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Final Mobile Banking

Final Mobile Banking

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Introduction RBI Operative Guidelines for Banks Mobile Banking: A Wallet for all Pockets Finacle Mobile Banking Solution Syndicate Bank Registration Mobile Banking Services Mobile Banking in India Mobile Banking Implications Statistics Stake-Holder¶s Expectation Challenges for a Mobile Banking Solution CONCLUSION


The non-transaction-based services of an informational nature are however essential for conducting transactions . payments etc.) is a term used for performing balance checks. may be offered as an independent module.INTRODUCTION Mobile banking (also known as M-Banking. The accounting and brokerage services are therefore offered invariably in combination with information services. balance inquiries might be needed before committing a money remittance.for instance. mbanking. A mobile banking conceptual model Mobile banking is defined as: "Mobile Banking refers to provision and availment of banking. on the other hand.The scope of offered services may include facilities to conduct bank and stock market transactions. SMS Banking etc. Information services. account transactions. via a mobile device such as a mobile phone.and financial services with the help of mobile telecommunication devices. Mobile banking today is most often performed via SMS or the Mobile Internet but can also use special programs called clients downloaded to the mobile device. 3 ." According to this model Mobile Banking can be said to consist of three inter-related concepts: y y y Mobile Accounting Mobile Brokerage Mobile Financial Information Services Most services in the categories designated Accounting and Brokerage are transaction-based. to administer accounts and to access customised information.

Use of mobile banking services for cross border transfers is strictly prohibited. Reserve Bank has brought out a set of operating guidelines for adoption by banks. ³Anti Money Laundering (AML)´ and Combating the Financing of Terrorism (CFT) from time to time would be applicable to mobile based banking services also.001/ 97-98 dated 4th February 1998 will apply mutatis mutandis to mobile banking.MOBILE BANKING TRANSACTIONS IN INDIA ­ RBI OPERATIVE GUIDELINES FOR BANKS Introduction Mobile phones as a delivery channel for extending banking services have off-late been attaining greater significance. It also covers accessing the bank accounts by customers for non-monetary transactions like balance enquiry etc.2 The services shall be restricted only to customers of banks and holders of debit/credit cards issued as per the extant Reserve Bank of India guidelines.BC. 10/ 31. 4 . 5 The guidelines issued by the Reserve Bank on µRisks and Controls in Computers and Telecommunications¶ vide circular DBS. for extending this facility to their customers.ITC. transactions enquiry. stop payment instruction of cheques. ³mobile banking transactions´ is undertaking banking transactions using mobile phones by bank customers that involve credit/debit to their accounts.CO. For the purpose of these Guidelines. Regulatory & Supervisory Issues 1 Only banks which are licensed and supervised in India and have a physical presence in India will be permitted to offer mobile banking services. Some banks have started offering information based services like balance enquiry. banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services.09. With the rapid growth in the number of mobile phone subscribers in India (about 261 million as at the end of March 2008 and growing at about 8 million a month). 6 The guidelines issued by Reserve Bank on ³Know Your Customer (KYC)´. 3 Only Indian Rupee based domestic services shall be provided. Acceptance of transfer of funds instruction for credit to beneficiaries of same/or another bank in favor of pre-registered beneficiaries have also commenced in a few banks. 4 Banks may also use the services of Business Correspondent appointed in compliance with RBI guidelines. In order to ensure a level playing field and considering that the technology is relatively new. The rapid growth in users and wider coverage of mobile phone networks have made this channel an important platform for extending banking services to customers. location of the nearest ATM/branch etc. .

authenticity and non-repudiability. To ensure interoperability between banks. 8 Banks shall file Suspected Transaction Report (STR) to Financial Intelligence Unit ± India (FID-IND) for mobile banking transactions as in the case of normal banking transactions. with express permission from Reserve Bank of India. banks may enter into bilateral or multilateral arrangement for inter-bank settlements. up to a maximum period of six months subject to review. technology used for mobile banking must be secure and should ensure confidentiality. Registration of customers for mobile service 1 Banks shall put in place a system of document based registration with mandatory physical presence of their customers. to the customers of particular mobile operator(s) is permissible only during the initial stages of offering the service. Therefore. a robust clearing and settlement infrastructure operating on a 24x7 basis would be necessary. with suitable modification to address specific needs . 5 . if any. 2 On registration of the customer. facilitating inter-bank settlement. Clearing and Settlement for inter-bank funds transfer transactions 1 To meet the objective of a nation-wide mobile banking framework. before commencing mobile banking service. Technology and Security Standards 1 Information Security is most critical to the business of mobile banking services and its underlying operations. the full details of the Terms and Conditions of the service offered shall be communicated to the customer. Restriction. Pending creation of such a national infrastructure.7 Only banks who have implemented core banking solutions would be permitted to provide mobile banking services. This would require inter-operability between mobile banking service providers and banks and development of a host of message formats. wherever necessary. Inter-operability 1 Banks offering mobile banking service must ensure that customers having mobile phones of any network operator is in a position to avail of the service. and between their mobile banking service providers banks shall adopt the message formats like ISO 8583. integrity. 2 The long term goal of mobile banking framework in India would be to enable funds transfer from account in one bank to any other account in the same or any other bank on a real time basis irrespective of the mobile network a customer has subscribed to.

Authentication Banks providing mobile banking services shall comply with the following security principles and practices for the authentication of mobile banking transactions: a) All mobile banking shall be permitted only by validation through a two factor authentication. Approval of Reserve Bank of India 1 Banks wishing to provide mobile banking services shall seek prior one time approval of the Reserve Bank of India. monthly). unless otherwise mandated by the Reserve Bank. 2500/. transaction velocity limit. depending on the bank¶s own risk perception.shall be imposed on all Mobile Banking transactions. 3. AML checks etc. the technology deployed is fundamental to safety and soundness of any payment system. The guidelines should be applied in a way that is appropriate to the risk associated with services provided by the bank and the system which supports these services. 5000/. per customer.per day. fraud checks. Transaction limit 1 A per transaction limit of Rs.The security controls/guidelines mentioned in this document are only indicative. However. Banks are required to put in place appropriate risk mitigation measures like transaction limit (per transaction. 2 Banks may also put in place monthly transaction limit depending on the bank¶s own risk perception of the customer. Technology and Security Standards 1. daily. Therefore. weekly. Subject to an overall cap of Rs. by furnishing full details of the proposal. Board approval 1 Approval of the Board of Directors (Local Board in case of foreign banks) for the product as also the related security policies must be obtained before launching the scheme. subject to following the minimum standards set out in this document. it must be recognised. 6 . banks are required to follow the Security Standards appropriate to the complexity of services offered. 2.Customer Complaints and Grievance Redressal Mechanism 1 The customer /consumer protection issues assume a special significance in view of the fact that the delivery of banking services through mobile phones is relatively new.

The Data Centre of the Bank and Service Providers should have proper wired and wireless data network protection mechanisms.e mPIN shall not be in clear text anywhere in the network. Mobile banking system may also make the banks dependent on small firms ( i. network equipments. d) Maintain proper and full documentation of security practices. and security and integrity of transactions are protected. c) Where mPIN is used.c) Conduct periodic risk management analysis. For channels which do not contain the phone number as identity. guidelines. banks should conduct regular information security audits on the mobile banking systems to ensure complete security. methods and procedures used in mobile banking and payment systems and keep them up to date based on the periodic risk management. security vulnerability assessment of the application and network etc at least once in a year. The following guidelines with respect to network and system security shall be adhered to: a) Implement application level encryption over network and transport layer encryption wherever possible. 7 . servers. if any.e mobile banking service providers) with high employee turnover. surveillance and incident response procedures and containment procedures. should be certified by an. and other hardware/software used from unauthorized access and tampering. host computers. 5. a separate login ID and password shall be provided to ensure proper authentication. d) The mPIN shall be stored in a secure environment. 6. In addition. It is therefore imperative that sensitive customer data. 4. b) Establish proper firewalls. It is necessary that the mobile banking servers at the bank¶s end or at the mobile banking service provider¶s end. e) Implement appropriate physical security measures to protect the system gateways. intruder detection systems (IDS). data file and system integrity checking. end to end encryption of the mPIN shall be ensured. Internet Banking login IDs and Passwords shall not be allowed to be used for mobile banking. The endeavor shall be to ensure end-to-end encryption of the mobile banking transaction. accredited external agency. analysis and vulnerability assessment carried out.b) One of the factors of authentication shall be mPIN or any higher standard. Proper level of encryption and security shall be implemented at all stages of the transaction processing. i. The dependence of banks on mobile banking service providers may place knowledge of bank systems and customers in a public domain. Adequate safe guards would also be put in place to guard against the use of mobile banking in money laundering. frauds etc.

000 to 120. "Mobile banking is still in its nascent stage. nearly double. HDFC. Mobile Banking addresses this fundamental limitation of Internet Banking. payments. it never became popular due to security concerns. After a slow start at the turn of the millennium. bank officials feel it is too early to gauge the success of mobile banking in India.MOBILE BANKING: A WALLET FOR ALL POCKETS Mobile Banking (also known as M-Banking. the biggest limitation of Internet Banking is the requirement of a PC with an Internet connection. whether nationalized bank or privatized." officials from various banks echo. SMS Banking. While the trend is growing. RCOM has tied up with ICICI Bank. Bharti Airtel has launched its mobile banking and plans to rope in about 100 major banks in India by end 2008. The majority of the Indian banks. not a big obstacle if we look at the US and the European countries.SBI.000 in two years. and now mobile banking promises to take it to the next level. While many operators. Several banks have even tied-up with mobile phone operators and service providers to carry out transactions on mobile phones. as it reduces the customer requirement to just a mobile phone. Mobile usage has seen an explosive growth in most of the Asian economies like India. via a mobile device such as a mobile phone. lack of awareness of services. it would seem this time around.to offer m-banking. the networks. HDFC Bank. Customers could check out their account details. The main reason that Mobile Banking scores over Internet Banking is that it enables 'Anywhere Anytime Banking'. Axis Bank and IDBI Bank. and pay their bills. perform transactions like transferring money to other accounts.   . etc. However. ICICI and Corporation Bank . account transactions. and it will be almost 80 Million in 2008. According to Cellular Operators Association of India (COAI). but definitely a big barrier if we consider most of the developing countries of Asia like India and China.. as well as banks. China and Korea. which ushered in a new era in banking convenience by bringing the entire operations to the computer. Internet Banking helped give the customers anytime access to their banks. some have gone a step further and stored the debit and credit cards on mobile phones as well to enable various transactions. It was Internet Banking. Four banks . and we will have to wait and watch if it really changes the way we bank. had introduced mobile banking applications. We all expect 2009 set to be a big year for Mobile Banking. etc.e.have partnered with India's largest operator Bharti Airtel . sitting in the comfort of their homes and offices. that the devices. m-banking. are inhibiting faster take-off.. the mobile subscribers' base in India hit 40. and the users have finally started using "Mobile Banking". The number of people using mobile banking services has jumped from under 10. are already involved in offering mobile services to their customers. i.) is a term used for performing balance checks. apart from perceived security issues.6 Million in August 2004. Mobile banking has been at the threshold of a revolution for some time. But despite the addition of around seven million mobile users every month. While some banks allow simple account -related queries on mobile phones.

gives us two kind of services . The Group had focused on three major areas of M-banking. the bank made its mobile banking service 9 . which is issued by the bank. your bank sends out an alert when your account balance goes below a threshold level. which have been offering unsecured and secured loans with minimal or no customer verification. India's leading telecom companies started their services for Mobile Banking. regulatory and supervisory issues. personal loan defaults have reached 9% and banks will be very wary of giving you a credit card on the mobile. inform the mobile phone operator as well as the bank to block the banking application. And recently. if you change your hand-set or SIM card. Change your m-PIN regularly and do not share it with anyone.. Here are few giants of telecom industries in India who are offering Mobile Banking in various states. Thus. nature.e. basically they use these services as a marketing tool to advertise there services on this basis. i. One way to classify these services depending on the originator of a service session is the 'Push / Pull' your last five transactions statement is a Pull-based offering.the credit environment. 'Pull' is when the customer explicitly requests a service or information from the bank. Mobile Banking. So a request for your bank statement is an enquiry-based service and a request for your fund's transfer to some other account is a transaction-based service. which means users cannot access their accounts using other hand-sets. Prices are coming down and services and features are now considerably easier to handle on the mobile.'Transaction-Based' and 'Enquiry -Based'. The bank launched its consumer banking services in India last year. IDBI's CTO. with a few precautions and safety measures. you should also inform the bank. Reserve Bank of India has set-up the Mobile Payments Forum of India (MPFI). in particular. should be memorized and the PIN-mailer destroyed immediately. integrity. high-definition colour displays. "Over 12% of our Internet Banking users use our Mobile Banking services as well. has finally become a fast. EDGE or 3G data transmission standards and has large. authenticity and non-reputability'. The PIN is valid only for the corresponding phone number. RBI has been tightening the banks. 'Push' is when the bank sends out information based upon an agreed set of rules. in case of a loss/theft of mobile phone. The m-PIN. echoes the sentiment. The new generation of mobile phones offers the speedy GPRS. for example. technology and security issues. user-friendly and affordable service. Neeraj Bhai. security remains a major concern as well as a hurdle. 1. business issues. and 3." While ICICI Bank offers its services on GPRS and secure SMS. so a request for UK-based Barclays is one of the largest corporate money managers in the world. Similarly. The other way to categorize the mobile banking services. 2. Barclays Bank's Hello Money is Based on Unstructured Supplementary Service Data (USSD) platform. Though RBI has specified norms for the banks to provide secure technology and ensure 'confidentiality.There is yet another reason why the service will not spread like wild fire . users can have a safer m-banking experience. which is independent of GPRS. a 'Working Group on Mobile Banking' to examine different aspects of Mobile Banking (M-banking). With RBI tightening liquidity. However.

ATM.available on GSM hand-sets. Due to large number of advantages. mobile banking deployments will develop significantly . thereby minimizing the risk of misuse. Mobile operators benefit from increased customer stickiness. the technology has taken off on slow pace." said Mr. data usage and. Vodafone. and these advantages have over-powered all the disadvantages of the technology. still it will be a big hit in coming years. Head-Cards Product Group. phone. on Airtel. General Manager. customer experimentation with other forms of mobile content. ICICI Bank. "We conducted a pilot in Delhi and received close to a thousand responses. Mobile phones can be safer as compared to physical cards as they are pin-protected. Despite lots of security issues related to mobile banking and lack of awareness on part of consumers. Over the next five years. Sachin Khandelwal. All these advantages create a WIN-WIN-WIN situation for the technology: End-users benefit from greater control of their personal finances. now that banks will have our mobile numbers (it was optional to give it to banks earlier). It would also help in financial inclusion as it would provide a large number of unbanked people access to banking services. Banks would save a huge amount of money on card issuance and merchant acquiring with zero point of sale cost. Bankers are of the opinion that mobile banking gives the banks an opportunity to expand their customer base without incurring additional infrastructure costs. banking purposes and to make payments for purchases or services provided. and Idea networks in forty cities. ICICI Bank has tied-up with Airtel and m-Chek to load a virtual credit card on a mobile phone to carry on complete banking transactions as well as for making payments. we expect uptake of mobile banking services to be robust among mobile subscribers. among others). could it mean more unwanted calls and SMS from banks? 10 . Barclays aims to include more languages and extend it to CDMA hand-sets as well. Mobile banking could be used to make remittances from person to person. users and the banks. Customers can choose between Hindi and English. The successful evolution of mobile banking and payments will be on the basis of the ability of financial institutions and mobile operators to balance ease of use with security.from "online banking" applications to one with richer interfaces and multiple mobile payment capabilities. Further. I certainly am looking forward to the convenience of banking on my mobile. But. potentially. Given this win-win-win situation. as well as time saved by not having to access account details via other channels (Internet.

Finacle mobile banking solution functions in tandem with disparate host systems. Customer On-boarding Finacle enables the bank¶s existing customers to be directed to use the mobile channel for banking and payment transactions through the following modes: Phone banking leveraging the bank¶s telebanking call center Mobile banking facility requested by sending SMS request in prescribed format Registering for mobile banking through the bank¶s Internet banking site The various flavors of mobile banking are: Browser-based mobile banking Downloadable-client based mobile banking Manual SMS banking Finacle offers various functionalities for consumer and corporate banking leveraging GPRS or WAPbased transmission. Infosys MConnect handles the multiplicity of form factors and access mechanisms on multiple devices to provide a context-adaptable view to the transaction server. leveraging a single platform. This ushers in the advantages of reduced integration by leveraging common interface messages. The end user experience thus created is richer. surmounting the challenge posed by the diversity of mobile devices. Leveraging recent technological advances in the mobility space. core banking solutions. It empowers banks to capitalize on their existing Internet transaction and support capabilities to extend it to the mobile world. The solution is interfaced with Infosys MConnect. the indigenously developed middleware. with builtin support for merchant-initiated payments and reversals. in addition to customer-initiated payments and reversals. An indicative list of features is: Account management and requests Local payments. telephonic or internet-based purchase transactions 11 y y y y y y y y y y . ensuring rapid time-to-market for banks. with reduced lead times. the mobile banking solution empowers banks with the means to innovate by easily deploying new services. maintenance and deployment costs. secure and truly convenient. with improved time to market.FINACLE MOBILE BANKING SOLUTION Finacle mobile banking solution empowers retail and corporate banking customers with access to banking services through SMS and GPRS/WAP-enabled handsets. The solution supports synchronization of customers¶ own data on their mobiles without re-downloading the application for downloadable client-based mobility. Key Modules The mobility banking offering from Finacle is a logical extension of its proven Internet banking solution. It offers both mobile commerce (m-commerce) and mobile payments within the DNA of mobile banking. which orchestrates mobile transactions between users¶ devices and the Finacle universal banking solution. All of Finacle¶s online capabilities can be translated to the mobile channel. payment networks and third-party applications. in practically real time. bill payments and transfers Transaction approvals for corporate customers Merchant payments and reversals for POS. This presents banks with a powerful channel to service customer segments ranging from the mass affluent to the under-banked or unbanked.

with support for mobile and/or Internet banking. data synchronization and self-audit Mobile Commerce Finacle offers commerce capabilities on its mobility and Internet platforms. Finacle mobile banking solution can service both retail and corporate consumers including the SME customer segment of banks.Chennai.y Support for administrative tasks like secure mails to relationship manager. SMS. India  Feedbackconsulting . India  BK Systems .India 12 . . password change. Mumbai.New Delhi. Merchants and consumers can leverage Finacle mobile banking solution to perform business transactions at points of sale. It enables the customer to subscribe to alerts and choose a delivery channel. India  ec21 . India  Banknetindia .INDIA  Attotel Technologies .Chennai.Mumbai.Pune. The module supports the following: Personalized alerts Alerts from multiple back-end systems Batch or real-time alerts Alerts digest y y y y MOBILE BANKING SOFTWARE SUPPLIERS . Maharashtra. Maharashtra. approvals.Sion (E). fax and Internet.Nagpur. India  Group Technologies and Exports . The module also allows the customer to set preferences for alerts and configure µdo not disturb¶ timings. voice. The solution offers out-of-the-box support for both merchant and customer initiated payments and reversals. Tamil Nadu. India  Indiabizclub . Alerts This module empowers customers to subscribe and receive alerts on multiple channels such as e-mail. India  Nucleus Software Exports Ltd.

If these particulars are not available with you.Your mobile number should have been registered by the Bank for the facility against your application (meaning. 3.         Registration for SMS Banking Balance Enquiry in CASA Change of primary account Term Deposit details enquiry Issued Cheque status Cheque stop request View of last 5 transactions De-register for SMS Banking 1. 6. fill in and submit the same to them. All the SMS need to be sent to short code µ56767¶ only. Syndicate Bank Procedure for registration through mobile phone. please get the same from the Branch. register for SMS Enquiry through same Mobile Phone by sending SMS Registration message as given below. Remember your customer ID for sending SMS Enquiries since all your requests are serviced based on customer ID only. 13 . 5.SYNDICATE BANK REGISTRATION  Collect SMS Banking application from your home branch. the customer can straight away register for this service by sending registration message through SMS. Please follow the sequence mentioned below in order to register for the service.  Details of Mobile numbers (With country code) from which SMS enquiry facility is accessed should be invariably mentioned very clearly in the application. Please note down same. Know the usage of Keywords. SMS should be sent from the same mobile number registered with the Bank.  Customer ID can be obtained from the Branch for the purpose of using SMS Enquiry facility. 2. Please refer keywords summary below. Facilities available in SMS Enquiry. you should have submitted application form in your home branch). Following facilities available under SMS Enquiry. If the Mobile Number is recorded in the branch against the Customer ID. 4.  After that. Please note down your account numbers in full (14 digits) of your operative account numbers and term deposit numbers.

SREG <Customer ID> or e. SREG <Customer ID> <14 digit A/c No. 2.> sreg 123456 04002020013220 System will mark the account number mentioned by you in your SMS message as your primary operative account. Mobile number Registration to be done as a one time measure using the same mobile number furnished to the Bank.g. System will register you for SMS Banking service and sends a welcoming message for mobile banking service of the bank. STEPS FOR SENDIND THE CASH THROUGH MOBILE BANKING 14 .1. 3. In order to register for a specific account. The following message is to be sent to 56767 for registration. you would be receiving appropriate error message from the system.> e. type the following message. : SREG 123456 sreg <Customer ID> or sreg 123456 System will mark the earliest opened and live operative account as your primary account.: SREG 123456 04002020013220 or or sreg <Customer ID> <14 digit A/c No. In case you are trying to send message from a different mobile number that is not registered with Bank.g.

When depositing money. 4. Withdrawals. 3. Domestic and international fund transfers Micro-payment handling Mobile recharging Commercial payment processing Bill payment processing Peer to Peer payments Withdrawal at banking agent Deposit at banking agent A specific sequence of SMS messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. 8. 3. and Transfers 1. Access to card statements 6. 4. 2. 5. Alerts on account activity or passing of set thresholds 3. Insurance policy management 8. Due date of payment (functionality for stop. Portfolio management services Real-time stock quotes Personalized alerts and notifications on security prices mobile banking 15 . the merchant receives cash and the system credits the client's bank account or mobile wallet. Ordering check books 11. Blocking of (lost. change and deleting of payments) 14. Change of PIN and reminder over the Internet 15. Investments 1.MOBILE BANKING SERVICES Mobile banking can offer services such as the following: Account Information 1. 2. In the same way the client can also withdraw money at the merchant: through exchanging sms to provide authorization. Balance checking in the account 12. stop payment on cheque 10. 6. 7. Access to loan statements 5. Monitoring of term deposits 4. PIN provision. stolen) cards Payments. Mutual funds / equity statements 7. Status on cheque. Recent transactions 13. the merchant hands the client cash and debits the merchant's account. Pension plan management 9. Deposits. Mini-statements and checking of account history 2.

there is a limitation on the availability of functions that can be deployed by banking customers. actual cash transactions like fund-transfer. including complaint submission and tracking ATM Location Content Services 1. In India.customers engage in m-banking services like balance enquiry.a world where you can make all payments by keying in instructions on your mobile phone. more "tech-savvy" customer segment. A third of mobile phone users say that they may consider performing some kind of financial transaction through their mobile phone. as m-banking is currently SMS-based. there is an issue of repudiation as till date there are no clear guidelines on wireless payments. Status of requests for credit. 4. One would also be ensured the same amount of security and comfort as one would be when using internet banking. Most m-banking transactions today are µinformation-based¶ -. last three transactions. With the advent of Javaenabled mobile devices. There are many reasons for this. news 2. one can see m-banking leaping into a new phase. 2.Support 1. General information such as weather updates. MOBILE BANKING IN INDIA India is marching towards m-commerce . In the very near future. Some banks like IDBI Bank are also offering bill-payment services to customers through m-banking. Loyalty-related offers 3. however. and insurance coverage Check (cheque) book and card requests Exchange of data messages and email. Firstly. "alerts" for strange activities in bank accounts etc. Location-based services Based on a survey conducted by Forrester. Secondly. the transaction delivery time is not guaranteed since it is dependent on factors like SMSC (short message service centre) congestion and network strength in the area where the customer is located. 16 . mobile banking will be attractive mainly to the younger. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment. including mortgage approval. 3. However. payment of bills at a restaurant among others have not yet been introduced in India. the shape of m-banking services is in for a change.

it can be used in thousands of shops and restaurants. pay utility bills. which are personal flows from migrants to their friends and families. with an initial set of three anchor services. providing microcredits through a mobile platform (SMSbased) could be the best way to reach out to the poor. play an effective role in reducing poverty. a good infrastructure for a cashless environment is already prevalent and most people have bank accounts and access to both debit and credit facilities. The cash value can also be used to load airtime. which has since been acquired by Banco de Oro. Capitalizing on the benefits of such a system. their beneficiaries and the financial intermediaries in the origin countries. Smart Money The service was launched in December 2000 in co-operation with First E-Bank. have become a major source of external development finance.M-BANKING IMPLICATIONS Micropayments In the more affluent economies. Once cash has been transferred to the SMART Money account. These factors are incentives in the developing countries to move the population at large away from cash with introductions of low cost solutions such as micro-payments to further efficiency gains. For people in such rural areas. P2P (phone-to-phone or person-to-person) transfers and payments for retail purchases. The mobile devices that could be a more efficient tool for such transactions. GLOBE on its own maintains records of all transactions and arranges settlement between the retailers and the G-Cash customers. a major constraint to microfinance is the high cost of operating in remote areas. remittance services can become cheaper and more convenient. and MasterCard. Microfinance through Mobile Technology Currently. G-Cash is able to provide M-Commerce capability to a previously underserved segment of the market. Hence. As users do not need to have a card or bank account to be part of the service. linked together by their cellular network. SMART Money was the world¶s first re-loadable electronic cash wallet. using computers is often a problem due to faulty Internet connections and frequent power failures. With G-Cash. all of GLOBE¶s subscribers are m-Commerce-enabled. Many institutions are now working toward low-cost delivery options such as Internet banking and cashless transactions to help the rural poor. and in the process. international and domestic remittance. or transfer money from one SMART Money card to another. G-Cash The service was launched in October 2004. including those who currently do not do banking. According to SMART.900 retail outlets nationwide and more than 500 G-Cash partners. G-Cash provides services through close to 4. Unlike SMART¶s approach whereby it operates the service jointly with BDO. Mobile Remittance Migrant remittances. 17 . thus improving financial access of migrants. one of the world¶s leading payment services providers.

3 million transactions were reported by Bank of Korea in 2004 Checking account balances is the most popular banking service used by urban Indians with almost 40 million users followed by checking last three transactions. 28 million and status of cheques with 21 million users. Bank account data is encrypted on a smart-card chip. a reach of 15% among urban . About 3.STATISTICS Market Report: Mobile Banking in India used by 40 Million Urban Indians Mobile banking in India is set to explode . 2009.approximately 43 million urban Indians used their mobile phones to access banking services during quarter ending August. One for the telephonic purpose and the other for banking. Most Popular Banking Service on Mobile In countries like Korea. 18 . two SIM Card is used in mobile phones.

India is all set to be among the top four countries in mobile phone subscriber numbers by the end of year 2008. the number of people using mobiles has increased three times C.15 21. according to data provided by the TRAI. Fixed Phone users already lag behind by 47.6%.Usage Used mobile banking Checking account balance View last three transactions Status of cheques Payment reminders Request a cheque book Unique Users (In millions) 43. D.1 to 5 lakhs per year income group with almost 60% of mobile banking users falling in the income bracket. A. Indian cellular services market had recorded the highest growth in Asia Pacific and Japan region in 2004 with a CAGR of 67%.97 28. China¶s cell phone density is at around 35%. a CAGR of 35.11 Mobile banking is popular among the Rs.06 20.92 19.44 million Awareness of technology formats Singapore Don't know 14% Java ready 7% WAP 66% MMS 85% Australia 31% 8% 79% 82% India 18% 18% 88% 79% China 5% 9% 91% 88% Taiwan 7% 2% 93% 84% 19 .57 million mobile subscribers in India. In comparison. an indicator of adoption of this service by younger generation. while some of the European and Asia-Pacific countries have 100% teledensity or more in mobile telephony. As on August 31. Cell phone teledensity is still very low in India at around 6%. There were 62. according to industry analysts E. B. 2008.70 39. Indian cellular services market is projected to reach $24 billion by the end of 2009. In the past two years. Gartner said.

26*/month (*Figures are in millions) Source :.5*/month Transaction through Mobile-23*/month Transaction through Internet :.Mumbai Edition COST ADVANTAGE     Through Branch Rs. 15-30 / Transaction Internet Transaction Rs. 2-5 / Transaction 20 .Lokmat dated 24th July. 10-15 / Transaction Mobile Transaction Rs.2008. 35-40 / Transaction ATM Transaction Rs.CLIENT BASE Transaction through branches :.9.

Mobile Network Operators D.STAKE-HOLDERS EXPECTATION The stake-holders are as follows: A. Mobile Device Manufacturer E. Telecom Network Providers: 21 . Consumers B. Government Each stake-holder group has the following expectations: - A. Merchant: Faster transaction time Low or zero cost in using the system Integration with existing payment systems High security Being able to customize the service Real time status of the mobile payment service Minimum settlement and payment time C. privacy and security Ubiquitous . Financial Institution & Banks F. anytime and any currency Low or zero cost of usage Interoperability between different network operators. Merchants C. banks and devices Anonymity of payments like cash Person to person transfers B. Consumer: Personalized service Minimal learning curve Trust.anywhere. Software & Technology Providers G.

22 .more card payments and less cash transactions Customer loyalty F. Airtel has already partnered with the Indian Farmers' Fertilizers Cooperative Limited (IFFCO) to set up IFFCO Kisan Sanchar Limited in Rajasthan. Sanjay Kapoor. Government: Revenue through taxation of m-payments Standards There are lots of evidences that not only big cities are using mobile banking. according to its President (Mobile Services). but even thousands of people from rural areas across 12 states are also likely to get their social security pension and wages paid under the National Rural Employment Guarantee Act (NREGA) Scheme with the help of mobiles over the coming few months. is in the process of tying-up with two leading banks to extend its mobile remittance services to rural areas. which will flash daily updates on agricultural practices and weather forecasts free of cost. Mobile Device Manufacturers: Large market adoption with embedded mobile payment application Low time to market Increase in Average Revenue Per User (ARPU) E. Bharti Airtel. the cooperative department will provide mobile hand-sets to farmers at marginal price through its out-lets in the rural areas. These hand-sets would be loaded with green SIM cards. Under this initiative.Generating new income by increase in traffic Increased Average Revenue Per User (ARPU) and reduced churn (increased loyalty) Become an attractive partner to content providers D. too. Software & Technology Providers: Large markets G. Banks: Network operator independent solutions Payment applications designed by the bank Exceptional branding opportunities for banks Better volumes in banking .

There is a myth that there is a challenge of interoperability between mobile banking applications due to perceived lack of common technology standards for mobile banking. User ID / Password authentication of bank¶s customer. money movements between service providers will naturally adopt the same standards as in the banking world. In practice. Physical part of the hand-held device. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network : 1. with countries like India using portals like R-World to enable the limitations of low end java based phones. Security Security of financial transactions. In case the device is stolen. the physical security of the device is more important. are easier to use and allow development of more complex capabilities similar to those of internet banking while SMS can provide the basics but becomes difficult to operate with more complex transactions. Encryption of the data being transmitted over the air. 4. Initial interoperability issues however have been localized. The desire for interoperability is largely dependent on the banks themselves. being executed from some remote location and transmission of financial information over the air. In practice it is too early in the service lifecycle for interoperability to be addressed within an individual country. banking interfaces are well defined and money movements between banks follow the IS0-8583 standard. As mobile banking matures. are the most complicated challenges that need to be addressed jointly by mobile application developers. 2. while focus on areas such as South Africa have defaulted to the USSD as a basis of communication achievable with any phone. where installed applications(Java based or native) provide better security. a WAP browser. Security of any thick-client application running on the device. Authentication of the device with service provider before initiating a transaction. the hacker should require at least an ID/Password to access the application. wireless network service providers and the banks' IT departments. If the bank is offering smart-card based security. or only SMS. 5. 23 . as very few countries have more than one mobile banking service provider.CHALLENGES FOR A MOBILE BANKING SOLUTION Key challenges in developing a sophisticated mobile banking application are : Handset operability There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solution on any type of device. This would ensure that unauthorized devices are not connected to perform financial transactions. 3. Some of these devices support J2ME and others support SIM Application Toolkit.

Preferred Language Date / Time format Amount format Default transactions Standard Beneficiary list Alerts 24 . Banks unable to meet the performance and reliability expectations may lose customer confidence. with leading banks adopting Mobile Transaction Platform and the Central Bank publishing guidelines for mobile banking operations. Application distribution Due to the nature of the connectivity between bank and its customers. anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion.Scalability & Reliability Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base. There are systems such as Mobile Transaction Platform which allow quick and secure mobile enabling of various banking services. Recently in India there has been a phenomenal growth in the use of Mobile Banking applications. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches (so called "Over The Air" updates). 4. the customer may be sitting in any part of the world (true anytime. 6. it would be impractical to expect customers to regularly visit banks or connect to a web site for regular upgrade of their mobile banking application. Personalization It would be expected from the mobile application to support personalization such as : 1. 5. their expectations from the solution will increase. 2. there could be many issues to implement this approach such as upgrade / synchronization of other dependent components. With mobile banking. However. 3. As customers will find mobile banking more and more useful.

The contradiction of less devices but greater mobile service use can be answered to some extent by the fact that India has three times the number of mobile internet users (31. Revenue generation. this helps to answer some of the more fundamental questions that financial institutions grapple with when formulating mobile strategy. In short.CONCLUSION Mobile banking is gaining traction in India on a number of levels. mirroring the region¶s sentiment towards mobile banking. is often presented as the more µvibrant¶ area for businesses to focus on. to pay for premium personal finance and security services using a mobile. mobile penetration rates in India are considerably smaller than in its Far Eastern neighbours. it is interesting to watch how mobile banking develops and which financial institutions become the trailblazers in offering consumers another tool with which to monitor and manage their finances. India has a greater enthusiasm for mobile banking services than Taiwan. Creating data services to lighten the burden on customer service infrastructure. banks need a 360-degree view of mobile service deployment and its benefits to customer and operational expenditure alike. Most of the Indian mobile user base is a largely untapped market in terms of mobile banking and there appears to be evident potential to expand existing efforts in helping consumers link to their banks via mobile data. Cost reduction provides an additional business proposition for mobile banking services. in some cases. 25 . there is considerable interest in mobile banking services across these huge populations and.3 million) than fixed line internet users (9 million) (source: Trai 2007). whilst also adding value to the customer experience is more likely to strengthen a business case for banks to µgo mobile¶.especially in the media and entertainment fields where premium pay mobile content creates exciting new revenue opportunities. in some areas. In short. As a market in its infancy. though the speed at which each region adopts mobile banking clearly differs. However. For the financial institution. the value in offering mobile services is two-fold ± revenue generation and cost reduction. encouraging levels of service awareness to adoption ratios. with only one fifth of Indians possessing mobile devices against 103% mobile penetration in Taiwan. However. for example. Indian mobile device use is fundamentally different.The impetus now is for mobile and banking sectors to encourage mobile banking services and to highlight the benefits of mobile banking to an audience who are likely to be open to using another tool to support their enthusiasm for personal financial services in a more immediate manner than the Internet can afford. Awareness is key if banking is to realise the opportunities presented by mobile services. the survey shows that there are monetisation opportunities for the financial sector as people are prepared. not surprisingly. Though diversity within India is an important consideration. For example.

26 . Like any technology format it is a tool that can enhance existing services. ‡ Increase awareness of mobile banking services amongst customer base ‡ Develop more sophisticated mobile data services beyond balance and payment updates ‡ Establish the enthusiasm for mobile banking services with different aspects of the customer demographic ‡ Evaluate operational savings of text µpush¶ services to replace aspects of customer service proposition ‡ Use flexibility of mobile data projects to validate wider strategy mobile services expansion Mobile banking is not necessarily a panacea for all customer needs.In response to the findings. Customers are keen to be kept abreast of any changes to the nano-economy and it appears that existing mobile provisioning could capitalise on this opportunity and better capture the imagination of mobile users. Innovation and cost management are critical tenets for commercial success in the financial sector and mobile banking services are capable of delivering against both of these objectives if appropriately executed. Sybase 365 has developed five key considerations for evolving mobile services and adoption in the banking sector.

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