Your Bank in Your Pocket

Mobile banking is more than an extension of online banking, said Mark Schwanhausser, a research analyst at Javelin Strategy and Research. "If you view mobile banking as just simply another version of online banking, you're missing the opportunity to see what it is," he said. "There are times when you want to check your money, whether you're in a taxi, on a mountaintop, or in line at the cash register. It's not yet mainstream, [but] it's one of those things that's going to be the Holy Grail."

Maybe. But first banks will need to prove that it's safe.

Most consumers polled said they were concerned that their personal information could be compromised if they lost their phone or by hackers, according to Javelin's research. And consumers aren't the only ones worried. Of the 13 mobile banking vendors polled by Javelin, 10 cited security fears as among the biggest hurdles keeping them from building their mobile programs.

There haven't been any major attacks in the United States.

People in other countries have seen "nuisance" banking attacks similar to online phishing schemes, said Bob Egan, chief analyst and managing director of TowerGroup. In a typical attack, a fraudster would send a text message with a link to a bogus mobile Web site that looks like a bank's. The site would ask for log-on, account or other personal information. The attacks can eat into users' text-message plan limits, but, "in general, people so far have been smart enough to ignore them," Egan said.

As mobile banking grows, it will probably become more attractive to scammers, experts say. "Mobile banking is the next unexplored wilderness from a fraudster's perspective," said Joram Borenstein, senior product marketing manager for the Identity and Access Assurance Group at RSA. RSA, which monitors the "fraudster underground," has seen an uptick in hackers' chat room discussions about mobile banking attacks.

But, Borenstein said, banks are actively working to protect customers from attacks. "From our experience, the financial institutions are being very proactive about this, both for themselves as businesses and for their consumers."

Egan has some concerns. He said many banks were playing down the mobile banking risks in much the same way they used to play down the risks of online payments.

Before signing up for mobile banking, Egan recommends that consumers ask banks about their security procedures. Consumers should also find out who's responsible if they become fraud victims.

Financial counselors warn that consumers who check their balances on the go should keep in mind any outstanding checks before making a purchase. "You still have to remember what's out there in float land," says Morris Armstrong, owner of Armstrong Financial Strategies.

But mobile banking can also have significant financial benefits.

Account holders alerted about a low balance can react before they are charged an insufficient funds fee, and consumers alerted to suspicious charges can catch fraud before their account is drained.

But whatever the advantages, freelance photographer Khalid Naji-Allah is no longer taking any security risks. He quit using mobile banking recently after he heard a news story -- not directly related to the service -- of a phone being hacked.

"I just don't feel it's safe anymore," he said.

But the service had been useful while it lasted: He would occasionally check his balance before making a purchase, and sometimes he'd realize he didn't have enough money.

"It saved me the overdraft fees and the embarrassment of not having money," he said.