NEW YORK (TheStreet) -- There's no doubt mobile banking is growing. Data from the Federal Reserve show 51% of U.S. smartphone users have used mobile banking in the past year, and 12% who don't use it now say they will next year.
But mobile banking won't reach its full potential until there's an answer for a major consumer anxiety: Banks that fail to secure their personal data.
So says Deloitte in a study released Tuesday, Raising the Bar on Customer Engagement Through Mobile Financial Services.
Of all smartphone owners who don't use mobile banking, 61% say it's because of "security" issues, and consumers who do use mobile banking limit it to "routine transactions," Deloitte says -- because about 33% of consumers just don't trust Wi-Fi security, and 28% worry they will lose their mobile phones and their personal financial data in the process.
But the banking industry, working with technology providers, have a security plan for mobile banking users.
"There are tremendous opportunities for innovation within financial services still, whether in video, biometrics and GPS," says Jim Eckenrode, executive director of the Deloitte Center for Financial Services. "The industry which has already spilled a lot of blood, sweat and tears in this area has merely scratched the surface in using mobile technologies to connect and strengthen relationships with customers."
"The biggest area of opportunity seems to be in the security area, rather than a certain mobile app or a new shiny feature," Eckenrode says. "To boost adoption and set the stage for more ambitious applications, companies will likely have to take tangible steps to reassure consumers about the security of their mobile financial transactions."
Specific technologies set to roll out includes bank system software that disables a smartphone automatically when lost or stolen, and biometric technology that ensures only the phone's owner can access financial data with the device.
Deloitte says about 66% of consumers say they would "find it valuable" to have security technologies such as fingerprinting or retina scans before a phone user can make payments or withdraw money from their bank accounts using mobile technology.
"However, the comfort level with biometric security and encryption decreases as the amount of the transaction increases," Deloitte reports.
Still, Deloitte is optimistic about the ability of the banking sector to better secure consumer's personal data on their mobile devices.
"In the not-too-distant future, new technologies will likely be added to the mobile platform that take advantage of its ability to know where it is, see what is around it, communicate with other local devices and connect with information sources that have yet to be deployed," says Robert Berini, a technology director at Deloitte. "Ultimately, it may require companies -- and all of us along with them -- to re-imagine what mobility means."