In this ever-changing world of technology, millions of people in the U.S. and worldwide enjoy the convenience of mobile banking on their smartphones. Mobile banking is offered by most financial institutions and has grown more popular over the past decade. Mobile technology allows bank customers to perform financial transactions remotely usually through the institution’s mobile app.
Thanks to this technology via mobile apps and web access, banking services are literally at our fingertips. A big mobile banking benefit for customers is having access to their account information and the ability to manage money 24-hours every day. Remote access is helpful particularly in communities that don’t have many banking institutions or ATM machines. This may be true for people living in both urban or rural communities.
One of the most valuable mobile banking features is the ability to deposit checks by snapping a picture of them with a cell phone. Mobile banking customers can also monitor balance alerts and view monthly statements with a simple download.
There are currently about 9 million unbanked households and about 21 million underbanked households in the U.S. When it comes to these households, being unbanked and underbanked often translates into no savings when paydays roll around. However, unbanked and underbanked consumers may find banks easier to work with by taking advantage of mobile banking for bill pay, deposits, money transfers and other financial services.
According to the Pew Center, six in 10 unbanked consumers own a smartphone. This means they can gain access to a checking or savings account no matter where they live or the operational hours of their bank.
Unbanked consumers can start saving their hard-earned money in a bank by setting up direct deposit and using mobile banking service. They can start earning interest on their banked money while easily managing it without stepping foot inside a bank branch.
Mobile banking indirectly helps the unbanked and underbanked save money. They can take advantage of free services bank customers enjoy instead of paying excessive fees by using alternative financial services. For example, by using mobile deposit, they save the time to visit a check-cashing store and service fees that run between $1 and $5 per check.
Mobile and online banking also saves fees and the hassle of visiting fund-transfer businesses to use Western Union and MoneyGram. Transfer service fees can run between $5 and $20 in addition to the hassle of filling out paperwork and long lines.
Challenges for the unbanked and underbanked do exist when it comes to mobile banking. Researchers find that the unbanked are more likely to have inconsistent cell phone service or internet service. Service problems due to financial hardship will limit bank accessibility to much-needed money.
Another challenge is the fact that the unbanked and underbanked prefer to use cash for bills and shopping. However, mobile banking is more advantageous for managing checks, electronic funds and credit card accounts remotely. For example, there is no way to deposit cash through mobile banking. That has to be done at an ATM or bank branch.
Also, research shows that some unbanked consumers prefer in-person contact when it comes to navigating financial services. Particularly, if there is a language barrier or literacy barrier, mobile banking doesn’t provide a layer of one-one instruction or extra information.
Playing a Role
Despite this, community merchants can consider establishing partnerships with area banks to provide more education and materials about mobile banking. Perhaps there are opportunities to create partnerships with local mobile phone services as well. Exposure to more banking literature may help your customers understand the benefits associated with traditional banks. It could help shed light on the excessive fees for alternative financial services like payday loans and check-cashing businesses.
Above all, mobile banking technology provides an easier way for the unbanked and underbanked to save their income and build wealth every month for the future. If unbanked and underbanked consumers take advantage of mobile banking features, it will help create greater financial stability.