Wireless banking services in the US were dealt a blow this month when the Bank of Montreal suspended its Canadian and US wireless retail banking services and its Canadian wireless brokerage services.
Other institutions across the US, including Bank of America and the US Postal Services, have also killed wireless access services, but the Bank of Montreal's decision is a particularly tough blow.
"The Bank of Montreal was the trailblazer for wireless banking and brokerage services here. Now the leader has turned deserter," said Adam Zawel, director of wireless enterprise and commerce at US analysts the Yankee Group.
According to the Bank of Montreal, the decision to halt support for wireless access was down to limited customer interest.
Nevertheless, analysts have maintained that the bank has learned valuable lessons that could be useful further down the line.
"The Bank of Montreal moved first and has learned a lot about delivering services over a medium that is not going away," said Zawel.
While those banks that have pulled wireless services stress that they will offer them again, it is unclear when this will happen.
"We continue to watch the market but we will not jump in until there is clear consumer interest," explained Betty Reiss, a spokeswoman at Bank of America, which has closed all its wireless banking services.
What has become clear, according to analysts, is that the type of wireless application deployed is key.
The latest figures from market research company Celent reveal that the number of active users conducting wireless banking and brokerage transactions peaked in 2001 with just 50,000 active users.
However, online brokerages, including Charles Schwab and Fidelity, have signed up nearly 200,000 wireless subscribers between them, even if many are not regularly using the service.
Customers may have little need to check account balances and transfer money using their mobile phones, but anyone trading shares may see real value in a wireless connection.
"It is in the nature of the task. Trading market stocks can demand real-time information and action and people will pay for that," said Zawel.
In fact, the Bank of Montreal has singled out its wireless brokerage services in the US as the only ones to continue.
It is likely to mean that most US banks will have wireless brokerage offerings within the next two years, but wireless banking is likely to be stalled for the foreseeable future, according to Zawel.
Early wireless deployments also created the model for deploying services. Zawel predicted that in future companies should focus internal developers on application design, while relying on vendors for integration and a wireless middleware solution.
But many of those external developers may be set for some lean years. Analysts expect the reality of poor demand to hit wireless application service providers (ASPs) hard.
"Those banks relying on an ASP to deliver a service are more likely to cut services over those that have already sunk costs in to support services, because it's easier to see savings from stopping those ASP cheques going out every month," concluded Zawel.
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