iPhone iHype

It is amazing to me how much hoo-haa the iPhone, especially in its new incarnation, is generating in banking. The thing is a phone after all, and yes, it has a nice new interface and is visually appealing, but does it really do all that much more than any other phone that’s out there?

It is easy to forget that there are are lots of people who can’t use mobile phones at all, let alone an iPhone. My mother can just about press the send key to dial a number. And when I’ve taken new banking self service options to her, she isn’t interested in investing the time to learn them.

My mother isn’t alone.

When I look around the office I work in, I am startled by how many people don’t have any kind of smart phone, let alone an iPhone.

Let us not forget there is a huge segment out there who are poorly served by this latest gadget, from a banking perspective at least.

This was brought home to me recently during various meetings at which I was pitching a new self service innovation we are considering. It goes directly to the segment I just described: the ones who don’t want, or can’t be bothered to, learn some new gizmo.

The universal consensus: everyone will do everything on the phone in a year or so. Doing anything else is a mistake.

My view: if people aren’t going to do the Internet, what chance have we got of getting them onto apps on mobile phones? And last time I looked, no traditional bank has 100% adoption of the Internet channel (and though I don’t have numbers in front of me right now, I’d bet that direct banks also have this problem, though to a lesser degree).

But it not the hype over the mobile channel that fascinates me, because there is always some fashionable channel in the news. It is the fact that everyone has fixated so heavily on one particular device.

There are shades of earned media envy showing, I think. I recall when certain banks rushed into Second Life, earning significant press fanfare. The result was the rest of us started to think about virtual worlds too. Press attention naturally waned, and so did the various islands established by banks.

Bank of America, with its recent release of the first native banking application on iPhone is similarly earning lots of press. It is causing quite a few banks to question whether they should change their online banking priorities to iPhone as well. Just the other day, a good friend in another institution told me that they were thinking about doing iPhone, and that suddenly it was the most important thing on the development agenda. We both laughed.

iPhone in banking is a bit of a fad. The present urgency to get on the bandwagon will wane as soon all the earned media stops playing the iPhone tune.

I wonder what the next big hoo-haa is going to be? Oh I know! The one that always intersperses itself in a banking slow news month: the branch is back, long live the branch!

18 Responses to“iPhone iHype”

  1. Paul (R&D for global payment card company)
    July 14, 2008 at 4:29 pm #

    Hey James, I agree the hype around anything Apple related is crazy. However, apologies I’m not sure I agree with you with regards to the mobile phone. I think the mobile phone will change everything for banking, I see it as a game changing opportunity, it’s just off to a slow to start.
    A high percentage of consumers seem to be permanently glued to their mobile phone. I’m more likely to walk out of the house without my wallet then my mobile phone. I’ve seen a recent study stating that 60% of mobile phone users take the phone to bed with them, 72% of phone owners use the phone as the alarm clock and a further 73% use a phone in place of a wristwatch. If I look around my office everybody has at least one mobile phone. Admittedly the technical capabilities of the mobile phones will vary considerably, but with free upgrades I think a potential for banking is there to be used.
    Consumers are more likely to have a mobile phone in their pockets than internet access. We have seen this in newly developed parts of the world; consumers have jumped technologies and do not have land lines but do have mobiles.
    I know in my sector of banking we are fully behind the development of mobile payments, which is great for me as I always forget my wallet and miss lunch, but ah har with my payment card loaded into my cell phone I will not go hungry anymore.

  2. July 15, 2008 at 1:30 am #

    The interesting thing here is delivery method: downloadable smart app versus xhtml browser app. The big argument for the downloadable app was the ability to customise the keys for best human interaction. We went through this at Kiwibank 2 years ago. Now along comes the iphone with no keys but (finally) a decent screen and browser. All of a sudden it’s so much easier to distribute a useful application to a mobile device. We’ve certainly made some good press off this one (www.kiwibank.co.nz/mobile)

  3. July 15, 2008 at 6:05 am #

    I think its easy to underestimate the impact of the iphone. While the device is being hyped, I believe there is a fundamental shift ocurring in the mobile marketplace with the user interaction that iphone type devices bring.

  4. James
    July 15, 2008 at 6:43 am #

    Personally I think it’d be nice if the press reported objectively with regard to the iPhone.
    Sure its a nice looking toy, but thats about it. Many other phones offer the same functionality (without forgetting some of the basics that Apple has omitted), the only thing that the iPhone offers is a large touch screen… which to many is just as much of a drawback as it is a advantage to others.
    And anyway – in Australia (where I am from) the mobile plans that have been released with the iPod do not complement it’s strong internet focus. For instance, Telstra offers a measly 5MB per month of data transfer on some of their plans, with the one of the most generous being 750MB by Vodafone.

  5. July 15, 2008 at 9:34 am #

    I think we should be wary of throwing out the baby with the bath water here. Never just see things in isolation.
    Yes, certainly the iPhone is “just” a device. In much the same way that the Model T Ford was “just” a car. But see the step forward it represents, not the actual device, per see.
    What the iPhone does is provide a real PC-like browser experience that no other phone has featured before. By allowing the screen to shift into wide mode, you can actually see the information you need.
    Not important in itself, but in what it now enables. It means that it opens the door for development of transactional applications to be written – like on-line banking – that can be accessed quickly and easily.
    Consider the proliferation of public wireless hotspots and 3G (iPhone can now access both). So banking in Starbucks without a notebook is now viable.
    I was very disappointed to see what was offered on SmartPhones up to couple of years ago and always felt the limitation was the display and keyboard – and the danger that Microsoft would hi-jack the platform with the awful Windows Mobile, rendering innovation almost impossible.
    Now with Google’s new mobile platform due soon, Linux Mobile and indeed iPhone, well, the future’s bright, the future’s… as they say.
    We should always think laterally around any announcement – remembering that such developments are rarely complete solutions in isolation, merely the messengers of solutions to come.
    I’d like to re-quote here a piece about the birth of the Model T. Look at the uncanny common ground between this and iPhone…
    “Henry Ford did not invent the car; he produced an automobile that was within the economic reach of the average American. While other manufacturers were content to target a market of the well-to-do, Ford developed a design and a method of manufacture that steadily reduced the cost of the Model T. Instead of pocketing the profits; Ford lowered the price of his car. As a result, Ford Motors sold more cars and steadily increased its earnings – transforming the automobile from a luxury toy to a mainstay of American society.
    “The Model T made its debut in 1908 with a purchase price of $825.00. Over ten thousand were sold in its first year, establishing a new record. Four years later the price dropped to $575.00 and sales soared. By 1914, Ford could claim a 48% share of the automobile market.”

  6. July 15, 2008 at 10:46 am #

    I agree that the iPhone gets too much attention. Partly because it is an Apple product, and the attention is driven by the media industry which is a core Apple fanbase. And technology journalists are influenced by the interest and adoption among the “leading” tech blogs, which usually have very little awareness that normal people don’t use many of the latest technologies (iPhone, RSS, social bookmarking, etc). Also, people like shiny pretty things and handset manufacturers have been pretty poor at producing anything like that, in the same way that PC manufacturers were (I would say are, Vaio notwithstanding) poor at making any beautiful hardware before Apple tried.
    As an iPhone user, the device has made it x% more likely that I would use mobile banking, but the reason I haven’t used mobile banking before is not that I had a pressing need and didn’t have a solution … it’s that I didn’t have a pressing need. If I needed to use mobile banking, I would rather do it on the iPhone, but I don’t need to. Even if my iPhone made mobile banking easy and quick, I would still use my PC most of the time because it is easier, quicker and I spend more time in front of my PC.

  7. Sam
    July 15, 2008 at 11:49 am #

    I’m guessing I’m the good friend that you write about!!!!
    And I now have the “Jesus” phone in my hands as we attempt to integrate this into our environment to do everything including solving world hunger, global warming and the Middle East crisis. Oh and maybe a banking app here or there and some corporate email if we can get our Security Dept to approve this as a channel!
    I obviously don’t have the vision of others as I’m yet to understand the fuss and frenzy of this device.
    As a phone, it’s big.
    As an internet device, I still believe the screen is too small to do “real” work for any length of time.
    But my personal photos I put on it sure look nice!

  8. July 15, 2008 at 12:13 pm #

    Just to take up James MacAongus’s point above:
    “Oh and maybe a banking app here or there and some corporate email if we can get our Security Dept to approve this as a channel!”
    If iPhone isn’t adopted as a corporate channel platform it isn’t the fault of iPhone. it’s down to a myopic and outdated internal security culture.
    I’m puzzled as to why you bought a product without deciding you obviously hadn’t seen, tried or apparently needed. You must be a marketer’s dream.
    I don’t have one. Version 1 was good, Version 2 (half price) was better and Version 3 (3G) is better still. But the iPhone killer app isn’t here yet.
    Regardless of what we think personally, the facts speak for themselves. Companies exist to serve the needs of their market, end of story.
    “The market” we serve has bought over 1 million iPhones this weekend, according to Reuters and the NYTimes.
    Maybe we should align our positions more closely with the market we serve rather than what we’re comfortable with or those who simply manage us…
    Oh, PS – its not Steve Jobs who’s trying to solve world hunger, global warming and the Middle East crisis. That’ll be the Bill Gates Foundation…

  9. July 15, 2008 at 2:33 pm #

    James, you’re completely correct about the hype surrounding the latest iteration of the iphone. And, mobile banking is only just emerging, and the momentum for mobile banking will probably continue to be in low bandwidth, high penetration SMS.
    However, one important point about the iphone is that it runs Mac OSX as its operating system. It has wifi and gps capabilities. In essence it’s a full blown laptop in a mobile phone form factor. It’s not a big deal now, but think of the potential for that idea in a few years.

  10. ray
    July 15, 2008 at 3:39 pm #

    there’s a white elephant in the room. it will result in iphone getting even more hype. if you look at any web 2.0 mobile innovation – its all on the iphone mobile stack (develop time is so very low – most importantly – easy to use).The true metric – have a look the number of tech books for cocoa. http://oreilly.com/catalog/9780596518554/
    reason high demand for iphone? very simple – unstoppable force of consumerization of enterprise 2.0. the iphone is best positioned for this. banks will feel this too.

  11. July 15, 2008 at 4:38 pm #

    absolutely, Ray.
    Think about the platform, not the feel of the device standing on it. Everybody’s seen the movie trailer, bought the ticket and are mumbling about the colour of the curtains before the film starts. Wait till you see the film and then judge how good the overall experience was.

  12. D Shea
    July 16, 2008 at 6:12 am #

    Long live the Branch! How do we use the branch to bring customers closer to the other technology options available to them? “Late” adopters either don’t care or are risk adverse. Make them care or lower their risk concerns, a branch is a good place to do both.

  13. July 16, 2008 at 10:03 am #

    Gosh what a lot of feedback this post generated. I noticed this morning that Ron over at Marketing ROI (http://marketingroi.wordpress.com/2008/07/14/why-the-iphone-isnt-going-to-revolutionize-banking/) is reflecting similarly on the revolutionary potential of iPhone in banking….
    Thanks all for your comments.

  14. Benjamin
    July 16, 2008 at 10:30 am #

    As a business, if only to keep up with competitors, we have to adopt these technologies and develop on them as there is a certain level of appetite from consumers. At the same time we do need to consider the demographics of our customer base, so we can focus our effort to an appropriate level on their needs & wants. I was speaking to a close friend recently, he needed to give his parent £20, so he logged onto internet banking, and asked for their account number, “errrr…. no thank you” was the reply, and they refused to divulge their information for use across the web, using the cashpoint is much safer, what I did find it rather funny was my friends frustration after a failed attempt to educate them on the security and benefits of using this service. So I do not expect they will be picking up an iPhone to use as their mobile wallet in the near future. Though it is inevitable that in time mobile technology will change the way we bank for sure, as it will be a matter of convenience.

  15. July 17, 2008 at 5:41 pm #

    One fact strikes me. More people own phones than computers. More people own phones than cars or televisions for goodness sakes.
    My guess is that this phone is certainly a solution for people in the Developed World. In the developing world what’s the bet that an interface like this is the way forward? That’s less sure. But if you’re talking about micropayments and collaborative borrowing then the mobile (not necessarily the iPhone) has to be the future in places where the the PC as we know it might never catch on.

  16. July 17, 2008 at 5:43 pm #

    Also, sorry, the point with the iPhone is how high the use of the “non-traditional” options is. The number of unique features isn’t high. The barriers to entry on every feature is really low because the key unique feature is the UI.

  17. July 26, 2008 at 12:28 pm #

    Well, my unlocked Nokia does everything an iPhone can. (+ VoIP). The form factor isn’t quite there, but it’s perfectly usable. Most Nokia’s aren’t unlocked though and won’t run 3rd party s/ware properly 🙁
    Corp. IT can’t can’t remote wipe/lock an iPhone when this happens (http://mobile.slashdot.org/mobile/08/07/20/0745236.shtml) 😉 So I don’t blame them for disliking it.

  18. September 30, 2008 at 10:09 am #

    nice post i haave RSS’d you, please update more often

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