A mobile phone group has predicted more people will use their mobile phones to manage money than the internet within five years.

According to mobile phone banking group Monilink, mobile banking is being adopted at a faster rate than online banking or even the use of cash machines and credit cards.

Currently a number of banks, including HSBC, Lloyds TSB and NatWest, offer their customers some form of mobile banking, but only 4% of people currently bank via their mobile phone.

However, a report by Monilink suggests the economic downturn will encourage more people to use the technology to bank as a way of keeping more in touch with their finances and managing their money more efficiently.

It is predicted 50% of people will be controlling their finances through their mobile handset by the end of the year. This will then rise to 75% by 2020.

One way that mobile technology can benefit customers is by people being able to receive a text message from their bank when they are close to reaching their agreed overdraft limit. This could then make the person stop spending before they go over the limit or top up their account with money, either way avoiding a charge.

Customers could also be informed when their credit balances exceed a certain level, enabling them to transfer excess money to a higher interest savings account.

But the research, carried out by the Future Foundation shows that although customers are happy to use technology, such as mobile banking for small value transactions, they are less likely to use the same banking methods when agreeing to a long-term deal such as a mortgage.

The Future Foundation said that removing human contact from many financial transactions is making banks "faceless" at a time when trust in the financial system is very low. It believes this trust will not be allowed to grow if customers no longer handle their finances face-to-face.

The results also suggest people are dubious about using their mobile phone for banking due to the perception that a mobile phone is less secure than online banking, particularly as mobile phones are items which are frequently lost.

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