Mobile banking has been around for a while. But only lately has it begun to live up to its promise.
While banks tried to offer some rudimentary services via mobile devices during the dot-com boom in the late 1990s, those earlier versions were difficult to use and customers largely ignored them. Now, banks are rolling out upgraded services that allow users to do their basic banking fairly easily - paying bills from a commuter train, for example, or checking a bank balance from a store checkout line and moving funds to cover the purchase.
Last month, Bank of America Corp. introduced a service that lets customers check balances, pay bills and transfer money between their accounts on their mobile devices. It comes on the heels of a similar service that Wachovia Corp. kicked off last year. This year, Citigroup Inc.'s Citibank plans to introduce a mobile-banking application that customers can download to their cell phones. Wells Fargo & Co. has been pilot-testing three different approaches to mobile banking, and it expects to fine-tune its strategy this year.
Financial institutions, which stand to save a bundle since transactions over a mobile phone cost a fraction of face-to-face transactions, have big hopes for mobile banking in the United States. Yet fewer than 1 percent of Americans use mobile-banking services, compared with 3 percent in Western Europe and Japan. Dan Schatt, an analyst at consultant Celent LLC, says he expects that by the end of this year, 10 percent of people who bank online will use mobile banking.
"It's the young folks that are going to drive this forward because they are already using their mobile phones for so much more than just conversation," he says.
What customers see when they bank over their phone will depend on their bank. With Bank of America and Wachovia's mobile-banking offerings, users can surf to the banks' Web sites. Because the browsers are designed to fit the smaller screens, customers will be able to move through the sites in much the same way they bank online.
Others will be able to punch a short text code into their cell phone and get a text message back from their bank - with their account balance, for example - within seconds. Customers can request to have their bank send them a text message if their account balance falls below specified levels or if the bank notices any questionable activity, and customers can message back.
Still other banks are working on new downloadable applications that are designed to be easier and faster to use than Web browsers or text-messaging services. Citibank's mobile-banking application, which is developed by mFoundry Inc., works much like an iPod: Instead of scrolling through a Web site, users click through a menu of options.
While banks are offering mobile banking services for free, there are some potential downsides:
- It can mean larger cellphone bills.
- A dropped connection could leave you wondering if a banking transaction was completed.
- The number of viruses that are attacking mobile devices, such as BlackBerrys, is on the rise, making it riskier to conduct financial transactions over them.
- Some banking activities exist that users generally can't do on their mobile devices: You may not be able to open new accounts or add new bill payees, for example.