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Rachel Siegel, CFA

Rachel Siegel, CFA is one of the nation's leading experts at ensuring the accuracy of financial and economic text.

 Her prestigious background includes over 10 years of experience in creating professional financial certification exams and another 20 years of college-level teaching.  Rachel has served as Academic Director at Bloomberg, as well as Exam Development Director at the CFA Institute. She holds a BA in English and an MBA, both from Yale University.

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Updated January 9, 2021

What Is Mobile Banking? 

Broadly speaking, mobile banking refers to any banking activities conducted on a cell phone. This includes receiving text alerts for fraudulent activities, accessing your account via the bank’s app, and using the bank’s website on your mobile device.

Mobile Banking vs. Online Banking

Both mobile banking and online banking use the internet to access your banking information, and most banks offer similar services via both (e.g. online bill pay, transferring funds, checking balances). 

You can conduct online banking on your desktop, laptop, tablet, or phone. However, mobile banking only occurs when you access your account information on your tablet or phone, and it’s usually through a specially-designed mobile app.

How Does Mobile Banking Work?  

At its most basic function, mobile banking is a text-based service. You sign up for text-based interactions with your bank and receive a guide regarding the ‘commands’ you can text to conduct banking transactions. The most common commands include BAL (obtain your account balance), TRA (transfer funds from one account to another which vary by bank), and ACT (see account activity).

Banks also offer mobile access to their online banking. This is a version of online banking, but it’s only available on your phone. Banks must have a mobile-enabled website for this to work or you’ll come across a confusing website that makes it difficult to submit any transactions.

The latest and most robust mobile banking option is a mobile banking app. Rather than logging in through a website, you can use the bank’s app instead. Most apps require two-factor authentication for safety purposes, and offer additional services including:

  • Mobile check deposits (ie. taking a picture of your check and depositing it remotely)

  • Electronic money transfers between accounts

  • Bill pay

  • Viewing account balances

Mobile Banking Examples 

Though every bank has different terms and conditions, here are a few common examples of mobile banking:

Example 1

You’re at the store and something catches your eye, but you aren’t sure whether you have enough funds in your bank account to cover the purchase. You log into your bank’s mobile app and – from the dashboard – you can check your account balance and decide whether you can afford the item.

Example 2

Your best friend pays you back for lunch via a check because she doesn’t have mobile banking. You don’t have the time to make a special trip to the bank, so you log into your bank’s mobile app. From the dashboard, you click ‘mobile deposit’ and take a picture of the front and back of the check. The sum will be deposited into your account according to your bank’s schedule – without going to a branch office. 

Advantages of Mobile Banking 

Mobile banking makes accessing your account information and balances quick and easy. Your money is typically accessible wherever you go, as long as you have your cell phone. Mobile bank deposit and electronic transfers result in fewer bank trips and you can also pay friends and family, receive funds, and split checks effortlessly. You’ll always have your account balance and banking information at your fingertips, which helps make more informed financial decisions.

Disadvantages of Mobile Banking 

Some banks only offer limited services on their mobile apps so transactions and access to account information may be limited. This means that you might have to log in to your account on a computer or even stop into a local branch to complete your request.

One of the biggest disadvantages of mobile banking revolves around security. 

Is Mobile Banking Secure? 

Because mobile banking is a relatively new feature, many people worry about security. Though banks use top-notch security systems, there’s not a completely foolproof way to ensure that your personal and financial information aren’t compromised. 

To make it more difficult to access your account, mobile banking apps usually require two-factor authentication (typically a password and identity verification). Most banks send a code in an email or text message that you must receive and confirm (ie. clicking on the message, then copying and pasting the provided code) to gain access to your bank account. This is a necessary step because most online predators won’t have access to your phone or email. 

As with any type of banking, always take extra precautions to protect your information. If you ever feel unsure about an email or notification regarding your account, contact your bank right away.

Types of Cyber Attacks 

Cyber attacks can occur in many ways, but the most common include:

  • Fake Apps - Unverified mobile banking apps are developed by hackers to look identical to your bank’s verified app. 

  • Mobile Ransomware - Hackers send mobile malware to hack into your phone and your bank data.

  • Phishing - Bots send malicious links that look like they’re from your bank so that you click on them and provide your personal information.

  • Malware - Crooks send malware that captures your keystrokes and steals your banking information.

Tips for Secure Mobile Banking

Mobile banking is convenient but it also comes with risks. Using these tips will ensure safer online banking by protecting your confidential information. If you’re ever in doubt about the legitimacy of an email, notification, or telephone call, immediately contact your bank for verification.

  1. Use strong passwords with a combination of letters, numbers, and symbols.

  2. Change your password every few months.

  3. Don’t share your password with anyone.

  4. Stick to your home network rather than banking on public Wi-Fi.

  5. Download the official app from your bank.

  6. Update your app every time there’s an available update.

  7. Log out of the app every time you’re finished using it.

  8. Regularly clear your browser cache so your information isn’t stored.

  9. Use two-factor authentication (or facial recognition when available).

  10. Never automatically save passwords in your phone.

  11. Have a way to erase your phone’s data immediately if it’s stolen.

  12. Sign up for online alerts each time account activity occurs.

  13. Look for the “https://” and a “secure lock” in the url bar so you’re connected to a secure website.

Ask an Expert about Mobile Banking
At InvestingAnswers, all of our content is verified for accuracy by Rachel Siegel, CFA and our team of certified financial experts. We pride ourselves on quality, research, and transparency, and we value your feedback. Below you'll find answers to some of the most common reader questions about Mobile Banking.

Are Mobile Banking and Internet Banking the Same?

Mobile banking can only occur on your phone while internet banking can occur on your desktop, laptop, tablet, or phone. Mobile banking tends to have more features than internet banking (such as mobile check deposit). However, several features may overlap, such as accessing account information and history, balances, and transactions.

Does My Bank Offer Mobile Banking? 

Ask your bank about their mobile banking offerings or check out their website. Most banks offer this feature but no two banks’ mobile apps have the same functionality. Always ask about the security, features, and abilities of the mobile app before adding it to your personal finance tools. 

Rachel Siegel, CFA
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Chartered Financial Analyst

Rachel Siegel, CFA is one of the nation's leading experts at ensuring the accuracy of financial and economic text.  Her prestigious background includes over 10 years of experience in creating professional financial certification exams and another 20 years of college-level teaching.

If you have a question about Mobile Banking, then please ask Rachel.

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