What is M Banking?

M banking is the use of a smartphone or other cellular phone to conduct tasks such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM while away from a computer.

How Does M Banking Work?

M banking typically operates across all major U.S. cell phone service providers via one of three methods: SMS messaging; mobile web; or specific applications for iPhone, Android or Blackberry devices.

Mobile text and alert is most basic. It allows users to transfer funds or access account information using text messages. Texting terminology is different from bank to bank, but the function is the same overall. For example, texting 'Bal' will obtain the account balance while 'Tra' will allow inter-account transfers. Initially, users have to register and confirm their phone numbers with their bank. However, once that's completed, they can decide whether to get alerts about negative balances or deposit confirmations.

Mobile web is the second m banking method. Like accessing online accounts from a home-based computer, this method permits users to check their balances, pay bills and execute account transfers. This is all done simply by logging into their accounts using a mobile web browser.

M banking applications for Android, iPhone and Blackberry, connect users directly to the bank server for complete banking functionality without having to first load a mobile web browser. These applications can be downloaded through the bank's website or through mobile application stores like iTunes.

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

Simply put, RDC allows users to scan checks and transmit the scanned images to a bank for posting and clearing. In the case of m banking, a customer can take pictures of both sides of a check and send the photos to their bank. The bank then deposits the money in the same way as if the deposit was made through a teller. RDC capabilities mean customers have quicker access to their funds with yet another automated deposit feature.

Why Does M Banking Matter?

For customers, m banking is a convenient way to manage occasional administrative tasks on the go. For small and mid-size business owners, m banking gives the precious gift of time. Closing a sale, meeting new customers or smoothing back office shipping glitches produce revenue. Waiting in line at the bank to deposit checks does not.

For banks, m banking is an excellent opportunity to simultaneously entice new customers and also diminish operational costs. By implementing innovations in mobile technology, banks are essentially saying they are hip to the needs of their customers, while simultaneously streamlining a number of processes to meet the demands for speed in the 21st Century.

However, customers should keep in mind that m banking can pose identity theft concerns. While the transmission of data is encrypted across a secure network, hackers are always trying to find new means of accessing this information. Due diligence should be sued when relying on m banking. This includes frequently monitoring your bank accounts, along with taking proper security measures if your mobile phone is lost or stolen.