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Important Update: Changes in FDIC Deposit Insurance Coverage

The FDIC deposit insurance rules have undergone a series of changes starting in the fall of 2008. As a result, certain previously published information related to FDIC insurance coverage may not reflect the current rules. For details about the changes, visit Changes in FDIC Deposit Insurance Coverage. For more information about FDIC insurance, go to www.fdic.gov/deposit/deposits/index.html or call toll-free 1-877-ASK-FDIC (1-877-275-3342). For the hearing-impaired, the number is 1-800-925-4618.

Winter 2010/2011

Calling All Smartphone Users: Are You Ready for Mobile Banking?

image of a smartphone

Nine out of 10 Americans have a cell phone and, according to research by The Nielsen Company, more than half of them will be using a smartphone by the end of 2011. A smartphone is actually a hand-held computer that enables users to access the Internet, run applications and make phone calls. And, for a steadily increasing number of consumers, smartphones can be used for banking.

"Banking over a cell phone isn't fantasy, it's a reality that many banks are offering their customers to check their balance, find the nearest ATM and even pay a bill," said Jeff Kopchik, an FDIC Senior Policy Analyst specializing in technology issues. "It means increased convenience and flexibility, especially for people who do a lot of traveling."

For example, he said, many banks can send alerts to customers' smartphones advising them if they are about to overdraw their account or if the bank has detected suspicious activity.

The Web-based version of mobile banking, in which customers access the bank's Web site using the browser on their smartphone, is the most prevalent option. However, application-based services, in which customers download specific software that runs on their phone, are quickly becoming popular because they are more user friendly.

What should you do if you are interested in mobile banking by smartphone?

Ask your bank if it offers the service and if there's a cost. As with online banking, most banks don't charge customers extra for mobile banking, but don't assume that it's free.

Take security precautions. Make sure that your phone or the mobile-banking application you'd be using is password protected. That way, if you lose your phone, someone else can't access your bank account without having your password.

Also confirm with your bank that account numbers, passwords and other sensitive details are not stored on the phone, where they could be retrieved by a thief. Another thing to remember is that both Web- and application-based mobile banking systems are more secure than those that use text messaging.

"You may also want to consider purchasing anti-virus software to run on your phone, since it's only a matter of time before the viruses that attempt to infect your home computer migrate to smartphones," added Kopchik.

Before you sign up for any mobile banking service, make sure you understand what's at risk if something goes wrong. "Some banks and other companies offer the option to use your smartphone to transfer relatively small amounts of money to friends and family," said Rob Drozdowski, a Senior Technology Specialist at the FDIC. "These are called person-to-person payments or 'P2P' payments, and you should not only ask what fees are associated with them, but you should understand what happens if a payment gets sent to the wrong person."

To learn more about mobile banking, start with your bank's Web site to see what services are offered and how they are provided. Ask your friends and family if they use mobile banking and what they think of it. And, as with any other product or service, make sure you understand how it works so you can make an informed decision about whether mobile banking may be right for you.

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Last Updated 2/22/2011