What is it?

ANZ will make two new mobile phone-based services available from February 11. M-Banking allows customers to use their mobiles to transfer funds between accounts and make payments to any third party with an Australian bank account. The other service, TXT Banking, will provide account balances and statements via text message. Customers can choose one service or both.

How it works

The M-Banking service will be available to any customer with a Java-enabled mobile phone that also has an active GPRS connection. This technology allows mobile phones to receive emails and get access to the internet. It is very widespread. In some cases the user will have to get the GPRS switched on. Transactions will require account, password and authentication details and can only be made on one registered handset. No customer information is stored on the phone and if the phone is reported lost or stolen ANZ will suspend the service.

Customers using TXT Banking will be able to set up alerts to keep them informed of account balances and confirm the completion of transactions. There is no password requirement for TXT Banking.

The services can be used on all mobile networks and do not need to be enabled by the network providers.

ANZ will support mobile phone banking with a help desk and a dedicated customer service number.

What it costs

ANZ is providing the services without charge until December. It will review the cost of the service after a year of operation. In New Zealand, where ANZ introduced mobile phone banking a year ago, it charges $2 a month on top of standard transaction fees. Mobile phone companies will charge SMS fees for TXT Banking and data transfer rates for M-Banking transactions; these will vary according to the terms of mobile phone plans.

Group managing director of ANZ's personal division, Brian Hartzer, says his preference is to establish mobile phone banking as a free service. "We want to see take-up. The cost of operating the service is not high at this stage but if we get customers over-using it we will have to look at that. In New Zealand we have not offered it as a massive take-up proposition. It is there for convenience."

Pros

Almost all adult Australians have a mobile phone - a testament to the convenience of the technology. People have taken readily to telephone and internet banking and there is no reason to think they would not use a mobile phone service as well. Hartzer says the bank wants to be seen as a leader in providing convenience for its customers.

M-Banking's facility to pay any third party has become a very popular function on internet banking sites. Banks such as St George, which already has SMS alerts, report that customers find it a useful service in helping them avoid overdrawing transaction or credit card accounts with multiple users.

Cons

Earlier attempts to provide mobile banking services have failed because of problems with security and technology. In 2004 Citibank launched a service on Telstra'si-mode network. It suffered from being tied to one carrier and had some security problems.

ANZ says it has both issues covered. Its mobile phone banking services will operate on all networks and do not need to be enabled by the carrier. For security, the services will use secure socket layer encryption to encode all information as it moves over the network.

This is the same level of security as ANZ's internet banking service. Hartzer says that apart from problems with phishing, ANZ has had no cases where its encryption has been cracked.