Most people today do at least a portion of their banking online. They pay their monthly bills automatically through online bill pay systems or check the status of their bank and credit card accounts online. If you’re not doing this yet then you’re behind the times. And if you’re really ready to catch up with the times, you probably need to go a step further and begin doing your banking from your mobile phone.

Mobile banking (also known as M-Banking and SMS-banking) is already popular in the Far East and it is rapidly beginning to take hold in both North America and Western Europe. It is predicted that these three markets of the world will make up seventy percent of the mobile banking user base within the next two years, a user base that is anticipated to be 150 million customers strong. It is further believed that 35% of those people who already do their banking online are going to begin using mobile banking within the next year, a massive increase from the less-than-one-percent of online bankers who were using the service just two years ago.

Why You Want to Start Mobile Banking

The main reason that customers are interested in using mobile banking services is because of the convenience of it. We have started using our mobile phones for everything from enjoying entertainment to engaging in business. It makes sense that we also want to do our banking on the go. Mobile banking allows us to check the status of our accounts, transfer funds between accounts and even make payments from our phones which means we can do our banking while traveling, waiting in lines or during downtime at work.

What’s Involved in Mobile Banking

Not quite sure what it means to do your banking by phone? Well, it actually might mean a lot of different things that you can do in linking your bank account with your mobile phone. Let’s take a closer look at some of the ways you can engage in mobile banking:

- Banking via the mobile web. As smartphones have increasingly gotten more advanced, access to the full Internet via our mobile phones has become much more common. As a result, we can now do many of things through the Internet on our mobile phones that we could previously only do on our computers. This includes doing all of our online banking from our mobile phones. This is the area of mobile banking that is currently seeing the most growth.
- Use of SMS messages to obtain basic account information. This is a simpler method of doing basic mobile banking. It involves receiving information from your bank via SMS messages on the phone (called push messaging) and contacting the bank via SMS (known as pull messaging). Push messaging may be in the form of message alerts from your bank or it may be a more complex system of SMS messages that allows you to verify and transfer funds via text. Pull messaging would include such transactions as using SMS messages to get your account balance from your bank.
- Banking through downloadable applications. Although most people do their mobile banking via either the Internet or the use of SMS messages, there are some people who use downloadable applications to do their banking on their mobile phones. This is likely to become more common as phone application stores like the Apple Marketplace, the Android Market and the upcoming Blackberry phone application store open up to a wider base of smartphone users.
- Mobile payment transactions on site. It is increasingly possible to use mobile banking to make payments for transaction in a system called “contactless payments“. This is an area that is still in development and could see great changes in the year or so to come.
- Voice transactions via mobile phone. At a very basic level, mobile banking may also simply include making telephone calls to your bank via your mobile phone. This is obviously increasingly popular as many people make their mobile phones the primary phone that they use throughout the day.

Problems with Mobile Banking

If mobile banking is such a good idea and there are several options for using it then why aren’t there more people doing it today? There are several different reasons that mobile banking has taken some time to take off including the fact that smartphones are just now becoming advanced enough to really be able to handle the full web interaction required for advanced mobile banking.

Some of the other problems that have hindered the growth of mobile banking to date include:

- Lack of common mobile banking standards. Simply put, there is no common technology regularly used yet for mobile banking so there has not been widespread growth of one type of mobile banking.
- Lack of common banking regulations between countries. Mobile banking has to develop differently in each country since the regulations governing banking vary from place to place.
- Banks are adopting the practice slowly. In the United States, only five of the top twenty-five banks are actively promoting SMS-banking today. Your bank has to get on board with mobile banking before you can do so as a customer and banks have so far been slow to adopt this method of banking. They seem increasingly willing to do so which should improve the growth of mobile banking significantly.

Security Concerns with Mobile Banking

The aforementioned problems have certainly hindered development of mobile banking to date. The main reason that people have been hesitant to engage in mobile banking, however, is that they are concerned about the security risks inherent in doing online banking. It is believed by many that these risks are heightened when moving from the relatively secure platform of the personal computer to the less secure platform of the mobile phone. However, advances in mobile phone security have now made it safe to engage in mobile banking from most modern phones. People who are concerned about the security of mobile banking should make sure that they have worked with their bank and their mobile phone provider to ensure the security of the phone itself, the applications running on the phone, the encryption of all data and the use / storage of passwords for accessing mobile banking accounts.

What to Expect from Mobile Banking

All predictions indicate that mobile banking is going to grow rapidly within the next couple of years. The biggest growth is likely to be among those people who are of an age which has grown up with online banking – the user base of customers under the age of 30. These people are most likely going to start out with using mobile banking for basic services such as checking their account balances but may rapidly adjust to full banking via both SMS messaging and the mobile web. Development of improved technologies for contactless payments with a mobile phone could be another area of growth in the near future and is something to keep an eye on if you’re interested in being on the cutting edge of the mobile banking experience.