By Luann Lasalle

Published: September 29, 2009

MONTREAL – The growing popularity of smartphones is expected to push up the use of mobile banking, allowing consumers to check balances, transfer money and pay bills.

In Canada, mobile banking is attracting small numbers of consumers who are essentially replicating their online banking habits.

Banks including RBC (TSX:RY) and Scotiabank (TSX:BNS) offer the service and both say smartphones are key to its adoption.

While the Bank of Montreal (TSX:BMO) says demand for mobile banking is still in its infancy and doesn’t offer it, it’s watching it with interest.

IDC Canada analyst Kevin Restivo said a lot of Canadians still don’t have access to the web on their mobile phones and that’s holding them back from trying the service.

“In the short term, it’s very new to Canadians,” said Restivo, who follows mobile devices and their applications.

Smartphones allow consumers to surf the Internet, access email, watch video, listen to music, play games and run applications  such as stock trading platforms and airline boarding information.

In the next three to five years, mobile banking should become more popular as more consumers get smartphones and wireless network speeds increase making the experience easier, Restivo said.

Scotiabank’s Mike Henry said it’s mobile banking service has hadn’t a high adoption rate, but noted that until recently cellphones didn’t have the speed or quality of browser to provide a great user experience for consumers.

“We’re seeing interest in this area growing now as smartphones become the norm,” said Henry, senior vice-president of sales and service.

Analyst Emmett Higdon said mobile banking won’t replace online banking because of the screen size and user experience.

“In most cases, it’s simply more difficult to do something on your mobile than it is to go and do it online,” said Higdon, senior analyst in electronic business at U.S.-based Forrester Research.

However, consumers who use mobile phones to do banking are doing it because “it’s in their pocket, it’s available any time, anywhere,” Higdon said from Charlotte, N.C.

Devin Sawyer, director of mobile channel for RBC, said customers using it have smartphones and an “untethered lifestyle” that often has them away from their desk and computer.

“It’s safe to say adoption is relatively low but steadily growing,” Sawyer said.

Younger consumers will push the adoption of mobile banking, he said.

“This younger generation is born to the view that there is no limit as to what a smartphone can do. So they will have an expectation going forward that there is no limit to where online banking can go.”

Aran Hamilton, of Toronto-based EnStream which has launched a mobile payment service called Zoompass, said one of the challenges to get consumers to adopt banking on cellphones is the “so what factor.”

“They don’t actually know why they want to do mobile banking,” said Hamilton, vice-president of strategic partnerships.

Hamilton believes that will change when consumers can do transactions with family and friends and businesses, making the mobile phone like a digital wallet.

EnStream is a joint venture owned by the three major Canadian wireless carriers, Bell Mobility (TSX:BCE), Rogers Communications Inc. (TSX:RCI.B) and Telus Corp. (TSX:T). Hamilton said he is discussing partnerships with several Canadian banks for Zoompass.

Higdon said banking on cellphones isn’t expected to really take off until mobile payments and commerce really start to take off.

“Right now, the biggest hurdle quite simply is the mobile banking that’s out there is, really, simply duplicating what the customer already has available in many other channels, be that the branch, the ATM and particularly online.”

Higdon said in the United States, about 10 per cent of consumers say they have used mobile banking.

“It’s smaller in Canada simply because the Canadian institutions haven’t pushing it as much as in the U.S.”