The Benefits and Risks of Mobile Banking

Efficient mobile banking options are becoming indispensable to both institutions and customers. With the widespread use of smartphones and tablets, customers expect their bank to provide various online banking options, from balance inquiries to instant check cashing through photo imaging. Banks are learning that customers will switch to more mobile-friendly options if these expectations are unmet.

According to data from New York-based consulting firm AlixPartners, about 60 percent of smartphone or tablet users who switched banks in the fourth quarter said mobile banking was an important factor in the decision, up from 7 percent in the second quarter of 2010. The consumers that were unsatisfied with their bank’s mobile banking service most often complained about how well the app functions and its design rather than with the actual banking features of the app, the report notes.

Advantages of Mobile Banking

However, not everyone is convinced about the utility of mobile banking, and security concerns are the culprit. About half of mobile banking users (56 percent) say it’s “somewhat safe.”

“It’s always advisable to use a bank app rather than going through a browser,” said Adam Levin, chairman and co-founder of Credit.com and Identity Theft 911. “Banking apps tend to be generally more secure.” Experts advise mobile bankers to habitually check account balances daily and assess credit risk by checking their credit scores.

As mobile applications continue to play a larger role in the banking sector, institutions must match their efforts to provide convenience to customers with risk management solutions that ensure all transactions are secure and serve the interests of borrowers and lenders.