Rise in Mobile Banking
Mobile banking has become a boon in a time when many banks face challenges with revenue and profit growth. Mobile banking offers customers the ability to view balances, transfer money, deposit checks and perform a myriad of other functions from their home computer or handheld device.
According to the Wall Street Journal, Bank of America customers deposit more than 163,000 checks a day via their mobile phones. Smartphones were involved in 10 percent of total deposit transactions at Bank of America in the first quarter, up from 6 percent in the prior-year’s quarter. The increase has been attributed to business owners and parents adopting the technology, alongside widespread use by students and young professionals.
For banking institutions, mobile banking is extremely cost-effective. The average cost of a mobile transaction is 10 cents, about half that of a desktop-computer transaction and far less than the $1.25 average cost of an ATM transaction. Institutions that wait too long to offer mobile banking also risk losing their clients. About 60 percent of smartphone users who switched banks in the fourth quarter of 2013 claimed mobile banking was an important factor in the decision.
The rise of mobile banking practices also leads to less clients coming into the physical bank, which has caused Bank of America to to cut 300 branches in the past year, which contributed to a expense savings of $180 million, the Wall Street Journal reports.
Of course, with the new mobile banking technology, institutions can leave themselves exposed to greater risk. Jim Ballagh of the Credit Union Times stresses the importance of assessing risk from multiple perspectives such as member history, size of deposit, the particular deposit channel being used, and the potential for duplicate deposits. Lenders should invest in risk management solutions that ensure all transactions are secure and serve the interests of both borrowers and lenders.
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