Pay your bills while you’re in line at the store? Possible. Transfer funds while you’re waiting for your daughter’s play to begin? No problem.

An increasing number of Iowans are discovering the convenience of using their smart phones to bank on the go. And their financial institutions are scrambling to keep up with them.

“There is huge popularity among customers to do more on their phones,” said Arah Erickson, head of retail mobile banking for Wells Fargo & Co., which began offering mobile banking services in Iowa three years ago. “And the more and more things people were doing on their phone, the more they expected to be able to check their balance or pay a bill on their phone. So it was providing that convenience to our customers.”

Though Wells Fargo and other banking giants such as Bank of America Corp. have dominated mobile banking for the past several years, community banks are now beginning to enter the market.

Two Rivers Bank & Trust rolled out mobile banking about seven months ago, and the number of customers using the service is about 150 “and growing,” said Kathy Nellor, Two Rivers’ chief retail banking officer at its Mount Pleasant office.

“We expected it to start out slowly and grow, because quite frankly there is an increasing demand for it,” she said. “One of the things we pride ourselves on is that we’re a community bank but we still have all the services that larger banks offer.”

Big potential

More than 230 million Americans are cellular telephone subscribers, and more than 40 million of those people use smart phones that connect to the Internet to support hosts of applications, among them mobile banking apps.

MShift Inc., a mobile banking technology company, estimates that 12 million Americans used mobile banking last year, and that number is expected to quadruple in the next four years.

Bankers have only to look at the growth of online banking to see the potential. According to a survey of more than 3,000 online consumers by another banking technology provider, Fiserv Inc., nearly 72.5 million U.S. households with Internet access are now banking online. And among those surveyed who said they own cell phones, 30 percent said they have conducted one or more banking service using their mobile phone, up from 23 percent in 2009.

Mobile banking’s growing popularity hasn’t escaped the attention of two Greater Des Moines-based organizations that serve the financial services industry on a regional basis.

The Members Group (TMG) announced earlier this month that it has added mobile banking and transaction alerting solutions to its product lineup for credit unions, through partnerships with MShift and Visa Inc. The mobile banking solution runs on any mobile or smart phone and can integrate with any online banking system without interfering with the core processing platform.

TMG, which is owned by the Iowa Credit Union League, provides credit card, debit card, automated teller machine and other services to credit unions throughout the United States.

“Overall, financial institutions are recognizing the power of offering mobile solutions to their customers,” said Jeff Falk, TMG’s director of product development. “Not only does mobile banking offer the potential to improve the bottom line through streamlining of services; it can greatly enhance the customer experience.”

Though no TMG member credit unions have signed up for the new product yet, many of them are “definitely interested,” said Georgeann Smith, a spokeswoman for TMG.

Meanwhile, the SHAZAM network is developing a mobile banking service to offer to its approximately 1,500 member banks in 32 states. The Johnston-based member-owned network expects to launch the service by this time next year.

“We envision a significant number of our customers using this service,” said Dan Kramer, SHAZAM’s vice president of marketing and merchant operations. At the present time, relatively few banks in the SHAZAM network have introduced mobile banking, he noted.

“It’s not because they don’t want it or that it’s not available,” he said. “Mobile banking is certainly important, but it’s not up at the top of what customers are asking for. It kind of comes down to that pracctical application of what (banks) need on a day-to-day basis.”

Both The Members Group service and SHAZAM will offer text and e-mail alerts, through which the financial institutions can instantly notify accountholders via text or e-mail to their mobile phones that a fraudulent transaction may have taken place.

“There’s a natural fit between us and this type of service because we are the first one to see a transaction,” Kramer said. “And we already have relationships with these institutions.”

Double-edged sword

To succeed in mobile banking, financial institutions will need to be strategic about their offerings, according to a recent report by IDC Financial Insights, a Massachussetts-based financial services consulting firm.

“This is probably a double-edged sword, as there are little to any direct revenue opportunities with mobile banking,” said Marc DeCastro, research manager of consumer banking and credit at IDC Financial Insights. “However, there are with mobile payments.”

Until recently, few banks have made any serious efforts to market their mobile banking products, DeCastro said.

“Most banks and credit unions are treating mobile as a defensive product offering, and subsequently not giving much marketing ‘umph’ behind it. … If you are going to roll something out, put a full plan behind it and set realistic goals,” he said. Bankers Trust Co., one of Greater Des Moines’ largest community banks, is currently evaluating its mobile banking options. Choosing a vendor that integrates well with the bank’s existing online banking system, as well as security considerations, is among the myriad factors to consider, said Paul Erickson, the bank’s senior vice president for consumer services.

“We’re also considering vendors that would consolidate all accounts for a customer – banking, investments and other financial products – into one portal,” he said. “Obviously, we want the portal to be Bankers Trust so we consolidate it all through our Bankers Trust piece.”

Nationwide, the growth that Wells Fargo has seen with mobile banking has been “really astronomical,” said Arah Erickson.

“I call it hockey stick growth, when the curve starts to go straight up; 2009 was a really big year for us,” she said. “Being able to keep track of their finances really helped with their peace of mind, our customers told us.”

In February, Wells Fargo began offering text banking, designed for smart-phone users who don’t bank online.

“We found that some people, like construction workers, teachers, their lives don’t revolve around a PC at all,” Erickson said. “One of the first places we’re offering to enroll them is at the ATM. … We’re getting great feedback on customers being able to enroll at the ATM.”

Earlier this month, the company announced new mobile banking applications for Android, BlackBerry and Palm devices.

The average Wells Fargo mobile banking customer makes 22 text-message requests per month, and seven visits per month to the bank’s mobile website, www.ws.com.

Wells Fargo’s mobile banking system is also integrated with each smart phone’s built-in global positioning system capabilities, enabling customers to quickly find the nearest ATM or branch.

Wells Fargo is finding that it’s not just younger people using mobile banking.

“Somewhat surprisingly, there’s really high usage of the service into older ages,” Erickson said. “Just as with smart phone users, you’re really seeing adoption across the board.”