3 Things to Do Before You Start Banking From a Smartphone

Mobile banking offers convenience and flexibility. But here's what you need to know before you tap in to this resource

Banker, beware. (Image: ThinkStock)

These days, 90% of Americans have a mobile phone and, according to The Nielsen Company, more than half will be using a smartphone by the end of 2011. In addition to browsing the Web, running various productivity applications (and, of course, making phone calls) an increasing number of consumers are using their Blackberries, iPhones, and Android devices for banking.

“Banking over a cell phone isn’t fantasy, it’s a reality that many banks are offering their customers to check their balance, find the nearest ATM and even pay a bill,” says Jeff Kopchik, an FDIC Senior Policy Analyst specializing in technology issues. “It means increased convenience and flexibility, especially for people who do a lot of traveling.”

For example, Kopchik notes, many banks can send alerts to customers’ smartphones advising them if they are about to overdraw their account or if the bank has detected suspicious activity.

The Web-based version of mobile banking, in which customers access the bank’s Web site using the browser on their smartphone, is the most prevalent option. However, app-based services, in which customers download specific software that runs on their phone, are quickly becoming popular because they are more user friendly.

Here are three things to do before you start banking from your smartphone.

1) Ask your bank if there’s a cost. As with online banking, most banks don’t charge customers extra for mobile banking, but don’t assume that it’s free.

2) Take security precautions. Make sure that your phone or the mobile-banking application you’d be using is password protected. That way, if you lose your phone, someone else can’t access your bank account without having your password.

Also confirm with your bank that account numbers, passwords and other sensitive details are not stored on the phone, where they could be retrieved by a thief. Another thing to remember is that both Web- and application- based mobile banking systems are more secure than those that use text messaging.

“You may also want to consider purchasing anti-virus software to run on your phone, since it’s only a matter of time before the viruses that attempt to infect your home computer migrate to smartphones,” adds Kopchik.

3) Make sure you understand what’s at risk if something goes wrong. “Some banks and other companies offer the option to use your smartphone to transfer relatively small amounts of money to friends and family,” says Rob Drozdowski, a Senior Technology Specialist at the FDIC. “These are called person-to-person payments or ‘P2P’ payments, and you should not only ask what fees are associated with them, but you should understand what happens if a payment gets sent to the wrong person.”

To learn more about mobile banking, start with your bank’s web site to see what services the company offers and how they are provided. Ask friends and family if they use mobile banking and what they think of it. And, as with any other product or service, make sure you understand how it works so you can make an informed decision about whether mobile banking is right for you.

SOURCE: FDIC Consumer News

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