Mobile Banking 101: What is it and Why Do We Need It?

Estimated read time: 4 minutes

The mobile revolution continues to modify the way we live our daily lives. Mobile banking has taken the large branch style of banking and turned it on its ear. Mobile banking has given you the power to see and modify your financial life anytime you like.

With the proliferation of banking apps, we can take any aspect of our banking and remove it from the long lines and face-to-face transactions of old. We can deposit checks, transfer money, pay bills, check balances, and handle any security issue that arises.

New paradigm

Online banking has brought a lot of quality of life features that help us keep up with our busy schedules. We now have the power to check our accounts and modify them anytime we need to. We can even transfer money person to person without the need of checks.

Here are some of the most popular features of mobile banking:

  • Bill pay– Online bill pay allows you to pay all of your normal month-to-month bills with just a few swipes of a finger. Set up your payees, and you only have to add the amount each month to send the money near instantly.
  • Mobile deposits– Using the camera on your smartphone, you can deposit checks much easier than the days of deposit slips and lines at the bank. Take a picture of the front and back of your signed check to deposit it.
  • Easy Transfers– You can easily transfer money between your accounts or set up recurring deposits to your savings or investment accounts. These transfers are nearly instant as long as both accounts are with the same institution.

Online only

Online banking has grown in leaps and bounds in the past 8 years. According to the Federal Reserve, 43% of mobile users are using mobile banking apps, up from 22% in 2011. A large percentage of those mobile users are even going online only.

Online only banking becomes easy because almost everything you could do at a branch is possible online. Banks like Capital One 360, Discover, and Ally offer all of the features and service without the traditional branches. You can open a checking account and fund it online in less than 10 minutes.

These banks will even reimburse your ATM fees if you ever need cash. They offer a network of ATMs, but if you leave that network, you can still get cash without paying a fee. The goal is to completely replace the bank structure of old.

Another advantage of these online banks is the higher interest rates they offer for savings accounts. The cost savings of not running branches is used to give you some of the highest interest rates in the industry. Savings interest rates over 1% are common, versus the national average of 0.09%.

Security

One of the factors that is holding back mobile banking is the fear of banking over the internet. This fear is a holdover from the early days of the internet, where we were told that entering personal information over the web was dangerous. Today's online banking is more secure than ever, using the same security features that banks use to transfer money behind the scenes.

In an increasingly online world, banks have used strong levels of encryption to protect your data and checking information. This encryption keeps any nefarious elements from accessing your accounts or data. The more we use online banking as a society, the better the banks get at protecting you.

Even in the case of something going wrong, banks have protection policies and ways to protect you. Your mobile banking app will allow you to report your debit card lost or stolen, freeze spending on your card, or lock your account entirely. These features along with insurance from the FDIC makes online banking as secure as branch banking.

Start mobile banking today

Even if you just want to dip your toe into the online banking waters, the Federal Reserve survey states that over 73% of Americans use mobile banking apps to check balances. In the 2018 holiday season more people than ever used that feature alone before making major purchases.

We aren't saying branches are going away, but they have seen their heyday in the past. Taking the plunge into mobile banking has never been easier and more feature rich. You can easily check if your bank has a mobile banking app.

By checking your bank's website, the Apple App Store, or Google Play, you can find your bank's mobile app. Most banks have some form of mobile banking, and they are free to download and use.

The future of banking

As more and more consumers switch to online checking and savings accounts, banks are realizing the cost savings and passing them on. Consumers are now in control of their finances any time of the day or night. The days of standing in line at a bank branch to get things done are slowly slipping away.

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