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And then there were three. Lots of big news on the mobile bankingfront in the last few weeks, starting with the fact that Qualcomm-owned Firethorn is finally giving up the ghost after struggling to find its way as a carrier-centric mobile banking venture. It's been a fairly ugly ending, but you've got to give a load of credit to BTN Innovator Hall of Fame member Tripp Rackley. Firethorn-which he sold to Qualcomm in 2007 for $210 million in cash-was Rackley's second big score; he took Internet banking pioneer nFront public in 1999, and then sold it to Digital Insight in 2000 in a $439 million stock deal. No word on what Rackley's next move will be, but he spent the years between nFront and Firethorn as an entrepreneur in residence at a Georgia-based VC firm. Stay tuned.
February 1 -
Austin, Texas-based University Federal Credit Union has contracted with Firethorn Holdings LLC, a unit of Qualcomm Inc., to provide its members with mobile banking services.
October 19 -
Firethorn Holdings LLC said Pennsylvania State Employees Credit Union has recently begun using its mobile banking system.
October 13 -
U.S. Bancorp executives provided details about their mobile banking strategy, including plans to roll out person-to-person transfer and remote check-capture services this year.
June 9
In the mobile banking business, a one-size-fits-all approach just doesn't cut it, as Firethorn Holdings LLC found out.
Now the Firethorn team is focusing on a new loyalty rewards technology.
The Qualcomm subsidiary, once considered a mobile banking pioneer, attracted banks that wanted their service preloaded on basic feature phones before the days of the iPhone and other app-friendly devices. It eliminated a lot of the legwork for banks, forming agreements directly with wireless carriers to get apps that aggregated access to multiple financial institutions on their latest phones.
The approach helped banks go to market quickly with services and allowed consumers to perform basic tasks, like check balances.
"The original premise was actually very, very effective in the early days of mobile banking given that you had this need with feature phones," said Emmett Higdon, a senior analyst who focuses on retail banking technology at Forrester Research Inc.
"Getting your mobile banking application into every mobile carrier's handsets was an incredibly arduous task that involved setting up separate legal agreements with different carriers," Higdon added.
When the smartphone craze took hold, with a push from the arrival, in 2007, of Apple Inc.'s iPhone, banks had a window to develop applications compatible with major mobile operating systems. As app stores popped up on Research In Motion Ltd.'s BlackBerry and phones that run Google Inc.'s Android software, this trend eliminated the need for mobile banking providers to strike up deals with individual wireless carriers, analysts said.
"Relying on this … deck preloaded into the phone became less where the momentum was," said Mark Schwanhausser, a senior analyst with Javelin Strategy and Research in Pleasanton, Calif.
Firethorn seems to have acknowledged as much. It has developed stand-alone smartphone apps for some of its bank customers.
Qualcomm, which bought the Atlanta company in 2007 for $210 million, shopped Firethorn's mobile banking assets last year, according to an industry executive familiar with the situation.
Firethorn has had bigger operating losses in recent quarters, according to Qualcomm's filings with the Securities and Exchange Commission.
It recently posted a notice on mobilebanking.com, its consumer marketing website, that it is no longer supporting new banks on its application, which offered access to more than 3,700 financial institutions. The app was limited to checking balances. "Beginning January 31st, only featured provider financial institutions will be supported; all other institutions will be un-enrolled from your application," the notice said.
"We have discontinued our aggregation service, which was the service for financial institutions that were not featured provider financial institutions," a Qualcomm spokesman said by e-mail.
Firethorn plans to continue supporting 20 featured financial institutions, including USAA Federal Savings Bank, SunTrust Banks Inc., Regions Financial Corp. and U.S. Bancorp, which have individually branded applications.
Firethorn's sister company Outlier Inc., which operates out of Firethorn's office, has been touting a new mobile app that it is marketing directly to consumers called SWAGG, which lets a consumer load multiple loyalty and rewards cards into a single "wallet" service. The application also allows consumers to purchase and give "virtually stored-value gift cards" with a mobile phone, according to a Qualcomm SEC filing. Regions and SunTrust declined to discuss their relationship with Firethorn.
"Firethorn has been a good partner, and we have had significant success with our mobile banking offerings," a spokeswoman for U.S. Bancorp said in an e-mail. "Looking ahead, we have a transition in place, including more activities related to mobile banking in-house."
Ironically, Firethorn's strategy of aggregating multiple banks under a main app is a strategy that has worked for Jeff Peiffer, a private developer behind an Android app that gives users access to multiple financial institutions.
The $5 app, one of the most downloaded paid finance apps in the Android Market, lets people log in to their accounts at eight financial companies. Peiffer's strategy is to add banks that lack a presence in the Android Market.
Peiffer said he isn't surprised banks would pass on the chance to be aggregated with competitors.
"They want to control their user experience," Peiffer said.
Though individual bank apps clutter mobile app stores, they are well suited to the banks behind them, Higdon said.
"You don't necessarily need the kind of model that Firethorn has been pushing over the years," Higdon said.
