Technology companies like Sybase and VeriSign are looking to tap robust growth in the nascent U.S. mobile banking market as text message use rises and banks aggressively explore ways to save.

Mobile banking services typically allow users to make payments, check balances, transfer money between accounts and generate statements of recent transactions on their handsets.

In the deepening recession, mobile banking is seen as a cost saver for banks, as customers who use mobile banking make fewer calls to customer service.

The big banks are all moving aggressively, said Steve Kietz, chief executive of Mobile Money Ventures, a joint venture between Citigroup Inc and top South Korean mobile carrier SK Telecom <017670.KS>.

Text messaging, initially slow to catch on in the United States, has been getting more popular with Americans, especially younger ones.

The Barack Obama presidential campaign's use of text messages to reach out to voters and the popularity of reality TV shows have helped increase the visibility of text messages, also known as short messaging service, or SMS.

SMS is taking off, said Nick Holland, senior analyst at Aite Group. Operators are encouraging the uptake of text messages, Holland said, adding that shows like 'American Idol' have educated the masses on the use of the service.

Viewers can send text messages to vote for their favorite contestant.

About 244 billion messages were delivered through VeriSign's mobile media division in 2008, a 134 percent increase over 2007. VeriSign says it owns 60 percent of the U.S. inter-carrier market.

The mobile banking market is expected to more than double in 2009 to 21.1 million users, Holland said. We estimate around 35 million users of mobile banking in the U.S. by 2011, Holland said.

The growth is being driven by consumers' desire to have access to financial services remotely, increased mobile penetration, more sophisticated devices, faster networks and rising familiarity with data applications, Holland said.

Part of the reason for the rapid growth is also the underpenetration of the market. Just over 3 percent of U.S. financial institutions will have mobile banking by the end of 2009, Holland said.

In North America, it is less advanced than it is in more advanced mature mobile markets, such as certain mobile markets in Asia, said Charles Landry, a vice president at VeriSign, whose mobile banking services are used by seven of the top 10 U.S. banks.

Asians have taken more to text messaging than Americans, and mobile banking tends to be popular in emerging markets where Internet penetration is low.

But now with the growth in SMS, the United States is seen as an attractive market.

The U.S. market for mobile banking is moving quickly from early adopter to being an early majority mobile banking market, said Haridas Nair, area vice president for mobile commerce at Sybase 365, the unit of Sybase that focuses on mobile messaging.

All major U.S. banks offer mobile banking in some form, and second-tier and regional banks are quickly catching up, Nair said.

Customers of Sybase, which recently acquired German mobile payment firm paybox Solutions AG, include Citibank, Compass Bank, Royal Bank of Canada and MoneyBox Africa.

Other firms offering mobile banking services include Fiserv , Jack Henry & Associates and Metavante Technologies Inc .


As banks formulate their strategies, they choose between offering mobile banking services through text messages and Web applications. Use of Web services on handsets for mobile banking has been slow to spread.

We're seeing the predominance of traffic being SMS driven, as opposed to WAP or embedded-application driven, Landry said. SMS will predominantly be the form of mobile banking for some period of time to come. There are banks that are working with downloadable applications and trying to drive traffic that way.

While SMS is currently the most popular platform, the next stage of mobile banking would be banking that occurs over the Internet on the handset.

In October, Mobile Money Ventures and Citibank Hong Kong launched a mobile Web product that offers advanced services such as stock market trading.

More recently MMV launched iPhone banking in the United States. The application had more than 40,000 downloads in the first five days of launch.

The growth and success of smartphones such as Apple's iPhone is an opportunity for the industry.

Consumers need activities to do on their smartphone. And we think mobile banking will be one of those features, said Kietz, who expects to have MMV's banking products on BlackBerry's online application store, which is expected to be launched shortly.

(Editing by Mike Miller)