Banking on Wireless

Bank of Montreal takes early lead

The Bank of Montreal may be more than 180 years old, but when it comes to rolling out wireless Internet applications, this venerable organization is as leading-edge as it gets. BMO committed early to the wireless Internet, and now stands to emerge as a major provider of mobile financial applications to the entire banking sector.

Three years ago, when many financial institutions were still on a nodding acquaintance with the Web, BMO was already preparing to provide mobile banking services. "We began looking at the future of electronic access channels for financial services," says Mark Dickelman, senior vice president at BMO. "At the time, we had a very successful PC and direct-banking capability for customers, but we saw a number of new devices and channels emerging, such as mobile phones and PDAs [personal digital assistants]."

Working in tandem with Internet infrastructure solutions provider 724 Solutions, the bank began developing a strategy to quickly and economically adopt those channels. "By the fall of 1998, wed determined that we wanted to proceed in implementing a platform to support a variety of mobile devices," Dickelman says.

Partnering with Bell Mobility, Bell Canadas wireless arm, and, which develops communications platforms for wireless access, the bank launched its retail wireless banking service in May 1999, only to discover that it had outpaced the market. "Wed done some research asking customers what they thought of mobile devices that enabled them to do certain types of transactions," Dickelman says. "At first they were very skeptical and didnt see much value in it."

Even after the bank used "live" mobile devices to demonstrate how customers could carry out transactions, using their account and personal identification numbers, they werent quite ready to embrace the new technology. "Wed usually get the Holy cow! response," Dickelman says. "But it was still so early people couldnt conceive of using this. Using their mobile devices for access to the Internet was a very foreign concept."

An Early Leader

Despite the disappointing response, the bank pressed ahead, working closely with 724 Solutions and to make sure it understood the security aspects of implementing and managing the network. "The security model for wireless is different from the wired Internet," Dickelman notes. "You dont have end-to-end security on wireless phones. You have to understand that and manage it."

Scalability was another early concern. "We built a platform from the outset that would enable us to grow," Dickelman says.

The upshot of these efforts is that BMO has emerged as an undisputed early leader in Internet wireless applications, now able to provide mobile banking and brokerage transaction capabilities to its 6 million Canadian and 1 million U.S. customers. Working with Sprint in the U.S., it also introduced Harris Wireless, a complete mobile banking and investment service, for its wholly owned U.S. subsidiary, Harris Bank. "We had a full commercial launch on Sprints national menu in July 2000," Dickelman says. "We were the first major U.S. bank to launch the technology."

Both efforts have been highly successful, Dickelman claims, but the real payoff in terms of shareholder value may well come from the banks efforts to commercialize its wireless expertise by delivering mobile solutions to other financial institutions.

"BMO is an early leader in the wireless business in North America and, through its wireless expertise, is uniquely positioned to capitalize on this very interesting and significant market potential," says Lloyd Darlington, president and chief executive of BMOs mobile commerce business unit, Emfisys.

"Being a forerunner and pioneer in wireless has served the bank well in going after this market," says Virginia Philip, an analyst at TowerGroup, a financial services information technology consultancy and research firm. BMO is targeting wireless financial services customers in North America, a market that TowerGroup estimates will reach 35 million by 2005. Within that same timeframe, TowerGroup projects that the financial services industry in Canada and the U.S. will spend $700 million for wireless Internet.

In pursuit of this market, BMO has taken a substantial equity stake in 724 Solutions, which supplies wireless financial solutions and platforms to major banks, including Bank of America, Citigroup, Wachovia and Wells Fargo.

"This puts the leading bank as to wireless rollouts together with the provider of market-leading technology," Philip says. "Thats a package for success."

Emfisys, which functions as a profit center, also provides e-business and wireless planning, strategy and development capabilities to other financial services firms. "The problem in the past with midsize banks using wireless has been expense," Philip says. "But what Bank of Montreal is offering is within their reach financially and relatively quick to implement."

While some big organizations are reluctant to move to mobile technology until new, richer wireless services enter the market, BMOs philosophy is to capitalize on the technology thats available. "We see immense value in the existing platforms," Dickelman says. "We have a migration plan from a 14.4 [kilobit-per-second] data rate on CDMA [Code Division Multiple Access] to 144 kilobits [per second] next year. We intend to use every device and every network thats important to customer services."

And how does Dickelman respond to the doubters who still question why wireless matters to their customers? "This is not about the latest, greatest technology," he says. "Its about creating an extremely convenient, extremely low-cost channel."