An increasing number of Americans are using smartphones to handle money in one way or another, and the Consumer Financial Protection Bureau is on it.
The CFPB announced today it would be launching an inquiry into how mobile financial services, especially mobile banking and financial management, affects consumers.
The agency is focused on four potential issues with mobile finance:
- How financial institutions do with customer service issues related to mobile finance such as incomplete transactions or canceling access to a device that's been lost.
- Whether the proliferation of mobile banking could drive a cutback in bank branches that could negatively affect consumers.
- The privacy concerns associated with combining the GPS functionality, ability to make purchases and other features that make smartphones a rich source of data for businesses.
- The data breaches that are regularly releasing that flood of information into the hands of hackers -- and ultimately, thieves -- all over the world.
Also looking at upsides for consumers
It's not all bad -- the CFPB is also looking at ways mobile finance can help people underserved by traditional brick-and-mortar banks and service providers, and how it can be a big help for budgeting and other money chores.
"In this modern age where people can manage their money on the go, there is great potential to provide access to more consumers and allow them to take greater control of their financial lives," said CFPB Director Richard Cordray, in a press release. "But we need to make sure that the legal and regulatory framework can keep up effectively, so that all consumers can remain protected whether they are opening their wallet or scanning the screen on their smartphone."
As part of their inquiry, the CFPB is taking comments from consumers, community groups, consumer groups, academics, businesses and others about how U.S. consumers use mobile finance.
Mobile finance going mainstream
It's pretty clear why the CFPB is asking these questions; mobile finance is rapidly becoming mainstream, and regulators don't want to be caught flat-footed as our money management migrates to our phones. In its press release, the agency cited a statistic that last year, an average of 74,000 U.S. bank customers a day began using mobile banking.
According to a 2013 Federal Reserve survey:
- 48 percent of smartphone owners said they'd used mobile banking in the previous 12 months.
- 24 percent said they'd made a payment on their phone, in the previous 12 months.
While "mobile wallets" used to make purchases at the point of sale haven't caught on quite as much, it's a safe bet that if they do, the CFPB will probably start looking into them, too.
What do you think? Do you use mobile finance tools on your smartphone? Which ones?