Following Citi Mobile, Bank Giant Forms Global M-Banking Venture

Less than a year after launching a commercial, handset-based banking and bill-payment program in the U.S., Citigroup Inc. announced it is working with a major South Korean telecommunications company to offer mobile banking around the world. The San Francisco-based joint venture, Mobile Money Ventures LLC, will be equally owned by Citi and SK Telecom and will launch two and possibly three pilots in as many regions in late summer with a planned commercial launch in 2009, according to Steven Kietz, a Citi executive who is taking over as chief executive of the company. Kietz refuses to disclose where the pilots will take place, saying only that the new company is targeting markets with a high penetration of mobile phones but a low penetration of mobile-banking service. He says the joint venture expects to have 10,000 Citi customers using the service across all the pilots by year's end. This major expansion of the banking giant's mobile-banking reach follows the introduction last April in the U.S. of Citi Mobile, a service that lets customers check balances, pay bills, and schedule future payments through a Java-based application they download to their phones (Digital Transactions News, April 4, 2007). Kietz says Citi Mobile, which was the first mobile-banking product rolled out by a major U.S. bank, now claims more than 30,000 users. That makes it the largest such product featuring a downloadable application, he says. The software for Citi Mobile comes from mFoundry Inc., a Sausalito, Calif.-based company. The results of the rollout have met the bank's expectations, Kietz says. “It's all very positive,” he says. “We have achieved our goals. Customer usage and satisfaction are well within our standards.” Through mobile banking, Citi hopes to take in more new accounts, achieve higher demand-deposit balances in existing accounts, and beef up retention of retail-banking accounts, Kietz says. Some experts say banks could also log savings in fewer calls to their customer-service units. Revenue prospects seem less certain. Citi Mobile is a free service, with consumers paying only charges levied by their wireless plans. “The marketplace is undecided” whether consumers will pay for mobile banking, says Kietz. The features offered by Mobile Money Ventures will vary by region, but will include balance lookups, funds transfers, bill payment, a branch locator, stock trading, and a tracking feature that Kietz says will send a confirmation message to customers after they have performed a card transaction. At least in some markets, the service will also include person-to-person payments processed by Obopay Inc., a Redwood City, Calif.-based mobile-payments company that lets handset users make transactions from prepaid accounts. Citi invested in Obopay last year. Indeed, Kietz sees the company's San Francisco location as a tactical asset. “San Francisco will allow us to have access to the best people and the best providers in the m-commerce category,” he says. Kietz says Citi decided to work with SK Telecom because of the commanding position it has built up in South Korea, where it has more than 5 million mobile-banking users. “SK Telecom is the No. 1 cell carrier in South Korea,” says Kietz. “It has been in downloadable apps and expanded use of the phone for five years.”