Mobile banking catching on

Chuck Kain was on a tight budget when he took a vacation to Myrtle Beach last month.

Before buying food and souvenirs on vacation, he checked on his cell phone to make sure he had enough money in his checking account.

Kain, 30, of Henrico County, also looked at his last transactions without visiting a bank, going to the ATM or being tied to his computer. “I used it in the middle of a campground when I didn’t have a laptop,“ he said.

Mobile banking is the newest way to do personal banking via a cell phone.

Bruce Whitehurst, president of the Virginia Bankers Association, said mobile banking is becoming a standard service at banks. “As a form of banking, it is still very new,“ Whitehurst said. “I would say there is rapidly growing awareness of mobile banking as another enhancement of banking in Virginia.“

Mobile banking also is growing in popularity, he said.

About 60 percent of the banks in the country will offer at least one type of mobile banking by the end of the year,

according to the American Bankers Association.

Large banks that offer at least one form of mobile banking include Wachovia, Bank of America, SunTrust, BB&T and Chase. Smaller regional banks, such as Provident Bank, also have started offering the service.

Wachovia’s mobile banking service, for instance, has been accessed a million times each month as of the end of the first quarter of 2008, up from 50,000 sessions at the same time a year ago. The number of users grows each quarter, Wachovia spokesman Matt Wadley said.

Wachovia has 35,000 mobile banking customers nationally using a version that is downloaded onto a cell phone. The application was added to Wachovia’s mobile banking options in November 2007.

Wachovia has 5 million active online banking customers, who could be accessing mobile banking through the Web version, Wadley said. The bank had 4.2 million online users last year.

Mobile banking also has caught on at Bank of America. The bank has about 25 million online banking users, half of whom have signed up for the free mobile banking service since its introduction in spring 2007.

And Provident is averaging 50 new mobile banking customers each week, said Mike Vavreck, the company’s vice president of Internet banking.

Banks generally don’t charge for mobile banking services, but text messaging and Internet fees may apply from phone carriers.

And customers may have some limitations as to what information they can retrieve depending upon the type of wireless device they use.

Those between the ages of 25 and 34 use mobile banking the most, said Don Rhodes, director of risk management policy for the American Bankers Association. While people ages 18 to 24 use their cell phones the most, he said most of them don’t have complex financial bills such as mortgages, car payments and insurance.

“Young people want to do everything on their cell phones,“ he said. “And this really offers the convenience that people are really looking for.“

Vavreck said Provident Bank targeted customers in the 35 and younger category when it introduced the service in March, figuring that age group would embrace the service.

But the bank learned that wasn’t the case. The average age of Provident’s mobile banking user is 37, Vavreck said.

“Convenience is the biggest seller to all generations,“ he said.

Security is an issue with mobile banking, said Rhodes from the American Bankers Association.

The text messaging version of the service carries the most risk because the information is stored on the phone. If the phone is lost or stolen, anyone would be able to look at the information on the device if the text messages are not deleted.

The most secure way to mobile bank is through the downloadable application because the information is not stored on the device.

Wachovia, for instance, can control security on the devices. “If your mobile device is ever lost or stolen, you can call us and we can remotely delete the application from the phone,“ Wadley said.

While Wachovia was one of the first U.S. banks to offer the mobile banking service in December 2006, the technology was available as early as 1998, Rhodes said.

“It didn’t take off because handsets were not capable of doing these things,“ he said.

The growing popularity of iPhones and BlackBerrys is one reason for the increased interest of mobile banking, Provident’s Vavreck said.

Since the iPhone was released in June 2007, about 7 million devices have been sold worldwide. Fewer than 40 million BlackBerry devices have been sold worldwide since 1999.

“We have seen an explosion in the use of [smartphones],“ Virginia Bankers Association’s Whitehurst said. “The more that usage grows, the more comfortable people will feel in using applications on those [phones] and the more mobile banking will grow.“