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Wednesday, May 1, 2013

The pros and cons of “branchless” banking

Online banking is carried out through HTTPS websites
Branchless banking is fast and convenient for customers
 By John Gower

Branchless” banking, i.e. mobile and online only banking, is more popular than ever. In many cases, it is the becoming a necessity as banks continue to cut costs and close branch locations. Since more and more people have access to the Internet at home or via smartphones, online banking has developed as the most convenient way to interact with the bank. But some people have their doubts about mobile banking: is it safe? Is it really easier? In this article, we will take a look at some of the pros and cons of branchless banking.


There are a lot of good things to be said about mobile and online banking, mainly centered on the element of convenience.

It’s fast. You save time by not having to physically go to the bank, by not waiting in lines, and by being able to quickly access all of your information in one place. Getting through a bank transaction online takes much less time than getting things done by talking to the teller at the bank.

It’s convenient. If you’re at home, you can check your accounts from your computer at any time, and even do so in your pajamas if the mood strikes you. Banking from a mobile phone is even better. If you’re out and about, but need to figure out what your balances are, you can pull it up on your phone and figure it out within a minute or two, rather than taking the time to find an ATM or call for your information. Furthermore, many banks now have mobile apps that let you deposit a check by snapping a photo of it with your smart phone and submit it to the bank. This is far easier than fighting the bank lines on payday.

It’s generally safe. Although mobile banking is still in its infancy, it is overall fairly safe. Your bank’s mobile developers frequently release updates to the app to make sure that they are limiting the possibility of new security exploits. Mobile apps also use encryption when transmitting banking data, which keeps your information safe. Additionally, mobile banking apps don’t typically display vital account information, such as account numbers.


It may be hard to get started. Mobile and online banking have a bit of a set-up cost. It can take some time to get your apps installed and, or your online account verified by your bank. This is a necessary piece of keeping your data safe, but it can be time consuming, which is problematic for people in a hurry. Mobile banking also has a learning curve and may be challenging for people not used to browsing account information on a tiny screen with clumsy thumbs. When the bank releases updates to its applications, this can necessitate a new round of learning the ropes, which is frustrating.

It isn’t always 100% safe. There are a few factors that can compromise the safety of branchless banking. Consider if your phone gets stolen, you save your bank login credentials and don’t require a passcode to unlock your phone, then someone could have access to all your bank information. Most people also don’t put anti-virus software on their phones like they would on their computer, so mobile banking information can be susceptible to malicious attack. Of course, you can increase the safety of online banking by using a pin or pattern to lock your phone, not saving your login data on your banking apps, and installing an app to lock or recover phones when stolen. The FDIC recommends some great tips for keeping your personal information safe when banking on your phone.

It isn’t encrypting communication. Although the actual bank data transmitted via your mobile app is encrypted, banks do not encrypt their communication with you. Any text messages or emails received on your phone from your bank are potential security holes.

About the author: John Gower is a writer for Nerd Wallet, a website dedicated to helping consumers compare CD rates, savings accounts, checking accounts and more.