As adoption of advanced mobile devices such as smartphones and tablets has exploded in recent years, consumers have grown more comfortable using phones and tablets to conduct all types of financial transactions.
In response, banks have introduced applications that allow consumers to transfer money, purchase goods and complete other transactions.
"Time is a precious commodity," said Nate Wehunt, senior vice president digital channels with City National Bank. "We want to allow our customers to handle their banking needs whenever or wherever they are."
Wehunt said the new normal is allowing consumers to bank during their off hours, whether it’s checking account balances or depositing checks remotely.
Remote deposit capture, also known as RDC, has rapidly become a game changer.
Financial institutions now see mobile deposit as a strategic channel to extend deposit offerings as they look for new ways to reach customers and pare down branch infrastructure or extend their presence as online banking providers.
"We have ample evidence demonstrating that the product is becoming mainstream through the mobile channel," Douglas King, a payments risk expert at the Atlanta Federal Reserve said in a blog post. "With four large financial institutions incorporating RDC with their mobile applications over the summer, eight out of the 10 largest depository institutions currently offer the product."
It’s not just the largest financial institutions — J.P. Morgan Chase & Co. and Bank of America Corp. — offering mobile remote deposit capture. One Nevada Credit Union is among a growing list of credit unions and community banks expanding their mobile offerings.
One Nevada Credit Union President Brad Beal said his company’s adoption of new technologies from mobile and online banking to remote deposit capture has been "mostly member-driven." The credit union rolled out RDC in May.
Beal said it was too early to tell how RDC will be received in the long run. Early on, though, he said early members have had a very strong acceptance rate.
"(RDC) also reduces our costs, because we don’t have to handle all that paper," Beal said.
Wehunt said RDC at City National is geared toward both individual and business clients. He said the construction company managing multiple sites with multiple transactions is a "completely different transaction than an individual depositing a birthday check."
Wehunt described it as a "high-touch digital strategy" at City National. Most users log in to check balances or to pay bills, a pattern that still holds at City National, but Wehunt said clientele also includes users logging in to check their investments or trusts and small businesses handling payroll.
He said although industry noise has surrounded the evolution of the "digital wallet," the vast majority of all transactions are now available in mobile banking.
Although the technologies have their benefits, they are still relatively new and important concerns remain, including consumer unease over security. Specifically, there are concerns about hackers gaining access to customers’ phones and exposing their financial information.
"We want to test it to make sure things are safe and sound, before we release it," Wehunt said. "We are very involved in security."
<b>MOBILE BANKING’S GROWTH</b>
A recent Federal Reserve survey found that 21 percent of mobile phone owners had used mobile banking services in the past year and that an additional 11 percent plan to use their phones to conduct similar transactions within the next 12 months.
The survey’s findings suggest that mobile banking is continuing to expand, with usage possibly increasing to 1 out of 3 mobile phone users next year. "The evolution of new technologies that enable consumers to conduct financial transactions using mobile devices has the potential to affect their financial lives in important, but as of yet, not fully known ways," Sandra Braun, director Division of Consumer and Community Affairs with the Federal Reserve, said.
Braun, who testified before the U.S. Senate’s Committee on Banking, Housing and Urban Affairs, said because mobile financial services continue to develop, the Fed is closely monitoring a growing industry.
She said mobile technology could expand access to mainstream financial services to segments of the population that are unbanked or underbanked.
The Federal Deposit Insurance Corp. put the underbanked in Las Vegas at 33.2 percent of households, while those considered "unbanked" — living without a checking or savings account — stood at 6.2 percent.
The FDIC defines "underbanked" as households with a checking or savings account, but that also rely on check-cashing stores, payday loans, prepaid debit cards and other services. Among those categorized as "underbanked," nearly 3 out of 10 have used mobile banking, primarily to check their account balances, according to the Fed.
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<strong>Tablet use growing, especially among the affluent</strong>
Credit unions and banks that adopt tablet-specific apps for their members and customers are catering to a growing, as well as affluent market, a new survey found.
According to the Pew Research Center’s Internet & American Life Project, ownership of tablets has increased from 4 percent of American adults to 25 percent in the past two years.
That figure increases to 47 percent of households that earn $75,000 or more per year, the Pew Research Center said. Households earning less than $30,000 per year were only 10 percent of the tablet market.
Twenty-seven percent of households earning between $30,000-$49,000 annually owned tablet computers, while 32 percent of those households between $50,000-$74,999 owned tablets.
Education level also was a predictive factor in tablet ownership, the center’s survey found, but race and ethnicity were not.
Eighteen percent of high school graduates owned tablets, while 27 percent with some college, and 41 percent of college graduates used tablets.
<strong>Spending more on mobile</strong>
Community banks are expected to spend more on technology next year, a recent study by the U.S. audit and advisory firm KPMG shows.
In a survey of 105 bank executives at institutions with $5 billion or less in assets, 60 percent said they would increase capital spending over the next year. Information technology (50 percent), new products and services (34 percent), and acquisition of a business (23 percent) are the top areas of investment.
Mobile banking and payments (26 percent) and cloud technology (23 percent) were identified as the most important IT-related projects for community banks in 2013.
"Mobile banking is clearly a channel in which community banks are investing. As its utilization by consumers continues to become more mainstream," said John Depman, national leader of regional and community banking for KPMG.
Fifty-one percent of community banking leaders said they were slightly concerned or not at all concerned that their bank might be vulnerable to a cyberattack, while 14 percent were extremely concerned and 33 percent were moderately concerned.
"Recent cyberattacks were highly publicized, but the majority of community banking executives report they are not overly concerned about this threat," Depman said. "Banks of all sizes should ensure their security systems and various processes are regularly updated to guard against this threat, which presents significant financial and reputational risks."