In recent years, the business of banking has continued to grow and evolve. Traditionally, consumers will typically open an account directly with a bank. They may do it in-person, on the website of the bank, or on the bank’s mobile app. If you are interested in or use banking apps, you should continue reading this guide. Here, you will learn about banking apps and how to keep you and your information safe from potentially fraudulent banking apps.
Your Account
If you want a bank account, you should open one up with institutions that are insured with the FDIC. In fact, you should only deal with FDIC institutions. If you stumble across a third-party app that is not backed by the FDIC, you should avoid using that app.
What is the FDIC Insurance Coverage?
FDIC insured accounts are those where the member of the account makes deposits in a legitimate banking account and provided with coverage up to $250,000 per person, per bank, per ownership. If you have more than one account at an institution, like a personal account, a joint account, and/or trust account, each will be insured up to $250,000 by the government.
How to Boost the Coverage
If you would like to boost the amount of coverage that you have, each bank will provide you with coverage of $250,000 per depositor, per bank. You should also consider using different ownership categories.
What is a Third-Party Banking App?
A third-party banking app (may be called a third-party financial app) are applications are created by pother companies than the bank or the credit union. Users may access their financial data, engage in other banking activities, and even simply manage their money from this platform. These apps are convenient and other many benefits; however, they also are associated with many risks that you should be aware of.
How Do Third-Party Apps Work?
Third-party apps work in the following way:
- First, you will be asked to provide the log in credentials so that you may gain access to your financial information.
- Then, the app utilizes your financial information in order to provide various types of features. Examples include sending or receiving money, budgeting, and the ability to pay bills online.
- Some third-party banking apps get information and financial data from different sources. This will let you look at the “big picture” in terms of your financial information.
- These types of banking apps may have the ability to data, conduct transfers, or pay their bills.
What are the Risks Associated with Third-Payor Banking Apps?
While there are many obvious benefits associated with third-party banking app, there are also many risks that may pose a danger to your identity and/or finances. These include the following:
- When you share your credentials associated with your bank, this raise concerns over security. Risk comes into play if the app is vulnerable to misuse or hacking.
- There are many privacy issues associated with third-party payor apps. These include the app invading your privacy and sharing your financial information with other financial companies.
- These apps typically do not offer FDIC insurance. In other words, they do not offer the same layer of protection as traditional banks and their associated banking apps.
- Third-party banking app users typically experience transparency issues. That is because most users do not know what information is being collected by the app, how it is being used, and who it is shared with.
How to Stay Safe with Third-Party Banking Apps
In order to stay safe while using third-party banking apps, you should do the following:
- You should only use third-party banking apps that you know have a solid reputation and have good safety practices.
- You should practice caution when providing information on the app and be careful about what you are sharing.
- Always use very strong passwords. Make them as unique as possible.
- If you want to disable the app., just log into the online portal for your app and remove it.
The 2023 Survey
The digital era has made banking apps indispensable for financial management. The 2023 survey from Consumer Reports reveals patterns in American banking app usage and highlights preferred features. This survey conducted among 2,019 U.S. adults provides an extensive view of how consumers interact with mobile banking services.
Key Findings
Frequency of Use
The banking app represents a routine aspect of users’ weekly activities because 77% of individuals use it at least once every seven days. Among digital bank users 85% utilize their app every week while 52% use it every day.
Popular Features
The most frequent banking app activities involve checking account balances (87%), monitoring transactions (72%), and transferring funds between accounts (70%). The functionality for setting up direct deposits together with bill payment capabilities and money transfers to friends and family receives high praise from users with more than 84% regarding these features as very beneficial.
Customer Service Preferences
Users contact their bank by phone when seeking support 45% of the time but digital bank customers predominantly opt for app-based support as their initial choice with 52% favoring this method. The option to have live conversations with human representatives proves to be the most valuable feature within app-based customer service settings.
Security Measures
Banking apps prioritize security as one of their most important features. The majority of users secure their accounts through passwords (80%) and multifactor authentication (42%) with additional layers of biometric security including face scans (35%) and fingerprint scans (30%). Most users find transaction alerts and suspicious activity reports to be highly beneficial features.
Financial Well-Being
Banking apps help users maintain financial wellness. Credit score monitoring together with low balance alerts and automatic savings transfers stand out as popular features among users. When comparing demographic groups users find utility in banking app features Black and Hispanic individuals demonstrate higher appreciation than white users with Black users specifically highlighting app functions that help them save money manage debt and accumulate wealth.
Fees and Promotions
Two-thirds of users have faced fees including 33% who experienced out-of-network ATM fees and 30% who dealt with overdraft fees. Users of digital banks encounter ATM fees more frequently while experiencing overdraft fees less often. The majority of users perceive that promotional content is infrequent or nonexistent while maintaining a neutral stance towards it. Black users encounter advertisements more frequently but experience fewer negative feelings toward them than white users do.
Differences Among User Groups
The survey results show significant variations in app usage patterns among different demographic groups and bank categories.
Income Levels: Users who earn less than $30,000 annually tend to choose digital banks as their main banking solution.
Race/Ethnicity: Black users engage with their banking app every day and appreciate the money management features while feeling supported in their financial health by the app.
Digital Bank Users: Digital bank customers show higher app engagement by performing various functions including debit card activation, direct deposit setup, and account opening.
Opportunities for Improvement
The widespread use of banking apps shows that they still have potential for expansion.
Customer Service: The percentage of users who have tried app-based customer service remains low while these users report reduced satisfaction with these features when compared to traditional phone or face-to-face support.
Financial Health Tools: Banks should develop additional services within their apps to assist customers with debt management and wealth-building alongside goal-based saving strategies. Although features such as budgeting tools and savings goals are rated as highly useful by users their adoption rates remain low.
Fake Banks and Apps
You should be aware of the fact that there are many fake banks and fake apps on the market today. It is important to know how to spot these so that you are able to protect your finances. First, see if the website is a fake of the bank the app is trying to represent. Many fake apps have malware programmed into them. This will steal information from your device. If you are concerned and cannot tell if the app or bank is a fake, you may contact the FDIC AT 877-ASK-FDIC to inquire and/or to report the scam.
Conclusion
Somerville Bank has been revolutionized by banking applications through their provision of user-friendly convenience alongside secure financial management tools. Banks can upgrade their applications by developing better customer service functions and adding more financial health management tools. Banks can develop more effective and approachable app experiences by applying these insights during the expansion of digital banking services. Remember, you can safely use digital banking services as long as you know how to.
Contact Us
We here at Somerville Bank offers traditional and modern features to account holders. If you want to avoid the risks associated with third-party banking apps, you should only choose apps that are offered directly by your bank. Contact one of our financial consultants today to learn more about third-party banking apps and/or all of the baking options and apps that we offer our clients: https://somervillebank.net/locations/
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