All right. I’ll admit to being an iconoclast, even a contrarian at times. But really, when it comes to mobile banking, can we all take a breath?

Mobile banking is supposed to change everything. Brick and mortar branches will vanish. ATMs will become obsolete. Checks – we won’t be able to remember when we wrote ’em. Even Internet banking (last decade’s greatest hit) will fold into a tiny mobile app.

Do you see any of that happening? I don’t – at least not yet.

What I do see is potential – a market coiling like a spring around features that many bankers have yet to exploit. A good example is the mobile wallet. Article after article has literally installed the mobile wallet concept in every banker’s vocabulary. But only 5 percent of consumers admit they are very interested in the mobile wallet, and a whopping 47 percent say that the mobile wallet is “very unimportant” to them. Hot? Definitely not.

By contrast, real time alerts represent a red hot mobile banking trifecta because they:

• Assist overdraft and credit monitoring, saving money for banks and consumers alike.
• Open the possibility for fee income through bill-pay alerts and expedited payments.
• Further expand market reach by delivering merchant-based offers, giving banks the ability to create revenue-sharing opportunities – something banks never really had with Internet banking.

Best of all, consumers want alerts. Free basic alerts have been shown to boost the adoption of mobile banking, which is good because mobile banking trumps all other transaction channels in cost-effectiveness.

Current research shows that mobile banking transactions cost less than half of an Internet banking transaction, a mere tenth of an ATM transaction, and one fiftieth of an in-person branch transaction. So, the more our customers go mobile, the more cost-effective banks become.

Payment Problems

Mobile banking also opens the door to additional product sales, such as real time budgeting, location-based services, merchant rewards, and coupon sales – all items that have income potential for banks. So, yes, this channel is hot, and would be even hotter except for one stumbling block – payments.

Banking analyst after banking analyst has predicted that mobile payments will explode in the next five years. The Aite Group points to a 377 percent increase in adoption between 2010 and 2013. By 2016, the global market for mobile payments is expected to reach $680 billion.

The trouble is that our industry faces a juggernaut of mobile payment experimentation, platform incompatibilities and competitive barriers between today and the golden era of mobile banking. Consumer and merchant confusion is all too likely as bankers struggle to learn how near field communication will finally enable us to press a button on our smart phones to buy a bottle of water from a vending machine.

Current trends show the big winner in alternative banking channels today is Internet banking, which has increased from 23.3 billion transactions in 2009 to 30 billion transactions in 2011. Mobile banking has smaller numbers – 1.2 billion in 2009 to 5.6 billion in 2011 – but the rate of increase is substantially higher: a 29 percent increase in Internet banking transactions, a 466 percent increase in Mobile Banking over the same period.

How your bank reacts to these statistics is up to you. In the meanwhile, I would focus on boosting mobile banking usability and implementing real time alerts. I wouldn’t hold my breath for mobile payments – they’re not quite ready for prime time. But I would certainly keep watching, because someday soon, the issues will be solved. Pursue merchant rewards – they can help market your bank as well as your business customers. And collect your customers’ mobile numbers as fast as you can.

Joe Trafton is senior vice president and chief strategies officer of COCC in Avon, Conn.