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Local banks respond to industry’s mobile trend

The days of getting a lollipop from your friendly bank teller aren’t dead yet, but they might just be on their last lick.

That’s because the latest craze sweeping the banking industry — mobile banking — is drawing users at an unprecedented clip and experts say it will continue to do so for the foreseeable future.

For the uninitiated, mobile banking is an up-and-coming service that allows people to check their balances and transactions, transfer money, pay bills and perform numerous other functions on their smartphones.

“That’s how people want to manage their money — on the go,” said Karen Buell, assistant vice president and eChannel officer at PeoplesBank.

Mobile banking began a handful of years ago, but has caught fire in the last year or two as more and more people buy iPhones or Android smartphones and more banks roll out the service to customers.

The number of people using mobile applications to bank has grown by 43 percent since 2011 and now stands at some 40 million nationwide, according to a recent survey from Forrester Research, a Cambridge research firm. The survey found that by 2017, that number is pegged at about 100 million, or nearly half of all adults who currently bank online.

“I recently read a Google stat that said more people access the Internet from smartphones than they do from PCs,” Buell said. “I think that’s a pretty good indication of the device of choice and tells us where we need to be focusing some (or most) of our energy.”

A recent report by analysts at Aite Group, a Boston research firm, found that about 7,000 financial institutions in the United States now offer mobile banking services, and banking on the go will triple in the next four years.

Of smartphone-owning consumers more than one-third, 36 percent, use their mobile device to check account balances, with nearly three in 10 receiving account alerts to their phones, the Aite report said. Additionally, one in six smartphone owners use mobile banking to transfer funds, pay bills, and view monthly statements, the report said.

It took customers 10 years to get comfortable with using ATMs and five years to bank online, but mobile banking is expected to be in the mainstream in less than three years. That’s something not lost on community banks, said Lynn Starr, senior vice president and chief information officer at Easthampton Savings Bank.

“This technology is being adopted at a much more rapid pace,” she said. “We have more and more customers asking for it now.”

PeoplesBank launched its mobile application in 2008, becoming one of the first community banks in the country to offer the service, Buell said. The bank rolled out apps for iPhones in 2009, followed in 2010 by an ap for Android phones and a mobile browser for any phone user with internet access.

While the “adoption rate,” or the number of customers using the service, hovered in the 5 percent range for the first couple of years, the bank says 35 percent of its customers are now using the service. Additionally, its mobile browsing product was used for 220,000 sessions last year.

“It’s way more than we originally predicted,” Buell said. “People are using their phones for everything, all the time.”

Last spring, PeoplesBank added text banking, completing what is known in the industry as a “mobile triple play.” A triple play describes a financial institution’s offering when it provides customers access to mobile banking in three ways: mobile browser, text and mobile application.

Easthampton Savings and Florence Savings Bank are both on the cusp of unveiling their own “triple play” mobile apps.

The apps will offer the standard services including balance inquiries, transaction history, transfers between accounts and information about the bank and its branches. Both banks also plan to offer text banking services through which customers can get their balances and transaction history by sending the bank a special code. Additional services, such as bill pay and remote check deposit, are on the horizon at both banks.

Florence Savings Bank has made its app available on an unofficial basis for the last few weeks and the bank currently is in the middle of a soft launch in order to give officials time to iron out any issues customers encounter, said Rebecca Lynch, vice president and eProduct manager.

Still, Lynch is surprised at the early response from customers.

“I’m surprised at how many people have found us,” she said. “But if people want it. They’re going to find it.”

Florence Savings expects to begin an advertising campaign early next month to promote its application, which will become available in stages.

Most banking experts say mobile banking will ramp up much quicker than online banking did. Lynch notes it took 10 years for banks to get 40 percent of its customers to start banking online. The adoption rate for mobile banking is 10 to 13 percent within the first 90 days.

“The phone is driving it all,” said Lynch. “People want to manage their money this way.”

Tablets are also growing as a mobile banking device. One in four tablet owners use them to check balances, with one in seven using them to receive alerts, transfer funds, or pay bills, the Aite report said.

The report’s author, senior analyst Ron Shevlin, predicts that tablets will become financial management devices and smartphones will become financial transaction devices.

He urges financial institutions to invest accordingly, and many local banks are doing just that.

Starr said industry surveys show two challenges banks face as they roll out their apps, including convincing some customers why they should go mobile.

“We certainly think the mobile area has great convenience to offer to consumers and they’ll find that it’s of value,” Starr said.

Security is another issue that all banks must address. A report last fall from California-based software security company Metaforic found that 68 percent of smartphone users who do not use financial apps are holding back due to security fears.

Starr said the mobile apps are secure, or at least as “secure as anything can be.” She said the apps limit the number of money-moving functions to reduce risk. For example, customers will only be allowed to transfer money between existing accounts.

Along with required user names and passwords, all data is sent in encrypted code, guarding information from being read. Like other bank programs, entire account numbers are not shown on the app, which also does not store and save account information, Starr said.

Plus, banks have the capability to disable the service should someone lose their phones.

Most community banks have multi-year road maps in place to stay abreast of the latest technologies. Among those on the horizon is so-called “remote deposit capture” that will allow smartphone users to take a picture of a check they want to deposit and send it to the bank electronically.

There’s also something called “mobile photo bill pay,” which allows users to take photos of bills and import biller information into their mobile banking apps and sending off payments.

“It’s just an example of how the landscape is changing and we’ll see more and more development with the native capabilities of the phone,” Buell said, referring to image capture, voice, geo-location, touch screen.

Also in the near future, more products and services will be rolled out to take advantage of the voice features within the banking applications. Buell envisions customers will soon be able to ask their phones a question, such as “What is my average spending on groceries this year?” and get an answer.

Banks will also be able to tap into the geo-location services the apps provide. For example, banks might be able to send offers to customers who are using the app to search for a specific feature.

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