Online banking technology expands

FinanceMarketingCell PhonesBankingBank of Stockton (CA)Business InstitutionsBank of America Corp.

Banking online made it possible to check account balances, pay bills and transfer cash at the convenience of a few clicks of the mouse. This year, that mobility is being taken to the next level as banks and financial software providers roll out technology that lets you bank from a cell phone.

And they are counting on you -- the tech-familiar twentysomethings -- to be the biggest adopters of the service.

By 2010, 35 percent of households with Web access will be using cell phones to bank, up from 1 percent today, according to a recent study from Celent LLC, a research and advisory firm to financial institutions.

The study also estimates that for 40 percent of 18- to 25-year-olds, mobile-banking services will be a factor in choosing a bank--a percentage that both national behemoths and local banks seem keenly aware of as they race to roll out the service in today's competitive retail banking market.

"The major banks have embraced technology. We felt it was absolutely necessary to be on the cutting edge in order to compete," said Thomas Shaffer, executive vice president for the Bank of Stockton, based in California.

You may not need to wait for your bank to introduce mobile service. Geezeo, a company launched just over a month ago in Framingham, Mass., is a Web-based financial aggregator that lets you track your accounts from any of some 6,000 financial institutions online -- and via your cell phone.

-- Benefits of mobile banking

How does mobile banking work? It depends.

With Bank of America Corp., for example, you essentially log onto the bank's Web page from your phone. Citibank, meanwhile, requires that you download an application to your hand-held device. And both the Bank of Stockton and Geezeo use a system based on text messaging in which you essentially "text" the bank to perform transactions, say transfer a balance or pay a bill.

In each case, the mobile service allows you to keep up with your cash flow in real time.

As Peter Glyman, co-founder of Geezeo, points out, far fewer people balance a paper checkbook these days. "Most people have no idea where their money goes every month and at least this way you can check your balance before you go to buy something."

While not all online banking functions are accessible through your cell phone--you can't set up a payee to receive electronic payments, for one--you're still able to do a lot: transfer cash between accounts, pay a bill, review your transaction history and find your bank's closest ATM.

In theory, by keeping on top of your accounts at virtually every moment you should be able to avoid the costly fees that banks charge when you overdraw from an account or use an ATM outside of your bank's network.

-- The drawbacks

Where's the catch? Well, for one, you could easily run up your cell-phone bill. Carriers charge extra for Web access and text messages. And you may need a particular wireless service or hand-held device to do mobile banking.

You also have to think about security. Both banks and financial-software providers pledge that your personal information is encrypted (meaning it is sent in code). And even in cases where you download an application to your cell phone, such as with Citibank, none of your account data is stored on your phone.

Your bank could also set up extra security layers. For example, you may have to key in a personal identification number to execute a transaction more than $300, according to ClairMail Inc., which powers the Bank of Stockton's text-based mobile service.

Even so, you still have to be prudent. If you're a customer of Citibank and lose your cell phone, for example, you have to remember to call the bank to deactivate the downloaded application.

The best bet: Make sure your bank extends its liability policy -- the maximum hit you'll take in the case of fraud -- to mobile banking.

E-mail Carolyn Bigda at yourmoney@tribune.com.

Copyright © 2014, Los Angeles Times
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FinanceMarketingCell PhonesBankingBank of Stockton (CA)Business InstitutionsBank of America Corp.
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