Is cell-phone banking safe?

Something weird happened when I asked banks and other promoters of mobile banking about how secure it really is to use your cell phone to check balances, transfer funds, pay bills and perform other financial transactions.

Without exception, they mentioned how quickly people tend to notice a missing cell phone -- some said 18 minutes, some said 38 minutes. That, they said, narrowed the window in which an evildoer could access a mobile-enabled account.

I don't know about you, but it always makes me a bit nervous when the linchpin of a bank's security system is, well, me.

At this point, of course, there's not much a bad guy could do with my mobile-bank connection. As the banks like to say, he'd see about the same amount of information he'd get from picking up an ATM receipt.

He might see the balances in my checking and savings accounts; perhaps he maliciously could move money from one to the other or pay a bill for me. My bank account numbers aren't visible and I don't keep my user ID or password stored on the phone.

But mobile banking won't stay simple for long, and I'm not the only one who's disturbed by the banks' "don't worry your little head" attitude about mobile-banking security.

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"There are too many people saying there's not a problem," said Bob Egan, chief analyst for research firm Tower Group and a man with 30 years' experience in information technology. "It's exactly the same thing I heard about e-commerce on the Web" when that was in its nascent stages.

Banks are going cellular, fast

Six of the 10 largest U.S. banks have introduced some kind of mobile-banking technology, according to information technology research firm Celent. By summer 2008, all the big banks are expected to have a mobile-banking option.

Mobile banking is still in its toddler stage, of course. Only 3% of the 45 million or so households that currently use online banking have tried mobile banking, but Celent expects that to grow to 30% by 2010.

Consumers already seem interested in the possibilities. When Javelin Strategy & Research asked people what banking functions they might like to perform with a cell phone, 71% of respondents said checking balances, 41% said monitoring recent transactions and 25% said paying bills.

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"I like being able to check my balance [in a store checkout line] before I use my debit card," said Celent banking senior analyst Red Gillen, who, like me, accesses his bank account using his Treo.

Such anywhere, anytime access can cut down on the possibility of a bounced-transaction fee by giving customers the options of forgoing purchases or quickly transferring money into their checking accounts.

Continued: 3 ways to deliver

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