The Apple iPhone is both a blessing and a curse for retail bankers responsible for the mobile channel, per a new report from Forrester Research.

Since its June launch in the United States and the yearend debut in Europe, the iPhone and its Safari browsers have given consumers access to Web sites, including banks' online banking pages. But this evolution in mobile banking comes with a unique set of challenges.

"On the one hand, it raises the bar on user experience and will spark mobile Internet adoption," said Ben Ensor and Alexander Hesse in their report, 'Will the iPhone Boost Mobile Banking?' "On the other hand, it adds complexity by introducing an additional low-cost alternative for banks to offer transactional mobile banking."

Financial institutions such as Bank of America, Britain's first direct and Germany's Postbank were among the early firms to make it easy to conduct online banking on the iPhone.

Indeed, Bank of America is one of the success stories in that space, claiming to have signed up 500,000 mobile banking customers last year, albeit not all iPhone users.

All bars for iPhone
However, there's no doubt that the iPhone and its ilk will affect the future of mobile banking, which Forrester claims has seen "tiny adoption and returns."

According to the report, the iPhone raises the bar on mobile user experience.

"The iPhone signals the beginning of the end of the mobile Web as we know it today: stripped-down sites crammed into tiny mobile screens," Messrs. Ensor and Hesse said.

Full Internet pages rendering on easy-to-use touchscreens with simple display enable customers to access online banking services with all their features and functions.

"For users, this familiar user experience knocks down a major barrier to mobile banking adoption," the report said. "Mobile banking simply becomes 'online banking on the go.'"

The iPhone also lowers barriers to mobile Internet adoption. The device comes bundled with flat-rate Web access and pre-installed video-sharing sites such as YouTube. Use of these services with some regularity will generate more confidence and translate to more comfort with mobile banking.

Finally, the iPhone increases overall mobile banking development complexity.

Forrester said banks such as first direct required only a few hours of development time to make its online banking services iPhone-friendly. But it gives first direct access to the estimated 30,000 iPhone users in Britain.

That said, application developers have to consider other mobile phones in use that have different browser platforms, device features and wireless carrier conditions.

Forrester said users of these other phones have their own set of problems: the need to download an application to the handset, having their bank's mobile site tucked away in the carrier's on-deck portal and using stripped-down mobile sites with ease and experience.

Double vision
The market researcher suggests a two-prong strategy for mobile banking, one near-term and the other long term.

In the near-term, banks are recommended to get their site iPhone-ready, but question more investments in existing services. Banks should remember that the iPhone is just one device among many.

For the long term, banks should find out which new applications add real value. Online business executives should prepare by working on scenarios with new applications of timely, location-aware and actionable mobile content.

"The most important reason why consumers don't use transactional mobile banking is that they don't see the value of it," the report said.

"For today's usage scenarios, existing channels can serve most of consumers' personal financial needs," it said. "Future developments like contactless mobile payments will create room for new usage scenarios in which mobile financial services will create additional value."