Mobile Money Ventures, a mobile banking startup bankrolled by financial services giant Citi and South Korean mobile operator SK Telecom, said it will begin offering banking services to Citibank’s Hong Kong customers later this year.
San Francisco-based MMV, which opened for business in March, is one of about a half dozen firms offering mobile banking applications that attempt to satisfy the sometimes divergent demands of banks and mobile carriers.
Mobile banking has gained far more traction in Asia than it has in the U.S. where concerns about cell phone security and the popularity and ubiquity of competing services such as online banking and ATMs have slowed acceptance.
SK Telecom, which owns more than half of the South Korean mobile market, has plied its mobile banking wares in that country for more than six years.
The carrier has benefitted from the support of the government and most of the major banks in pushing two major mobile banking applications which have enrolled more than 2.5 million customers.
“SK Telecom has a real desire to come into the U.S. with some of the expertise it has developed, and with Citi’s desire to enter the mobile space, we felt it was a perfect match for us,” said Jayastu Bhattacharya, senior vice president, strategy and business development for MMV.
Citi and SK Telecom invested $8 million each in MMV and both companies have transferred banking and mobile communications personnel to MMV.
The main goal for both Citi and SK Telecom is cracking the stubborn U.S. mobile banking market.
“There is a very steep acceptance curve for mobile banking in the U.S. based largely on perceived security problems but this market will thrive ultimately,” said Sameer Mithal, senior principal at IBB Consulting. “The technology is there and both the banks and the carriers are excited by the potential.”
For carriers mobile banking could be one of the compelling data applications that spur sales of their data service packages. For banks, mobile banking promises to reduce the cost of customer service at a time when banks are in cost–cutting mode.
“Banks are starting to offer mobile banking guarantees to increase acceptance and we are beginning to see the results. Adoption rates are going up among consumers,” said Brandon McGee, vice president and senior product manager at Huntington Bank, a regional bank based in Columbus, Ohio.
Huntington, the 25th largest bank in the U.S., guarantees that customers would not be responsible for any unauthorized mobile transactions.
“Banks can generate revenue and reduce expenses through mobile banking and it offers a great deal of convenience to customers, so there is a lot driving mobile banking,” Mr. McGee said.