[dagw]

I've been online banking in Norway and Sweden since 1999 and I've never seen a bank that just uses passwords.

For phones you download an app and enter a unique security code that you get from your bank. This, combined with some uid on your phone, creates a unique salt and basically ties that copy of the app on that phone to your bank account, so only your phone can log into your account. Your phone now becomes the "something you have" in addition to the "something you know" (your chosen bank password)