MOBILE BANKING IN THE PHILIPPINES

Dianne Añes, Raisa Aquino, Bea Carpio, Solomon Lim, and Nica Tanjutco EM-TECH S14 De La Salle University-Manila
ABSTRACT Mobile banking is using a handheld device to make banking transactions. Despite being the texting capital of the world with over thirty-five (35) million mobile phone users, the Philippines is still trying to cope up with other countries in terms of this emerging trend in banking. One reason may be because of the low number of mobile banking users in the country, as the current trends in mobility are leaning toward simplicity over complexity and that consumers are still not ready for feature-rich mobile banking services. As such, one objective is to introduce mobile banking applications on a step-by-step proves, wherein consumers are first only exposed to the most basic applications which slowly transitions to the more complex ones through the passing of time as to not arouse much hesitation and rejection on the new trends in banking. 1. INTRODUCTION With the emergence of smaller and more portable devices such as cellphones, ultramobiles, and netbooks, new trends of computing have emerged. People nowadays prefer doing things mobile and on-the-go than doing things the old way – going somewhere just to do and accomplish something. Many industries today are now implementing mobile solutions for their products and their services, and the banking industry is no exception. Banks today are shifting from its old, manual process to a new trend which just requires the use of a handheld device, a new trend known as mobile banking. Surprisingly, the Philippines isn’t moving as fast as other countries in this trend of banking besides it having the most number of mobile phone users in the world. What are the causes of such instances? This paper would delve into such topics and would propose means and ways on how to address such issues. 2. WHAT IS MOBILE BANKING Mobile banking, simply put, is using a handheld device to make banking transactions. The target of mobile banking is to enable people in rural areas to transact in banks who using their mobile devices. Many countries, where most of their population are unbanked, have been able to successfully implement mobile banking. Examples of which include the Latin Americas (Argentina, Brazil, Colombia, Guatemala, Mexico, Paraguay, Uruguay, Venezuela). Other countries like Sudan, Ghana and South Africa have also been successful in implementing this new type of banking. The Philippines today also has its set of mobile banking applications which are supported and even accredited by the Philippine Central Bank. Mobile banking through a mobile phone is possible for the following technologies. First, the interactive voice response (IVR) this uses software which enters data on a mobile keypad and put information this is usually the recorded voice to be followed with a concern. Second, sending text messages is the most used technology since it does not depend on the model of the phone. The user can request services through a set of codes for every transaction to be made. 3. HOW MOBILE BANKING WORKS Today, mobile banking offers services that are similar to those currently there in banks. These services can be divided into two (2) categories – push services and pull services. Push services are services wherein the bank sends out information based upon a set of rules. An example of which is banks sending out alerts if an account is low on balance. The second type of service, pull services, are services wherein the user, in this case the customer, is the one who asks the bank for information. Examples include inquiries on account balances, transferring funds, and paying due bills. Mobile banking services can also be classified based on transactions and inquiries. From the name itself, one can see the types of services under these classifications. Specific examples of these services include account balance inquiries, account statement inquiries, status inquiries, credit and debit alerts, bill payment alerts, and many more.

The table below classifies transactions from pull to push and transaction to inquiry types:
Push Transaction     Pull Funds transfer Bill payment Share trade Check order

Telecommunications companies like Globe also offer mobile banking applications like G-CASH and other applications to allow its users to make transactions on the go. Banks under G-CASH are allowed to convert electronic money to actual money and actual money to electric money. Indeed, more and more people are now using their mobile phones to buy goods, make donations, pay loans, and do a lot more things which were before not possible with their mobile devices. 5. ISSUES IN MOBILE BANKING According to a survey conducted by the National Telecommunications Commission (NTC) in 2006, there are approximately thirty-five (35) million mobile phone users in the Philippines, giving the country the privilege of being known as the text capital of the world. It has remained the texting capital through the passing of time mainly due to the magnitude of the short message service (SMS) messages are sent out and transmitted to other mobile phone users every day. Telecom executives estimated that around 200,000 text messages are sent daily; however, despite all these factors, there are still issues with regards to the establishment of mobile banking in the country. These issues include (1) mobile banking users consist of only a very small minority, (2) interest and trends are leaning toward basic services, and (3) consumers are not yet ready for function-rich mobile banking. Each issue would be discussed in detail below. 5.1. Mobile banking users consist of only a very small minority As of 2009, the most notable mobile banking application used in the Philippines today is Globe Telecom’s G-CASH. G-CASH had become a common transaction, especially for online buyers and consumers when paying for the products that they had bought online. According to a survey conducted in 2004, around 500,000 users are making transactions using G-CASH. Though the population seemed high, when compared to the total number of cell phone users in the country – about 35 million – the number of people using mobile banking services only comprise of about 1.5 percent of the total mobile phone users. In short, mobile banking users consist of a very small minority. 5.2. Interest and trends are leaning toward basic services The country, as of today, is already providing users with different platforms and technologies used in handling banking transactions through the use of the consumers’

Inquiry

 Minimum balance alert  Credit/debit payment  Bill payment alert

 Account balance inquiry  Account statement inquiry  Check status inquiry  Transaction history

Figure 1. Push-Pull and Transaction-Inquiry Classifications

Mobile banking services enable the customer to keep track of his or her banking transactions with just the use of a mobile phone. Performing these transactions can be made through short message service (SMS) and/or through mobile Internet. Besides these two, there are also mobile banking providers that let users download mobile applications which enable them to connect to banks through their phones. An example of this is the American Telephone & Telegraph Company (AT&T) which asks customers to download to their mobile phones their mobile banking application to access the services that they offer. In an article by the Economist, mobile phones also open doors to economic benefits. The services which banks offer allow customers to deposit and withdraw cash through a mobile operator's agents, and send money to other people via text messages that can be are equivalent and can be converted to cash. Banks also keep in mind the changing times in technology. It is an advantage if the banking company is resilient and will use new and emerging technologies and integrate them into their existing mobile banking processes. 4. MOBILE BANKING IN THE PHILIPPINES In the Philippines, there are a number of banks that support mobile banking. Usually, these banks use SMS in conducting the transactions for mobile banking. For example, ChinaBank requires users to send their mobile banking transactions through SMS to the numbers provided to them by the telecommunications companies. Through SMS, users of this system can request for their bills payment, account status, and many more. For security purposes, ChinaBank also requires users to input their 4digit passwords before they can access their accounts.

mobile phones. These banking transactions range from the simple checking of account balances to more complicated ones like paying bills; however, most consumers right now prefer simple applications rather than more complex ones. Consumers are more inclined to the basic services of mobile banking rather than its intricate processes. This issue further highlighted in the next issue below. 5.3. Consumers are not yet ready for function-rich mobile banking As stated in the previous issue, the Philippines already has the technologies needed for mobile banking. Needless to say, more technologies are bound to emerge; however, it seemed that it is only the applications that are basic which are more dominantly used by the users. One reason behind this phenomenon is that consumers are not yet ready for function-rich mobile banking. This unreadiness can be caused by other factors including (1) distrust on the processes on how a transaction works in mobile banking and (2) consumers are already used to and prefer the old, manual process of banking. But in implementing something big of a change, users are naturally bound to get scared and hesitant at first in acceptance and usage, as such, it could not be averted if users would prefer the old process of banking. According to a survey conducted to nine thousand (9,000) mobile phone users which ask them on what mobile activities they are interested in, majority of the respondents answered “None”. Below is the bar graph showing the results of the conducted survey.

Mobile operators may need networks that are able to support a huge increase in traffic, and should review their strategies towards USB modem services.” This means that the users of mobile phones will increase in the future, as such, despite the current situation, it is advisable for the banking industry to continue investing in mobile banking. With countries like the Philippines and Kenya showing that mobile banking is successful. Others could follow suit since users now a days are finding the best services banks could offer. The bank industry should also survey sample clients to verify if the services they offer in mobile banking is sufficient to their needs. It is not enough that the banks offer basic services but offer more and make use of the platform presented to them. 6. CONCLUSION AND RECOMMENDATIONS Mobile banking is indeed helpful especially during a situation where banks are not present and a transaction is needed to be done at that point of time. It provides a more secure way of making transactions instead of carrying cash; it facilitates transactions such as deposits and withdrawals; and it makes operations much simpler for microentrepreneurs. In a country like the Philippines, where mobile phone users are everywhere, mobile banking would be advantageous for those in the provinces where fewer banks can be found. Mobile phones can bring banking within everyone’s reach. Mr. John Owens, chief of party at RBAP-MABS, mentions that their transactions are growing and have increased substantially over the previous year, with over 2,000 clients being registered weekly by rural banks as m-banking clients.” This proves that the Philippines really has a potential for widespread mobile banking, considering that SMS usage in the country is one of the highest in the world in ratio to population.

Figure 2. Mobile Phone Application Survey Results

5. POSSIBLE SOLUTIONS To address the issues stated above, the group has come up with possible solutions to solve the mentioned problems, three (3) of which are discussed below. According to telecick.ca, “Strong take-up of USB modem services could result in traffic per cellular customer increasing to as much as 23 times its 2008 level by 2015.

To eliminate and prevent hesitations to this new trend in banking, mobile banking applications must be introduced on a step-by-step proves wherein consumers are first only exposed to the most basic applications which slowly transitions to the more complex ones through the passing of time. 7. REFERENCES
[1] Harris, W. (2008). How mobile banking works. Internet. Available: http://money.howstuffworks.com/personal-finance/ banking/ mobile-banking.htm.

[2] N.A. (2005). Mobile banking services. Internet. Available: http://www.tutorial-reports.com/mobile/mobilebanking/services.php. [3] N.A. (2007). Mobile banking. Internet. Available: http://www.economist.com/opinion/displaystory.cfm?story_id=101 33998.

[4] N.A. (2008). Expanding horizons. Internet. Available: http://www.nokia.com/NOKIA_COM_1/Corporate_Responsibility /Society_/Expanding_Horizons/Subscribe_to_Newsletter/Nokia% 20Expanding%20Horizons%2001%202008%20web2.pdf. [5] N.A. (2008). Mobile network traffic projected to increase tenfold by 2015. Internet. Available: http://www.teleclick.ca/2008/12/mobile-network-traffic-projectedto-increase-tenfold-by-2015/.

[6] N.A. (2009). Cell phones and cell phone plans - |wireless from AT&T. Internet. Available: http://www.wireless.att.com/cellphone-service/welcome/. [7] N.A. (2009). China banking corporation [chinabank]. Internet. Available: http://www.chinabank.ph/ personal/.

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