Is mobile banking safe?

© Emily Rose Bennett/Staff/ZUMA Press/Corbis

© Emily Rose Bennett/Staff/ZUMA Press/Corbis

A rock climber clinging precariously to the side of a cliff gets a text alert on her cellphone that her checking account balance is low. She quickly transfers funds to avoid an overdraft, then resumes her ascent.

A couple on a road trip suddenly remember they forgot to send their car payment before they left home. No problem -- the wife, sitting in the passenger seat, zaps it off from her smartphone as they zoom down the highway.

Judging from these TV commercials, using a cellphone to check your bank balance, transfer money and pay bills seems like a no-brainer, so easy and convenient that anyone who doesn't do it must be some kind of Luddite. According to Javelin Strategy & Research, mobile banking increased by 40 percent in 2013, with 74,000 new users per day.

If you're not yet using your phone to check your balance, pay your bills or move money from account to account, you will soon. "There's little doubt that the era of mobile banking is coming," says Mark Schwanhausser, director of omnichannel financial services at Javelin Strategy & Research in Pleasanton, California.

That raises the question: How safe is it? With all the tech-savvy crooks and identity thieves lurking about, is it really a good idea to have your precious financial information floating around the airwaves or residing on a piece of gear that you could easily lose? According to a Javelin study, security, or the lack thereof, is the No. 1 fear among potential mobile banking customers.

The good news is that the fear is so far worse than the reality, thanks in part to the financial industry's heavy investment in security technology. In addition, many bank and credit card companies promise to cover 100 percent of a customer's mobile fraud losses. Other banking institutions, such as Bank of America, offer zero liability as long as customers report the fraudulent transaction within 60 days and have not violated other protection rules.

Mobile banking comes in three different flavors. Most banks emphasize one or a combination of them.


Short message service, or SMS, works with just about any cellphone sold in recent years. It basically involves you and the bank exchanging text messages, like infatuated teenagers. Once you have registered your phone with the bank, you can ask the institution to send you a text alert when, say, your checking balance drops to a specific level or when your credit card is approaching its limit. 

You can also request your current balance by sending the bank a message code, like BAL, and get a quick response. By sending various codes, you can learn what checks have cleared recently or move funds to a linked credit card. Because the bank will accept instructions only from your phone, you don't have to worry about someone impersonating you unless you lose or loan your phone. 


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