Rates Braking The Mobile Bank In Canada
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19 July 2010
Earlier this month, I was fortunate enough to have the opportunity to speak with almost every major bank in English- and French-speaking Canada. As it is well-known, one feature that distinguishes the Canadian banking market from the U.S. is the relatively low number of (mostly) nationwide banks. The "big 5" banks based in Toronto, and the Quebec-based banks represent the overwhelming lion's share of Canada's banking business. With such banking concentration comes great visibility. As such, one would expect Canadian FIs to be running neck-and-neck with their retail banking offerings. Interestingly, this is not the case with mobile banking. Among the top banks in Canada, I found a wide range of mobile banking services, from the very advanced (e.g., including bank-to-bank P2P), to the very basic (e.g., ATM/branch locator only), to no mobile banking at all. Notably, Canadian mobile banking really didn't even get going until this year. This was quite a surprise, as in the U.S. the top 10 retail banks all offer mobile banking, with major banks launching their services in 2007. One would expect more of banks in the home country of the Blackberry. However, Canadian banks cannot be entirely blamed for the spotty mobile banking landscape. As our Canadian readers know all too well, the biggest culprit is likely mobile operators' data plan pricing. To illustrate this, I quickly checked out the data plans of a major U.S. and a major Canadian mobile carrier: AT&T: 2GB data plan (smart phone) + unlimited text msgs = USD 45 Rogers: 1GB data plan (smart phone, includes text msgs) = USD 42 (CAD 45) Very simply put, Canadians pay twice as much as Americans for mobile data. This of course places a damper on the demand for mobile data services, including mobile banking. Unless these prices change, I would expect mobile banking to progress in two directions -- apps (iPhone, Blackberry) for corporate and high-income bank customers, and text banking for the wider customer base. Simple use cases (e.g., balance inquiry and transaction history) will flourish, while more complicated, data-intense usage (e.g., bill pay, PFM) will be relegated to on-line banking. Although gasoline and liquor may be a lost cause, mobile data is hopefully one area where our Canadian neighbors (whoops, I meant neighbours) will eventually pay the same price as we do...