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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


may be offered as an independent module.INTRODUCTION Mobile banking (also known as M-Banking. A mobile banking conceptual model Mobile banking is defined as: "Mobile Banking refers to provision and availment of banking.and financial services with the help of mobile telecommunication devices. balance inquiries might be needed before committing a money remittance. The accounting and brokerage services are therefore offered invariably in combination with information services. payments etc. SMS Banking etc.The scope of offered services may include facilities to conduct bank and stock market transactions.for instance. 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. Information services. The non-transaction-based services of an informational nature are however essential for conducting transactions . to administer accounts and to access customised information.) is a term used for performing balance checks. account transactions. on the other hand. 3 . via a mobile device such as a mobile phone." 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. mbanking.

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.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. Some banks have started offering information based services like balance enquiry. transactions enquiry. For the purpose of these Guidelines. In order to ensure a level playing field and considering that the technology is relatively new. Reserve Bank has brought out a set of operating guidelines for adoption by banks. 3 Only Indian Rupee based domestic services shall be provided. 5 The guidelines issued by the Reserve Bank on µRisks and Controls in Computers and Telecommunications¶ vide circular DBS. It also covers accessing the bank accounts by customers for non-monetary transactions like balance enquiry etc. 6 The guidelines issued by Reserve Bank on ³Know Your Customer (KYC)´.ITC. 10/ 31. 4 Banks may also use the services of Business Correspondent appointed in compliance with RBI guidelines. banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. ³mobile banking transactions´ is undertaking banking transactions using mobile phones by bank customers that involve credit/debit to their accounts. 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). Use of mobile banking services for cross border transfers is strictly prohibited. for extending this facility to their customers. 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. . 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. location of the nearest ATM/branch etc.001/ 97-98 dated 4th February 1998 will apply mutatis mutandis to mobile banking. 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.BC. stop payment instruction of cheques. ³Anti Money Laundering (AML)´ and Combating the Financing of Terrorism (CFT) from time to time would be applicable to mobile based banking services also.09.CO. 4 .

with suitable modification to address specific needs . 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. authenticity and non-repudiability. facilitating inter-bank settlement. wherever necessary. technology used for mobile banking must be secure and should ensure confidentiality. Clearing and Settlement for inter-bank funds transfer transactions 1 To meet the objective of a nation-wide mobile banking framework. Technology and Security Standards 1 Information Security is most critical to the business of mobile banking services and its underlying operations. 5 . the full details of the Terms and Conditions of the service offered shall be communicated to the customer.7 Only banks who have implemented core banking solutions would be permitted to provide mobile banking services. if any. to the customers of particular mobile operator(s) is permissible only during the initial stages of offering the service. Pending creation of such a national infrastructure. 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. To ensure interoperability between banks. integrity. before commencing mobile banking service. with express permission from Reserve Bank of India. and between their mobile banking service providers banks shall adopt the message formats like ISO 8583. banks may enter into bilateral or multilateral arrangement for inter-bank settlements. 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. Therefore. Restriction. 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. a robust clearing and settlement infrastructure operating on a 24x7 basis would be necessary. up to a maximum period of six months subject to review. 2 On registration of the customer. This would require inter-operability between mobile banking service providers and banks and development of a host of message formats.

Subject to an overall cap of Rs. Technology and Security Standards 1. Banks are required to put in place appropriate risk mitigation measures like transaction limit (per transaction. fraud checks. 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. 6 .The security controls/guidelines mentioned in this document are only indicative. banks are required to follow the Security Standards appropriate to the complexity of services offered. monthly). 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. However. Therefore.per day. weekly. by furnishing full details of the proposal. 5000/. 3. daily. AML checks etc.shall be imposed on all Mobile Banking transactions. 2 Banks may also put in place monthly transaction limit depending on the bank¶s own risk perception of the customer. 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. unless otherwise mandated by the Reserve Bank. 2. subject to following the minimum standards set out in this document. Transaction limit 1 A per transaction limit of Rs. 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. depending on the bank¶s own risk perception. per customer. the technology deployed is fundamental to safety and soundness of any payment system. transaction velocity limit. 2500/.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. it must be recognised.

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

etc. bank officials feel it is too early to gauge the success of mobile banking in India. and the users have finally started using "Mobile Banking". not a big obstacle if we look at the US and the European countries." officials from various banks echo. Mobile banking has been at the threshold of a revolution for some time. SMS Banking. Customers could check out their account details. While the trend is growing.e. China and Korea.6 Million in August 2004. Internet Banking helped give the customers anytime access to their banks.) is a term used for performing balance checks. had introduced mobile banking applications. Mobile usage has seen an explosive growth in most of the Asian economies like India. i. but definitely a big barrier if we consider most of the developing countries of Asia like India and China.000 in two years. via a mobile device such as a mobile phone. and we will have to wait and watch if it really changes the way we bank. etc. Bharti Airtel has launched its mobile banking and plans to rope in about 100 major banks in India by end 2008. HDFC Bank. it would seem this time around.   . that the devices. apart from perceived security issues. sitting in the comfort of their homes and offices. HDFC. Mobile Banking addresses this fundamental limitation of Internet Banking. it never became popular due to security concerns.to offer m-banking. lack of awareness of services. According to Cellular Operators Association of India (COAI). payments. While many operators. After a slow start at the turn of the millennium. The main reason that Mobile Banking scores over Internet Banking is that it enables 'Anywhere Anytime Banking'. However. whether nationalized bank or privatized. m-banking.. and pay their bills. account transactions. as it reduces the customer requirement to just a mobile phone. The number of people using mobile banking services has jumped from under 10.000 to 120. as well as banks. Several banks have even tied-up with mobile phone operators and service providers to carry out transactions on mobile phones. nearly double.have partnered with India's largest operator Bharti Airtel . Four banks . and it will be almost 80 Million in 2008. We all expect 2009 set to be a big year for Mobile Banking. "Mobile banking is still in its nascent stage. perform transactions like transferring money to other accounts. Axis Bank and IDBI Bank. 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. the biggest limitation of Internet Banking is the requirement of a PC with an Internet connection. are already involved in offering mobile services to their customers.SBI. ICICI and Corporation Bank .. the mobile subscribers' base in India hit 40. and now mobile banking promises to take it to the next level. RCOM has tied up with ICICI Bank. which ushered in a new era in banking convenience by bringing the entire operations to the computer. are inhibiting faster take-off.MOBILE BANKING: A WALLET FOR ALL POCKETS Mobile Banking (also known as M-Banking. But despite the addition of around seven million mobile users every month. the networks. While some banks allow simple account -related queries on mobile phones. The majority of the Indian banks.

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

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

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

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

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

g.1. STEPS FOR SENDIND THE CASH THROUGH MOBILE BANKING 14 . System will register you for SMS Banking service and sends a welcoming message for mobile banking service of the bank. In order to register for a specific 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. SREG <Customer ID> or e.g.> e.> sreg 123456 04002020013220 System will mark the account number mentioned by you in your SMS message as your primary operative account. type the following message. Mobile number Registration to be done as a one time measure using the same mobile number furnished to the Bank. SREG <Customer ID> <14 digit A/c No. 3. 2. : SREG 123456 sreg <Customer ID> or sreg 123456 System will mark the earliest opened and live operative account as your primary account. you would be receiving appropriate error message from the system. The following message is to be sent to 56767 for registration.

Blocking of (lost. Monitoring of term deposits 4. 7. and Transfers 1. Withdrawals. 3. Recent transactions 13. stolen) cards Payments. Alerts on account activity or passing of set thresholds 3. 3. stop payment on cheque 10. change and deleting of payments) 14. 2. Change of PIN and reminder over the Internet 15. Mutual funds / equity statements 7. 6. 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. Ordering check books 11. Access to loan statements 5. Access to card statements 6. Due date of payment (functionality for stop. 5. PIN provision. 2. Status on cheque. Deposits. the merchant receives cash and the system credits the client's bank account or mobile wallet. Investments 1. the merchant hands the client cash and debits the merchant's account. Insurance policy management 8. Pension plan management 9. Portfolio management services Real-time stock quotes Personalized alerts and notifications on security prices mobile banking 15 . Mini-statements and checking of account history 2. When depositing money. 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. 4. 4.MOBILE BANKING SERVICES Mobile banking can offer services such as the following: Account Information 1. 8.

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

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

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

while some of the European and Asia-Pacific countries have 100% teledensity or more in mobile telephony.6%. There were 62.15 21. according to data provided by the TRAI. Fixed Phone users already lag behind by 47.97 28.70 39. the number of people using mobiles has increased three times C.11 Mobile banking is popular among the Rs. a CAGR of 35.57 million mobile subscribers in India. Gartner said. 2008. In comparison. China¶s cell phone density is at around 35%. according to industry analysts E. India is all set to be among the top four countries in mobile phone subscriber numbers by the end of year 2008. Cell phone teledensity is still very low in India at around 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. Indian cellular services market is projected to reach $24 billion by the end of 2009. B.06 20.44 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 . In the past two years. As on August 31.1 to 5 lakhs per year income group with almost 60% of mobile banking users falling in the income bracket. D. Indian cellular services market had recorded the highest growth in Asia Pacific and Japan region in 2004 with a CAGR of 67%. A. an indicator of adoption of this service by younger generation.92 19.

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

banks and devices Anonymity of payments like cash Person to person transfers B.STAKE-HOLDERS EXPECTATION The stake-holders are as follows: 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. Telecom Network Providers: 21 . Financial Institution & Banks F. Consumers B. Government Each stake-holder group has the following expectations: - A. Software & Technology Providers G. privacy and security Ubiquitous . Consumer: Personalized service Minimal learning curve Trust. anytime and any currency Low or zero cost of usage Interoperability between different network operators. Merchants C. Mobile Device Manufacturer E. Mobile Network Operators D.anywhere.

too. 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. Software & Technology Providers: Large markets G. which will flash daily updates on agricultural practices and weather forecasts free of cost. Banks: Network operator independent solutions Payment applications designed by the bank Exceptional branding opportunities for banks Better volumes in banking . Mobile Device Manufacturers: Large market adoption with embedded mobile payment application Low time to market Increase in Average Revenue Per User (ARPU) E. 22 . according to its President (Mobile Services). Government: Revenue through taxation of m-payments Standards There are lots of evidences that not only big cities are using mobile banking. Airtel has already partnered with the Indian Farmers' Fertilizers Cooperative Limited (IFFCO) to set up IFFCO Kisan Sanchar Limited in Rajasthan. Bharti Airtel.more card payments and less cash transactions Customer loyalty F. Sanjay Kapoor. These hand-sets would be loaded with green SIM cards. is in the process of tying-up with two leading banks to extend its mobile remittance services to rural areas. 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. the cooperative department will provide mobile hand-sets to farmers at marginal price through its out-lets in the rural areas.

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

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. their expectations from the solution will increase. 3. However. 2. 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. Preferred Language Date / Time format Amount format Default transactions Standard Beneficiary list Alerts 24 . anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion. With mobile banking. there could be many issues to implement this approach such as upgrade / synchronization of other dependent components. 4. Personalization It would be expected from the mobile application to support personalization such as : 1. As customers will find mobile banking more and more useful. 5. 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. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches (so called "Over The Air" updates). Banks unable to meet the performance and reliability expectations may lose customer confidence. There are systems such as Mobile Transaction Platform which allow quick and secure mobile enabling of various banking services. the customer may be sitting in any part of the world (true anytime. Recently in India there has been a phenomenal growth in the use of Mobile Banking applications. 6.

in some cases. 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. For the financial institution. However.CONCLUSION Mobile banking is gaining traction in India on a number of levels. Though diversity within India is an important consideration. Indian mobile device use is fundamentally different. to pay for premium personal finance and security services using a mobile. not surprisingly. For example.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. there is considerable interest in mobile banking services across these huge populations and. In short. the survey shows that there are monetisation opportunities for the financial sector as people are prepared. though the speed at which each region adopts mobile banking clearly differs. In short. However. for example. 25 . in some areas. As a market in its infancy.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¶. the value in offering mobile services is two-fold ± revenue generation and cost reduction. is often presented as the more µvibrant¶ area for businesses to focus on. banks need a 360-degree view of mobile service deployment and its benefits to customer and operational expenditure alike. mobile penetration rates in India are considerably smaller than in its Far Eastern neighbours. encouraging levels of service awareness to adoption ratios. Cost reduction provides an additional business proposition for mobile banking services. 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. this helps to answer some of the more fundamental questions that financial institutions grapple with when formulating mobile strategy. mirroring the region¶s sentiment towards mobile banking. Revenue generation. India has a greater enthusiasm for mobile banking services than Taiwan. Creating data services to lighten the burden on customer service infrastructure. with only one fifth of Indians possessing mobile devices against 103% mobile penetration in Taiwan. 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.especially in the media and entertainment fields where premium pay mobile content creates exciting new revenue opportunities.

In response to the findings. Sybase 365 has developed five key considerations for evolving mobile services and adoption in the banking sector. Like any technology format it is a tool that can enhance existing services. 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. ‡ 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. 26 . 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.

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