Fintech

What Are the Main Advantages of Mobile Banking?

Aleksandra Rajczyk
Aleksandra Rajczyk

Operators, banks, and financial institutions push the idea that the benefits of mobile banking are endless. Are they really from the point of view of a regular customer? In this article, we’re going to have a closer look at the real advantages of mobile banking. 

Convenience is the mother of invention. That is the main reason why digital banking services have been growing along with the popularity of mobile devices. Banks and traditional financial institutions now have to compete with innovative fintech solutions that win customers with their custom financial services that perfectly target the very specific needs of mobile users. 

Governments do not turn blind to the expanding landscape of digital finance. Necessary regulations had to be introduced to ensure that mobile banking services are safe for users. The PSD2 Directive presented by the European Union defines the new players on the market and specifies how traditional institutions should work with them. The benefits of mobile banking are now more controlled and precise for everyone interested in that type of service. 

If you’d like to know more about how PSD2 influences digital banking, check out our blog posts:

binarapps.com/psd2-what-is-it-and-what-does-it-mean-for-customers/

binarapps.com/open-banking-and-psd2-api-implementation-faq/

For now, keep reading to learn more about mobile banking and how it works. 

What is mobile banking’s definition?

The broadest mobile banking definition is that it’s the type of banking that doesn’t require the customer’s presence at a banking institution. Instead, they are encouraged to use a web or mobile banking app. Therefore, all of the operations that can be done by using a mobile banking app are considered to be digital banking. It’s up to the bank how many digital options are available to the customers. That is why it is important for them to understand the advantages of mobile banking and create digital products that give them a competitive edge on the market. The mobile banking definition is subject to change because of the fast development of online banking platforms and services. 

What are the main advantages of mobile banking?

Mobile banking is an application in your mobile device which serves as a pocket bank. It can be a smartphone or a tablet. This app operates without a need to go out to the bank. In layman’s terms: performing various banking-related actions on a mobile electronic device is called mobile banking. 

Traditional financial institutions have introduced mobile banking applications to improve customer experience. It’s a direct response to the changing needs of the general public and the growing fintech market. 

Fintech brings new mobile banking solutions that haven’t been offered by the banks in the past. They’re usually very specific, allowing the user to perform only one or two actions instead of the variety of choices provided by the banks’ mobile applications. 

Today, the type of banking services available through mobile banking are:

  • account balance inquiry,
  • mobile payments,
  • use of a debit or credit card,
  • quick transfer of funds,
  • keeping track of bank balance,
  • access to account history,
  • receiving notifications about the account activity,
  • getting information about the latest financial offers,
  • finding ATMs in the area,
  • paying bills,
  • buying insurance,
  • applying for loans, 
  • checking exchange rates,
  • travel services,
  • depositing checks.

To put it simply: the advantages of mobile banking are clear to everyone who uses a mobile device on a daily basis.

How does mobile banking work?

To enjoy the benefits of mobile banking, check if your bank offers a mobile app. Some customers who are very attached to mobile devices create new accounts specifically for a good mobile banking application! Download the app to your device of choice and create a login and password according to the instructions provided by the bank. Once you login to the account, you can see how does mobile banking work on your own – the interface should make the discovery easy for you.

The same process applies to financial mobile apps. Keep in mind that apps to not operate as banks. For example, to fully enjoy the benefits of having an e-wallet, you’re going to have to connect it to the debit or credit card. Some mobile apps are meant only for users who use specific software or service providers. 

The fintech apps interact with the funds in your bank account based on the information you allow for them to collect. In the European Union, they perform under the guidelines of the PSD2 Directive.

What are some examples of mobile banking services?

As mentioned previously, it is up to the bank how many services their customers can receive via the mobile banking app. From managing the bank account and taking a loan to order a new credit card – every service traditionally offered at a stationery bank agency can be turned into mobile banking services.

When it comes to fintech solutions, some of the most popular mobile banking services they offer are the following (even though the solutions themselves are often not supported by any bank, but rather connect with banks as Third-Party Providers):

  • PayPal – online financial service for secure payments, 
  • Klarna – buy now, pay later system that allows customers to pay for their purchase in four installments,
  • ApplePay – contactless payment service for Apple devices,
  • Google Wallet – virtual wallet for online transactions,
  • Venmo – peer-to-peer mobile payment application.

These are just a few examples of what mobile banking brings to users. Mobile banking services are a growing branch of the IT industry. The upcoming years are going to introduce a lot of new technologies to the market. 

What are the benefits of mobile banking for consumers?

Judging by the rapid development of mobile banking services, it is safe to assume that the advantages of mobile banking outgrow the disadvantages. The main benefits of mobile banking that users can already enjoy:

  1. Convenience

No need to show up at the bank! Every banking service is available wherever you are. 

  1. Ease of access

A smartphone with a wifi connection is all you need to use mobile banking services.

  1. Availability 24/7

You can benefit from mobile banking services at any time.

  1. Timely tracking of financial transactions

Every transaction is immediately tracked, stored, and accessed via a mobile app. 

  1. Improved customer experience

Mobile banking services greatly improve the way customers view their financial operators.

  1. Personalization 

You only get the services you want without additional options that won’t benefit you in the long run.

  1. An environment-friendly way

Mobile banking services reduce paper consumption and minimize personal carbon imprint. 

These are just the most obvious mobile banking benefits. Every satisfied customer can definitely come up with their own!

Mobile banking security – is mobile banking safe?

The first question that pops up in the heads of the consumers is “is mobile banking safe”? A valid concern since we are dealing with finance – the basis of our everyday well-being. Mobile banking security is the primary concern of all parties involved. New technologies are implemented in mobile banking apps to protect users from fraud and cyber threats.  

The PSD2 Directive demands that every mobile banking operation is secured by multiple-level authentication. It is an authentication method that requires at least two steps to verify the identity of the user that requests a mobile banking service. Usernames and passwords are important, but they often get stolen. Another factor of verification makes it harder for attackers to succeed. What kind of verification techniques users can use for multiple-level authentication? It can be something based on the user’s knowledge (like a specific question, something the user has (a token) or something the user is (thumbprint). Only then the requested operation gets processed successfully.

To further enhance the security of mobile banking services, every mobile device should have security software installed. Users should not miss this step when buying a new smartphone. It is also advisable to use a password protection app (i.e. Apple Keychain). 

Summary – Is it worth using mobile banking app?

The rise of mobile banking is proof that the old saying “the customer is king” rings true. The era of high-speed internet fueled the popularity of smartphones. That has been the beginning of mobile banking. Because of this, the benefits of mobile banking are targeted towards mobile device users. The mobile banking definition is very broad because it covers all of the traditional banking services that can be implemented into the mobile app. What is more, mobile banking recognizes new financial services provided by the fintech industry, i.e. e-wallets and online transaction platforms. The advantages of mobile banking allow users to have a seamless customer experience without leaving their houses. The benefits of mobile banking include things such as convenience, speed, customization, and environment-friendly solutions. However, most users are focused on the benefits of mobile payments. In order to keep up with the demand, traditional financial services have to pay attention to the needs of modern, digital customers.

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