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TowerGroup's latest report on mobile banking and payments

Central to mobile banking and payment adoption and usage is finding a balance of security, cost and customer convenience.

These are the latest findings of a mobile banking report by research firm TowerGroup. The report focuses on security and usability of mobile payments.

"As mobile banking develops its critical for banks to be at the center -- sort of the back-bone of security for the end-user," said George Tubin, research director of the delivery channels and financial information security division at TowerGroup, Needham, MA.

"We've seen in the online banking space, the balance of security effects its usability," he said. "Banks need to figure out how to balance security and usability, like they have in the online space."

As mobile banking evolves into mobile payments, the struggle between mobile operators and financial services institutions over the control of these payments and their associated fees will intensify, according to the report.

The report also found that it is unlikely that a single password protection initiative for a mobile wallet would be a great enough risk reduction.

Consumer banks must be the central player in the burgeoning mobile payments market due to their vast experience and expertise in payments processing and maintaining trusted consumer relationships.

"As mobile banking develops banks have to see themselves as a central point for the consumer direction and not relegate that out to third-party providers or mobile carriers," Mr. Tubin said.

Mr. Tubin said that about 1 million consumers were doing mobile banking by the end of 2007 and TowerGroup expects that to quadruple by 2008.

"Most banks will roll-out a mobile banking approach similar to Bank of America's," he said. (See Story)