Mobile banking: the key to financial future


Editor’s note: This story pairs with “Mobile pay: risk or benefit?

The world is changing.

As technology marches forward, everything from the simplest actions to the most advanced processes are becoming electronic, instantaneous and mobile — namely, banking.

In a world where time is money, this progress may be seen as nothing but positive. However, according to Dale Phelps, president and CEO of Nebo Credit Union, it all depends on value.

When it comes to the financial industry, there are both pros and cons to making everything automated, Phelps said.

“The objective is to try to make everything easier and to accommodate what our members need and want,” Phelps said. “As long as we can maintain our security and it’s cost efficient, we’ll adopt new technology.”

Trevor Allphin, accounting manager for Nebo Credit Union, agrees. He said online banking and mobile apps make things easier for customers.

“As a credit union, we’re not looking to increase margins, we’re looking to meet the needs of our customers,” Allphin said. “And if their needs are automation, then that’s what we aim for.”

Another benefit to digital banking is the time it saves, Phelps said.

“We were on the phones a lot more before there was online banking,” Phelps said. “It has eliminated a lot of the need for that. Now we have thousands of people who check their balances and make their transfers online.”

According to the Pew Research Center, 51 percent of adults in the United States bank online, and 32 percent of adults bank using their mobile phones. The Pew report stated that this increase has come since June 2000, when only 18 percent of people in the United States used online banking. Phelps said this trend is likely to continue.

Colby Wright, professor of finance at Brigham Young University, said he believes all financial transactions will eventually become digital.

“My vision for the future is that there is no paper cash,” he said. “It will all be digital.”

Both Phelps and Allphin, however, agree that human interaction will always be needed.

“How many times have you been on the phone with an automated system and become frustrated and pressed zero as many times as you could just so you could talk with a real person?” Allphin asked. “I think most of us still prefer somebody we can talk to who will interact with us.”

A lack of interaction with people is only one of the cons associated with automation. Another con of online digital banking is associated risk.

“There has been an increase in fraud because of it,” said Phelps. “People don’t have to be present anymore in order to rob you. They can do it from the other side of the world.”

Allphin said crooks are usually one step ahead. “Fraudsters are always coming up with new ways to get to your money,” he said.

When it comes to implementing new technology, cost — not security — is always the determining factor, according to Phelps.

“The thing is, people view everything from a cost-benefit situation,” he said. “And as long as the cost of fraud is below the cost of implementing new technology, they won’t implement it.”

As an example, Phelps explained how credit card chip technology was used for years in Europe before it was implemented in the United States, simply because U.S. banks saw it as too expensive to use.

Chip technology adds an additional layer of security to credit card transactions because every time a card with a chip is used at a terminal, card member information is converted into a unique code that is hard to duplicate, according to the Citi Bank website.

“It’s always about the costs,” added Allphin.

Javelin Strategy & Research reported that in 2016, $16 billion was stolen from 15.4 million U.S. consumers via cybercrimes, up from $15.3 billion and 13.1 million victims in 2015. The report also states that in the past six years, thieves have stolen over $107 billion.

Allphin said as the U.S. moves further and further from cash, criminals will continue to progress in their ability to steal electronically.

“Every time we get one hole plugged, criminals find another way to get money that isn’t theirs,” he said.

Wright said he believes the answer to fraud prevention can be found in biometric technology, which allows for verification using individually distinguished biological traits, like a fingerprint.

“I think a biometric system has to be a part of it,” he said. “We’ve seen too many data breaches, too much identity theft.”

According to Wright, as the world becomes more digitized, both retinal scans and fingerprint identification will be necessary to prevent fraud and may even be used to process digital payments. But for this to happen, Wright said, people will need to have difficult conversations about which is more important — efficiency or privacy.

According to Wright, some people will always resist letting others have access to such intimate information as their retinal scans or fingerprints, but he believes efficiency and security will eventually outweigh those objections.

“Imagine not having to click a button to buy something. Imagine not having to punch in a credit card or go to a cash register ever again,” he said. “The efficiencies are obvious to me. Think of all the minutes you will get back in your life, and if you’re like me, time is your scarcest commodity.”

So, what is in store for the future of online banking? No one knows. But according to Phelps, one thing will always be certain: change.

Michael Morris
Data from shows the number of mobile pay users in the United States from 2009 to 2016. (Michael Morris)
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