Mobile banking apps are set to bring seismic changes to the banking industry.
Very soon, paying a visit to your local branch to pay bills or make deposits could be a thing of the past.
According to KPMG, the number of mobile banking users globally is forecast to double to 1.8 billion over the next four years.
Some countries are already thinking of using mobile banking as a way to make banks more competitive.
More generally, mobile banking is only just starting to catch on. Much of this stems from understandable apprehension from the general public.
To ease apprehension, the public needs more education about the potential risks and what they can do to minimize them.
For example, connections to free and unsecured Wi-Fi are open and vulnerable. This makes them prime targets for fraudsters.
To reduce the risks, it’s advisable to use a virtual private network (VPN). This is a tried and tested way to secure the connection and encrypt all data transferred between the mobile app and the bank.
Worldwide internet usage on mobile devices now exceeds the desktop. As usage has evolved, so have customer expectations of banking services.
In an age of contactless card payments and the ubiquitous smartphone, banks are under pressure to offer customers a seamless digital experience on any device at any time of day.
Changing customer attitudes have also encouraged a host of new market entrants to develop mobile banking apps with new and advanced features that challenge the offerings of the big traditional banks.
Another market driver in some countries has been the desire among regulators to use mobile banking as a way to promote increased competition between established banks. The aim is to encourage better value services for customers and reduce unfair practices.
For example, the banking industry in the UK has suffered a series of financial scandals from the mis-selling of mortgage payment protection insurance (PPI) schemes to squeezing small business customers out of business to boost profits.
Consequently, the UK’s Competition and Markets Authority (CMA) has announced new rules to let customers access details of their entire finances as well as apply for loans, overdrafts and mortgages through a single mobile phone app by 2018.
Popular mobile banking apps
It’s perhaps not surprising that the traditional banks and e-payments companies feature heavily in the list of all-round, top-rated mobile banking apps. Among them are Credit Karma, Chase Mobile, Bank of America, Wells Fargo and PayPal.
However, a new wave of specialist mobile apps is starting to gain significant traction. This is largely down to their ability to make banking easy – (even fun).
Emerging names for mobile banking include Tandem and Mondo. Qapital, Sweep and Digit are popular with savers while Azimo and Circle Pay are a handy way to make international payments.
Some apps are specialists in a single banking activity. Acorns, for example, introduces millennials to the concept of investments; Shift Card is a flexible credit card facility; Level Money and Moven are popular personal money managers; while Robinhood and Zillow are top apps for stocks, shares and real estate respectively.
As the range of mobile banking services grows to sit alongside traditional banking, questions are inevitably raised about how secure they are.
From a study by the Federal Reserve, 42% of mobile phone owners think mobile banking puts personal information very or somewhat at risk, while another 15% admit they simply cannot be sure.
In a second survey, this time from MyBankTracker.com, the proportion of respondents who trust “mobile technologies for their banking needs and financial transactions” is as low as 6%.
Adhering to a few basic ground rules, however, can make all the difference.
Most importantly, never use a modified or jailbroken device for banking apps. Also, only download apps that are approved and available from a smartphone’s native app store. Check the description in the app store to make sure it’s the right app you want and ensure you install all updates as they become available.
Another check is to make sure the app enforces strict password policies and certificates. Finally, always connect via the actual app as opposed to a bank’s website.
Common user mistakes
Users still have much to learn about security.
One of the first rules is to choose a strong password and a username for banking that is different from any other username for apps or websites. For extra security, experts recommend changing your banking password every 90 days.
Similarly, make sure the answers to security questions are not easily found in public records or social media accounts and that they are not stored on the device.
It might seem obvious, but always make sure to log out of the app after use. If a thief were to take the mobile while a user was still logged in, it would theoretically be possible for them to access all their bank account information.
Most importantly, do not conduct any banking over an unsecured public Wi-Fi network without first installing a VPN.
Using a VPN ensures there is a secure, encrypted, end-to-end connection for information to flow between device and bank.
In summary, use of mobile banking apps is growing rapidly. Intense competition in the sector will ensure apps will continue to be developed. The end-user will be spoilt for convenience and choice.
But wherever there is money the fraudsters will follow.
Mobile banking is safe so long as users take appropriate precautions to avoid being eavesdropped on what they are doing. A VPN is one of the best ways to do this.