But the growing use of smartphones is proving that to be the case. As surprising as it may seem, the growing trend towards mobile commerce is the one area of commercial innovation in which the financial services industry has been out-hustled by its public. This is especially surprising given the speed with which companies previously owned or funded by big banks like credit card firms and tech behemoths are moving into mobile commerce.
The banks' belated embrace of mobile has been driven by their early disappointment with online banking, their financial and regulatory uncertainty following the financial crisis and their technological backwardness.
Younger consumers are accustomed, even expect most services in which they engage to be available on mobile platforms. Even older and less tech-savvy consumers are becoming more comfortable with the convenience of managing many aspects of their lives via phone.
Given the industry's unenviable reputation for ethical behavior - or the absence thereof - and concerns about security lapses for which the banks' understandably believe they would be held liable, it may be prudent to permit the practice to mature. This might not be a first, though reticence to make money has not recently been an industry hallmark. Even with those hesitations, the move to mobile seems inevitable. Customers may well rue the day they complained about banks not keeping up with them. JL
Robin Sidel reports in the Wall Street Journal:
Americans are growing increasingly comfortable using their mobile phones to conduct basic financial transactions, sending banks racing to offer new technology that will cut down on costly customer-service calls and branch visits. The moves represent a big change from just a few years ago, when customers mostly used their phones to check bank balances or find the nearest branch. Customers now are manipulating their gadgets to deposit checks and move money between accounts.
First Financial Bank, a community lender with 55 branches in Texas, recently rolled out a feature that lets customers pay bills using their mobile phone to snap a picture of their monthly payment coupon. U.S. Bancorp, the fifth-largest U.S. bank by assets, plans to launch its own version of "mobile photo bill pay" in March.
The trend is taking hold with younger consumers who increasingly rely on smartphones for everyday tasks. It is less clear, however, whether older bank customers—many of whom took a while to embrace online banking and who are among the industry's most profitable customers—are willing to make another switch.
The efforts come as banks of all sizes look for new ways to attract customers during a period of low interest rates, tepid loan demand and tight profit margins. U.S. banks closed more than 1,100 branches in 2012, on a net basis, said SNL Financial, a Charlottesville, Va., research firm.
The mobile-banking efforts are more advanced than the industry's race to transform mobile phones into payment devices. Banks also compete against nontraditional payment firms like eBay Inc.'s EBAY PayPal.
By contrast, consumers' "readiness to manage their personal finances and banking via a mobile device has caught the industry off guard," said Robert Hedges, managing director at AlixPartners LLP, a Boston-based consulting firm.
Mobile banking represents roughly 8% of transactions, with online banking at 53% and branches, 14%, according to AlixPartners. Other methods, including automated teller machines, make up the rest.
Kate Greenough of Boston rarely visits a Bank of America Corp. BAC -0.04%branch. She doesn't own a laptop or desktop computer. Instead, she relies on her smartphone and iPad for virtually all of her banking.
"It has become part of my normal routine," said the 25-year-old who works in the marketing industry.
She has used her phone to transfer rent money to her roommate's bank account and will sometimes log onto her account when shopping to check her recent spending habits.
Most banks don't charge for the new mobile applications; they consider them as a way to lure consumers who may ultimately turn to the bank for a credit card, mortgage or wealth-management services.
Nearly half of smartphone users who switched banks said that mobile banking was an important factor in their decision, up from 7% in 2010, according to an AlixPartners survey.
J.P. Morgan Chase JPM -0.64%& Co., which started offering mobile banking in 2009, said that it has some 13 million customers who use its mobile services.
"We have gone from mobile as an experiment to mobile banking being a core experience that is just as important as the branches, call centers and the Internet," said Ryan McInerney, who runs the New York bank's consumer-banking operations.
Bank of America began offering mobile check deposit in August. The bank said customers are depositing more than 100,000 checks each day through their mobile phones.
U.S. Bancorp is one of the few big banks that charges customers 50 cents to deposit a check by taking a picture of it with their smartphone.
"We find that our customers appreciate the convenience for the service and are more than willing to pay the 50 cents rather than go to the nearest ATM or branch," said Howell "Mac" McCullough, chief strategy officer at U.S. Bancorp.
The Minneapolis-based bank doesn't plan to charge for its new mobile photo bill-payment service.
Banks began offering mobile banking five or six years ago in the form of text messaging and web-based browsers.
The adoption of mobile banking is being fueled by the explosion in smartphone usage. Roughly half of Americans who use a mobile phone are using a smartphone, according to mobile-phone industry estimates.
The new features "give the banks a couple of new weapons in terms of engaging the next generation of consumers," said James DeBello, chief executive of Mitek Systems Inc., MITK +2.53%a San Diego software developer that sells mobile features to banks.
Still, there are skeptics. Nearly half of mobile-banking users and 63% of nonusers said they would be hesitant about using a phone camera to make a check deposit, according to a survey conducted last year by Infosys Ltd., a technology and consulting firm.
Jeff Murphy uses a smartphone to deposit checks into his ING Direct savings account but said he wouldn't be comfortable using the feature for his everyday account at TD Bank TD.T -0.08%even if the bank offered it.
"I like the ING security, but I don't trust these app makers," said the 41-year-old systems administrator in New York. ING is a unit of Capital One Financial Corp. COF -0.58%
TD plans to offer mobile deposit in the first half of the year, a spokeswoman said. The bank, which has more than 1,300 U.S. branches, is part of TD Bank Group in Toronto.
Banks say mobile banking is secure. Customers typically choose a login and password so that their bank information can't be accessed if a phone is lost or stolen.
In the first 24 hours after First Financial, a unit of First Financial Bankshares Inc., Abilene, Texas, launched the mobile photo bill payment last month, some 53% of the bank's active mobile users upgraded to the new application that included the feature.
"The appeal for us is opening new accounts and taking care of our customers to make the bank grow," said F. Scott Dueser, chief executive.
Mr. DeBello of Mitek thinks banks ultimately will add features that allow customers to use smartphones to get a credit card or a mortgage.
"It's instant, it's gratifying, it's easy and it's kind of fun. When is the last time you had fun banking?" he said
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