Forgot to pay the electric bill? Want to buy a snack but don't have cash? Feel like checking that 401(k) balance?
Use your cell phone.
Banks and other financial institutions are increasingly adopting the cell phone as the latest channel for consumers to carry out transactions. They are working to perfect the technology to stay competitive with peers and to meet demand from consumers who want another avenue to manage their money remotely.
Companies are first targeting "technology optimists," or consumers who have extreme confidence in new gizmos. Over time, industry analysts say the cell phone, which most Americans already own, could become as popular as the ATM. Analysts caution, however, that security concerns could stunt consumer acceptance, at least initially.
Citibank and Bank of America rolled out new services in recent months that enable customers to bank through cell phones equipped with Internet access.
Other companies working with eMoney Advisor will soon give clients access via cell phones and PDAs to a financial planning program that brings together information from various accounts in one place. Meanwhile, MasterCard and Visa are testing credit cards embedded in cell phones.
The cell phone has been considered, in many ways, the next frontier after the Internet because activities once reserved for computer screens have migrated. Consumers have taken to sending instant text messages, watching television, listening to music and playing games on tiny cell-phone screens. Now many are expected to access their financial accounts on the small screen.
About 1 million U.S. households bank or make payments by mobile device today, and that's projected to rise to nearly 50 million, or about 40 percent of all households, in the next decade, according to Online Banking Report, an industry newsletter.
The evolution of mobile banking, or "m-banking" in industryspeak, means added convenience and speed for consumers -- and another way for banks to attract customers. The service builds on earlier niche offerings, such as stock trading by cell phone through E*Trade Financial Corp. as well as Obopay and PayPal Mobile, which allow users to send and receive money using cell phones.
The mobile trend also comes as banks continue to build out their brick-and-mortar branch networks. The number of branches in the United States has increased every year for 15 years, to more than 95,000 at the end of March, according to the Federal Deposit Insurance Corp. Many of the banks that are pushing mobile banking continue to build branches. Citibank, for instance, is opening another 100 this year.
Industry analysts contend that banks need to offer customers a range of access, including online and face-to-face interaction. In fact, some Web-only banks have run into trouble. NetBank Inc., an online financial services firm with no branches, sold most of its assets in May because of "extreme financial pressure."
The branch is still the most popular channel, used by 75 percent of banking consumers, according to Speer & Associates, a financial services consulting firm. The ATM and Internet are used frequently, too, by 62 percent and 48 percent, respectively. And when consumers choose a bank, they cite convenience as the primary driver, meaning branch location as well as the availability of Internet and other services, Speer found.
"By allowing you to do banking when you want and how you want, they believe they can build loyalty," Richard N. Speer, the firm's chief executive officer, said.
Several banks tried to launch mobile banking in the late 1990s, in the midst of the dot-com frenzy, but few customers used the service because it was cumbersome and slow. Since then, the technology has improved and cell phones have penetrated deep into the American market. There are 240 million cell phone subscribers, representing roughly 80 percent of the population.
Banks are also betting that because online banking has taken hold among consumers in the past decade, they are now more likely to embrace mobile financial transactions.
Sharon Prusz of Laurel said that her husband banks online, and she often checks her account balance from the home phone. But if she were on the go, she said, banking through the Internet with her cell phone would be a convenient option. "A lot of times people don't carry around laptops or have access to a computer," she said, "so I think this is a great idea."
Catherine Palmieri, managing director for Citibank Direct, said only a few thousand people used the bank's first mobile banking application but that its latest, easier-to-use service will be "quickly" adopted.
To explain why mobile banking will catch on, she relayed a story about a Citibank employee whose debit card was rejected recently at a retail store. Embarrassed, the employee used her cell phone to transfer money from her savings to checking account and then asked the clerk to run the card again.
"It was just like one of those ads except without the music," Palmieri said.
Bank of America has the largest online banking customer base and the biggest market share by deposits in Maryland. Spokeswoman Betty Riess said mobile banking is a "natural extension" of online banking.
Wachovia Corp. and SunTrust Banks Inc., also major players in the Maryland market, are getting into mobile banking, too.
The services are free. Some require users to download software, and some use a simplified Web format. In general, consumers are able to check account balances, pay bills, view transaction histories and transfer money. Some can use the service to find the nearest branch or ATM.
Banks say the information sent between the phone and bank is encrypted, and many do not hold customers liable for unauthorized transactions. Still, some analysts say they are concerned that security is lacking.
"As phones are identified with money, the thieves will follow the money," said Bob Egan, chief analyst at Tower Group, a consulting firm. "My biggest concern is that banks are very careful to stay in step with good security practices for mobile phones, and I just don't think they're there."
Meanwhile, MasterCard and Visa are testing "mobile wallets," or cell phones containing short-range wireless technology, so that users can wave the phone in front of a point-of-sale terminal to pay for items. Contactless credit cards are now available separately but used at a limited number of retailers, and mostly for small-dollar transactions.
Instead of rolling out mobile banking, some banks are choosing to improve online banking that can be done from a personal computer. For instance, Provident Bank is offering remote deposit to business customers, in which they scan checks from their offices. USAA, a financial services company that caters to military personnel and their families, also offers remote deposit to retail consumers.
"There's not a general acceptance of banking by cell phone," said Stephen Heine, a senior vice president. "It's not that it won't catch up; it eventually will. But for institutions like ours, there are other payment methods that customers find more valuable."
Commerce Bank, which refers to itself as "America's most convenient," has begun offering its Virtual Private Bank to customers via BlackBerry and other PDAs. The financial planning tool, developed by eMoney Advisor, aggregates information about a person's assets as well as legal and medical documents into one program that continually updates various account information, such as 401(k)s and car loans, through the Internet.
Commerce founder Vernon W. Hill said the mobile option would give customers instant access "from poolside, in their cars or on the golf course."
Another version of the tool, called the Living Balance Sheet, is offered through the Guardian Life Insurance Co. It will be accessible by cell phone in addition to PDAs next month.
Leonard P. Raskin, CEO of Wealth Advocacy Partners, a financial planning firm based in Sparks, is a believer in the Living Balance Sheet tool. He worked on an early version and has consulted on the final product. While he said he can't imagine checking on his financial picture at, say, a ball game, he knows that mobile access is a sign of the times.
"People didn't think they would be listening to music on their phones; they didn't think they would be texting on their phones," Raskin said. "But let's face it, everybody does."
laura.smitherman@baltsun.com