Mobile phone bankingYour smartphone -- that supercomputer in your pocket -- can easily morph into other handy tools, such as a virtual wallet that stores credit card information so you can shop without your traditional deck of plastic charge cards.

But while apps like Google Wallet are a long way from widespread adoption, mobile banking is everywhere. More than 25% of U.S. households use mobile banking via text messaging, mobile browsers and downloadable apps, according to a survey by financial services technology firm Fiserv.

But although "thumb" banking is both popular and growing, some are still fuzzy on its benefits, and wary about security and privacy concerns.

For anyone who's thinking about making the move to mobile banking, here's a primer on the basics:

Browsers and Apps and
Texts, Oh My

"The signature convenience of mobile banking is that consumers can more easily manage their financial lives," Steve Shaw, director of strategic marketing, electronic banking services for Fiserv, tells DailyFinance. "Information-based activities, such as checking balances, are most popular, but as consumers become more comfortable with mobile banking, they are also conducting more transactions, such as transferring funds or paying bills."

Most of the big banking institutions now offer these capabilities.

Customers transferring funds or paying bills via a web browser click on a mobile banking site, then log into the service using their password and proceed with their transaction. Or they can transfer funds and pay a bill using an app. But if you download a mobile banking app, make sure to do so from reputable sources, such as Bank of America or Wells Fargo, or from a known third-party supplier like the iTunes store or the Android Market.

Beyond mobile sites and apps, text messaging is becoming a popular way to transfer funds and pay bills. But be careful: "The biggest caution around the use of text is not to provide personal data in response to a text message," Shaw says, "as this can [expose people to] phishing," in which online scammers attempt to acquire usernames, passwords and credit card details.

Fortunately, the banks help you protect yourself: "When an alert, such as a bill reminder, is triggered, a text message which includes a unique code is sent to the consumer. If the consumer is interested in moving forward with a transaction, such as paying a bill, they can text the code back to the bank and they will put the transaction through," Shaw says. This keeps the customer from having to send any personal information via text.

Mobile Deposit Capture

With these app, customers can snap a photo of a check with their smart phone, transmit the image to their bank, and voila, the check is instantly deposited.

Although mobile deposit capture apps such as this one from Citi have been around for a few years, they're still not widely used -- but they're practical tools, Shaw says.

Person-to-Person Banking

Call it the modern day version of Western Union: Person-to-person banking allows people to send money from their bank account directly to another person's bank account via an app or web browser.

With Chase Person-to-Person QuickPay, for example, you can send money to another person using their email address or mobile number. As long as both of you have a U.S. bank account and at least one of you has a Chase checking account, you'll be able to send or receive money.

Some Final Tips

Put a password on your phone. That serves as another layer of protection that prevents anyone from accessing your personal information in the event your phone is lost or stolen, Shaw says. "Most users should be able to turn on the password feature by accessing the 'settings' area on their phone."

• Make sure your financial institution can remotely wipe off your personal information should your phone be lost or stolen. "Check your financial institution's frequently-asked-questions section to see if they offer this capability, or ask them before you sign up for mobile banking."

In one respect, mobile banking can be more secure than banking online or at a physical branch, Shaw says. "It can be used as a more proactive security measure because of the capacity to receive real-time notifications and alerts on the status on your account," he says. So if there is suspicious activity related to your bank accounts, you can be alerted immediately. That's because "you have your phone with you all the time."



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