| Technology Application
 By
Thomas P. Johnson Jr.
Building a business case for a
technology depends on matching the right application to
consumer demand.
Cool technology, but what's the business
case? Such is the skeptical response of bank executives
when confronted with the latest hardware or software that
promises to revolutionize their business – and they
have good reason. As several articles in this issue indicate,
no amount of whiz-bang science will assure commercial
viability if the application of that technology does not
adequately meet the needs of customers.
Consider, for example, the current debate
over the future of wireless banking and smart cards in
the United States. While both technologies have proven
themselves and achieved notable success in overseas markets,
U.S. business models have not yet coalesced.
The allure of wireless banking is that
it allows customers to access online financial services
through hand-held devices such as cell phones and Palm
Pilots. Encouraged by surging growth in Europe and Asia,
proponents say this technology will transform Internet
banking into a mass-market phenomenon. Unlike PCs, which
are relatively expensive and difficult to use, cell phones
and Palm Pilots function more like ordinary household
appliances, and portable ones at that.
Foreign precedents aren't necessarily
applicable here, however. As writer John Engen relates
in our cover story, the U.S. remains a PC-centric market
when it comes to the Internet. More fundamentally, banking
per se may not turn out to be the favored application
for wireless. Some surveys suggest people will get a lot
more excited about using remote devices to trade stocks
than to check their account balances.
Similarly, the European success of the
smart card may not be relevant in assessing its potential
in this market. While smart cards have been popular across
the Atlantic for many years in their "stored value"
application, where embedded chips are used to carry digital
money, this application never caught on stateside because
consumers here are perfectly happy with their existing
array of credit and debit card products.
A switch in the application from stored
value to online authentication may turn that around, according
to writer Julie Monahan. As demonstrated by the success
of American Express Co.'s "Blue Card," demand
does exist for a safe and secure method of making online
purchases. However, it remains to be seen whether the
smart card meets this need better than other alternatives.
These two examples demonstrate that
a pragmatic approach is essential in evaluating various
kinds of enabling technology. It doesn't necessarily matter
what a solution can do in theory, nor does it strictly
matter how the technology fares in another market. The
acid test is whether it meets a customer need that can
be profitably fulfilled.
Copyright © 2003 by Banking
Strategies, published by BAI.
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