Professional Documents
Culture Documents
Introduction To Mobile Banking
Introduction To Mobile Banking
Introduction To Mobile Banking
The last technology that had a major impact in helping banks service their
customer was with the introduction of the internet banking. Internet banking
helped the customers anytime access to their banks. Customers could check out
their account details, get their bank statement, perform transactions like
transferring money to other account and pay their bills sitting in the comfort of
their homes and offices.
Mobile usage has seen an explosive growth in most of the Asian economies like
India, China and Korea. In fact Korea has seen one of the most aggressive rollouts
of mobile banking services. Still, the main reason that mobile banking scores over
Internet banking is that it enables Anywhere Banking. Customers now dont
need access to a computer terminal to access their bank.
The scales at which Mobile banking has a potential to grow can be gauged by
looking at the pace users are getting mobile in these big Asian economies.
According to the Cellular Operators Association of India (COAI) the mobile
subscriber base in India hit 40.6 million in the August 2004. In September 2004 it
added about 1.85 million more. The explosion as most analysts say, it yet to come
as India has about one of the biggest untapped markets. China, which already
witnessed the mobile boom, is expected to have about 300 million mobile users by
the end of 2004. South Korea is targeted to reach about 42 million mobile users by
the end of 2005. All three of these countries have seen gradual roll-out of mobile
banking services, the most aggressive being Korea which is now witnessing the
1
Study on Mobile Banking
roll-out of some of the most advanced services like using mobile phones to pay
bills in shops and restaurants.
Indian Scenario:
Most Indian banks offer mobile banking facilities. RBI has cautiously encouraged
the trend with guidelines on mobile banking with putting in place a Rs 5000/- limit
on withdrawals via a mobile banking transaction to avoid fraud.
The mobile payments market is still at its infancy in India and it is estimated that
the current daily transaction volumes today will be in the range of Rs 5-10 Million.
Even if 5% of mobile bill payment and recharge shifts onto mobile payments
platform the industry can grow to Rs200 Million a day.
1. Push Based
2. Pull Based
3. Transaction Based
Fund Transfer
Bill Payment
Other financial services like share trading.
4. Enquiry Based
Credit/Debit Alerts.
Minimum Balance Alerts
Bill Payment Alerts
Account Balance Enquiry
Account Statement Enquiry.
Cheque Status Enquiry.
Cheque Book Requests.
Recent Transaction History.
2
Study on Mobile Banking
Mobile Payments are any monetary transactions that take place with the help of a
mobile phone. There are three primary types of mobile payments:
M-Commerce
Mobile phones linked to credit/debit cards can be used to make payments typically
for transportation, vending machines etc.
E-Money
Cash loaded in the mobile phones at service provider outlets. Consumers use this
virtual cash as real value for all types of transactions.
Banking Channel
Mobile phone used for accessing the bank accounts. All payments are routed
through the bank.
Today Cash cow will be focusing on Mobile Banking. Mobile banking is a way for
the customer to perform banking actions on the cell phone or other mobile device.
The amount of banking you are able to do on your cell phone varies depending on
the banking institution you use. Some banks offer only the option of text alerts,
which are messages sent to your cell phone that alert you to activity on your
account such as deposits, withdrawals, and ATM or credit card use. This is the
most basic type of mobile banking.
3
Study on Mobile Banking
A more involved type of mobile banking allows the user to log into his or her
account from a cell phone, and then use the phone to make payments, check
balances, transfer money between accounts, notify the bank of a lost or stolen
credit card, stop payment on a check, receive a new PIN, or view a monthly
statement, among other transactions.
State-owned banks have received a much poorer response from their clients
compared with their private-sector peers for mobile banking, with only a small
number of PSB customers showing interest to avail the service.
4
Study on Mobile Banking
Conceptual model
In one academic model, mobile banking is defined as:
According to this model Mobile Banking can be said to consist of three inter-
related concepts:
Mobile Accounting
Mobile Brokerage
Mobile Financial Information Services
5
Study on Mobile Banking
These models differ primarily on the question that who will establish the
relationship (account opening, deposit taking, lending etc.) to the end customer, the
Bank or the Non-Bank/Telecommunication Company (Telco). Another difference
lies in the nature of agency agreement between bank and the Non-Bank. Models of
branchless banking can be classified into three broad categories - Bank Focused,
Bank-Led and Nonbank-Led.
Bank-focused model
The bank-focused model emerges when a traditional bank uses non-traditional low-
cost delivery channels to provide banking services to its existing customers.
Examples range from use of automatic teller machines (ATMs) to internet banking
or mobile phone banking to provide certain limited banking services to banks
customers. This model is additive in nature and may be seen as a modest extension
of conventional branch-based banking.
6
Study on Mobile Banking
Bank-led model
Non-bank-led model
The non-bank-led model is where a bank has a limited role in the day-to-day
account management. Typically its role in this model is limited to safe-keeping of
funds. Account management functions are conducted by a non-bank (e.g. Telco)
who has direct contact with individual customers.
Account Information
Mini-statements and checking of account history
Alerts on account activity or passing of set thresholds
Monitoring of term deposits
Access to loan statements
Access to card statements
7
Study on Mobile Banking
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. When depositing money, the merchant receives cash and
the system credits the client's bank account or mobile wallet. In the same way the
client can also withdraw money at the merchant: through exchanging sms to
provide authorization, the merchant hands the client cash and debits the merchant's
account.
Investments
Portfolio management services
Real-time stock quotes
Personalized alerts and notifications on security prices
8
Study on Mobile Banking
Support
Status of requests for credit, including mortgage approval, and
insurance coverage
Check (cheque) book and card requests
Exchange of data messages and email, including complaint
submission and tracking
ATM Location
Content Services
General information such as weather updates, news
Loyalty-related offers
Location-based services
With the advent of technology and increasing use of smartphone and tablet based
devices, the use of Mobile Banking functionality would enable customer connect
across entire customer life cycle much comprehensively than before. With this
scenario, current mobile banking objectives of say building relationships, reducing
cost, achieving new revenue stream will transform to enable new objectives
targeting higher level goals such as building brand of the banking organization.
Emerging technology and functionalities would enable to create new ways of lead
9
Study on Mobile Banking
10
Study on Mobile Banking
The biggest advantage that mobile banking offer to banks is that is drastically cuts
down the costs of providing service to the customers. For example an average
teller or phone transaction costs about Rs 2.36 each, whereas an electronic
transaction costs only about Rs 0.10 each. Additionally, this new channel gives the
bank ability to cross-sell up-sell their other complex banking products and services
such as vehicle loans, credit card etc.
For service providers, mobile banking offers the next surest way to achieve growth.
Also service providers are increasingly using the complexity of their supported
mobile banking services to attract new customers and retain old ones.
Mobile banking solution offer a full range of benefits for financial institution,
ranging from reduced customer support costs to improved customer satisfaction
and retention as well a revenue growth. A recent Gartner Measurement Study
showed that an average contact center deflects 16% of its contacts to phone-based
automated self-service technology, with some high performing companies
achieving deflection rates upto 50%. With typical IVR (Integrated Voice Response)
calls averaging Rs. 0.95 per call, banks could reap cost saving of up to 45% by
deflecting half of their calls to an IVR system.
A mobile self-service alternative to both call centers and IVR customer queries
could reap even more cost saving. Bank-related customer support calls typically
relate to routine banking inquiries, such as account balances, which are perfectly
situated to a mobile self-service solution. Customer ROI studies has shown that
Mobile aware can reduce the cost of simple query resolution or transaction by up
to 95%. Added to that is a more satisfied customer based that is no longer faced
with the frustration of dealing with IVR systems, or waiting in line for the next
available customer service representative.
11
Study on Mobile Banking
Mobile banking also offers financial institutions the opportunity to target and
acquire new customer segments that value mobility and real time control of their
finances, leading to increased customer growth and revenue.
Business Benefits
Greater Customer Convenience
Finical mobile banking solution has a robust integration framework which allows it
to function in tandem with disparate host systems, core banking solutions, payment
networks and third-party applications. This translates into reduced go-to-market
time for the bank as well as support for legacy systems.
Finical mobile banking solution leverages Infosys connect to smoothly hurdle the
challenges posed by the multiplicity of form factors and access mechanisms on
multiple devices to provide context agnostic view to the transaction server. This
enables banks to include, through the mobile channel, its various customer
segments, ranging from the HNWI to specific unbanked communities, surmounting
the complexities of diverse location and dissimilar mobile devices.
Maximize Innovation
12
Study on Mobile Banking
precluded due to the availability of a banking solution behind the mobile interface.
Finical also provides the flexibility to deploy services over the existing online
banking platform or through a standalone delivery channel interfaced directly with
the relevant host systems. This ensures the rapid delivery of a comprehensive range
of financial services, embellished with new innovative features, on mobile devices.
Robust Security
The solution offers extensive application security features like URL encryption,
referral URL check and session management to provide a robust security
framework. The solution also supports OTP (one time password), which provides a
two factor authentication mechanism for users transacting with downloadable
mobility client. This enables the bank to offer products that are highly secure and
geared to withstand the onslaught of security threats associated with mobile
transactions.
Cost Savings
Client Value
13
Study on Mobile Banking
Technically speaking most of these services can be deployed using more than one
channel. Presently, Mobile banking is being deployed using mobile application
developed on one of the following four channels:
IVR service operates through pre-specified numbers that banks advertise to their
customers. Customers make a call at the IVR number and are usually greeted by a
stored electronic message followed by a menu of different options. Customers can
choose options by pressing the corresponding number in their keypads, and are
then read out the corresponding information, mostly using a text to speech
programme.
Mobile banking based on IVR has some major limitation that they can be used
only for enquiry based services. Also, IVR is more expensive as compared to other
channels as it involves making a voice call which is generally more expensive than
sending an SMS or making data transfer (as in WAP or Standalone clients).
One way to enable IVR is by developing a PBX system that can host IVR dial
plans. Banks looking to go the low cost way should consider evaluating asterisk,
which is an open source Linux PBX system.
Asterisk, due to its open source nature has caught on in a big way and is being old
as a PBX solution by quite a few companies commercially. However there has
been considerably noise on multiple asterisks related forums over the stability of
asterisk based systems. Companies planning to use Asterisk for their IVR solution
should certainly do a rigorous evaluation of its capabilities before committing their
long term future on it.
14
Study on Mobile Banking
For example, customer of the HDFC bank in India can get their account balance
details by sending the keyword HDFCBAL and receive their balance information
again by SMS. Most of the services rolled out by majors banks using SMS have
been limited to the Inquiry based ones.
However there have been few instances where even transaction-based services
have been made available to customer using SMS. For instance, customer of the
Bank of Punjab can make fund transfer by sending the SMS TRN (A/C no) (PIN
No)(amount).
One of the major reason that transaction based services have not taken of on SMS
is because of concerns about security and because SMS doesnt enable the bank to
deliver a customer to access more complex service such as transactions.
The main advantage of deploying mobile application over SMS is almost all
mobile phones, including the low end, cheaper ones, which are most popular in
countries like India and Chine are SMS enabled.
An SMS based service is hosted on SMS gateway that further connects to the
mobile service providers MS center. There are couple of hosted IP based SMS
gateways available in the market and also some open sources one like Kannel.
15
Study on Mobile Banking
WAP uses a concept similar to that used in Internet banking. Banks maintain WAP
sites which customers access using a WAP compatible browser on their mobile
phones. WAP sites offer the familiar from based interface and also implement
security quite effectively.
Bank of America offers a WAP based service channel to its customers in Hong
Kong. The banks customers can now have an anytime, anywhere access to a secure
reliable service that allows them to access all inquiry and transaction based service
and also more complex transaction like trade in securities through their phone. A
WAP based service requires hosting a WAP gateway. Mobile application users
access the banks site through the WAP gateway to carry our transactions, much like
internet users access a web portal for accessing the banks services.
The following figure demonstrates the framework for enabling mobile applications
over WAP. The actually forms that go in to a mobile banking application stored on
a server, and served on demand. The WAP Gateway forms an access point to the
Internet from mobile network.
Standalone mobile application are the ones that hold out the most promise as they
are most suitable to implement complex banking transaction like trading in
securities. They can be easily customized according to the user interface
complexity supported by the mobile. In addition, mobile applications enable the
implementation of a very secure and reliable channel of communication.
The major disadvantage of mobile application clients is that the applications needs
to be customized to each mobile phone on which it might finally run. J2ME ties
together the ATI for mobile phones which have the similar functionality in what it
calls profiles. However the rapid proliferation of mobile phone with support
16
Study on Mobile Banking
different functionality has resulted in a huge number of profiles, which are further
significantly driving up development costs. This scale of this problem can be
gauged by the fact that companies implementing mobile application clients might
need to spend as much as 50% of their development time and resources on just
customizing their application to meet the needs of different mobile profiles.
Out of J2ME and BREW, J2ME seem to have an edge right now Nokia has made
the development tools open to developers which has further fostered a huge online
community focused in developing application based on J2ME.
Banking on technology
Fifty percent of respondent use mobile to check their bank balance 29% thinking
mobile baking is safe 41% are ready to pay for service that allow them to freeze a
card 35% are ready to pay for reporting a potentially fraudulent transaction.
banking tecnologyes
safe
ready to pay for
services
ready to pay for reporter
a fraud transaction
17
Study on Mobile Banking
Deposit mobile phones being much more prevalent than PCs, there are more
service available in the market place for internet commerce rather than mobile
commerce or M-commerce. It is interesting to note this phenomenon, as one would
assume a marketers interest in tapping a device that is always with the customer.
While one almost carries a mobile phone, one does not carries ones PCs and
laptop. The adoption of mobile technology is still slow while web technology is
still slow while web technology in being used by people to offer more convenient
customer services.
The same is true for banking services. Bank need to look for multiple and alternate
channels to engage the customer by providing him/her with value added services.
Bank also need to look for innovative means of reducing transaction costs as the
per-customer transaction have increased, as bank are providing multiple service
under one roof. Mobile technology can come into rescue of financial services in
such a scenario. SMSs based through a web interface could be one such service. A
web interface allows you to communicate instantly with individual or groups via
bulk text messaging.one could send SMSs to ones group through a mobile phone.
Similarly, the bank could remind customer f outstanding loan repayment dates,
date for the payment of monthly installment or simply tell them that a bill has been
presented and is up for payment. The customer can then check their balance on
phone and authorize the required amount for payments. The customer can also
18
Study on Mobile Banking
request for additional information. They can automatically view deposit and
withdrawal as they occur and also pre-schedule payment to be made or cheques to
be issued. Similarly, one could also request for services like stop cheques or issue
of cheques book over ones mobile phone.
There a number of reasons that should persuade bank in favour of mobile phones.
They are set to become a crucial part of a total banking services experienced for
the customers. Also, they have the potential to bring down costs for the bank itself.
Through mobile messaging and other such interfaces, bank provided value added
services to the customer at marginal costs. Such messages also bear the virtue of
being targeted and personal making the services offered more effective. They will
better result on account of better customer profiling.
With Indian telecom operators working on offering services like money transaction
over a mobile, it may soon be possible for a bank to offer phone based system. This
will make credit card redundant and also aid in checking credit card fraud apart
from offering enhanced customer convenience. The use of mobile technology is
thus a win-win proposition for both the banks and the banks customers. Such
services are highly personal in nature and are effective because of the same.
19
Study on Mobile Banking
Mobile banking is used in many parts of the world with little or no infrastructure,
especially remote and rural areas. This aspect of mobile commerce is also popular
in countries where most of their population is unbanked. In most of these places,
banks can only be found in big cities, and customers have to travel hundreds of
miles to the nearest bank.
In Iran, banks such as Parsian, Tejarat, Mellat, Saderat, Sepah, Edbi, and
Bankmelli offer the service. Banco Industrial provides the service in Guatemala.
Citizens of Mexico can access mobile banking with Omni life, Ban comer and
MPower Venture. Kenya's Safaricom (part of the Vodafone Group) has the M-Peas
Service, which is mainly used to transfer limited amounts of money, but
increasingly used to pay utility bills as well. In 2009, Zain launched their own
mobile money transfer business, known as ZAP, in Kenya and other African
countries. In Somalia, the many telecom companies provide mobile banking, the
most prominent being Hormuud Telecom and its ZAAD service.
Telenor Pakistan has also launched a mobile banking solution, in coordination with
Taameer Bank, under the label Easy Paisa, which was begun in Q4 2009. Eko India
Financial Services, the business correspondent of State Bank of India (SBI) and
ICICI Bank, provides bank accounts, deposit, withdrawal and remittance services,
micro-insurance, and micro-finance facilities to its customers (nearly 80% of
whom are migrants or the unbanked section of the population) through mobile
banking.
In a year of 2010, mobile banking users soared over 100 percent in Kenya, China,
Brazil and USA with 200%, 150 %, 110 % and 100 percent respectively.
20
Study on Mobile Banking
21
Study on Mobile Banking
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.
Mobile banking is popular among the Rs.1 to 5 lakhs per year income group with
almost 60% of mobile banking users falling in the income bracket, an indicator of
adoption of this service by younger generation.
ICICI bank maintains its position as country biggest private lender on mobile
screen as well with 17.75 million users. HDFC accounts for second most
subscribers with 9.1 million subscribers followed by State Bank of India with 6.13
million subscribers.
22
Study on Mobile Banking
According to a recent report by Celent, there are currently about 5 million users of
mobile financial services in Europe. Recently, i-mode services have been Imported
from Japan, and a number of banks are offering i-mode services now, hoping that it
will lead to more rapid growth in terms of usage.
After the failure of WAP-based mobile financial services in 2001,now hopes for
mobile banking in Europe have been awakened by a Japanese import, i-mode. A
hand full of banks in western Europe have deployed mobile banking services using
the Japanese i-mode standard.
23
Study on Mobile Banking
Germany
8% 9% Benelux
10% 10% France
4%
Iberia
12% Italy
8% U.K
39%
Scandinavia
Others
According to the study, wide variances exist between countries in Europe, with
mobile banking playing a virtually non-existent role in many countries. The rather
unexpected leader in terms of mobile banking penetration is the French market,
which accounts for almost 40% of all mobile banking users in Western Europe.
The report analyses and compares the mobile banking offering of the top 25 banks
in Western Europe, compare the state of play in the major countries within Europe,
examines the role of WAP, i-mode and SMSs and make recommendation to banks
regarding future mobile strategies.
24
Study on Mobile Banking
8. Relative Advantage
Complexity
25
Study on Mobile Banking
Compatibility
Observability
26
Study on Mobile Banking
Trialability
Rogers argues that potential adopters who are allowed to experiment with the
innovation will feel more comfortable with it and are more likely to adopt it.
Consequently, if consumers are given the opportunity to try the innovation certain
fears of unknown and inability to use can be reduced. In this survey 12.75 % of
non-users had tested mobile banking services, but this did not lead to permanent
use. However, this evidences that trial use of mobile banking services is possible.
Perceived Risk
27
Study on Mobile Banking
Mobile banking through an SMS based service would require the lowest amount of
effort, in terms of cost and time, but will not be able to support the full breath of
transaction based services. However, in markets like India bulk of the mobile
population users, phones can only support SMS based services, this might be the
only option left.
On the other hand a market heavily segmented by the type and complexity of
mobile phone usage might be good place to roll of WAP based mobile application.
A WAP based services can let go of the need to customized usability to the profile
of each mobile phone, the trade-off being that it cannot take advantage of the full
breadth of features that a mobile phone might offer.
Mobile banking has the potential to do the mobile phone what E-mail did to the
Internet. Mobile Application based banking is poised to be a big M-commerce
feature, and if South Koreas foray in to mass mobile banking is any indication,
mobile banking could well be the driving factor to increase sales of high-end
mobile phones. Nevertheless, Banks need to take a hard and deep look in to the
mobile usage patterns among their target customers and enable their mobile
services on a technology with reaches out to the majority of their customers.
28
Study on Mobile Banking
29
Study on Mobile Banking
The services provider forwards this message to the banks mobile banking
applications. The mobile banking applications interface with the core
banking servers (that contain the user account information) that service the
request made by the user. The response is then sent by the mobile banking
applications to the bulk service provider who in turn forward it to valid user
via SMS.
There are two ways in which a bank can communicate with a customer using
SMS.
In the first method the bank proactively sends data to customers in response to
certain transactions. For e.g. account to account transfer, salary credit and some
promotional messages. This data can sent to the customer in two ways
Database to mobile(D2B)
here the mobile banking application continuously polls the bank
database server and whenever a relevant period happen, for e.g. an
account to account transfer , it forward the specific message to the
service providers application server. The message format may be the
same as one used in the E2M case. This message is then forwarded to
the wireless carrier which in turn forwards the messages to the
customer.
In the second method the bank send data in respond to specific customer
query such as account balance details. The customer first sends a pre-
30
Study on Mobile Banking
defined request code via SMS to the Bulk SMS providers registered
mobile number. Depending on the message code, the Bulk SMS provider
forwards the SMS to a PULL application in the mobile banking server. The
PULL application receives the request and forwards it to the core banking
application for further processing. The core banking server than processes
this message and sends the reply to the pull application which in turn
forwards in to the customer via the service provider. As in the above cases
the request and the response for the PULL application may be a HTTP GET
message with tags in the query string.
Many banks would have some concerns when the prospects of introducing SMS
Banking are discussed. Most of these concerns could revolve around security and
operational controls around SMS banking. However supporters of SMS claim that
while SMS banking is not as secure as other conventional banking channels, like
the ATM and Internet Banking, the SMS Banking channel is not intended to be
used for very high-risk transactions.
31
Study on Mobile Banking
received by the customer instantaneously; unlike other channels such as the post,
E-mail, Internet, telephone banking, etc. on which a banks notification to the
customer involves the risk of delayed delivery and responses.
The SMS Banking channel also acts as the banks means of alerting its customers,
especially in an emergency situation; e.g. when there is an ATM fraud happening in
the region, the bank can push a mass alert (although not subscribed by all
customers) or automatically alert on an individual basis when a predefined
abnormal transaction happens on a customers account using the ATM or credit
card. This capability mitigates the risk of fraud going unnoticed for a long time and
increases customer confidence in the banks information system.
Suppliers of SMS Banking software solutions have found reliable means by which
the security concerns can be addressed. Typically the methods employed are by
pre-registration and using security tokens where the transaction risk is perceived to
be high. Sometimes ATM type PINs are also employed but the usage of PINs in
SMS Banking makes the customers task more cumbersome.
32
Study on Mobile Banking
Most SMS Banking solutions are add-on products and work with the banks
existing host system deployed in its computer and communications environment.
As most banks have multiple backend hosts, the most advance SMS banking
system are built to be able to work in a multi-host banking environment; and to
have open interfaces which allow for messaging between existing banking host
systems using industry or de-facto standards.
Well developed and mature SMS Banking software solution normally provide a
robust control environment and a flexible and scalable operating environment.
These solution are able to connect seamlessly to multiple operators in the country
of operation. Depending on the volume of messages that are require to be pushed;
means to connect to the SMS could be different, such as using simple modems or
connecting over leased line using low level communication protocols. Advanced
SMS Banking solutions also cater to providing failover mechanisms and least-cost
routing options.
33
Study on Mobile Banking
SMS banking services are operated using both PUSH and PULL messages. PUSH
messages are those that the bank chooses to send out to a customers mobile phone,
without the customer initiating a request for the information. Typically PUSH
messages could be either Mobile Marketing messages or messages alerting an
event which happens in the customers bank account, such as a large withdrawal of
funds from the ATM or a large payment using the customer credit card etc.
Another type of PUSH message is One-time password (OTPs). OTPs are the latest
tool used by financial and banking service providers in the fight against cyber
fraud. Instead of relying on traditional memorized passwords, OTPs are requested
by consumers each time they want to perform transactions using the online or
mobile banking interface. When the request is received the password is sent to the
consumers phone via SMS. The password expired once it has been used or once it
scheduled life-cycle has expired.
PULL messages are those that are initiated by the customer, using a mobile phone,
for obtaining information or performing a transaction in the bank account.
Example of PULL messages for information include an account balance inquiry, or
request for current information like currency exchange rates and deposit interest
rates, as published and updated by the bank.
The banks customer is empowered with the capability to select the list of activities
(or alerts) that he/she needs to be informed. This functionality to choose activity
can be done either by integrating to the internet banking channel or through the
banks customer service call center.
34
Study on Mobile Banking
35
Study on Mobile Banking
The big push came when LG telecom Ltd., the smallest of Koreas three mobile
service providers teamed up with the Kookmin bank to launch the Bank on
service. Under this scheme mobile users were able to use smart chips embedded in
cell phones for accessing all of the transaction and inquiry based services. The
chip-based service automated the authentication of users when they assessed their
banks financial services to make the whole process much faster and convenient.
The icing on the cake came with the ability of these chip enabled cell phones to be
used simultaneously as cash cards. By Oct, 2004 there were already about 100,000
infrared readers adapted to take payment directly from mobile phone handsets in
Korea. Users can now use their cell phones to pay for everything, from restaurant
bills, travel ticket, merchandise and even haircuts.
36
Study on Mobile Banking
From mid-2004 Reliance tied up with two of the popular private sector banks,
HDFC and ICICI, to provide a host of their inquiry and transaction based mobile
banking services through its R-World environment.
This feature allows for joint accounts or business account to have a pre-determined
limit to prompt for either supervisor or joint account holder approval. A payment
request is made from the account to another pre-nominated account; a message is
then send to either supervisor or joint account holder to also approve the payment.
This payment process is similar to a letter of credit, when the end user sends a
payment instruction for goods or services, the amount of payment will be
transferred to a specific account. The beneficiary will be notified that the amount is
guaranteed. Once the goods or services are delivered the end user/payee will be
able to accept or reject the goods or services and make payment accordingly by
approving or denying the payment process.
Using nothing but their own mobile handset, consumers will be able to make
purchased at a wide variety of retail outlet. Lets use the supermarket as a common
example: the consumer needs to make a purchase from a supermarket, he/she goes
to the cashier and sends a payment request along with his/her password and the
specific POS machine number. The system will then send back a Digital Money
Sequence Number (DMSN) to the buyer. When asking to pay for the goods, the
cashier will use his/her special banking card, and when the buyer is asked for a
password all they need to the is enter the DMSN. As long as the transaction is
within the daily limit of the account the transaction will take place instantly.
37
Study on Mobile Banking
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. Some
of these devices support Java ME and others support SIM Application Toolkit, a
WAP browser, or only SMS.
Initial interoperability issues however have been localized, with countries like
India using portals like R-World to enable the limitations of low end java based
phones, while focus on areas such as South Africa have defaulted to the USSD as a
basis of communication achievable with any phone.
The desire for interoperability is largely dependent on the banks themselves, where
installed applications (Java based or native) provide better security, 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.
38
Study on Mobile Banking
Interoperability:
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. Some
of this devices support J2ME and others support WAP browser or only SMS.
The desire for interoperability is largely dependent on the banks themselves, where
java enabled applications are of better security, easier to use and offer development
of more complex transactions similar to that of internet banking while SMS can
provide the basics becomes as Hassel to operate with more difficult transactions.
Security:
Security of financial transaction, being executed from some remote location and
transmission of financial information over the air, are the most complicated
challenges that need to be addressed jointly by mobile application developers,
wireless network service providers and the banks IT department.
39
Study on Mobile Banking
1. Physical security of the hand - held device. If the bank is offering smart card
based security, the physical security of the device is more important.
2. Security of the thick client application running on the device. In case the
device is stolen; the hacker should require ID/ Password to access the application.
6. Encryption of the data that will be stored in device for later/off- line analysis by
the customer.
Another challenge for the banks is to scale-up the mobile banking infrastructure to
handle exponential growth of the customer base. With mobile banking, the
customer may be sitting in any part of the world (a true anytime, anywhere
banking) and hence banks need to ensure that the systems are up and running in a
true 24 x 7 fashion. As customer will find mobile banking more and more useful,
their expectations from the solution will increase. Banks unable to meet the
performance and reliability expectations may lose customer confidence.
Application distribution:
Due to the nature of the connectivity between bank and its customers, it would be
impractical to expect customers to regularly visit banks or connect to a website 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. However, there could be many issues to implement this approach such as
upgrade/synchronization of other dependent components.
40
Study on Mobile Banking
Personalization:
1. Preferred language
3. Amount format
4. Default transactions
6. Alerts
These are a few of the most probable challenges that a banking organisation or
company will face while newly introducing the mobile banking system into its
business processes. However, a bank should see past all the difficulties and
drawbacks in the mobile banking system as every aspect of todays world has some
negative quality incorporated in it as every coin as two sides and so on.
The main point that such a bank should focus on is the benefit such a system
has in the future and how such a system will help the bank to further increase its
customer base and increase its business in the future to come of the bank.
For the time being these challenges, and many more which may arise and pose
a threat to the adoption of mobile banking and its success, is not to be considered
as a real drawback because for every problem or hindrance which may occur in
mobile banking, there is a solution and such solutions are being devised,
formulated and solved by professionals and expert who do what they do best and
that is consult and find the most logical solution for that problem.
41
Study on Mobile Banking
For Example, an information security company NSS MSC SDN BHD has
devised a suitable solution for mobile banking fraud. The main headache, which
was caused by this fraud, for the banks were that the instructions regarding what
has to be done by them which was told by the account holder, via mobile banking
services, would fall into the wrong hands and lead to illegal transactions or, even
worse, identity theft.
For this reason, NSS MSC had devised a way to encrypt the message sent by
the account holder to the bank. Only the account holders bank could read the
encrypted message and the bank could carry on its duties as instructed by the
account holder without the worry or Hassel of fraud or information falling into the
wrong hands.
Therefore, in future all problems and dead ends of mobile banking will be taken
care off which will pave the way for the ascension of mobile banking services
throughout all parts of the world.
42
Study on Mobile Banking
14. CONCLUSION
With the rapid development of transport and communication, people and services
are coming together as if they were just around the corner. If this is the case for
many services, then why should the banking industry lag behind?
Internet banking, Phone banking, E-banking and now Mobile banking all enable
the bank to be better connected with the customer and vice-versa. A customer who
is provided with a variety of additional services feels appreciated and is more
likely to be loyal to that bank, which is always a good sign for a bank.
In the end mobile banking not only helps a bank to reduce costs but also helps it to
retain its valuable customers. And as far as customers are concerned, this facility
enables the customer to bank anywhere, at any time and in any condition,
definitely a boon if a customer is stuck in the middle of nowhere and requires
banking services as soon as possible.
Thus mobile banking helps both, the customer as well as the bank, to lighten the
burden of todays world and to save time, money and energy which is greatly
required and appreciated. In a competitive world where everyone is waiting to
outdo the other, a helping hand, in whatever forms and from whatever source, is
definitely god sent and should not go unrecognized.
43
Study on Mobile Banking
15. BIBLIOGRAPHY
http://en.wikipedia.org
http://mbanking.blogspot.in
http://www.globalenvision.org
44