It wasn't long ago that bank customers judged the quality of their local financial institutions by the sturdiness of their columns and vault doors. That idea is a throwback to an era when money was physical, and so was security.
Now, money is just data. And banks -- especially small banks -- are evolving rapidly to reflect that new reality.
No, I'm not talking about garden-variety mobile banking applications. Simple apps that let you check bank balances, transfer money and find branch locations already feel old and stale. I'm talking about trends that free you from ever having to visit bank branch offices again -- and trends that make you want to visit.
Breaking the branch habit
The only remaining reason for many of us to visit bank branch offices, wait in line and interact with a teller is to deposit checks. That's about to change.
The United Services Automobile Association, a financial services company for members of the U.S. military and veterans, plans to launch a free iPhone app that lets you deposit checks via your iPhone camera. The service will be called USAA Deposit@Mobile. To make a deposit, you use the app to log onto your account, enter the amount of the check, snap a picture of the front and back of the check, then touch the "Send" button. The bank sends a confirmation. Here's a video demo. This is such a compelling service that I'm thinking about joining the Army to qualify.
Of course, you can always find an ATM and deposit your checks in there. But that can give you a creepy feeling. How do you know the bank won't later tell you they never got your check?
Bank of America has installed about 12,800 new ATMs that print receipts that show scans of the checks you deposit. This is nice, because it gives customers proof that checks were in fact deposited.
Soon, you won't need checks at all. You'll be able to use your cell phone as a debit card, and also to receive money from other people's cell phones (it's best to get their permission first). A huge number of companies are working on technology and systems to offer this service. Even Nokia wants to get in on the mobile money racket. The company has registered the trademark "Nokia Money." They intend to launch a service, apparently, that lets you transfer money from your cell phone to either another cell phone or to a store checkout counter. In March, Nokia invested $70 million in a company called Obopay, which enables secure mobile electronic money transfers.
It's likely that all cell phones in the future will enable this kind of functionality. When that happens, you can leave your entire wallet at home and use your phone instead of cash and credit cards.
The future of mobile money has barely begun, and already it's changing how banks offer their services. Bank of America blames its closure of more than 600 branches on the use of the Internet and mobile phones for banking.
Innovative bank branches. Oxymoron?
While BofA is shutting down branches because nobody wants to go there, other banks are making branch offices places you want to visit.
Oregon-based Umpqua Bank has 151 branches that double as offices for digital nomads, including Internet cafes and conference rooms. They've installed a giant multi-screen interactive video display called the Discover Wall. PC stations let customers hold videoconferences with bank financial advisers. Here's the bank's breathtaking vision for the future of cell phone-centric banking.
The concept is vaguely similar to the ING Direct Cafe, which isn't a bank branch, but an Internet cafe offering PC terminals where you can do online banking or just surf the Internet for free. You can find an ING Direct Cafe in eight US locations. (Best of all, they serve Peet's Coffee & Tea - the richest kind.)
These banks are doing something truly interesting: They're taking advantage of their locations and real estate to offer services people can use. Pushing money around is trivial and increasingly branch-independent. But we can always use some of these services (not to mention free coffee).
The future of mobile banking
The biggest hurdle to widespread adoption of mobile banking, of course, is consumer concern about security. Financial services firm KPMG says two-thirds of Americans aren't "comfortable" using cell phones for financial transactions. (Of course, everyone is comfortable with letting a restaurant waiter take physical possession of their credit card for 10 minutes.)
But that's mainly an age thing. Young people aren't so timid. The use of mobile banking has tripled in the past year among young adults in the U.S. Some 21% of Americans between the ages of 18 and 25 are doing banking via cell phone, according to a survey by Mercatus LLC.
Research firm TowerGroup says 10 million people now do mobile banking, but that the number will rise to 53 million over the next four years.
If you know where to look, there is incredible innovation happening in the banking space, especially in how customers interact with banks -- and their money.
Now if only the economy would cooperate, there might actually be some money to move around and the whole experience of banking just might become something interesting and enjoyable.