• by Judy Warner , February 21, 2007

The race to deliver mobile banking to a rising number of wireless consumers will escalate next month in Tennessee when Bank of America begins to allow the first of its 21 million online banking customers to check balances, transfer funds, pay bills, activate alerts and view transaction history over their cell phones and PDAs.

Why Tennessee? "We've found the state/market approach helps ensure a smooth rollout," says bank spokesperson Betty Reiss. "As we roll out to states, we will market directly to our online customers with splash screens and announcements within online banking and on BankofAmerica.com."

BofA expects to complete the rollout in all of the 30 states, plus the District of Columbia, where it does business by mid-year.

A similar state-by-state rollout was used to introduce the "SiteKey" security feature, an added layer to logging in that is supposed to make online banking safer.

Earlier this month, Wachovia introduced mobile banking to some of its customers after a complete overhaul of its Web-based retail banking operations. Wachovia Mobile allows cell phone and PDA users to access account information, transfer funds and activate alerts. Bill pay is not being offered in this first phase, but is expected to be added.

Online banking is not viewed as a money maker for the bank. Instead, notes TowerGroup Senior Analyst George Tubin, "every time a bank implements a new channel, it increases their costs, but what they are hoping for is retention," providing another service that deepens its ties to customers and attracts younger customers who "live online." In addition, Tubin says, "rather than call on the phone to a live customer service agent or go into a teller, people will access their account information using the mobile channel."

Tubin also predicts that mobile banking brings customers one step closer to centralizing all their transactions through a single provider rather than having transactional relationships with myriad companies.

Reiss says retail branches would serve as sales channels for online banking. "Our banking center associates will promote the new mobile banking services directly to customers," she says.

BofA estimates that more than 85% of mobile phone subscribers in the U.S. currently could access mobile Internet through their cell phones. BofA's online banking will be accessible to customers who have Internet access via Verizon Wireless, Sprint-Nextel, Cingular and T-Mobile.

Customers will also be able to use a wide variety of mobile phones and devices, including Motorola, Nokia and LG handsets or popular smartphones, such as Palm Treo, RIM BlackBerry or Motorola Q.

"We're taking convenience and control to a new level by providing customers with the ability to stay connected with their finances even when they're on the go," says Sanjay Gupta, e-Commerce executive for BofA.

Of the 9,000 retail banks in the country, only a small percentage has begun to roll out mobile banking products. BofA is among the first of the major banks to roll out a system-wide product. "Many more will soon follow," Tubin says.