Mobile banking is online banking at our fingertips. With instant electronic bank transfers and automated features, online banking through a mobile banking app allows us to move money to friends, family, and businesses faster than we’ve ever been able to do it before.
Now, with the introduction of cryptocurrency and its increased usability, mobile banking needs to consider the ways that cryptocurrency transfers can be integrated into mobile banking, ACH digital wallets, and online banking methods.
If we are to actually use cryptocurrency in the way it was intended, as a decentralized form of banking, then we need to find ways to integrate it into the banking methods and financial services that we use daily.
Reasons to use mobile banking for your cryptocurrency
According to The World Bank, around 70% of adults have some kind of bank or mobile money account. However, a staggering 1.7 billion adults do not have any formal account at a financial institution.
For those with access to banking at their fingertips, trying to comprehend not having a bank account, credit card, debit card, electronic money account, or any of these resources close at hand may be shocking. Being able to manage our money electronically is desirable and mobile is a feature that many new consumers look for when it comes to B2C purchases.
As a way to provide a mobile banking service to more people, cryptocurrency can bridge that gap. And here are two good reasons why:
Mobile money is centralized, whereas cryptocurrency (even in mobile form) is decentralized
When we talk about centralized or decentralized money, we are talking about the level of control that a private institution might have over the money. So, when money is considered centralized, it is under the control of a private company or a government.
Centralized money is vulnerable because this means that the money is controlled by fewer and fewer people, which allows the banks, financial institutions, and governments to do what they want with that money.
A perfect example of why a central bank or centralized money can lead to difficult financial situations is the state of the economy in Venezuela. In 2018 alone, the nation-state experienced a 130,060% increase in the inflation rate. Now while this sharp increase was not solely because of a centralized financial system, the people in Venezuela have seen the value of their money drop and must still rely on this system in order to survive.
By introducing a decentralized financial system, one that included mobile money and cryptocurrency, which are both extremely secure and stable ways of handling money, then this might allow for decentralized ways of interacting with financial services.
More and more, stablecoins are being created as a way to remove price volatility, allowing for everyday transactions to occur regardless of the market volatility.
While not meant to be the solution for all economic problems, the ability to issue and use decentralized mobile cryptocurrency might allow for those in countries with fluctuating economies the chance to even out, and in the meantime, use a stable crypto coin in order to survive while the economy is in flux.
Mobile money is still local, whereas cryptocurrency can be global
The introduction of cryptocurrencies, like Bitcoin and Ethereum, have provided people all over the world with a tool to send money wherever and whenever they want, and usually at a fraction of the cost of sending money with a legacy financial system (such as with a wire transfer).
On top of this, cryptocurrency is global, and it does not restrict the user to the financial banking system, geographical area, or nation-state of that financial institution. Even if we were to put mobile banking into the hands of everyone, there would still be issues with moving money around.
By introducing a universally-accepted stablecoin cryptocurrency to mobile banking, cryptocurrency can be introduced as a fiat currency. Once this happens, the doors of the financial system will open wider and it will allow entrance to more businesses and countries beyond traditional border constraints.
While a universally-accepted stable cryptocurrency has yet to be established, there are still widely accepted stable coins that can be useful at times when the national currency of a people is unavailable for use (like Venezuela). This provides added protection to people who would otherwise be forced to use a particular currency.
As more folks worldwide have access to a mobile device, more people are moving to mobile banking for the first time. We are seeing more and more users skip a physical or traditional bank altogether and move to a completely digital bank and a new way of banking. With this move, we must be able to scale the size of the banking infrastructure. With cryptocurrency, this makes intuitive sense, as the system is built on decentralization, all over the world.
Security measures for cryptocurrency and mobile banking
Cryptocurrency is ultimately built on security. This complex mathematical algorithm allows for a user to use both a private and secure public key in order to make financial transactions with strangers across the internet.
Because of how blockchain technology works (every cryptocurrency transaction that takes place is publicly posted to the blockchain), then any transaction can be publicly verified, making cryptocurrency transactions virtually tamper-proof.
However, as this type of digital currency continues to evolve, hackers are able to find ways to take advantage of newer technologies, loopholes, or improved hacking methods. In fact, cryptocurrency can still be subjected to hacking or malicious attacks (called cryptojacking), so there are some cybersecurity concerns that those in fintech need to be mindful of.
It’s important to note that when it comes down to the cryptocurrency transaction, this form of money transfer is secure. However, many of the security and privacy concerns stem from the use of a cryptocurrency wallet app, a digital wallet app, or an exchange provider.
When considering cryptocurrency security and mobile banking practice the following:
- Consider a cold wallet (also known as a hardware wallet), which, unlike “hot wallets”, do not connect to the internet. These wallets are less vulnerable to cyberattacks and are a good place to store your private key. A cold wallet will most likely be encrypted as well. Hot wallets are always online and vulnerable to malicious attacks, which can spread through multiple cryptocurrency markets within the hot wallet’s network.
- Always use a secure internet connection, especially when trading on the cryptocurrency exchange or making a cryptocurrency transaction. Avoid public Wi-Fi networks and use a reliable VPN even if trading on your home network.
- Diversify your cryptocurrency investments with multiple crypto wallets. You can keep a crypto wallet for daily transactions, with savings in a separate crypto wallet (that is most likely a cold or hardware wallet). By separating these accounts you can protect your portfolio and mitigate losses.
- Keep your personal device secured regularly. While standard now, always protect your personal devices with anti-virus software, secure internet networks, a firewall, and multi-factor authentication.
- Change your passwords frequently. According to a study, approximately three-quarters of American millennials use the same passwords across 10 devices, apps, or social media accounts. These passwords might be used in as many as 50 different places at once. Considering that password managers come highly recommended, there is no reason why the same passwords need to be used at the same time. If you are regularly using one account type (like Google or Facebook password) in order to access an account, then you’ll need to regularly change that password. Even if the password is not the same one that you use for your cryptocurrency mobile wallet, a vulnerability in any account can put your cryptocurrency accounts at risk.
- Educate yourself on phishing scams. Phishing scams and other similar malicious attacks won’t just target banking financial information. Phishing scams can target cryptocurrency too. In 2018, CryptoCore, a malicious hacking group, was able to steal USD 200 million over two years; the group targeted companies in the US and Japan after a reconnaissance phase that identified email accounts and cryptocurrency exchanges of employees and security executives in the companies.
Cybercriminals will be able to manipulate vulnerable wallets in order to access that user’s private key, which is your digital identity on the cryptocurrency market. If anyone has access to a user’s private key, then they can perform any transactions on their behalf, including fraudulent transactions and stealing crypto coins.
Mobile banking options for cryptocurrency
Cryptocurrency is not a fintech trend. In fact, it is opening up how we move money globally, and integrating it into your point-of-sale (POS) will put your business ahead of competitors still using only traditional banking options.
Consider integrating cryptocurrency transfers as a viable payment option. If you want to operate mobile banking apps with cryptocurrency transfers as one (or the main) way to transfer money, or you want to create an intuitive banking app for a business to use, consider a mobile banking ACH API that can integrate with your eCommerce suite, as a mobile wallet, or financial services.
An ACH API that facilitates cryptocurrency like Sila allows business owners and app developers to custom-create their own crypto- and money wallet, capable of sending ACH payments and other digital transactions using cryptocurrency.
Sila is not just a service to use, but instead, this banking and digital wallet app can be completely white-labeled and it can be tested in our developer sandbox.
By using a verified ACH API, you’ll know that the supporting bank is FDIC-insured, an ODFI/RDFI for facilitating ACH transfers and is able to provide secure bank accounting linking and customer and business identity verification.