The advent of smart phones means you can now access your bank accounts whenever and wherever you are - but are you leaving yourself open to fraud and loss when you do so?

Is it safe?

Firstly there are various types of 'mobile' banking and each comes with associated risks.

Text update facilities, whereby you receive notifications of your balance or a mini statement in the form of a text, pose little risk as they do not actually provide direct access to your accounts. As such there is little a potential fraudster can do with this facility alone.

However, there are other forms of banking using your smart phone that do provide you - and anyone who accesses your phone - with direct access to your bank accounts.

For example First Direct allows smart phone users to log into a full version of their internet banking site using a smart phone. While others provide banking apps that let you manage your money via your mobile.

At the moment banking on most smart phones is relatively safe - as long as you take the necessary security precautions - as they will only allow you to run one application at a time.

This means that while you are using your mobile banking application there is unlikely to be another program (like a virus or other malicious software) running in the background, accessing the internet and posing a security risk.

However, as phones become increasingly sophisticated and more like regular computers, the safety of mobile banking is getting to be a bigger concern.

Phones that allow you to access multiple applications simultaneously, like the iPhone 5, pose the biggest risk when you use them to access your bank accounts. This is because with multi-tasking comes a greater chance that malicious software could be running in the background without your knowledge.

Is it actually worth it?

Standard mobile banking applications let you view account balances, mini statements and transfer money between your own accounts. This means it is easy to check the activity on your account but less easy to take money out.

Some dedicated mobile banking apps also let you send money to existing recipients, which have been set up using the banks online banking service. This means you can send money out of your account to pre-authorised recipients but not to any bank account.

Using you smart phone to access your online banking facility will allow you to perform the same functions as if you were logging onto your PC in your living room. While this opens you up to the same risks it does provide you with easier access to your account and means should you fall victim you will be quicker to spot any fraudulent transactions and report them.

Providing you take the necessary security measures, there is currently no reason to think the banking via your smart phone is any less secure than any other means of accessing your accounts.

If it means you check your finances on a more regular basis, then that has got to be a good thing.

Does my bank make mobile banking safe?

Most specific mobile banking apps don't actually store your bank details directly on your phone, but instead access it from a secure data centre. This means your mobile itself will never hold your personal bank information.

HSBC, First Direct, Alliance & Leicester, NatWest, RBS and Lloyds TSB all use the mobile banking service provided by Monilink.

Some banks now offer specific software to tackle the threat of mobile fraud. Barclays currently offers free Kaspersky Mobile Security Software with their phone banking application. This is aimed at providing an extra security level to protect you from any virus or Trojan attack.

Does my bank fight mobile fraud?

What may make all the difference as to whether you decide to give mobile banking a try is the guarantees you get from your bank.

It is worth checking if your bank will refund any losses you incur if you fall victim to mobile fraud. Most UK banking institutions will refund any losses providing you have taken reasonable care and not misused the service .

With regards to accessing internet banking from a smart phone most banks do not specifically state a policy regarding guarantees against fraud. (Although they do for internet and 'mobile' banking separately). If you have any doubt as to where you stand then you should contact your bank to check before logging on.

Do I need anti-virus for my smart phone?

Due to the ever developing nature of the smart phone industry most of the major anti-virus providers now offer a dedicated smartphone security packages. These monitor background activity on your phone to stop viruses compromising your personal data.

While smartphones users are not quite in the same position as laptop and netbook users for whom anti-virus is essential, if you plan to use your smartphone for banking on a regular basis then anti-virus software certainly will add an extra level of protection.

The general consensus among the security industry is that mobile viruses and worms are only going to become more sophisticated and a greater threat in the near future. As a result it is certainly something worth considering.

What happens if my phone is lost or stolen?

If you are unfortunate enough to lose or have your mobile stolen then you will need to contact your mobile network provider as soon as possible. They can then block the phone to make it unusable.

As long as your passcode or log in details are still secure then whoever has your phone would not be able to access you mobile banking.

If you are using the online banking system using your smart phone again without your log in pin and passwords, any potential fraudster would have difficulty accessing you online account.

Can I make my phone more secure?

To reduce your chances of falling victim to fraud when you bank online via your smart phone you should:

  • Only download mobile applications directly from your bank - they are free to use and you can download without any reservations about the software.

  • Download any free security software provided by the bank, we all know that having to enter additional passwords can be frustrating but if it prevents an attempted fraud then it could be worth the inconvenience.

  • Install quality security software. Often if you have it installed there is a remote deletion option that means you can delete any data stored on the phone if you discover it is lost or stolen.

  • Set up your smart phone to be more secure. Use a PIN or password to lock your phone when you are not using it.

  • Make sure your phone's browser doesn't automatically input your passwords or usernames for you.

  • Switch off the Bluetooth function on your mobile when it is not in use. This will stop any unmonitored wireless activity on your phone. You can take this further and avoid accessing your bank accounts from public networks, if you are happy to restrict where you log on.

  • Avoid 'jail-breaking' your iPhone. This is where you modify your iPhone to allow the installation of unofficial applications that have not been approved by the provider. Doing this removes certain security features that protect your phone from remote access. There are already worms that take advantage of 'unlocked' smart phones which target online banking data.

  • Register your mobile to the Immobilise property register; although this will not protect you from fraud or theft, if it does get recovered there is a better chance of you being reunited with your property.

  • Delete any text messages from your bank when no longer needed, so that any information they have sent to you is not sat in your inbox.

Anything else I need to know?

As with any form of banking there are people out there who are trying to take advantage of mobile banking to scam you and get access to your money.

Banks will never ask for you mobile banking passwords or log in details by email, so any message you receive asking for this information is likely to be a scam. If you are suspicious in any respect then contact your bank to check if they have tried to contact you.