It’s evident that mobile banking only became more important in a year of a worldwide pandemic.
The long-standing allure, of course, is its convenient real estate: Our smartphones are usually near us at all times, and a mobile banking app on the device can help us quickly take care of a wide range of troublesome to-dos whenever we wish. It’s essentially a bank in your pocket or purse.
The channel’s significance is only more profound when the typical alternatives, like a branch or a call center line, have lost appeal at a time when branch hours have been reduced and 1-800 numbers have been clogged, forcing consumers across the country into new habits. According to an October survey published by the American Bankers Association, 39 percent of bank customers used mobile banking apps to manage their bank account — making it the most-used method to interact with a financial institution.
“Peoples’ lives were disrupted,” says Rob Morgan, vice president of innovation technology at American Bankers Association. “People having to find ways to do things differently meant that one of those things people ended up doing differently was connecting with their bank. And so we saw really strong adoption that normally takes a lot longer to happen. We’ve also seen banks accelerate their plans to roll out new products. In many cases, the 2-year plan just became a 6-month plan.”
Here’s why you should use mobile banking in 2021
Right now, mobile banking apps can warn you when you spend more than you have in your account, automatically move money into savings on your payday and let you set controls on your cards to restrict spending. The apps can also send you account alerts, let you tap a button in a bank app to call a customer service representative and pay back a friend.
Here are some of the biggest benefits of using mobile banking in 2021:
- Accessing the bank 24/7
- Optimizing your money
- Paying IOUs
- Strengthening security
- Providing added controls
- Offering clarity of where your financial data is going
- Giving you tailored options
1. Accessing the bank 24/7
The ability to call the shots is a boon, and mobile banking is no exception: Unlike a bank branch, mobile banking lets you determine the hours of when you access your account — with some exceptions, such as planned maintenance updates and unexpected outages.
Ultimately, this accessibility saves you time. Consider mobile check deposit, a feature most mobile banking apps offer. In using remote deposit, you can deposit a check from the comfort of your couch.
Mobile banking can also help you avoid taking on in-person risks — and not just pandemic-related health concerns that many of us have right now.
“People don’t want to have to go into bank branches anymore, especially during these Covid times. But for people whose identity might still not be well received, especially in smaller towns or for trans or binary people, the idea of being able to do everything via your phone is super attractive because it allows you a certain layer of safety and convenience that branch banking just can’t provide,” says Billie Simmons, co-founder and chief of staff of Daylight, a startup building a digital-only financial services and lifestyle brand for the LGBTQ community.
2. Optimizing your money
Nowadays, the best mobile banking apps are evolving to help you do less thinking about the comings and goings of your money.
For example, Ally Bank offers checking account customers a feature to help organize their digital money and optimize how much money they can regularly save. U.S. Bank messages customers when its algorithms spot an opportunity to save money, or alternatively, forecast when they are at risk of overdrafting an account. Varo, a challenger bank with a federal bank charter, also includes automatic savings tools and something less expected: The digital bank partners with ApexEdge, a service that tries to lower your bills for you.
Optimizing your money also includes the little things, like spending alerts, to keep you informed.
“You are seeing a lot of people say, ‘hey, I want to know every time there is a transaction over $150 or over $250 or whatever that threshold the consumer happens to care about is,” says Zach Bruhnke, co-founder at HMBradley, a challenger bank. “A lot of people want to go and understand things like ‘what are my daily limits?’ Things you’d probably ask your banker or call a branch for, now you are not one to do it. The push is for more and more information to be available at customers’ fingerprints.”
3. Paying IOUs
When you are logged into your mobile banking app, it’s easy to pay back someone you know.
Banks across the country partner with Zelle (their version of Venmo) so that you can send someone money in minutes through their mobile banking app rather than pay them back with physical cash or IOU slips.
You will only need to know your recipient’s email address or phone number to send someone money. If your bank doesn’t offer Zelle, it will usually let you transfer funds to someone else’s bank account if you know their routing and account number.
4. Strengthening security
Banks are in the business of guarding your assets — including your interactions on their mobile apps. Of course, nothing is foolproof. But there are steps you can take to step up security precautions if you’re worried about mobile banking security.
While you may still use a username and password to log in to a mobile banking app, your financial institution may let you enroll in added safety features. You could, for example, enroll in multifactor authentication where you need two (or more) kinds of verification to prove that it’s really you. For example, a bank could send a code to your phone for money transfers above a certain amount. In order for the payment to go through, you would need to enter the code in addition to logging in through the app to help verify you are who you say you are.
These days, mobile devices — and some bank apps — will let you log in by scanning your face or fingerprint as yet another way to protect your digital bank account without trading convenience. “In mobile banking, you can really leverage biometrics for authentication,” says ABA’s Morgan.
That also means if your phone goes missing, you will have an added lock to keep fraudsters out. You can also disable your mobile phone remotely.
Your bank app may also let you share your location to help you spot payment fraud.
“It can be better for security for the consumer because we are getting to the world where we can do things like ‘we know where your phone is and if your card is a long way from your phone, it might not be you,’” HMBradley’s Bruhnke says. “There are a lot of interesting security controls that can come out of actually having the app installed.”
5. Providing added controls
Think of a mobile banking app as a remote control for your money. The app lets you deposit a check and send someone money whenever you wish.
These controls are getting more advanced. Some bank apps let you activate a new credit or debit card, for example.
“If someone tries to use their card that is not activated, a bank for years would just decline the card. That’s the default,” Bruhnke says. “Now if you have the mobile app, you can get a push notification ‘hey your card hasn’t been activated. Do you want to activate that?’”
It’s not the only way banks let you control your cards. A growing number of banks, like Wells Fargo, Ally Bank and Bank of America, let you use your mobile banking app to turn your debit or credit card off if it goes missing or is stolen. It’s a nice feature to help you feel instantly secure in a moment of panic. Calling a 1-800 number is not required if you want to turn your card back on, either.
6. Offering clarity of where your financial data is going
Many of us share our bank data to use services like Venmo and Mint. Depending on how many outside apps you use, it can be quite taxing to remember which company has what bank data. So a number of banks are trying to help customers understand where it’s going by changing the way data is shared behind the scenes.
“We are seeing a lot more banks offer that functionality that gives consumers proactive control over where their data is going,” ABA’s Morgan says. “It’s not just the added security … But it’s also the importance of transparency so you see where your data is going, how it is being used and control, the ability to turn off this thing when you are no longer using the service.”
At Wells Fargo, for example, customers are able to see their recurring payments connected to their payment card and turn their cards on and off under one hub. It’s called Control Tower, and it’s meant to help you when you’re in a life transition, like when you’re moving to a new city and want to make sure you aren’t paying for services you no longer use.
7. Giving you tailored options
If you are looking for a like-minded community, mobile banking provides a variety of options to serve specific pockets of the population.
Daylight, for example, is building its brand to solve for problems the LGBTQ community experiences, like lower mortgage approval rates and the hassles associated with changing their dead names (the name they were assigned at birth) on bank cards or within online banking if they transition.
Rob Curtis, co-founder and CEO of Daylight, says going into a bank as a LGBT person is largely an exercise in futility. “They won’t understand who you are,” Curtis says. “They will ask you the wrong questions and they will give you a service that is designed for people that don’t act like us.”
While it’s early days, Daylight is partnering with Visa to build a digital brand focused on the community’s needs.
There are also startups building mobile financial services experiences for the Black community, young adults, women and other groups.
Disadvantages of mobile banking
Not all mobile banking apps work well. You could become frustrated with a digital banking experience. Even the best ones will encounter outages every now and then.
As banks layer in ever-more features, navigating the apps can feel daunting, too. It’s not always obvious what feature is available or where it’s located within the app.
While you could go into a bank branch to get a demo to understand this or that, it’s a lot harder to take this action when the country is still social distancing. The good news is that banks are working to make their designs more intuitive.
Highly rated mobile bank apps
In 2021, mobile banking apps with standout features let you automate money decisions, block your cards, quickly get answers to your questions and more. Here are some of Bankrate’s favorites.
- Chase: The big bank lets you do the basics, like send money to someone else and monitor your account. It also shows you a daily snapshot of your spending and saving patterns on a nonledger interface.
- Chime: The challenger bank gives you daily balance alerts and allows you to block your card in-app. More impressively, it lets you set up rules to automatically save money and potentially get your payday up to two days early. You can also overdraw your account without paying a fee.
- Bank of America: Among the standouts of the big bank’s app is Erica, a virtual assistant that can answer a wide range of financial questions. You can also use the mobile banking app to book an appointment with an in-person banker.
- Ally Bank: The online-only bank offers the staples (find nearby ATMs, transfer money) and provides extra touches. You can use Ally Assist, a virtual assistant who can answer questions you have. You can also set up controls for your cards and set up savings buckets to help organize your money.
- Current: The challenger bank’s app provides the biggies, like the ability to deposit checks. It also lets direct deposit customers get an early payday and overdraw their account without paying fees. It also lets customers set up savings pods for their goals.
- Varo: The modern bank lets you overdraft without paying fees, get paid early and track your spending with instant alerts. It also includes a service that helps you find side jobs.
Mobile banking is designed to help you in all kinds of ways — some of which are fundamentally redefining what a bank is and what it offers.
“Banks for a long time have been a mattress replacement,” Bruhnke says. “You put money at a bank because you didn’t want to stick it under a mattress. Now, it’s becoming more of a utility.”