Citi Expects New Mobile Service to Reach More Than Half of Accounts

The new mobile-banking application unveiled by Citigroup Inc. this week will penetrate more than half of the banking giant's U.S. consumer accounts within five years, an executive at Citi says. The application, dubbed Citi Mobile and set to debut Friday in California, represents the first rollout of an electronic-banking and bill-payment service on mobile phones by a major U.S. bank, an advantage Citi apparently intends to press in an increasingly crowded mobile-banking market. “We're the first with the way we're delivering [this service],” says Steven Kietz, business manager for RDNA enhancement services and e-commerce at New York-based Citi (RDNA stands for retail delivery, North America). The service will become available to customers in the rest of the country by the third quarter, Kietz says. Banks are starting to revisit mobile banking and bill-payment, a market some experimented with a number of years ago, only to abandon the technology as premature. Kietz says consumers now are ready to check balances, pay bills, and transfer funds on their handsets. He points in particular to the rapid uptake of non-voice services such as text messaging and the increase in Internet-ready phones as indicators that the market will be receptive. “We saw the growth of mobile phones and the expansion of the ways people are using phones,” he says. But Citi isn't alone in that recognition. A number of competitors are readying handset-based banking and payment services. Last week, mobile-banking software developer Firethorn Holdings Inc. said five banks, including Wachovia Corp., had agreed to use its application, which works on the Cingular and Verizon wireless networks. One of the five, BancorpSouth, announced it is rolling out a mobile-banking service (Digital Transactions News, March 27). But Citi Mobile has an edge, Kietz says, in that it works on three major carriers, which the bank doesn't name, as well as on more than 100 phones. Sausalito, Calif-based startup mFoundry Inc., which developed the application, says its mobile-banking product works with seven carriers, including Cingular, Verizon, Sprint, and T-Mobile. Kietz also cites the timing of Citi Mobile's introduction as a competitive advantage. “We're months and months ahead of [the Firethorn banks],” he notes. The service, which is free to users outside of carrier charges for Web access, allows customers to check balances, review transaction activity, and get the locations of branches and ATMs, as well as make bill payments and schedule future payments. The menu of services, Kietz says, should allow the bank to book savings in customer-service costs. “We're expecting to see saves in less calls to customer service,” including the bank's voice-response-unit (VRU) system, he says. To use Citi Mobile, customers will download the Java-based application to their phones, install it, and then navigate through screens using the phone's arrow keys. The application features two-factor authentication, including the phone's device ID and a six-character, alphanumeric access code, which is the same code customers use to perform transactions on the bank's VRU system. The application can be disabled if the phone is lost or stolen, and stores only the last four digits of account numbers. At the launch Friday, customers will be able to sign up online. Signup at branches and over the phone will come later, Citi says.