What it is:
How it works/Example:
Smartphone banking typically operates across all major U.S. cellular service providers in via one of three ways: SMS messaging; mobile web; or specific applications for iPhone, Android or Blackberry devices.
Mobile text and alert is the simplest. It allows users to transfer funds or access account information over text messages. 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. Initially, users have to register and verify their phone numbers with their bank. However, once that's completed, they can choose to receive alerts about negative balances or deposit confirmations.
Mobile web is the second smartphone banking method. Like accessing online accounts from a home-based computer, this method allows users to check their balances, pay bills and execute account transfers simply by logging into their accounts via a mobile web browser.
Smartphone 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 mobile application stores like iTunes.
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 that allows users to scan checks and transmit the scanned images to a bank for posting and clearing. In the case of smartphone banking, a customer takes pictures of both sides of a check and sends the photos to their bank. The bank then deposits the funds in the same way as if the deposit was made through a teller. RDC capabilities mean customers have faster access to their money, through automating yet another deposit feature.
Why it matters:
For consumers, smartphone banking is a terrific way to efficiently manage occasional administrative tasks on the go. For small and mid-size business owners, smartphone banking gives the precious gift of time. Closing a sale, meeting new customers or smoothing back office shipping glitches are effective revenue producers. Waiting in line at the bank to deposit a wad of checks is not.
For banks, smartphone banking is a brilliant opportunity to simultaneously woo new customers while diminishing 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 rapid demands of the 21st Century.
However, consumers should be aware that smartphone banking poses identity theft concerns. While the transmission of data is encrypted across a secure network, hackers are always trying to find ways of accessing this information. Due diligence should be employed when relying on smartphone banking. This includes closely monitoring your bank accounts, along with ensuring proper security measures if your mobile phone is lost or stolen.