What We’re Reading: Corporate Mobile Banking, Security, Mobile Gift Cards

Below are interesting stories the Banking.com staff has been reading over the past week. What have you been reading? Let us know in the comments section below or Tweet @bankingdotcom.

 

  • Websites that adapt on the fly

ABA Banking Journal

The days of online banking being limited to desktop computers are over. Modern consumers are increasingly interacting with their banks using mobile devices such as tablets and smartphones. Understanding the popularity and value of on-the-go banking services, a handful of financial companies are beginning to introduce websites with “responsive design” to optimize their digital resources across the online and mobile channels.

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  • Microsoft Joins FIDO Alliance Security Standards Group

American Banker

The FIDO Alliance, a consortium of vendors promoting authentication standards that includes Google, PayPal, Lenovo, BlackBerry and Nok Nok Labs, announced a major new member today: Microsoft. The Mountain View, Calif.-based FIDO Alliance (FIDO is short for Fast IDentity Online) is creating a protocol that will let applications, browsers and servers speak the same language for authentication. This could become a universally accepted alternative to passwords, which are considered by most to be too easy to game and too hard to remember.

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  • Corporate Mobile Banking? Not So Fast

Bank Systems & Technology

Capital One research suggests security concerns are delaying many business customers’ adoption of mobile for corporate banking, while there is growing interest in commercial cards and self-service capabilities. Fewer than half — 48% — of the finance professionals surveyed by Capital One at the recent Association for Financial Professionals (AFP) Annual Conference said their companies have plans to implement new treasury management tools and/or services this year. Those plans include implementation of corporate mobile banking for a relatively small portion — 12% — of the 68% of responding firms that do not already offer the service, according to Capital One.

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  • Weak Security In Most Mobile Banking Apps

Dark Reading

Security experts this month tested 275 Apple iOS- and Android-based mobile banking apps from 50 major financial institutions, 50 large regional banks, and 50 large U.S. credit unions. Overall, they found that eight out of 10 apps were improperly configured and not built using best practices software development. Among the big-name banks whose mobile apps were tested by security firm Praetorian include Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, Capital One Financial, and Suntrust Banks.

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  • Putting the Pieces in Place: LifeLock and Lemon Wallet

Javelin Strategy & Research Blog

At first glance, LifeLock’s $42.6 million acquisition of Lemon may not seem to fit quite right.  To some it may appear that LifeLock is buying access to Lemon Wallet’s user base, but an app with 3.6 million downloads does not justify that kind of investment on its own.  As for LifeLock getting into the mobile payments game, the last thing the market needs is another also-ran.   Fortunately, all is not as it seems because LifeLock may have actually found a way to avoid the rampant customer turnover which has been plaguing the identity protection industry.

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  • Bank Opportunity #307: Online/Mobile Gift Cards

Net Banker

Regardless of the form factor, a favorite holiday gift is money. Some people like to give crisp 20s, the hand-written check still has a certain charm (as long as the recipient has mobile deposit capture), but the biggest growth area has been the plastic gift card. Banks should have owned this trend, at least in the United States. Those 100,000 branches would have been good distribution points, a place that you trust far more than the express checkout lane at Safeway. Financial institution still have an opportunity to be major players in digital gift car distribution, especially mobile.

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  • Banks shouldn’t use text messages for two-factor authentication

PC World

A widely used security feature intended to protect access to online bank accounts is becoming increasingly ineffective, as cybercriminals develop advanced malicious software for Android devices, according to a report released Wednesday. Many banks offer their customers two-factor authentication, which involves sending an SMS message with a code that’s entered into a Web-based form.

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Platform Shift in the Making

What does the banking industry as a whole have to do with Amazon, Microsoft and Apple? Just about nothing—and down the road, it may turn into a major problem (if it isn’t already).

Consider the many stories emerging from the realm of technology that have to do with financial services. Just last week, Amazon unveiled Amazon Coins, billed as “a new currency for Kindle Fire.” To launch the program, the company will dole out coins to customers (each coin is worth a cent), giving them essentially free access to apps and other services available on Kindle. The company can afford the generosity; late last year, it raised $3 billion through its first bond offering in a long time. Giving customers some free money is a great way to raise goodwill and popularize a new program that represents a new channel for transactions. For their part, app developers get another source of monetization.

See which industry is missing from this process?

Actually, the new “currency” is just the latest salvo in the ongoing battle between Amazon, Google, Apple and Microsoft to seed new apps on their respective platforms: Android, iOS and whatever mobile iteration of Windows happens to be in vogue. It’s not really about new software; it’s about creating mobile and other technologies that become increasingly embedded in the daily lives of consumers and business professionals everywhere. More apps, more users, more transactions, more money—that’s how it works. And at the core of this financially intense ecosystem will be. . .the technology platform companies.

In other words, it won’t be the banks.

The way these conglomerates (and it’s appropriate in this context to see Amazon as a technology provider) are driving app development is itself noteworthy. Each company is using a different model for the platform war, raising comparisons to everything from currency manipulation in China to ‘quantitative easing.’

For the record, it looks as if Apple still has a major advantage, thanks in part to being first to market with a smartphone and tablet. But few leads in the technology industry last very long. Kindle still has significant mindshare through its e-reader fan base, Google has racked up major partnerships for Android, and counting out Microsoft is often a mistake. (The company, which has at least as much in assets as Amazon, has been subsidizing developers to the tune of up to $600,000 per app for the Windows Phone, and the just-released Microsoft Surface Pro will likely have even more support, along with the massive user base for Windows PCs.)

We may also see more platforms emerge and find an audience. Facebook, which has already stirred interest with Facebook Credits, could yet become a financial services platform of its own, enabling consumers to pay bills and transfer funds when they go online to post a comment about a movie.

It’s not quite fair to suggest that banks are already irrelevant, but they may be in danger of getting to that point. The financial services industry has long been seen as the enabler for all other forms of commerce, which automatically brought with it a significant level of power. Is that power corroding?

If the role of enabler moves from banking institutions to technology platforms and the companies that own them, and the center of gravity shifts from Wall Street to Silicon Valley—a status some already crave—will that be a good thing?

We’ve commented earlier in this space how the two industries are dramatically different in their operating philosophies. New technologies considered “disruptive” win praise, while new releases from financial services providers that play the same role create instability and roil the markets. There are always new technology companies climbing into the upper echelons of the industry, while the top tier in banking seldom changes except through consolidation.

It’s not as if banks can’t handle technology—they have huge IT departments to run daily operations and regularly release custom apps designed to draw new business and ease customer engagement. But it may be time to go further.

Could banks do what Amazon did and release their own hardware? Should they partner with Apple, Google or Microsoft to gain more control at the platform level? Is it feasible to compete with those companies on their own turf and develop a banking-centric platform?

We don’t have the answers to any of this yet, but we may need some soon.