Some time soon, you may be able to cash your checks by mobile phone. Just take a picture of the check with the phone's camera, transmit it to the bank, and it's cashed. No need to visit a bank branch or an ATM.
Bank of America, the second-largest player in the St. Louis market, is experimenting with such a system now. USAA Bank, a Texas bank with a big military clientele, and JPMorgan Chase have it up and running.
Some time after that, your smart phone may double as a debit card. Wave it at a wireless reader at the checkout counter, and your phone will pay your bill and debit your checking account.
"Your mobile phone becomes your wallet," said Cindy Tetrault, manager of consumer on-line services at Commerce Bank.
Banking is going wireless. It's the next step in a two-decade technological march that has made bank branches lonely places and might eventually turn paper checks into quaint memories.
Banks are trying to put themselves in your pocket through applications for smart phones — such as the iPhone, BlackBerry and the new Android-enabled devices. About one in five consumers now uses a mobile phone for banking.
When cell phones proliferated in the last decade, banks tried to turn them into a banking tool through text messaging and access to bank websites. The service never really took off.
"It was hard to use because of the size of the screen on the phone," said Rick Bagy, president of First National Bank in Clayton.
Smart phones, with their bigger screens and faster Internet access, are changing that. Banks generally still offer smart-phone access through the mobile version of their websites, and maneuvering in them can be clunky. That's why they're developing special smart-phone applications, dubbed apps, making it easier to check balances, switch money between accounts and pay bills on the screen.
Some use the phone's GPS system to help you find the nearest branch or ATM.
That movement is being led by the big banks, although the small ones are expected to catch up. Bank of America and PNC, for instance, have apps for iPhones, BlackBerries and Android.
"The adaptation of it is exploding," says Andy Baker, retail marketing manager for PNC Bank in St. Louis.
Javelin Strategy & Research, a California firm that tracks the online banking industry, says 24 million Americans used mobile banking in 2008. That jumped to 36 million last year, and the firm expects 99 million users by 2014 — equaling nearly a third of the U.S population.
"The iPhone was a game-changer. It woke people up to the idea that this thing on their hip could be a device to help them manage money," said Max Schwanhausser, senior analyst at Javelin.
PNC put its "virtual wallet" financial tracking system on the mobile system as well as its website. The system lets people plan ahead, by writing down paydays and noting when bills are due. It issues a warning if too many bills are due before a paycheck is to arrive.
Cell phone ownership has actually fallen during the recession, from 85 percent of adults last year to 74 percent this year. But smart-phone use has been growing fast and now stands at 20 percent of adults.
Still, concerns over security are the biggest roadblock to mobile banking. Four out of 10 consumers say they're afraid to use it.
Mobile bank theft has been a minor problem so far, but there's reason to worry. In December, cyber-thieves posted phony apps for 50 banks and credit unions, aiming to snare personal banking information from users of Android phones, according to Javelin. Google's Android system is an open-market platform, which allows other firms and individuals to offer apps.
The iPhone is thought to be safer, because Apple tests applications before it allows them on its App Store website.
Banks generally offer mobile banking free in an effort to hang on to their customers.
"The biggest benefit is that it creates a loyal customer," said PNC's Baker. "We're going to save the customer time, which is going to make him loyal."
Javelin regularly surveys people who have switched banks. This spring, 8 percent of switchers said they moved to get mobile banking.
Mobile banking users also tend to be more affluent, which makes them more profitable customers.
"It's a sticky service. Once they start using it, they use it frequently," said Schwanhausser. The biggest number of customers, 87 percent, use their phones to check their account balances, but a third of them use phones to pay bills and to switch money between accounts.
The mobile drive is part of banking's long effort to get customers to deal with money electronically, instead of face-to-face with tellers or through paper checks. That saves the bank money.
About 60 percent of customers now use Internet banking from home computers, which allows them to pay bills with a mouse click. Largely as a result, the volume of paper checks is dropping 20 percent per year.
"Within the next 10 years, people will charge you to use paper checks," predicts Bagy of First National Bank.
That's where cell-phone check cashing comes in. Many retailers already have automatic check readers that wire the information to the bank, while the checks stay put. Using cell phones to transmit check images is the next step.
Meanwhile, MasterCard is piloting "tap and go" debit and credit cards with a chip that can be read by a remote receiver, speeding the line at the checkout counter. Some industry analysts think the next step is to put the chip in smart phones, so consumers don't have to dig out the credit card.