMS; and 25% uses the downloadable application, he said.