By: Joe Gillen
Mobile banking has been heralded for its ability to provide more convenience to consumers who don't want to visit bank branches or pay fees for paper-based transactions. However, mobile capabilities may also be crucial in helping low-income individuals take more control over their finances and build a stronger foundation for their futures.
A recent American Banker article highlighted the benefits of mobile banking in allowing individuals to monitor their spending, make key decisions about purchases, avoid overdraft fees, make deposits into savings and keep track of their bill payments. Data from the Federal Deposit Insurance Corp. found that one in 12 Americans lack access to basic checking and savings accounts, and many of those who do maintain an account may not utilize all of the tools available to them to budget their money properly. Mobile apps can change that by allowing consumers to track their finances on a day-to-day basis and notice behaviors that may be hindering their ability to save money, such as overspending.
Save money, gain education
In addition, underbanked consumers that adopt mobile banking strategies can avoid the costly fees that are attached to check cashing services and other non-bank entities by using mobile check deposit features. Enrolling in rewards checking programs may also allow them to keep their money in a safe, FDIC-insured haven while earning cash back and discounts for their everyday spending. This is a message that community banks and credit unions should send to underbanked individuals as well as customers and members who are not enrolled in mobile banking to both boost adoption and help them better manage their finances.
Further, many financial institutions are developing mobile apps that are instructive and educational, which can provide consumers with resources to help them learn about smarter ways to save and spend. Banks and credit unions that provide financial education apps on their mobile platforms can reach out to individuals of all financial backgrounds and close the knowledge gap that impacts consumers' financial decision-making abilities. Studies show that while people of all income levels may have varying levels of knowledge regarding savings, budgeting, debt, loans and management strategies, low-income individuals represent the demographic that lacks the most access to resources.
As mobile banking comes to play a bigger role in the financial industry, it's important that financial institutions ensure that customers are aware of the cost-saving benefits this feature can provide, as well as the convenience it affords them.