Banking Innovations for 2011

Here are six banking innovations to look for in the coming year that can help make life easier:

1. Mobile remote deposit Capture:
The ability to cash a paper check without ever going to the bank is a feature that will most definitely save a bunch of people time and money. You can accomplish this with a relatively new banking service called remote deposit. With Mobile Deposit, offered by Mitek Systems Inc., your smart phone acts as a scanning device and sends digital images of your check electronically to the bank for processing. Mobile remote deposit makes a lot of sense for a people always on the go or simply don’t have the time to make a trip to the ATM. Best of all, the service is free when included as part of your mobile banking app.

2. Social savings accounts:
Reaching a savings goal when interest rates are low can be tricky. You lose the power of compounding interest and inflation can actually decrease the worth of your money. To help you save in spite of these problems, a new form of savings, called a social savings account gaining steam. The account helps you increase your savings by publicizing your savings target with a widget or personal message on a social network, blog or website. This allows friends and family to hear your story and contribute to your goal. Savings is now a higher priority for Americans. The question is how to save enough for college, a family vacation or a wedding. Social savings accounts may be the answer. It’s the modern day version of your grandparents buying you a savings bond.

3. Mobile text banking:
You can call your bank, go online, or use a mobile phone browser or banking app to retrieve account balance information. All seem reasonably fast, but now there is something new on the scene that is even faster. Text banking services allow bank customers to send SMS text messages to retrieve an immediate answer from their bank regarding balances, transaction history or bill payments. No fees are charged by most banks for enrolling in the program, but check your phone’s service plan to make sure these texts are free.The first bank to roll out a sophisticated text banking service was Wells Fargo Bank. Expect to hear much more about text banking services in 2011 as more advanced features are developed by banks.

4. Inflation-indexed CDs:
A CD that is actually indexed to inflation, as measured by the Consumer Price Index (CPI), could be an exciting product. Why? First, inflation reflects your actual cost of living, so a CD that is indexed to inflation will protect you from rising prices. Second, the Fed has already announced that they plan to hold rates low for an “extended” period. This means your CD rate could stay low, even if inflation is increasing, unless you have a CD indexed to inflation. Finally, bank high yield savings accounts compete directly with Treasury products for your deposit dollars. The Treasury Department already offers the Series I bond and TIPS securities for investors worried about inflation. Banks aren’t likely to sit on the sidelines if inflation becomes a buzzword. Look for at least a few banks to realize the value of an inflation-indexed CD for consumers. We hope to see them sooner, rather than later.

5. iPhone, iPad and Android banking applications:
In the beginning mobile banking left a lot to be desired. Mobile browsers were primitive and features were very limited, some mobile banking applications did nothing more than tell you where the closest ATM machine was located. Those days are gone. Today, applications written for the iPhone, iPad and Android-powered devices are taking mobile banking to the next level. Users can pay bills, see transaction history and send third-party payments. The next wave of banking applications will add even more money management features and tighten up security issues. You probably don’t need to switch banks to find a mobile banking app. The app will find you. 2011 will see a large number of new banks and credit unions develop their iPhone, iPad or Android app–just sit back and let the app wars begin.

6. Mobile payments:
This form of payment uses information stored on your phone that can be scanned to immediately purchase an item, make a person-to-person (P2P) payment or provide identification. Think of a checking account, credit card and driver’s license all rolled into one. Sound far-fetched? Don’t bet against mobile payments being the wave of the future. There is a furious battle raging between phone carriers, banks and credit card companies like VISA, Discover and Mastercard on the issue of mobile payments. No one wants to be left behind. Earlier this month, Google bought the mobile payment company Zetawire, a company that uses near-field technology to allow consumers to make payments with their Smartphones. There are also strong rumors that Apple will bring mobile payments to the next version of the iPhone. Whether or not you decide to be one of the first pioneers to start moving money by pointing your phone at a cash register, one thing is for sure: we will be hearing a lot more about mobile payments in 2011.


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