Matt Gunn

Matt Gunn, Managing Editor | TechComply

For the past several years, it’s been near impossible to talk channel strategy without some sort of discussion about mobile banking. Why? Because the age of the smart device — the iPhone, Android, tablet or hybrid — has brought with it a new expectation from customers that they can do more with less from wherever they want and at whatever time is most convenient.

Indeed, if your bank or credit union hasn’t at least entertained the idea of mobile banking, it probably will before too long. Smartphones now make up more than half the mobile phone market (58%), according to recent comScore data. And of the 136.7 million Americans using smartphones today, odds are at least a handful of them are customers of your financial institution.

In fact, according to Medill Reports, as of late last year, some 48% of smartphone users had accessed mobile banking in the past 12 months. Medill cites a Federal Reserve study on consumer use of mobile phones and access to financial services. While the majority of users primarily use mobile banking for basic services, such as checking account balances, there is a growing population of those who also use mobile banking apps to pay bills or deposit checks. But that comes with an asterisk, Medill writes:

The biggest obstacle in the way of growth in this industry is fear among some consumers that the technology is not secure. Experts, however, say that mobile banking is secure.

The mobile banking industry has not had many major cyber attacks, partly due to the fact that the industry is a new one. In 2010 Citibank publicly acknowledged its banking app stored sensitive information including account numbers and passwords. However, Citibank said, it upgraded its app to delete files with stored sensitive information.

From a consumer standpoint, there is still some uncertainty about the safety of banking on a mobile device. However, as Medill’s article points out, there should be some concern on the financial institution’s side as well.

Banks and credit unions typically rely on third-party providers to develop and deliver wireless banking applications, says Tom Hinkel, Safe Systems director of compliance. In a presentation he delivered today at the Jack Henry CIF 20/20 Smoky Mountain User Group conference, Hinkel reinforced the need for due diligence in managing mobile vendors. The same compliance standards that apply to other banking providers should go for mobile, as well. Institutions should ensure the service provider’s physical and data security standards meet or exceed the standards required by the institution. Any new product or service deployed through third-party vendors will have an affect on risk.

“Risk management in mobile banking is all about knowing and trusting your vendor,” Hinkel says.

Deploying a mobile banking solution, and taking on the associated risk, has quickly become a par. The mobile juggernaut doesn’t show any signs of slowing.

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