Mobile Banking

What it is:

Mobile banking refers to the use of a smartphone or other cellular device to perform online banking tasks while away from your home computer, such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM.

How it works/Example:

Mobile banking typically operates across all major mobile providers in the U.S. through one of three ways: SMS messaging; mobile web; or applications developed for iPhone, Android or Blackberry devices.

Mobile text and alert is the simplest, allowing the user to transfer funds or access account information via text message. Texting terminology varies from bank to bank, but the overall function is generally the same. For example, texting "Bal" will obtain the account balance while "Tra" will allow inter-account transfers. Users need to first register and verify their phone numbers with their bank, but once that's completed, they can also set up alerts to let them know about negative balances or deposit confirmations.

Mobile web is the second mobile banking option. Similar to online account access from a home-based computer, this option allows for checking balances, bill payment and account transfers simply by logging into the user's account via a mobile web browser.

Mobile banking applications for Android, iPhone and Blackberry, connect the user directly to the bank server for complete banking functionality without having to navigate a mobile web browser. These applications can be downloaded either through the bank's website or through the iTunes store.

Some banks are taking the technology one step further with account rewards confirmation, person-to-person payments (P2P) and, more importantly, remote deposit capture (RDC) capability.

Simply put, RDC is a service allowing users to scan checks and transmit the scanned images to a bank for posting and clearing. In the case of mobile banking, a customer takes pictures of both sides of a check and forwards the photos to the bank, which then deposits the funds in the same way as if the deposit was made through a teller. RDC capability means customers have faster access to their money, while automating yet another deposit feature.

Why it Matters:

For consumers, mobile banking is a terrific way to efficiently manage the occasional administrative task on the go. For small and mid-size business owners, mobile banking gives the precious gift of time. Closing a sale, meeting new customers or smoothing back office shipping glitches are important revenue producers. Waiting in line at the bank to deposit a wad of checks is not.

For banks, mobile banking is a brilliant opportunity to simultaneously woo new customers while paring operational costs.  By responding to the innovations in mobile technology, banks are effectively saying they're paying attention to the needs of their customers, while at the same time streamlining a number of processes to meet the fast-paced demands of the 21st century.

Consumers should also be aware that mobile banking poses certain identity theft concerns. While the transmission of data is encrypted across a secure network, hackers are always on the lookout for ways of accessing this information. Due diligence should be employed when relying on mobile banking, including close monitoring of your bank accounts, along with ensuring proper protection in the event that your mobile phone is lost or stolen.

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