As the top executive of a Hays-based wireless phone service provider to parts of western Kansas and eastern Colorado, Johnie Johnson spends a lot of time on the road.

So when Bank of America said in late May that it was rolling out a mobile banking service to its more than 20 million online customers, Johnson signed up.

"I logged on the day I saw the press announcement and have been using it ever since," said Johnson, chief executive of Nex-Tech Wireless.

Bank of America is the first bank doing business in the Wichita area to offer an online banking service via Web-equipped mobile phones and personal digital assistants, or PDAs.

Others will follow.

The realm of possibilities for using a mobile phone for banking is wide. But experts say it will likely be a few years before the full potential of Internet banking via a portable wireless device -- including using a mobile phone as a payment device -- is fully realized.

"From where we're sitting... there certainly seems to be a real opportunity this time for mobile banking and mobile payments to take off," said Terri Bradford, payments system research specialist for the Federal Reserve Bank of Kansas City.

A Bank of America spokeswoman said the bank's mobile banking service allows customers to view balances and transactions, transfer money from one account to another and pay bills online.

They can do so using several types of mobile phones and PDAs, such as a Palm Treo or BlackBerry, and phones manufactured by Motorola, Samsung, Nokia and LG.

"More consumers are doing more with their cell phones," said Betty Riess, the Bank of America spokeswoman. "This is really a natural extension of the convenience of online banking."

Barriers to entry
Some of Wichita's largest banks are interested in the concept.

But they don't think the technology to make it happen is fully developed. They want to make sure whatever they offer in the future is cost-effective and secure.

"This is something we've looked at quite a bit for several years," said Tom Morrison, Intrust Bank senior vice president and director of e-commerce.

Morrison doesn't think there's a strong demand among Intrust customers for such a service yet.

And at this point, Intrust would have to look at becoming sort of its own software developer to be able to offer the "rich, mobile Internet capabilities" it would like to offer.

Developing its own software to make Internet banking work is also problematic because technology advances quickly. Morrison thinks that by the time the bank develops something, it could be outdated by the time the bank is ready to rollout the service.

"We don't necessarily want to develop an application that we don't know how far out it will carry us," Morrison said. "I think the costs for us would be greater than for a larger (bank).

"Frankly, it's more development than we want to put into it at this point."

Monte Cook, executive vice president at Commerce Bank, said that's one of his bank's concerns, too.

Commerce could work with one of myriad wireless phone service carriers to offer a mobile banking product instead of developing its own, he said. But that could isolate some customers.

"That's kind of where we are," Cook said. "We kind of fall back on, 'How are we going to take care of the majority of our customers?' "

And then there's the whole issue of security. Cook and Morrison said systems will need to be put into place to protect access to accounts and wireless banking sessions.

"Convenience is still the No. 1 priority," Cook said. "But when you get into this arena, it's also security."

Bank of America's Riess said her bank's online security measures include the ability to encrypt information sent to and from the wireless user.

"The security is obviously a very important consideration for us," she said.

'Contactless banking'
Security will become a bigger issue when the next evolution in mobile banking comes.

That next evolution will feature mobile phones and PDAs set up to work as a payment device, like a credit or debit card.

It's called "contactless banking" and it uses a specially configured mobile device, such as a phone, that can be waved or passed in front of a sort of card reader that captures the same kind of account information included in the magnetic strip on a payment card.

Such devices are already in limited use in Japan, said the Fed's Bradford.

"They've got the phone, the bank, the card application tied all into one," she said.

Implementing a similar service will be more difficult in the U.S., Bradford said, so it will likely be years before contactless banking comes here.

In Japan, there are fewer banks and fewer wireless service providers, Bradford said.

To get widespread adoption of that kind of service would require hundreds of U.S. banks, wireless phone providers and manufacturers, and retailers working together to have uniform technology services and products to make it work, she said.

"We have so many more things to work through," Bradford said. "When you've got that dynamic... it's a little more complex to pull something like that together."

With such a system in place, the issue of security would become even greater, she said.

Losing a mobile phone would suddenly become an even more urgent issue because that phone has become a payment device and also something that may store important information like passwords.

"There are a lot of hurdles," Bradford said. "(But) I think at the end of the day the mobile banking piece is just the first step."

News from: Kansas.com