The slow take-off of wireless trading reflects the general cooling of interest in mobile data services over the last two years. While a number of companies set up wireless trading services in 1999 and 2000, when mobile enthusiasm was at its height, most of them now admit that their offerings have not been as successful as hoped. Many have either scaled back their investment or pulled out. And few new companies have come in.
The experience echoes that of wireless banking. While there are more services than in the trading sector, the level of take-up has again generally been disappointing, and many banks have withdrawn.
Egg, for instance, decided to drop its Wap-based (wireless application protocol) mobile banking service at the start of this year, after 16 months of operation. NatWest dropped its Wap service in October after only 12 months. In the US, the Bank of America turned off its mobile service in December.
But there are exceptions. Fidelity Investments, the largest mutual fund company in the US, says its mobile trading service, launched in January 1999, has been very successful. And many experts expect to see a general take-off in mobile trading once advances in network and handset technology make it possible to provide more user-friendly services.
Broker TD Waterhouse, which launched the UK's first mobile trading service in the summer of 2000, acknowledges that take-up has been slow. Richard Saville, senior vice president for the TD Waterhouse e-channel, thinks that no more than about 1,000 of the company's 50,000 online customers are regular users of its MobileBroker service, which enables them to trade shares from their Wap phones as well as accessing pricing quotes, news on stocks, and information on personal accounts and portfolios.
"But those that do use it, love it," he adds. "For many of them it is invaluable."
The main problem with the service, as with all Wap-based offerings, is that it is difficult to use, particularly with certain handset models, he says. The entry of passwords and other information on tiny phone keypads is a more complicated and time-consuming process than it is on a full PC keyboard. But he adds that users are prepared to put up with this if they think it is worth it. "If you hear price-sensitive news when you are 20 miles from the nearest PC, then you are getting a real benefit."
TD Waterhouse will maintain the mobile service, says Mr Saville, because it views it as agood product base from which to expand. But it will not be investing much on development in the immediate future. Instead, it will wait until third-generation (3G) services and advanced all-in-one handsets arrive, opening up the possibility of more sophisticated offerings. He is sceptical about the prospect that GPRS will produce much improvement in the short term.
A need for new wireless services
Tim Devine, managing consultant at PA Consulting, agrees that the "clunky" nature of Wap is one of the main reasons why wireless trading and banking have been slow to take off. And too many organisations have sought simply to introduce mobile versions of their existing fixed-line products, despite the fact that mobile devices are incapable of supporting the same sorts of services as a PC.
"Really, you want products that you could not have had before," he says. "Products that take advantage of the particular characteristics of the mobile."
This means thinking about which customer segment is being addressed. "Is it for professional dealers? Probably not. They want to trade from their desks. Is it for punters like you and me? Maybe. But the devil is in the detail. Do I want to do the trading myself? Or do I want to send an e-mail to my broker?"
Mr Devine says companies will introduce more advanced GPRS-based services in the next few months. These will among other things take advantage of the "always-on" nature of GPRS to provide continuously-updated financial information to wireless-enabled personal digital assistants (PDAs) with large colour screens. These could, for instance, display graphs of share price movements.
Joe Ferra, chief wireless officer of Fidelity e Business (FeB), a division of Fidelity Investments, says his company has managed to avoid many of the above problems. Its Fidelity Anywhere mobile service has 125,000 registered users, representing between 300,000 and 500,000 accounts, roughly 10 per cent of the 4m online accounts that it has altogether.
The service is delivered to a variety of mobile devices including the RIM 950, Wap-enabled phones and personal digital assistants (PDAs) running the Palm operating system. All of these devices can be used for trading, real-time quotes, market indices, portfolio balances, order status and information on the top 10 gainers/losers/most active stocks. Some devices can also receive other services.
From the start, Fidelity was conscious that the creation of a mobile service should not mean trying to provide a wireless version of the internet, says Mr Ferra. "It's not about trying to get mobility.com," he says. "It's about looking at what is most relevant to people in the mobile space, and presenting that in an appropriate form."
The company was also keen to make the service easy for the user to set up and use. It put a lot of effort into the creation of partnerships with manufacturers such as Palm and operators such as Sprint PCS and Verizon Wireless to make sure that, for instance, the Fidelity application was already installed on a mobile device when the customer received it, so that they did not have go through a time-consuming and complex procedure of linking their device to their PC and downloading software.
The way to the future is highlighted by companies such as Swissrisk, a specialist provider of internet-based interactive and integrated risk and portfolio management tools, which signed a deal with IBM last November to jointly offer similar services over wireless networks. Chief executive officer Thomas Wolfensberger says the company is, for instance, working with a German bank which wants to provide representatives with mobile access to advanced services that can help them advise clients.
"They need very sophisticated mobile applications to perform financial planning functions," he says. "That means having devices with real-time access to fully-fledged portfolio and risk-management applications as well as to a trading gateway." The author is the editor of "Wireless Internet"; see also www.mmwirelessinternet.com.
© Copyright The Financial Times Limited 2002.
