Announced in concept almost a year ago, American Airlines’ test of in-flight broadband finally took off this week with virtual shake-downs of the new service on flights from JFK to LA, San Francisco and Miami.

As reviewed in a story in PostBulletin.com, the new WiFi service, called “Gogo,” will be available on 15 Boeing 767-200 jets. If all goes well with the testing, American could decide to expand the service.

American partnered with AirCell, which operates a system of 92 cell towers that beam signals skyward to the specially equipped planes. Passengers with WiFi enabled laptops or devices can then surf to their heart’s content (while munching on the contents of their $7 snack boxes).

Previous posts in this blog noted other airlines are dipping their toes in the virtual water. Southwest Airlines and Virgin America have plans to offer similar Internet services, while Alaska Airlines tested a satellite-based service last fall. In 2000, Boeing tested its Connexion broadband service, which folded after failing to sign on enough airlines.

Even as new technologies promise to make surfing the friendly skies a reality, let’s hope the rising price of oil and rounds of cost cutting don’t scare passengers away and dampen airlines’ plans to launch and maintain new services like this.

As reported in American Banker (registration required), the Sybase study shows that only 10% of US banks surveyed offer mobile banking services now, but more than 50% expect to offer the services in the next two years.

The Aite report suggests the percentage of online banking users at large banks who use mobile banking will climb from 4% in 2007 to 13% in 2009. The report also says the share of online banking customers enrolled to receive alerts from mobile Short Message Service, or short text messages between mobile devices, will grow from 5% in 2007 to 12% by 2009.

Reasons cited in the surveys for banks pursuing mobile banking strategies include increasing consumer awareness to drive adoption, improving customer service, extending Internet banking and increasing competitive advantages. 

While the surveys shows high interest at the bank level, the findings also suggest many banks have been slow to adopt even the simplest of mobile banking services, such as SMS or text-based services.

As counterpoint, a few big financial institutions did announce in May new mobile-banking services: Fidelity is offering financial institutions a mobile banking and payments service including text messaging, mobile Web and downloaded applications. Plus, WaMu launched a SMS mobile banking service, following on the heels of Chase, which also offers a text-based mobile banking service. Previous posts here have tracked the growing interest in mobile banking solutions.

Reading between the lines, the move to mobile banking appears to be a classic “chicken or egg” scenario.

One camp suggests that banks are driving this move to mobile banking. An Aite research director interviewed by American Banker says that “financial institutions plan to increase their marketing of online and mobile banking services, which is why they expect the growth in adoption of online and mobile banking services. Financial institutions need to balance the addition of new services with making sure customers actually use what is offered.”

On the other side is consumer demand for more and easy-to-use mobile services. An IBM report and press release shows 60% of consumers are interested in banking via mobile devices, and their wish is to be able to personalize their mobile experiences.  “Clearly the same market forces which empowered consumers to choose personal computers that were open and enabled them to customize their applications are at play in the mobile web marketplace,” said Dr. Sungyoul Lee, IBM global consulting leader, in a May 21 research-findings press release.

In the end, it looks like this will turn out to be a win-win for consumers and banks, letting consumers access their accounts when and how they want, while letting banks provide new access and convenience channels to help drive efficiencies.

What remains to be seen is how banks will integrate consumer wishes with technology solutions to “bake” mobile banking into their online services – and how or if they’ll charge you for it.

Meanwhile, get ready for an onslaught of mobile-banking advertising. Oh, you might want to make sure you have unlimited text messaging on your cell phone service.

Amidst the steady stream of stories about the worsening credit crunch and tightening lending standards, Zopa’s style of social or peer-to-peer (P2P) lending stands as a virtual beacon for beleaguered borrowers and serves as a potential investment alternative for would-be P2P consumers-turned- lenders. Traditional banks beware!

Zopa, Virgin Money, Lending Club and Prosper.com are probably among the more well-known entities offering P2P lending sites linking consumers who want to lend money to ordinary people who need money, but who don’t want to deal with a bank or credit card company to do so.

As reported in USA Today, consumers-turned-lenders can use the sites to evaluate whether to lend money to a particular borrower — and at what rate — based on the borrower’s credit score, existing debt, as well as social factors, like how compelling the borrower’s reason is for a loan or whether he or she shares similar interests.

According to Bank Marketing News, what makes Zopa different and popular is the fact that is has partnered with U.S. Credit Unions to offer guaranteed and insured investments via CDs. A consumer who wants to turn lender simply funds a CD through a Zopa-partner credit union, picks an interest rate, selects a Zopa borrower to help, and presto! (Zopa!) – that “help” then comes in the form of lowering the borrower’s monthly loan payment. The lower the lender’s chosen CD rate, the more Zopa funds are earmarked for the borrower.

It appears our credit crunch is helping accelerate growth of these alternative-lending sites. Bank Marketing says that Zopa has 200,000 customers, and cites an Online Banking Report that $100 million of P2P loans will be issued in 2008, and grow to $9 billion by 2017.

At a time when traditional and online banks are fighting for deposits and customers, social lending no doubt better show up on banks’ competitive radars. If not, they may find themselves playing out a scene from a LendingTree.com TV commercial, where a banker tells her co-worker that she got a better offer from competitor LendingTree.com. “But you work for our bank,” replies the shunned and stunned loan officer. “I know,” replies the banker-turned-borrower.

While not new to commercial or business banking customers, this service stands ready to expand into the consumer market, building on proven technology from financial imaging and payment systems.

Wells Fargo claims to be the first player in the retail market. It announced last week its vSafe service for online personal banking customers will be ready by summer. Other banks, like JP Morgan Chase & Co., already offer similar services for business customers.

At Wells Fargo, customers will be able to use the vSafe service (priced at $4.95/month for 1 gig, up to $14.95/month for 6 gigs), to store electronic tax returns, wills, trust, financial documents, medical files, photographs and more.

Banks are betting that their status as a trusted financial partner (plus heavy duty online security, encryption and backup) will allow them to get more share of their customers’ virtual documents, (and increase share of wallet, as this service comes with a fee).

Other non-bank players (Microsoft, Apple, Google and Iron Mountain for example) offer online storage as well, but “they may lack the reputation for trust that bankers have long cultivated,” said an analyst for Celent, quoted in American Banker (registration required).

At a time when banks are fighting to retain customers, grow low-cost deposits and increase fee income, experts predict things to heat up as banks further define an evolving “clicks and mortar” role to be the virtual guardian of your electronic documents.

The only catch to “free”: You need to be a Starbucks Card holder (a purchase card) to get two free Wi-Fi hours per day, or have qualifying AT&T services. If you don’t have either, customers may still purchase hourly or monthly access memberships, at a cheaper rate compared to the current T-Mobile Hot Spot arrangement, which, after a six year run at Starbucks, will end.

The new partnership with AT&T will beef up AT&T’s total number of hotspots to 17,000 across the nation.

Apple iPhone and iTouch users also should welcome the beefed up free Wi-Fi service and access to featured “Hear Music” and Starbucks Collections, or even the last ten songs played in that store.

No doubt Starbucks company officials (and shareholders) hope this move will boost in-store traffic and sales. The free Wi-Fi announcement comes at a time when Starbucks is in the midst of a financial turnaround agenda (its 52-week stock price change is off more than 40%), which, on top of recalling former leader Howard Schultz to step back in, could include closing some underperforming stores, slowing growth here or increasing growth abroad, reports MSNBC.

Starbucks’ PR release suggests that this news means customers will get “a rich in-store” experience. While the company hopes to profit in numerous ways and expand its customer offerings, to customers, the Wi-Fi announcement not only means “new and improved” – but now, most of all, free.

On one hand, Payments News cites a new report by Juniper Research, which reviews the opportunities afforded by “the freedom to bank and make payments on the move.” According to the report, use of a mobile phone for financial services will rapidly revolutionize this sector, much like the ATM did (but which took years before consumers fully adopted such use).

On the other side, Unisys identified five security issues likely to emerge in 2008, the top two of which center on the difficulty of protecting data on mobile consumer devices and the challenges banks face to protect client data and money. The Unisys report suggests that more than 35% of online banking households will use mobile devices for financial transactions by 2010 (Celent study), but there could also be a concurrent rise in e-banking attacks such as phising.

Thus, at the very time when consumers are demanding more “on the go” banking and payment options, the bank sector—already bashed by the sub-prime mess (let alone making earnings, retaining customers and fighting for low-cost deposits)—is facing added costs to build new business-processes and IT protocols to safeguard the ATM in your pocket.

As reported in today’s New York Times, there’s a gold-rush of sorts as businesses flock to the Web with new virtual-world sites targeted at children. And no wonder.

As reported on nytimes.com, sites like Webkinz drew six million unique visitors in November, up 342 percent from a year ago. 

Disney’s Club Penguin ($5.95/month) attracts seven times more traffic than Second Life.

And other media, entertainment and toy companies like Nickelodeon, Warner Brothers, Lego and Mattel all are poised to launch kid-friendly online worlds, worlds with “low overhead and fat profit margins once they are up and running,” according to the nytimes.com article.

In part, this move is not only being done as a way to generate new and profitable growth streams, but to build brands online and to get eyeballs where kids are going first, the Internet, not TV.

That reality is causing old business models to be swept up and trashed faster than day-old New Year’s confetti as marketers rethink how to reach kids and teens.

Illustrating the marketing machine that it is, the nytimes.com article cites how Disney is taking a portfolio approach to virtual world creation, investing $5 million to $10 million per world for up to ten new virtual worlds, to reach browsers at various stages, pre-school to teen to young adults and beyond.

And that means it is time to strap in. “Get ready for total inundation,” said an analyst quoted in the nytimes.com article.

2008 is shaping up to be the year of virtual worlds – for kids.

Industry experts suggest that while the rollout of mobile banking technology is one of the fastest introductions of a new banking channel ever, adoption by consumers is still on the low side.

That all may change as wireless carriers and banks team up and market the service and the phones, much like AT&T is doing with Wachovia and SunTrust.

The upside is significant. According to the American Banker article, AT&T expects to ship half a million mobile banking software-equipped handsets before the holidays, with another 10 million units shipping in 2008. 

As one industry analyst proffered, “The banks, devices and networks are up to speed, but are the consumers?”

Time will tell, and the holiday buying season should offer a glimpse if mobile banking is indeed ready for Prime Time.

Meanwhile, don’t be surprised if there’s a rush of letters to the North Pole saying, “Dear Santa: All I want for the holidays is a shiny new cell phone preloaded with mobile banking software!”

The survey, conducted (no surprise) by the Consumer Electronics Association, also shows that consumers will be spending on average $358 per household on gadget gifts this holiday season. Portable music players are expected to lead the pack here.

According to a report on MSNBC, retailers, buoyed by such indications, already are expecting fourth quarter electronics sales to rise 7% to $48.1 billion, compared to $44.8 billion a year ago. The overall retail industry is expecting holiday sales to grow by 4%, according to the National Retail Federation.

If this is any indication, you better start shopping early – or be prepared for long holiday shopping lines at retail outlets.

Road warriors and vacationers who thought they could “unplug” for a few hours while in flight soon will be able to keep up with emails and surf the Net using their laptops and smart phones (and presumably the iPod Touch), thanks to Wi-Fi enabled hotspots installed throughout the plane.

As reported by AP, Alaska Airlines, the nations ninth-largest carrier, will test the satellite-based in-flight wireless Internet service on one of its jets. The broadband service, from tech firm Row 44 (with help from HughesNet), would work across the carrier’s routes serving Alaska, Hawaii, Canada and Mexico.

Pricing options are still being researched, but could include day passes or even free service for some passengers.

Other airlines are dipping their toes in the virtual water. American Airlines is testing a high-speed air-to-ground Internet service using cell towers instead of satellites.

In 2000, Boeing tested its Connexion broadband service, which folded last year after failing to sign on enough airlines.

Now, momentum is building again, and new technology promises to make surfing the friendly skies with broadband a reality.