Canada’s big banks are working on bolstering their mobile banking services, with most expected to roll out more sophisticated and robust suites of applications and services to meet what they say is steadily increasing demand from consumers.

“Even if there’s only a small group of clients now who find it valuable, we believe that as smartphones continue to proliferate, the market is going to get bigger over time,” says James McGuire, vice president of online strategy and client experience with Royal Bank of Canada in Toronto.

RBC has been offering clients a variety of mobile banking services for the past two years. It intends to roll out banking applications designed for use on the most popular lines of smartphones and an improved web browser-based application over the next 12 months. “By next year,” McGuire says, “the mobile banking environment across the industry is going to look a lot different from the way it does today.”

The big banks’ improved mobile services are likely to include mobile investing applications — or “apps” — that will allow the banks’ direct-brokerage clients to place orders to buy and sell equities quickly and securely from their smartphones.

“Making investment decisions is more time-dependent than banking,” says Rob Barbuch, senior analyst with Toronto-based consulting firm IDC Financial Insights Canada, who believes that buying and selling equities using a mobile device will appeal to active investors who have self-directed accounts.

Most banks already offer basic mobile banking services, such as the ability to check account balances, transfer money and pay bills. However, the Canadian financial services industry has lagged behind its global counterparts in offering more sophisticated and easy-to-use mobile financial services. One of the main reasons has been a lack of client interest, particularly considering the ready availability of online banking, ATMs and bank branches in Canada.

Only 7% of Canadians who own a mobile phone used mobile banking services between July 2009 and September 2009, according to a study by Cambridge, Mass.-based Forrester Research Inc.

But as more clients obtain smart-phones — cellphones with larger screens that can connect to the web and run applications — the more open these clients will be to using them to do their banking, industry observers say. And as the younger, tech-savvy generation of Canadians matures and seeks out financial services, its members will expect ready access through their handheld devices.

“Young people can’t imagine lives without being connected,” says Joe Compeau, a lecturer in information systems at the Richard Ivey School of Business at the University of Western Ontario in London, Ont.

Some Canadian banks are rushing in to establish themselves as providers of mobile services. This month, Canadian Imperial Bank of Commerce launched a mobile banking app, downloadable free of charge, to its banking customers who use Apple Inc.’s iPhone. Clients can check balances, transfer funds, pay bills and locate the nearest CIBC branch or ATM through the app.

Late last year, Bank of Nova Scotia released an app, compatible with the iPhone and Research in Motion Ltd.’s BlackBerry, that allows clients to locate the nearest Scotiabank branch or ATM. At the same time, the bank announced that it would be releasing a more robust line of mobile banking services this spring.

McGuire says RBC’s mobile banking apps, when they are released, will be compatible with the iPhone, the BlackBerry and Google Inc.’s Android — the dominant smartphone brands.

So far, an app that will enable Canadian retail customers to make payments to retailers through a mobile device is still a few years off because of the complexity of devising such a system that has both security and ease of use. But the payment process is headed in that direction. “It’s very seductive, this idea that all a consumer has to carry is a mobile device that does everything,” Compeau says. “You [will] no longer even have to carry a wallet or have credit cards.”

One of the benefits of a mobile payments system is the reduction in the cost of offering bank clients a means of making financial transactions. For example, providing apps is less expensive than mailing out credit cards or processing cheques. “It’s a fairly cost-effective way to run your business,” says Andrew Light, a vice president of advisory services with PricewaterhouseCoopers LLP in Toronto.

@page_break@Concerns over security and privacy could delay the move to mobile banking in Canada. That is probably one of the reasons Canadian banks are taking their time before rolling out their mobile banking apps and other services.

“All it takes is one big case of fraud and everyone will get panicked,” says Barbuch. “For the banks, it will be about reassuring people that banking by mobile is just as safe as banking online.”

Some clients may find that mobile banking provides them with more privacy rather than less, Light suggests: “People aren’t happy about talking out loud over a mobile phone to a bank representative about their account. With an app, they can quietly bank wherever they are.”

Direct-brokerage clients might also eventually see a benefit in the ability to trade securities by using a mobile device. ScotiaMcLeod Direct Investing already allows clients to place orders to buy and sell equities, get real-time quotes and receive stock alerts on their mobile phones, although the company has yet to release a trading app. RBC, for its part, is likely to include a trading app when it rolls out its enhanced mobile banking services over the next year.

“For certain people, the ability to buy and sell stocks over a mobile phone would be ideal because they’re always looking to capitalize quickly on an idea or a piece of news,” says Compeau. “Some people love that kind of trading.”

Most financial services industry experts believe mobile investing will grow slowly and remain appealing only to active traders who are comfortable with new technology. “We’re not likely to witness an immediate mass exodus of clients from full-service financial advice into the realm of self-directed [just because of] the smartphone,” says Jack Rando, director of capital markets with the Toronto-based Investment Industry Association of Canada. “Self-directed is simply not for everyone.”

However, over the longer term, clients’ expectations regarding buying and selling of equities may change. In the future, clients may not feel happy about waiting for their advi-sors to return a call regarding a trade if the clients know their neighbours can immediately execute a trade over mobile devices. And younger generations of Canadians, now growing up immersed in technology, will be comfortable conducting transactions via the web or smartphone.

“We’ve seen tremendous growth and popularity in the self-directed channel over the past several years, and mobile investing is just another example of how the online channel is increasing its value proposition to clients,” Rando says. “So, the full-service advisor is going to have to continue to show what value he or she can bring to the table.” IE