Introduction
In recent years smartphones have become the gateway to everything from ordering take-out to finding a date, so it’s hardly a surprise that more and more of us are turning to mobile apps to manage our finances.
You may be surprised to learn, however, that mobile banking actually originated before the millennium. Some institutions introduced this service as early as 1999 in the form of SMS solutions. But it wasn’t until the advent of smartphones in 2007 that many of the features we associate with mobile banking in 2021 began to emerge.
Since 2020, the adoption of mobile banking apps reached an all-time high, with the number of users in the US climbing to 57 million in 2020, according to the Mobile Banking Apps in the USA report. The research also found that, by April 2021, more than 70% of consumers with the 4 biggest banks in the US were using mobile banking apps, which represented a 63% increase compared with the previous year.
Below, we’ll take an in-depth look at the pros and cons of mobile banking before exploring our top picks for banking apps.
What is mobile banking, and how is it different from online banking?
As the name suggests, mobile banking is the act of making financial transactions via a mobile device. But, while the concept is simple enough, many customers—even some within the financial world—confuse mobile banking with online banking.
So, what is the difference? Online banking started far earlier, with banks in the US beginning cautious tests of online services in 1984. Another key difference is the way in which users access their accounts. While online banking enables customers to conduct their transactions through a laptop or PC, mobile banking allows consumers to manage their money via a smartphone or tablet.
While online banking requires users to log in to their accounts through a bank’s official website, mobile banking users typically access their accounts via an app, which they can download from the Apple Store or Google Play.
If you have an account with a bank, its app is typically free to download, although you may have to pay a fee to hold an account.
What are the benefits of using a banking app?
For time-pressed consumers, the most significant benefit of mobile banking is likely to be the freedom to access financial information and make transactions on the go.
Most of us take our mobile phones every time we leave the house, which can make mobile banking far more accessible than traditional online banking models. Plus, if you're a night owl or work shifts, you could benefit from the 24/7 customer support, either through online chat or a virtual assistant, offered by many apps.
Mobile banking also offers several features online banking does not. Many apps allow you to make an instant mobile check deposit without visiting a brick-and-mortar branch. Likewise, you may also be able to use the app to search for ATMs near your location or find retailers participating in reward programs offered by your bank.
What are the most common features of mobile banking?
Even if you’re not particularly tech-savvy, you can use your banking app to perform most of the core functions of personal banking, including:
- Paying bills
- Mobile check deposit
- Viewing your balance
- Transferring funds
Depending on the mobile banking app you choose, you may also benefit from a range of additional features, such as having immediate access to your credit score and specialized tools for setting savings and money-management goals.
Most of the best solutions also offer access to the Zelle payment network, which allows you to quickly send funds to friends and family, even if they are a customer of a different bank.
Is mobile banking secure?
As mobile banking is a (relatively) new technology, it’s understandable to have concerns about safety. However, you may be reassured to learn that most apps include robust security features to keep your money and your data safe.
Like online banking, many apps employ strong encryption to help keep you safe from hackers. The best banking apps will use 256-bit encryption—the most secure form of encryption offered by financial institutions. Others operate multi-factor authentication, which requires users to enter more than one piece of information before accessing their accounts.
Many of the top banking apps also offer additional security features not available through conventional online or in-branch banking, such as facial recognition and fingerprint ID.
Some banks also enable you to set up alerts for certain types of unusual activity or freeze your account if potentially fraudulent transactions are detected.
Plus, all apps available from official stores undergo a series of security checks by Apple or Google, while a PC or laptop may run any software regardless of the source.
Finally, every banking app is different, so it’s essential to check the security features thoroughly before choosing a product. If you have any concerns, contact the bank or app provider. If it can’t provide comprehensive information on security and privacy, take your business elsewhere.
What are the downsides of mobile banking?
Mobile banking may not be for everyone, especially those who prefer to manage their finances in person. These concerns may be especially relevant in the case of the growing number of online-only banks, which are often referred to as neobanks.
Designed to appeal to tech-savvy customers, these companies do not operate brick-and-mortar branches. This can prove difficult for customers who encounter an issue which they are unable to resolve through in-app customer services.
Also bear in mind that you may be unable to download your bank’s app or use all its features effectively if you have an older device, as many banking apps only run on newer smartphones or tablets.
Our top picks for mobile banking
Although the best mobile banking app for you will depend on your circumstances, there are several that stand out from their competitors. Once you’ve downloaded any of the below, you can connect your existing external bank accounts to the app.
Chime
With more than 10 million downloads, Chime’s fee-free mobile banking app is a clear leader in the market. As well as providing access to more than 60,000 fee-free ATMs, it allows you to receive your paycheck up to 2 days early through its direct deposit feature. And while it doesn’t have any physical branches, we were impressed by its automatic savings option, which allows you to transfer a portion of your paycheck into your savings every month.
Oxygen
Founded in 2018, this neobank provides a secure and affordable option for those who wish to conduct their finances virtually. Separating its accounts into Earth, Water, Wind, and Fire tiers, the company allows you to earn cash back on purchases from participating retailers, with rates ranging from 2% to 6%. Likewise, you’ll earn interest on your savings, with rates of APY. Oxygen also allows you to create an LLC during the application process for a business banking account.
Conclusion
For many tech-savvy customers, the advantages of mobile banking are clear, with a plethora of features that could potentially save time and money. Finding the best online banking app for you, however, will depend on which features you most value in an account.
One golden rule: when you’re choosing an app, it’s vital to do your research to ensure the solution you choose offers all the money-management features you need, as well as the security precautions to keep you and your money safe. This attention to detail is why many consider options like Chime, Empower, and Oxygen among the best online banks available today.
So, would you consider mobile banking? If so, what features would be top of your list of priorities?
Disclaimers
Chime
Chime is a financial technology company, not a bank. Banking services and debit card provided by The Bancorp Bank or Stride Bank, N.A.; Members FDIC. Chime Checking Account is required to be eligible for a Savings Account.
* Out-of-network ATM withdrawal fees may apply except at MoneyPass ATMs in a 7-Eleven, or any Allpoint or Visa Plus Alliance ATM. Cash deposit or other third party fees may apply.
*Eligibility requirements apply. Overdraft only applies to debit card purchases and cash withdrawals. Limits start at $20 and may be increased up to $200 by Chime. See chime.com/spotme.
^Early access to direct deposit funds depends on the timing of the submission of the payment file from the payer. We generally make these funds available on the day the payment file is received, which may be up to 2 days earlier than the scheduled payment date.
⁺The Annual Percentage Yield (“APY”) for the Chime Savings Account is variable and may change at any time. The disclosed APY is accurate as of October, 25th, 2022. No minimum balance required. Must have $0.01 in savings to earn interest.
¹ Round Ups automatically round up debit card purchases to the nearest dollar and transfer the round up from your Chime Checking Account into your savings account. Save When I Get Paid automatically transfers 10% of your direct deposits of $500 or more into your savings account.
² FDIC deposit insurance limit to $250,000 per depositor, per insured bank, per ownership category. For Stride Savings Account depositors, funds are eligible for FDIC insurance when it arrives at the bank. Please visit www.chime.com/savings-apy-and-program-banks/ for more details on FDIC insurance.
³ Sometimes instant transfers can be delayed. The recipient must use a valid debit card to claim funds. See your issuing bank’s Deposit Account Agreement for full Pay Friends Transfers details.
⁴ The average national savings account interest rate of 0.17% is determined by FDIC as of September 19, 2022 based on a simple average of rates paid (uses annual percentage yield) by all insured depository institutions and branches for which data are available. Visit National Rates and Rate Caps to learn more.
⁵ Chime will be offering members a chance to get their federal tax refund up to 5 days early when they file directly with the IRS and direct deposit with Chime. Getting your federal tax refund early is simple, just sign up for a Chime Checking Account, file your return with the IRS, and set up your tax refund to direct deposit into your Chime Checking Account. After setting up direct deposit, members will also be eligible to get regular paychecks up to 2 days early^.
Banking services and debit card provided by The Bancorp Bank N.A. or Stride Bank, N.A., Members FDIC, pursuant to a license from Visa U.S.A. Inc. and may be used everywhere Visa debit cards are accepted.
