Financial institutions and banks turn to SMS technology to restart mobile finance after WAP banking failure

Two more banks have announced their decision to close their respective Wireless Application Protocol (WAP) banking platforms. UK's Abbey National Bank PLC and Halifax Bank PLC is the latest addition to a growing casualty list.

Instead of wallowing in failure, technology analyst firm Forrester Research Ltd gives four reasons for European banks to now turn their attention to offering mobile finance using the much simpler Short Message Service (SMS) technology.

According to Forrester's analysts Charlotte Hamilton, the robust and popular SMS technology deserves a better chance of succeeding where WAP has failed.

Firstly, the use of SMS technology has a greater reach. Three of four Europeans adults use a mobile phone and have regular access to SMS. This percentage is even higher in countries like Sweden where it is as high as 88 per cent. "These European adults who use a mobile phone represent the largest audience of all the electronic channels," writes Hamilton. By comparison, only 36 per cent indicate regular use of email and the number of users with WAP-enabled mobile phones remains small.

Secondly, banks can recoup their investments in mobile finance services delivered via SMS by offering a subscription-based service on SMS alerts. According to Hamilton, account holders and banking customers have indicated a willingness to pay for SMS alerts. For example, Netherland's Rabobank received a quick return on investment (ROI) for their increasingly popular SMS-based mobile finance service. Rabobank charges €2 for a three-months registration and €0.15 per SMS message for stock alerts and on-demand bank balances.

Next, services such as SMS alerts are able to build customer loyalty. Hamilton commented SMS alerts increase bank account holders' ability real-time control of their own individual finances. For example, French bank Societe Generale's Messalia and UK's First Direct Bank's SMS alert service enable 430,000 and 230,000 bank account holders respectively to verify unusually large payments, or when their account balances is too high or low.

The last reason is SMS's inherent text-based communication. Written communication easily helps the bank's customer support or help centre resolve problems by giving clear instructions via SMS rather than by talking through the problem.