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By 2010, 35 percent of online banking households will be using mobile banking, up from less than 1 percent today according research firm Celent.

Mobile banking will be appealing to 18- to 25-year-olds, or Generation Y. They will be early adopters of mobile banking with 40 percent indicating that mobile services will be a factor in their choice of bank.

Celent projects that by 2010, about 70 percent of bank center call volume will come from mobile phones. Fifty-percent of those calls will be related to basic balance inquiry information. A customer service inquiry via mobile banking will cost less and be a reason for banks to embrace the new channel.

"The mobile banking end game will not be about checking balances and paying bills. It will evolve into a mobile wallet, allowing banks to generate greater electronic payment volume through the combination of electronic loyalty programs, mobile marketing, and contactless payments," says Dan Schatt, author of the report and senior analyst at Celent.

"While loyalty and marketing applications are still largely confined to product roadmaps, they will make their debut in late 2008, and by 2010 we will see the fusion of mobile banking and mobile contactless payments."