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Beyond Checks & Balances: Mobile & Online Banking Evolve

Mobile and online innovations changed the way that we bank. More change is on the horizon as financial institutions expand what you can do on your smartphone or tablet computer. So far, security hasn’t been a problem for consumers who bank online or through their mobile device, but experts warn that criminals constantly look for new ways to rip you off.

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Convenience grows on you. That’s the case with mobile banking.

Online banking—using a computer to pay bills, transfer money and make deposits into your accounts on a bank’s website—has become an established technology. So banks, credit unions and other financial institutions (which we call “banks” for the purposes of this article) shifted their attention to mobile banking. This means that you use a smartphone or a tablet computer to accomplish the same tasks and additional ones.

“We’re seeing the rise of the ‘mobile-first consumer’—those who go to the mobile phone first when they want to pay their bills or send money to someone,” says Mary Monahan, who is the executive vice president and research director of mobile systems at Javelin Strategy & Research.

More people use online banking than use mobile banking, but the latter is gaining ground. In 2013, at least 51 percent of U.S. adults—and 61 percent of Internet users—banked online, according to a Pew Research Center study of 1,003 consumers. That’s up from 46 percent of adults and 58 percent of Internet users in 2010. Meanwhile, the percentage of U.S. smartphone users who banked on their smartphone nearly doubled in 2 years.It’s risen to 35 percent in 2013 from 18 percent in 2011, according to Pew.

Consumers have come to expect easy access to current account information from banks, says Tom Feltner of Consumer Federation of America. That is, consumers want to, say, check balances or transfer funds regardless of when they want it or where they are, he says. Mobile applications now provide that access, whereas a few years ago, you had to get to your home computer or notebook computer.

Further, mobile-banking apps significantly broadened the range of tasks that you can perform without setting foot inside a bank or, increasingly, without sitting in front of a computer. This means that you can deposit checks or send money to anyone anywhere, all from your smartphone or tablet.

A March 2014 report by Javelin, which was based on a survey of 12,000 consumers, considers 2013 to be the year that U.S. consumers fully embraced mobile banking, “with 74,000 new users joining mobile banking each day.” Javelin notes that tablets, which were so new that they weren’t even on the financial industry’s radar in 2010, now are used for at least 50 percent of all mobile-banking transactions. That isn’t surprising, because a tablet’s larger screen provides easier reading and navigation.

Although you might hear worries about security, which is understandable given the high-profile data breaches that plagued major retailers in 2013 and 2014, that hasn’t been a problem with mobile or online banking. However, because mobile-banking apps continue to evolve, experts say it’s important to adopt good practices, such as downloading security upgrades and using passwords to lock mobile devices.

TOP TRENDS. Increasingly, consumers choose their bank based largely on what it provides in terms of mobile-banking services, according to a March 2014 report from consultancy AlixPartners. The report found that 60 percent of U.S. smartphone- and tablet-using consumers who were surveyed in late 2013 considered mobile-banking capabilities an “important” or “extremely important” factor in their decision to switch banks. That’s up from 48 percent of U.S. consumers who were surveyed in the early part of 2013.

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Consequently, banks are expanding their mobile capabilities. One of the emerging services, which Javelin calls mobile banking instant, lets you, by a single swipe or click, peek at your account without signing in. The underlying notion: For innocuous tasks, banks want to avoid piling on so many security requirements that it eliminates the ease of mobile banking. It’s a “look, don’t touch” approach. Consumers are able to track spending and transfers but not actually access funds unless they log into their account. “It’s like having a keyhole through which they can just see certain things,” Monahan says.

This service essentially is a mobile version of well-established software programs and online financial-management tools. These allow consumers to review banking activity easily, such as to verify that a scheduled payment or a deposit cleared.

Doug Johnson of American Bankers Association (ABA) believes that consumers can trust these mobile tools as long as the app comes from the bank or a software company that has a strong reputation for security.

Only four of the 25 largest banks provide such functionality in their mobile-banking apps, Monahan says. She expects that number to grow.

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