Mobile, P2P and Consumer Demand

Fifth Third Rolls Out Online, Mobile P2P
Mobile, P2P and Consumer Demand
Demand for more mobile services is the catalyst for Fifth Third Bank's launch in mid-2011 of mobile peer-to-peer payment service available via the and online banking channels, says Fifth Third's Larry McClanahan, who's heading up the project. "Initially, it's going to be more online P2P, rather than mobile. Customers are very comfortable with that online channel, but we definitely see the mobile component of it growing rapidly," he says. "It's all about what customers are looking for."

Through CashEdge, a third-party provider of remittance services for the bank, Fifth Third is launching Popmoney, a P2P payment platform that links to the bank's online banking infrastructure.

During this interview, McClanahan discusses:

  • Why Fifth Third is launch the service only as a consumer-to-consumer payment option;
  • The security testing the bank performed before signing with Popmoney; and
  • Why mobile is expected to play a significant role in P2P's future.

McClanahan serves as vice president and director of alternative delivery channels for Fifth Third Bancorp, where he manages the strategic direction and execution of Fifth Third's ATM, Internet banking, 53.com, mobile banking and retail support channels. Before joining Fifth Third in February 2010, McClanahan was general manager for Consumer Internet Services at Cincinnati Bell. He also previously served as a consultant at Sogeti, vice president of Consulting Services at Systems Insight Inc. and as director of development and support at Cincinnati Bell Telephone. McClanahan holds a bachelor's degree in economics from Northern Kentucky University.

P2P: Mobile Variety

TRACY KITTEN: Larry, Fifth Third announced that it expects to roll out mobile and online P2P payment services to its customers in mid-2011. The service, facilitated through CashEdge's Popmoney program, allows users to send funds using an e-mail address, mobile number or bank account. The service provides support for text messaging, browser-based/WAP mobile banking and downloadable mobile banking applications. Is Fifth Third offering all of those options, and how will the service be rolled out to your customers?

LARRY McCLANAHAN: We are in the process of finalizing our project plans for the implementation of Popmoney and, as you alluded to, we expect to roll this out mid-2011; but, more than likely, there will be a couple of phases with this. Our plans are to extend all of these services to our customers by the end of 2011.

KITTEN: CashEdge is a third-party provider of bill-payment services. Has Fifth Third worked with CashEdge in the past and, if so, how did you decide to work with this particular third-party when it came to the P2P platform?

McCLANAHAN: Fifth Third currently utilizes CashEdge's Transfer Now services, and we have used those services for a couple of years. The reason we chose them for Popmoney is because they have a strong track record in this field and we have been very pleased with their services so far.

KITTEN: Can you tell me a little bit about the services that you have been using, such as the transfer services? Is that a bill-payment service, or is that actually a money-transfer service?

McCLANAHAN: It's money-transfer services -- the ability for our customers to transfer funds between Fifth Third and other financial institutions.

Third Parties and Security

KITTEN: Working with a third-party, there obviously would be some security concerns, I would assume. What types of security concerns do you have, and what unique security challenges does P2P pose, especially as we enter the mobile arena?

McCLANAHAN: Security is always a very, very important issue for Fifth Third and it was a very critical part of our decision criteria. We are confident that CashEdge is strong in this area, and we are confident that they are going to continue to allow us to offer simple and secure solutions for our customers.

We looked at security; we had a team that dove into that very deeply to make sure that account information could never be compromised and our customers' identities and valuable data would always be secure.

Social Networks and Mobile

KITTEN: Now, social networking is something we talk about quite often, especially when mobile comes into the conversation; and there is a connection between peer-to-peer and mobile. What role do you see P2P playing, from a social-networking perspective, and is this an area Fifth Third is even considering? Might P2P be linked to Facebook, for instance?

McCLANAHAN: That is a very interesting question. Currently, we don't have plans to extend P2P in our social strategy. However, we will continue to evaluate that and look for opportunities to expand services in media, looking at how we can get that information out to our customers. But right now, it is not on our roadmap.

KITTEN: Now, as we look out to 2011, what trends or movements do you see banks making in the area of P2P? Does this type of service offer banks a competitive edge, and help them compete with emerging non-traditional providers that are increasingly entering this space?

McCLANAHAN: There are a lot of different services that are offered to customers looking for financial services and we are constantly looking for services to enhance the life of our customers. P2P offers customers choices, based on their lifestyle and how they potentially are going to pay other individuals. So, I don't know if I would phrase it as a way of competing against non-traditional providers, but more of a way of providing our customers choices.

KITTEN: And do you see other banks following suit?

McCLANAHAN: I absolutely think that other banks are going to continue to look at the needs of their customers and offer solutions based on what their customers are looking for. So, I do think that there will be many banks that offer these types of solutions in the future.

KITTEN: And do you plan to leverage this service to attract new customers?

McCLANAHAN: Currently, we deploy the services to provide additional value for our existing base. We are not looking at it as a new way to attract new customers, but really to continue to leverage our existing relationships that we have with our customers, based on their market segments and based on how we interact and how the customers interact with us. I really don't see a differentiation between those market segments. I think this is a service that, depending upon the services that you have with us, fits the needs of all of our customers.

KITTEN: And do you expect in the near future, or perhaps longer down the road, to branch this service out to include payments to merchants, rather than just person-to-person?

McCLANAHAN: Very, very good question. We have been asked this a number of times, and we are looking at that but at this time we don't have plans to branch it out to payments to merchants.

KITTEN: One thing I did want to ask, Larry, when we take a step back and look at mobile versus online, do you have any kind of handle on where the payments might go? Do you expect to have more online payments or more mobile, or is it too early to tell at this point?

McCLANAHAN: You know, I think initially it is going to be more online. The mobile market is growing very, very quickly, but most of the focus is going to be online. Customers are very comfortable with that online channel and the comfort level for mobile is growing quickly. So, while we anticipate most of the usage will be online, we definitely foresee the mobile-payment piece of it growing rapidly.

KITTEN: And, in closing, what advice could you offer other financial institutions interested in offering an online or a mobile P2P service?

McCLANAHAN: I think that first they should focus on their customer needs and go back and research what their customers are looking for and how they can enhance their service offerings to meet the needs of their customers. And then, second, make sure that they do a very detailed analysis on security, to make sure that they don't put their customers at risk.


About the Author

Tracy Kitten

Tracy Kitten

Director of Global Events Content and Executive Editor, BankInfoSecurity & CUInfoSecurity

A veteran journalist with more than 20 years' experience, Kitten has covered the financial sector for the last 13 years. Before joining Information Security Media Group in 2010, where she now serves as director of global events content and executive editor of BankInfoSecurity and CUInfoSecurity, she covered the financial self-service industry as the senior editor of ATMmarketplace, part of Networld Media. Kitten has been a regular speaker at domestic and international conferences, and was the keynote at ATMIA's U.S. and Canadian conferences in 2009. She has been quoted by CNN.com, ABC News, Bankrate.com and MSN Money.




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