Personal Finance

Personal Finance: What consumers need from mobile banking

May 7, 2014 

NB_PamelaYip1

Pamela Yip

EVANS CAGLAGE

Mobile banking is hot – and getting hotter.

Last year, 74,000 consumers a day began using mobile banking services such as paying bills and making balance inquiries and transfers, according to Javelin Strategy & Research.

“The adoption of mobile banking is occurring at a breakneck pace,” Javelin said, “with 4 in 10 mobile bankers having used the service for the first time in the past year.”

Javelin expects that 48 percent of mobile consumers will conduct mobile banking this year, up from 43 percent in 2013.

“By 2018, more than 6 in 10 mobile consumers, or 63 percent, are anticipated to be using mobile banking,” the company said.

In the next five years, Javelin said, the stream of customers switching “to financial institutions with superior mobile services will soon become a river.”

At its core, mobile banking refers to systems that allow customers of a financial institution to conduct a number of transactions through a mobile device such as a smartphone.

But not all mobile banking services are the same.

“What consumers should shop for is a relationship that’s relevant to them,” said Chris Gaginis, director of congressional affairs at the Consumer Bankers Association. “There are certain products and services that some banks may offer that some other banks, depending on their size and location, are unable to do.”

In other words, what do you really want out of your financial institution?

“As consumers evaluate their different options, rather than considering mobile banking as a stand-alone product, it’s important for consumers to shop for the account that meets their transaction needs best,” said Tom Feltner, director of financial services at the Consumer Federation of America.

“If one of those transaction needs is the ability to check balances on the road outside their home, to be able to pay bills through their mobile phone, as well as to be able to deposit checks outside of their branch network, then mobile banking makes a lot of sense,” he said.

Here are services that you should look for in mobile banking:

Strong security

“Your bank should be telling you about their security,” said Mary Monahan, Javelin research director. “That is the No. 1 reason why people aren’t using mobile banking – because they’re worried about the security.”

Don’t be afraid to ask your bank questions about the security it has for mobile banking.

Make sure that the system logs you off if you’re not engaged in any mobile banking activity. That’s done through an inactivity timer that logs a user off automatically.

“You don’t want to leave that thing open forever,” Monahan said. “They have to log you off. That would be a definite, big, big red flag if you’re not being logged off. That tells you that that security is very, very lax.”

Also make sure your banking app allows you to block the information on your bank card if it’s lost or stolen, recommends MyBankTracker.com, a banking information website.

“When the card information is physically lost, it can only take minutes for your entire bank account to be wiped out,” it said. “By blocking access to the card immediately, you will be more protected from any fraudulent activity attempts occurring on your card.”

Remote deposit

This feature enables you to deposit your check with your cellphone by taking a picture of the check and sending it to your bank.

“That’s probably the most popular app that comes with mobile banking,” Monahan said. “You’ve got this camera on your phone that you could take a picture of a check with and then send it off to your bank. A lot of people have checks just hanging around in their pocketbooks and they don’t want to take a trip to the bank. Now they don’t have to anymore.”

And you can make the deposit anytime.

Remote deposit “has cut down on the time the consumer has to go and travel to a bank location, and it makes that product available to deposit at their own home or during halftime at a soccer game,” Gaginis said.

P2P payments

Peer-to-peer payments, or person-to-person payments, allow you to pay someone without cash or a check.

For example, electronic P2P payments let you cover your share of a restaurant tab, reimburse a friend for tickets to a movie, or pay your baby sitter, housekeeper and other individuals, usually with just a few taps on your smartphone.

“If I want to pay allowance to my son and we’re all on the same network, I can simply make that transaction through my phone and transfer that money within the bank accounts,” Gaginis said.

You can also deliver payments electronically by mobile phone or computer to another person’s account by transferring money from a prepaid account, a debit card or a credit card using a third-party processor such as PayPal or Amazon WebPay.

“Depending on the provider, you may or may not need the recipient’s bank account number and bank routing number,” said Ruth Susswein, deputy director of national priorities at Consumer Action. “Typically, you log in to your account online or via a mobile app and provide a person’s name, email address or mobile phone number, the amount of the payment and, if you like, an optional note.”

Many banks don’t charge for P2P payments.

“If the transfer is within the bank, it’s highly likely there would be no fee,” said Tom Crosson, spokesman for the Consumer Bankers Association.

Other features

Another key feature, obviously, is the ability to pay bills using mobile banking.

“You certainly want to be able to transfer balances and schedule payments from your mobile device,” said Greg McBride, chief financial analyst at Bankrate.com.

You also want to be able to check your bank balances, and you probably want account alerts.

For instance, you want to be notified if your account balance is falling to a dangerous level or if it’s overdrawn. You also want to know when transactions or ATM withdrawals exceed your preset limits.

Understand that the mobile banking landscape is constantly changing with new features being added regularly.

“The mobile banking offerings are continuing to grow and evolve,” McBride said. “Just because your financial institution doesn’t have all the bells and whistles today doesn’t mean it won’t in the near future.”

Pamela Yip is a personal finance columnist for the Dallas Morning News.

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