Wells Fargo to shutter mobile service
The banking service, which lets customers make transactions from cell phones and handheld devices, will end this fall due to lack of interest.
The financial company said Tuesday that it plans to shut down the mobile service by late September, due to lack of interest. The service, which debuted last year and lets customers make transactions from cell phones and PDAs (personal digital assistants), had just 2,500 active customers, company spokeswoman Wendy Grover said.
"When wireless first became available, people may have been overly optimistic about adoption rates," Grover said.
Wells Fargo's decision to abandon wireless banking is just the latest in a series of departures from what was once seen as a hot market. Last month, Bank of Montreal decided to end its own foray into wireless banking.
Large companies early on saw the growth of wireless as an opportunity to expand banking services. In November 2001, mobile handset maker Nokia teamed up with a group of companies to launch Meridea Financial Software, which develops software to let banks offer services over mobile devices.
Yet those early efforts haven't produced viable services, as banks have discovered that launching and maintaining such services is costly--especially considering slow adoption rates, according to Keith Waryas, a wireless analyst with IDC.
Wells Fargo had a good approach to wireless banking, so shutting it down is "pretty significant," Waryas said.
"It's not a sign that the market is doomed, but it is a sign that the market is going to be delayed," he said.
Wells Fargo offered wireless banking services for free to its customers. Customers could view transaction histories, check account balances or transfer funds. The service was available only to Sprint PCS customers and users of Palm wireless handhelds.
Wells Fargo still has plans in the wireless market, however, Grover added. The company is testing wireless services within the company, such as forwarding company e-mail messages to employees' wireless devices, she said.
It also plans to continue sending alerts to customers concerning mortgage rates or stock prices, Grover said. Although these are sent via e-mail, many of them end up on wireless devices.
"That's where we see the interest right now," she said.
Both the Bank of Montreal and Wells Fargo were customers of 724 Solutions, which helped them introduce wireless banking services. The shuttering of both services won't materially affect 724 Solutions, company spokeswoman Rachel Douglas said. Douglas blamed the closures on the economic downturn.
"Financial institutions have really slashed their IT budgets," Douglas said. "Wireless being something new, it's not surprising that it's the first to be cut back, especially considering that adoption demand just hasn't been there."