Will depositing checks by phone open more doors to bank exits?

A shopkeeper displays a new unlocked Apple Iphone 3G at a mobile phone shop in northern Tehran November 1, 2008.

(Reuters) - If you are looking for a way to rebel against big banks, you could just sit on your couch and scan a few checks.

How is that making a statement? Once you can easily scan a check and deposit it, do you really need to stick with a bank just because it has a branch in your neighborhood? The technological advance of smartphone scanning breaks down one of the last barriers to easy bank switching. As the practice spreads, there may be no stopping upstarts from cutting into the deposits of major banks.

The idea of switching out of big banks to smaller ones has morphed into its very own day: November 5 is Bank Transfer Day (see www.facebook.com/NovemberFifth). It was launched by Los Angeles art gallery owner Kristen Christian to encourage folks to pull their money from big banks in protest of their policies, from mortgage lending practices to the repayment of TARP funds to a constant array of new fees.

"Seriously, who likes going to branches? It's much more convenient to either mail checks or use cutting-edge mobile deposit technology," asks former Capital One executive Dan O'Malley, who is now CEO of PerkStreet Financial, one such small financial institution.

Mailing checks for deposit to operations like PerkStreet, State Farm Bank, ING Direct or a distant credit union has long been an option, but the growth and acceptance of deposit by phone could be a game-changer for many consumers, O'Malley and others say. USAA Bank has been accepting scanned check deposits for years. It caters to mobile military families but also offers banking services to the general public,

"In addition to reducing costs associated with mailing checks, mobile-based remote deposit makes it infinitely more convenient for customers to get money into their online-only accounts at branchless banks," O'Malley says.

Security experts say there is no particular concern to making deposits via a smart phone app. The main issue is being sure to take basic precautions with your phone, says Joseph Steinberg, CEO of the IT firm Green Armor Solutions. "You should have security software on your smartphone. You should have the capabilities to do an anti-malware check," Steinberg says.

Of course, using a phone to deposit a check isn't exclusive to upstarts. In addition to USAA Bank, which has but a handful of locations, big banks including JPMorgan Chase have since joined in.

Brian Ruby of Stratford, Connecticut, uses the Chase app. "It's very easy: endorse the check, launch the app, snap a couple pictures, confirm the numbers, wait for an email saying it's good and shred it," he says. "I don't get checks very often, and when I would they would sit around for a long time since I seldom visit a branch, so now I'm much quicker on deposits."

Depositing a check by mail is riskier scenario than a deposit by phone app, Steinberg says.

Online banking through remote Internet-based financial institutions isn't new, but is growing with deposit technology. At State Farm Bank, mobile check deposits are up 150 percent since January. Customers using the technology run the age gamut -- nearly 45 percent of mobile check deposit customers are 36- to 55-years-old, the company says.

In case you're concerned about the security of your online bank, check to see if your funds will be FDIC insured. State Farm, PerkStreet (through Bancorp Bank) and ING, for example, all are FDIC members.

Being a revolutionary is one thing. But doing without that government deposit guarantee? That's revolting in a different way.

The author is a Reuters contributor. The opinions expressed are his own.

(Editing by Lauren Young and Beth Gladstone)