Professional Documents
Culture Documents
Mobile Banking
Mobile Banking
The Indian banking sector has emerged as one of the strongest drivers of India’s economic
growth. The Indian banking industry (US$ 1.22 trillion) has made outstanding advancement in
last few years, even during the times when the rest of the world was struggling with financial
meltdown. State Bank Of India is the largest nationalized Bank in the country in terms of Branch
Network, Total Business, Advances, Operating Profit and Low Cost CASA Deposits. The ICICI
is amongst the first to receive an 'in principle' approval from the Reserve Bank of India (RBI) to
set up a bank in the private sector, as part of the RBI's liberalization of the Indian Banking
Industry in 1994.
E-banking:-
Internet banking (or E-banking) means any user with a personal computer and
a browser can get connected to his banks website to perform any of the virtual banking
functions. In Internet banking system the bank has a centralized database that i s w e b -
e n a b l e d . Internet banking is the term used for new age banking system. Internet banking is
also called as online banking and it is an outgrowth of PC banking. Internet banking uses the
internet as the delivery channel by which to conduct banking activity, for example, transferring
funds, paying bills, viewing checking and savings account balances, paying mortgages and
purchasing financial instruments and certificates of deposits. Internet banking is a result of
explored possibility to use internet application in one of the various domains of commerce. It is
difficult to infer whether the internet tool has been applied for convenience of bankers or for the
customers’ convenience. But ultimately it contributes in increasing the efficiency of the banking
operation as well providing more convenience to customers. Without even interacting with the
bankers, customers transact from one corner of the country to another corner. There are many
advantages of online Banking. It is convenient, it isn’t bound by operational timings, there are no
geographical barriers and the services can be offered at a minuscule cost (IAMAI’s, 2006).
Electronic banking has experienced explosive growth and has transformed traditional practices in
banking.
In its very basic form, e-banking can mean the provision of information about a bank and its
services via a home page on the World Wide Web (WWW). More sophisticated e-banking
services provide customer access to accounts, the ability to move their money between different
accounts, and making payments or applying for loans via e-Channels. The term e-banking will
be used in this book to describe the latter type of provision of services by an organization to its
customers. Such customers may be either an individual or another business. To understand the
electronic distribution of goods and services, the work of Report and Sviokla (1994; 1995) is a
good starting point. They highlight the differences between the physical market place and the
virtual market place, which they describe as an information-defined arena. In the context of e-
banking, electronic delivery of services means a customer conducting transactions using online
electronic channels such as the Internet? Many banks and other organizations are eager to use
this channel to deliver their services because of its relatively lower delivery cost, higher sales and
potential for offering greater convenience for customers. But this medium offers many more
benefits, which will be discussed in the next section. A large number of organizations from
within and outside the financial sector are currently offering e-banking which include delivering
services using Wireless Application Protocol (WAP) phones and Interactive Television. Many
people see the development of e-Banking as a revolutionary development, but, broadly speaking,
e-banking could be seen as another step in banking evolution. Just like ATMs, it gives
consumers another medium for conducting their banking. The fears that this channel will
completely replace existing channels may not be realistic, and experience so far shows that the
future is a mixture of “clicks (e-banking) and mortar (branches)”. Although start up costs for an
internet banking channel can be high, it can quickly become profitable once a critical mass is
achieved.
Fig.1.1 E-Banking Services
EVOLUTION OF E-BANKING
There have been significant developments in the e-financial services sector in the past 30 years.
According to Devlin (1995), until the early 1970s functional demarcation was predominant with
many regulatory restrictions imposed. One main consequence of this was limited competition
both domestically and internationally. As a result there was heavy reliance on traditional branch
based delivery of financial services and little pressure for change. This changed gradually with
deregulation of the in-E-Banking Management IGI Global, distributing in print or electronic
forms without written permission of IGI Global is prohibited industry during 1980s and 1990s,
whilst during this time, the increasingly important role of information and communication
technologies brought stiffer competition and pressure for a faster pace of change. The Internet is
a relatively new channel for delivering banking services.
Mobile Banking (also known as M-Banking, m-banking, SMS Banking, etc.) is a term used for
performing balance checks, account transactions, payments, etc., via a mobile device such as a
mobile phone. It was Internet Banking, which ushered in a new era in banking convenience by
bringing the entire operations to the computer, and now mobile banking promises to take it to the
next level. Internet Banking helped give the customers anytime access to their banks. Customers
could check out their account details, perform transactions like transferring money to other
accounts, and pay their bills, sitting in the comfort of their homes and offices. However, the
biggest limitation of Internet Banking is the requirement of a PC with an Internet connection, not
a big obstacle if we look at the US and the European countries, but definitely a big barrier if we
consider most of the developing countries of Asia like India and China.
Mobile Banking addresses this fundamental limitation of Internet Banking, as it reduces the
customer requirement to just a mobile phone. Mobile usage has seen an explosive growth in most
of the Asian economies like India, China and Korea. The main reason that Mobile Banking
scores over Internet Banking is that it enables 'Anywhere Anytime Banking'. The last time that
technology had a major impact in helping banks service their customers was with the
introduction of the Internet banking. Internet Banking helped to give the customer's anytime
access to their banks. Customer's could check out their account details, get their bank statements,
perform transactions like transferring money to other accounts and pay their bills sitting in the
comfort of their homes and offices. However the biggest limitation of Internet banking is the
requirement of a PC with an Internet connection, not a big obstacle if we look at the US and the
European countries, but definitely a big barrier if we consider most of the developing countries
of Asia like China and India. Mobile banking addresses this fundamental limitation of Internet
Banking, as it reduces the customer requirement to just a mobile phone.
Mobile usage has seen an explosive growth in most of the Asian economies like India, China and
Korea. In fact Korea boasts about a 70% mobile penetration rate and with its tech-savvy
populace 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 don't need access to a computer terminal to access their banks, they can now do
so on the go – when they are waiting for their bus to work, when they are traveling or when
they are waiting for their orders to come through in a restaurant. The scale at which Mobile
banking has the 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, is 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 roll-out of some of the most advanced services like using mobile phones to pay
bills in shops and restaurants.
Mobile banking has been at the threshold of a revolution for some time. While many operators,
as well as banks, had introduced mobile banking applications, it never became popular due to
security concerns. The number of people using mobile banking services has jumped from under
10,000 to 120,000 in two years. While the trend is growing, lack of awareness of services, apart
from perceived security issues are inhibiting faster take-off. There is yet another reason why the
service will not spread like wild fire – the credit environment. RBI has been tightening the banks,
which have been offering unsecured and secured loans with minimal or no customer verification.
With RBI tightening liquidity, personal loan defaults have reached 9% and banks will be very
wary of giving you a credit card on the mobile.
Though RBI has specified norms for the banks to provide secure technology and ensure
'confidentiality, integrity, authenticity and non-reputability', security remains a major concern as
well as a hurdle. However, with a few precautions and safety measures, users can have a safer m-
banking experience. The m-PIN, which is issued by the bank, should be memorized and the PIN-
mailer destroyed immediately. Change your m-PIN regularly and do not share it with anyone.
The PIN is valid only for the corresponding phone number, which means users cannot access
their accounts using other hand-sets. Thus, in case of a loss/theft of mobile phone, inform the
mobile phone operator as well as the bank to block the banking application.
Similarly, you should also inform the bank, if you change your hand-set or SIM card. Reserve
Bank of India has set-up the Mobile Payments Forum of India (MPFI), a 'Working Group on
Mobile Banking' to examine different aspects of Mobile Banking (M-banking). The Group had
focused on three major areas of M banking, i.e.,
(i) Technology and security issues,
(ii) Business issues, and
(iii) Regulatory and supervisory issues.
Each stake-holder group has the following expectations: -
a) To meet the following expectations of Consumer: -
· Personalized service
· Minimal learning curve
· Trust, privacy and security
· Ubiquitous - anywhere, anytime and any currency
· Low or zero cost of usage
· Interoperability between different network operators, banks and devices
· Anonymity of payments like cash
· Person to person transfers
b) To meet the following expectations of 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) To meet the following expectations of Telecom Network Providers: -
· 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) To meet the following expectations of Mobile Device Manufacturers: -
· Large market adoption with embedded mobile payment application
· Low time to market
· Increase in Average Revenue Per User (ARPU)
e) To meet the following expectations of Banks: -
· Network operator independent solutions
· Payment applications designed by the bank
· Exceptional branding opportunities for banks
· Better volumes in banking - more card payments and less cash transactions
· Customer loyalty
f) To meet the following expectations of Software & Technology Providers:
· Large markets
g) To meet the following expectations of Government: -
· Revenue through taxation of m-payments
· Standards
There are lots of evidences that not only big cities are using mobile banking, 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. Bharti Airtel, too, is in the process of tying-up with
two leading banks to extend its mobile remittance services to rural areas, according to its
President (Mobile Services), Sanjay Kapoor. Airtel has already partnered with the Indian
Farmers' Fertilizers Cooperative Limited (IFFCO) to set up IFFCO Kisan Sanchar Limited in
Rajasthan. Under this initiative, the cooperative department will provide mobile hand-sets to
farmers at marginal price through its out-lets in the rural areas. These handsets would be loaded
with green SIM cards, which will flash daily updates on agricultural practices and weather
forecasts free of cost.
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.The scope of offered services may include facilities to
conduct bank and stock market transactions, to administer accounts and to access customised
information."
According to this model Mobile Banking can be said to consist of three interrelated
concepts:
· Mobile Accounting
· Mobile Brokerage
· Mobile Financial Information Services
Most services in the categories designated Accounting and Brokerage are transaction-based. The
non-transaction-based services of an informational nature are however essential for conducting
transactions - for instance, balance inquiries might be needed before committing a money
remittance.
The accounting and brokerage services are therefore offered invariably in combination with
information services. Information services, on the other hand, may be offered as an independent
module. The lifespan of all good ideas can be broken into five phases: concept, prototype, pilot,
pre-production, commercial deployment. Few ideas ever reach the stage of commercial
deployment, because they are just not viable, or have been ill conceived or badly deployed. For
some or other reason, mobile banking has been over-saturated with concepts and to some degree
with prototypes. The idea of utilising the phone for financial transactions are so obvious that
every man and his dog have developed a new concept or have submitted a patent somewhere.
Everyone of them believing that they have stumbled on the ultimate approach.
The reality is that very few of these ever progress past the rudimentary prototype stage. And it is
actually quite easy to demonstrate simple mobile banking functionality in a prototype
environment. Some of the challenges that often have not even been identified and hence solved
are issues related to integration, regulatory/legal and usability. These are sometimes addressed in
the few prototypes that migrate to pilot.
A pilot usually consists of a few hundred, maybe thousands of subscribers performing
transactions in a controlled environment with limited functionality. Even if pilots work, they
often don't address important aspects like scalability and system responses to unpredicted actions
or break-downs. What happens in the case of transactions that have been lost and how does the
system respond to situations where a component is not available. Important legal aspects are also
often not addressed yet at this stage. Pilots seldom uncovers the real system challenges and at
best highlights key elements regarding user experience.
During the pre-production stage business processes and system reliability and robustness should
be attended to. Many different business processes are required if a system is to be deployed in a
production environment. This should include registration, dispute resolutions, service activation
to name only a few. In examples that we have seen in the market some deployments have
neglected key processes leading to very difficult deployments and disillusioned clients. What
looked easy during pilot now turns out to be a nightmare of realities.
It is only when a solution is deployed commercially that they most important element of any idea
is tested: Can it make money? Mobile banking solutions that are not profitable will fail
ultimately. And this is where we at Fundamo can really contribute to making a difference in
deploying successful mobile payment/banking solutions. We have seen what works and what
does not. We have built powerful business modeling tools and have helped many customers to
culminate with commercially successful deployments of novel ideas. We have seen many
competing products fail because they were not commercially viable
TRENDS IN MOBILE BANKING
The advent of the Internet has revolutionized the way the financial services industry conducts
business, empowering organizations with new business models and new ways to offer 24x7
accessibility to their customers.
The ability to offer financial transactions online has also created new players in the financial
services industry, such as online banks, online brokers and wealth managers who offer
personalized services, although such players still account for a tiny percentage of the industry.
Over the last few years, the mobile and wireless market has been one of the fastest growing
markets in the world and it is still growing at a rapid pace. According to the GSM Association
and Ovum, the number of mobile subscribers exceeded 2 billion in September 2005, and now
exceeds 2.5 billion (of which more than 2 billion are GSM).
According to a study by financial consultancy Celent, 35% of online banking households will
be using mobile banking by 2010, up from less than 1% today. Upwards of 70% of bank center
call volume is projected to come from mobile phones. Mobile banking will eventually allow
users to make payments at the physical point of sale. "Mobile contactless payments” will make
up 10% of the contactless market by 2010.
Many believe that mobile users have just started to fully utilize the data capabilities in their
mobile phones. In Asian countries like India, China, Bangladesh, Indonesia and Philippines,
where mobile infrastructure is comparatively better than the fixed-line infrastructure, and in
European countries, where mobile phone penetration is very high (at least 80% of consumers
use a mobile phone), mobile banking is likely to appeal even more.
This opens up huge markets for financial institutions interested in offering value added services.
With mobile technology, banks can offer a wide range of services to their customers such as
doing funds transfer while travelling, receiving online updates of stock price or even performing
stock trading while being stuck in traffic. According to the German mobile operator Mobilcom,
mobile banking will be the "killer application" for the next generation of mobile technology.
Mobile devices, especially smartphones, are the most promising way to reach the masses and to
create “stickiness” among current customers, due to their ability to provide services anytime,
anywhere, high rate of penetration and potential to grow. According to Gartner, shipment of
smartphones is growing fast, and should top 20 million units (of over 800 million sold) in 2006
alone.
In the last 4 years, banks across the globe have invested billions of dollars to build sophisticated
internet banking capabilities. As the trend is shifting to mobile banking, there is a challenge for
CIOs and CTOs of these banks to decide on how to leverage their investment in internet banking
and offer mobile banking, in the shortest possible time.
The proliferation of the 3G (third generation of wireless) and widespread implementation
expected for 2003–2007 will generate the development of more sophisticated services such as
multimedia and links to m-commerce services.
MOBILE BANKING SERVICES
Mobile banking can offer services such as the following:
Account Information
1. Mini-statements and checking of account history
2. Alerts on account activity or passing of set thresholds
3. Monitoring of term deposits
4. Access to loan statements
5. Access to card statements
6. Mutual funds / equity statements
7. Insurance policy management
8. Pension plan management
9. Status on cheque, stop payment on cheque
10. Ordering check books
11. Balance checking in the account
12. Recent transactions
13. Due date of payment (functionality for stop, change and deleting of payments)
14. PIN provision, Change of PIN and reminder over the Internet
15. Blocking of (lost, stolen) cards
Payments, Deposits, Withdrawals, and Transfers
1. Domestic and international fund transfers
2. Micro-payment handling
3. Mobile recharging
4. Commercial payment processing
5. Bill payment processing
6. Peer to Peer payments
7. Withdrawal at banking agent
8. Deposit at banking agent
Especially for clients in remote locations, it will be important to help them deposit and withdraw
funds at banking agents, i.e., retail and postal outlets that turn cash into electronic funds and vice
versa. The feasibility of such banking agents depends on local regulation which enables retail
outlets to take deposits or not.
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
client's account.
Investments
1. Portfolio management services
2. Real-time stock quotes
3. Personalized alerts and notifications on security prices
Support
1. Status of requests for credit, including mortgage approval, and insurance coverage
2. Check (cheque) book and card requests
3. Exchange of data messages and email, including complaint submission and tracking
4. ATM Location
Content Services
1. General information such as weather updates, news
2. Loyalty-related offers
3. Location-based services
Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the
younger, more "tech-savvy" customer segment. A third of mobile phone users say that they may
consider performing some kind of financial transaction through their mobile phone. But most of
the users are interested in performing basic transactions such as querying for account balance and
making bill payment.
One way to classify these services depending on the originator of a service session is the
‘Push/Pull' nature. ‘Push' is when the bank sends out information based upon an agreed set of
rules, for example your banks sends out an alert when your account balance goes below a
threshold level.
‘Pull' is when the customer explicitly requests a service or information from the bank, so a
request for your last five transactions statement is a Pull based offering.
The other way to categorize the mobile banking services, by the nature of the service, gives us
two kind of services – Transaction based and Enquiry Based. 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. Transaction based services are also differentiated from enquiry
based services in the sense that they require additional security across the channel from the
mobile phone to the banks data servers.
The new generation of mobile phones offers the speedy GPRS, EDGE or 3G data transmission
standards and has large, high-definition colour displays. Prices are coming down and services
and features are now considerably easier to handle on the mobile. Mobile Banking, in particular,
has finally become a fast, user-friendly and affordable service. India's leading telecom companies
started their services for Mobile Banking, basically they use these services as a marketing tool to
advertise there services on this basis. Here are few giants of telecom industries in India who are
offering Mobile Banking in various states.
Utility of Mobile Banking from Banks’
Perspective
At this stage it would be relevant to understand the usefulness of Mobile Banking from the
banks’perspective. It is therefore imperative to understand the business environment in which
banks operate and to identify customer groups that the banks may seek to target via Mobile
Banking.
Intensified Competition in the Banking Sector:
Bank products are of immaterial nature sold increasingly with the help of computer networks
spanning across the globe.The global networks provide the customer with world-wide services,
for instance the use of credit cards while abroad. The creation of an EU-wide single domestic
market has led to intensification of competition in the EU in all business fields including in the
banking sector. The ongoing Globalisation has further intensified the competition. Technical
developments coupled with the process of Globalisation, have made it possible for banks to offer
their services in far-flung areas without investing money to build branches and hire additional
staff. This opportunity, of course, is a two-way street: On the one hand, a bank gets access to
new markets.
On the other hand it is faced with increased competition on its home turf. To master this
combination of opportunities and challenges banks need – apart from business consolidation and
cooperation – organic growth. It is therefore necessary to retain the existing customer base while
simultaneously acquiring new, economically prosperous customers. Seen in conjunction with the
price-sensitivity of customers and the resultant low relevance of the brand-name banks are
compelled to introduce innovative services that potentially attract prospective customers while
retaining others. Even though the brand-name remains a critical factor on account of the need for
trust in banking business, the Globalisation and the technological developments, however, have
reduced entry barriers so that the number of available reputed brands has increased significantly;
thereby intensifying the competition.
b) The Young Adults: Also this segment is thought to be technology- and innovation friendly.
Though this group too is financially not very strong, many members of this
group are known to be involved in stock market activities. Further, this group can be expected to
enter in short to medium-run a professional carrier so that it needs to be cultivated in order to
retain customers of this age-group even after they enter professional lives.
c) The Business People: this group of customers, generally in the age group of 26-50 years, is
thought to be the most important one for Mobile Banking. Members of this group are generally
well educated and economically well-off. They need to be professionally often on the move and
carry mobile devices to ensure accessibility. For this reason they are ideal candidates to use
services offered via mobile devices. From the banks’ perspective this group is particularly
attractive on account of its relative economic prosperity and the need for financial services, e.g.
home loans for young families. In order to fulfil the requirements of these customer groups banks
tend to look at Mobile Banking as a promising option. However, these services also have their
own utility for the banks.
Mobile Banking as Distribution Channel
Mobile Banking enhances the number of existing channels of distribution that a bank employs to
offer its services. The efficiency of a distribution channel can be measured by its fulfilment of
three major objectives, which are closely related to each other.
Increasing Sales Volume
One of the primary tasks of a distribution channel is to increase the volume of demand for
products at profitable prices .This objective is arrived by increasing operational efficiency so that
those losses are minimized that are caused by delays in catering to customer orders. Further, a
favourable reputation of the firm’s logistical capacities may help generate additional orders.
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 J2ME and
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.
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. In practice it is too
early in the service lifecycle for interoperability to be addressed within an individual country, as
very few countries have more than one mobile banking service provider. In practice, banking
interfaces are well defined and money movements between banks follow the IS0-8583 standard.
As mobile banking matures, money movements between service providers will naturally adopt
Security
Security of financial transactions, 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
departments. The following aspects need to be addressed to offer a secure infrastructure for
1. Physical part of the hand-held device. If the bank is offering smart-card based security, the
2. Security of any thick-client application running on the device. In case the device is stolen, the
3. Authentication of the device with service provider before initiating a transaction. This would
ensure that unauthorized devices are not connected to perform financial transactions.
6. Encryption of the data that will be stored in device for later / off-line analysis by the
customer.
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. With mobile banking, the
customer may be sitting in any part of the world (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 customers
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. There are systems such as Mobile Transaction Platform which allow quick and
secure mobile enabling of various banking services. Recently in India there has been a
phenomenal growth in the use of Mobile Banking applications, 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, 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).
However, there could be many issues to implement this approach such as upgrade /
Personalization
1. Preferred Language
3. Amount format
4. Default transactions
6. Alerts
Features of Mobile Commerce
Mobile Commerce is characterised by some unique features that equip it with certain advantages
i) Ubiquity: Ubiquity means that the user can avail of services and carry out transactions
ii) Immediacy: Closely related to the feature of ubiquity is the possibility of real-time availment
of services (the “anytime” feature). This feature is particularly attractive for services that are
iii) Localisation: Positioning technologies, such as the Global Positioning System (GPS), allow
companies to offer goods and services to the user specific to his current location. LBS can thus
cater to consumers’ needs and wishes for localised content and services.
iv) Instant connectivity: Ever since the introduction of the General Packet Radio Service
(GPRS) mobile devices are constantly “online”, i.e. in touch with the network (the “always-on”
feature). This feature brings convenience to the user, as time consuming dialup or boot processes
immediate, local and personal, new avenues for business. The user may choose the products, and
services, which he wants to be kept informed about. The Short Message Service (SMS) can be
used to send brief text messages to customers ensuring that the “right” (relevant) information is
vi) Simple authentication procedure: Mobile devices function with an electronic chip called
Subscriber Identity Module (SIM). The SIM is registered with the network operator and the
owner is thus unambiguously identifiable. The clear identification of the user in combination
with an individual Personal Identification Number (PIN) makes any further time-consuming,
financial services via mobile devices. It comprises of services in the field of accounting,
brokerage and financial information. Mobile Banking is increasingly being employed by many
banks around the world to generate additional revenues, reduce costs or to increase customer
satisfaction, often with very promising results. For instance, the utilisation of transaction-based
MFS of Finland-based Nordea bank grew by 30% in 2004.The number of France’s Société
Générale customers using mobile services crossed the mark of one million in year 2004,
registering an impressive growth of nearly 200% vis-à-vis 2003. These facts point toward a
positive shift in the customer perception of Mobile Banking. On the other hand, technological
developments like Universal Mobile Telecommunications System (UMTS) have provided a new
Unlike in the past, when banks offering mobile services suffered a severe setback due to lack of
customer interest and unripe technologies, the time seems to be now ripe for (re-)launching
mobile services. Mobile Banking is usually defined as carrying out banking business with the
help of mobile devices such as mobile phones or PDAs [8; 11]. The offered services may include
transaction facilities as well as other related services that cater primarily to informational needs
revolving around financial activities. Considering these factors we can define Mobile Banking as
following:
“Mobile Banking refers to provision and availment of bank-related financial services with the
help of mobile telecommunication devices. The scope of offered services may include facilities
to conduct bank and stock market transactions, to administer accounts and to access customized
information.”
Mobile Banking, as defined above, includes a wide range of services. These services may be
categorized as following:
Mobile Accounting
revolve around a bank account and are availed using mobile devices .Not all Mobile Accounting
differentiate between services that are essential to operate an account and services that are
Mobile Brokerage
Brokerage, in the context of banking- and financial services, refers to intermediary services
related to the bourse, e.g. selling and purchasing of stocks. Mobile Brokerage can be thus defined
as transaction based, mobile financial services of non-informational nature that revolve around a
securities account. Mobile Brokerage, too, may be divided in two categories to differentiate
between services that are essential to operate a securities account and services that are essential
Mobile Financial Information refers to non-transaction based banking- and financial services of
informational nature. Mobile Financial Information services include subsets from both banking
and financial services and are meant to provide the customer with anytime, anywhere access to
information .The information may either concern the bank and securities accounts of the
customer or it may be regarding market developments with relevance for that individual
customer. The information may be customized on the basis of preferences given by the customer
and sent with a frequency decided by him. The information should be provided, ideally, on both,
pull and push basis. Information services are an integral part of Mobile Accounting and Mobile
Brokerage but they may also be offered as a stand-alone, independent module, i.e. Mobile
Financial Information can be offered without offering Mobile Accounting or Mobile Brokerage
This part of the mobile commerce is very popular in countries where most of their population is
unbanked. Countries like Sudan, Ghana and South Africa received this new commerce very well.
In Latin America countries like Uruguay, Paraguay, Argentina, Brazil, Venezuela, Colombia,
Guatemala and recently Mexico started with a huge success.In Colombia was released with
Redeban.In Iran banks like Parsian, Tejarat, Mellat, Saderat, Sepah, edbi and bankmelli offer this
company(MPower Ventures). Kenya's Safaricom (Part of the Vodafone Group) has had the very
popular M-Pesa Service - mainly used to transfer limited amounts of money, but has been
increasingly used to pay utility bills. Zain in 2009 launched their own mobile money transfer
In terms of the evolution of services being offered on mobile applications, South Korea is
showing the way. The big push came when LG Telecom Ltd., the smallest of Korea's 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 enquiry based services. The chip-based service automated the
authentication of users when they accessed their bank's 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 October 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
When Reliance Infocomm, India rolled out its CDMA network, (at the time the mobile market in
India was still in its infancy, and data services were almost never heard off) it made sure that all
handsets supported Java.The Reliance application platform, also known as R-World brought Java
compatibility even to the lower end phones. Reliance used a novel way to overcome the memory
limitations of lower-end mobile phones, which hampered deploying of multiple standalone J2ME
based clients. Instead of storing applications statically on their cell phones, users access a single
menu based application called R-World, which connects them to the Reliance servers. Using the
menu based user interface, mobile users select the application, which they want to run and
download them over-the-air to their cell phones. These applications are then executed locally on
the mobiles. From mid-2004 Reliance tied up with two of the popular private sector banks,
HDFC and ICICI, to provide a host of their enquiry and transaction based mobile banking
the extent of Internet banking services offered by Internet banks. In addition, it seeks to examine
the factors affecting the extent of Internet banking services. The data for this study are based on a
survey of bank websites explored during July 2009. The sample consists of 82 banks operating
in India. Multiple regression technique is employed to explore the determinants of the extent of
Internet banking services. The results show that the private and foreign Internet banks have
performed well in offering a wider range and more advanced services of Internet banking in
comparison with public sector banks. Among the determinants affecting the extent of Internet
banking services, size of the bank, experience of the bank in offering Internet banking financing
pattern and ownership of the bank are found to be significant. The primary limitation of the study
is the scope and size of its sample as well as other variables (e.g. market, environmental,
regulatory etc) which may have an effect on the decision of the banks to offer a wide range of
Internet banking services. The purpose of the study is to help fill significant gaps in knowledge
about the Internet banking landscape in India. The findings are expected to be of great use to the
government, regulators, commercial banks, and other financial institutions, e.g. co-operative
banks planning to offer Internet banking bank customers and researchers. An understanding of
the factors affecting the extent of Internet banking services is essential both for economists
studying the determinants of growth and for the creators and producers of such technologies.
Moreover, this paper contributes to the empirical literature on diffusion of financial innovations,
Dr. Saroj K. Datta (2010) concluded that the factors which are affecting the acceptance of e-
banking services among adult customers and also indicates level of concern regarding security
and privacy issues in Indian context. Primary data was collected from 200 respondents, above the
age of 35, through a structured questionnaire. Statistical analysis, descriptive statistics was used
to explain demographic profile of respondents and also Factor and Regression analyses were
used to know trend of internet use and factors affecting e-banking services among adult customer
in India. The finding depicts many factors like security & privacy, trust, innovativeness,
familiarity, awareness level increase the acceptance of E Banking services among Indian
customers. The finding shows that in spite of their security and privacy concern, adult customers
are willing to adopt online banking if banks provide him necessary guidance. Based on the
results of current study, Bank’s managers would segment the market on the basis of age group
and take their opinion and will provide them necessary guidance regarding use of online
banking.
Polaris Software Lab (2010) had this study Polaris Software Lab Limited (POLS.BO),a leading
technology and four patents filed by the Indian Institute of Technology Madras. IndusInd Bank
has become the first bank in India to implement Intellect(TM) PRIVACY, an online and internet
banking security card, for its internet banking customers. The technology will protect customers
and banks from practically all kinds of phishing attacks, viz. deceptive e-mail, key/screen logger,
brute force/dictionary attacks and Trojans, etc .Intellect PRIVACY uses multi factor ,dynamic
programmer, said, "At IIT Madras, the Department of Computer Science and Engineering and
Azouzi, D. (2009) this paper aims to check if the current and prompt technological revolution
altering the whole world has crucial impacts on the Tunisian banking sector. Particularly, this
study seeks some clues on which we can rely in order to understand the customers' behavior
regarding the adoption of electronic banking. To achieve this purpose, an empirical research is
carried out in Tunisia and it reveals that panoply of factors is affecting the customers-attitude
toward e-banking. For instance; age, gender and educational qualifications seem to be important
and they split up the group into electronic banking adopters and traditional banking defenders
and so, they have significant influence on the customers' adoption of e-banking. Furthermore,
this study shows that despite the presidential incentives and in spite of being fully aware of the e-
baking’s benefits, numerous respondents are still using the conventional banking. It is worthy to
mention that the fear of loss because of transactions errors or hackers plays a significant role in
Elizabeth Daniel (2009) concluded that the newest delivery channel to be offered by the retail
banks in many developed countries and there is wide agreement that this channel will have a
significant impact on the market. Aims to quantify the current provision of electronic services by
major retail banking organizations in the UK and the Republic of Ireland. Additional in- sight
into the banks' adoption of this new channel is gained by exploring two areas important in the
analysis of new offerings, that is: an organization’s approach to innovation; and their view of the
current and future markets. By use of a mailed questionnaire, it was found that 25 per cent of the
banks in the UK and the Republic of Ireland which responded to this survey are already offering
online transactional services to consumers in their homes. The largest group of respondents (50
per cent) is those that are currently testing or developing such ser- vices, while just 25 per cent of
the respondents were in organizations not providing or developing such services. It is also found
that the organization’s vision of the future, their prediction of customer acceptance, which tends
to be very low, and their organizational culture of innovation are the most important of the
Hill (2009) conducted a study concerned with identifying the characteristics of online banking
users. She mentioned that it is commonly assumed that demographics do influence the
acceptance of electronic self-service tools, such as online banking. The result of the study was
that people who use such services are young, trendy and high earning. They actively seek out
online banking tools, and they want to conduct all transactions through the same channel.
B. Dizon, J.A. (2009) have founded that "E- Baking’s appeal is primarily its convenience.
Clients now a day’s want instant results; they don't want to wait anymore," said Francisco M.
Caparros, Jr., senior vice-president of Asia United Bank and president of Banc Net. It's also
turned out to be a more efficient way to process transactions, as e-banking does away with most
of the paperwork that clients have to accomplish. "A lot of people don't like filling forms," Mr.
Caparros added. "Online banking, in particular, relies on usernames and passwords which need
to be protected," said Ferdinand G. La Chica, first vice- president and marketing group head for
Sterling Bank of Asia. These anti- theft barriers are at times supplemented by transaction
passwords and "tokens", often a key chain-like device that is issued to the client and generates
random, one-time passwords to enable him to log into his account online. Last year, the Rural
Bank Association of the Philippines announced that its members are looking to appoint local
merchants like sari-sari stores as third party agents where consumers can open new accounts and
make large payments. Such informal outlets will enable banks to reach out to small-income
businesses and individuals, particularly those in the agrarian sector, most of who are based
Uppal, R.K. & Chawla, R. (2009) highlights the customer perception regarding e-banking
services. A survey of 1,200 respondents was conducted in Ludhiana district, Punjab. The
respondents were equally divided among three bank groups namely, public sector, private sector
and foreign banks. The present study investigates the perceptions of the bank customers
regarding necessity of e-banking services, quality of e-banking services, bank frauds, future of e
banking, preference of bank customers regarding banks, comparative study of banking services
in various bank groups, preferences regarding use of e-channels and problems faced by e-bank
customers. The major finding of this study is that customers of all bank groups are interested in
e-banking services, but at the same time are facing problems like, inadequate knowledge, poor
network, lack of infrastructure, unsuitable location, misuse of ATM cards and difficulty to open
an account. Keeping in mind these problems faced by bank customers, this paper frames some
facilities, online shopping facilities, proper working and installation of ATM machines, etc., to
enhance e-banking services. Majority of professionals and business class customers as well as
highly educated and less educated customers also feel that e-banking has improved the quality of
novel ways of handling daily banking affairs especially via the online banking channel. The
acceptance of online banking services has been rapid in many parts of the world and in the
leading e banking countries the number of e banking contracts has exceeded 50 percent.
Investigates online banking acceptance in the light of traditional technology acceptance model
(TAM), which is leveraged into the online environment. On the basis of the focus group
interviewed with banking professionals, TAM literature and banking studies we develop a model
indicating online banking acceptance among private banking customers in Finland. The model
was tested with the survey sample of 268 respondents. The finding of the study indicates that
perceived usefulness and information on online banking on the web site were the main factors
Reeti, Sanjay, and Malhotra, A. (2008) examined about the Customers’ perspectives regarding
e-banking in an emerging economy. So that, the author determining various factors affecting
customer perception and attitude towards and satisfaction with e-banking is an essential part of a
bank's strategy formulation process in an emerging economy like India. To gain this
understanding in respect of Indian customers, the study was conducted on respondents taken
from the northern part of India. The major findings depict that customers are influenced in their
usage of e-banking services by the kind of account they hold, their age and profession, attach
highest degree of usefulness to balance enquiry service among e-banking services, consider
security &trust most important in affecting their satisfaction level and find slow transaction
different observational variables to identify innovation capital (training and R&D density) and
process capital (IT system sufficiency). The results show that human capital has a direct impact
on both innovation capital and process capital, which in turn affect customer capital; while
relationship between process capital and customer capital in the financial service sector. It
suggests that in the financial service sector, customer satisfaction relies on a sufficient degree of
training and R&D density. Intemperate investment on the support of e-banking operation
Malhotra, P. & Singh, B. (2007) stated that the larger banks, banks with younger age, private
ownership, and higher expenses for fixed assets, higher deposits and lower branch intensity
evidence a higher probability of adoption of this new technology. Banks with lower market share
also see the Internet banking technology as a means to increase the market share by attracting
more and more customers through this new channel of delivery. Further, the adoption of Internet
banking by other banks increases the probability that a decision to adopt will be made .An
understanding of the factors affecting this choice is essential both for economists studying the
determinants of growth and for the creators and producers of such technologies. From this
perspective, understanding the factors determining the adoption of technology becomes highly
relevant from the policy point of view. Moreover, the studies on the adoption of financial
innovations are related to developed markets, e.g. US or European banking markets. Hence, this
Research Methodology
A Marketing research design specific a procedure for conducting and controlling the
research project. Every marketing research must explicitly state its plan about
collection and analysis of data. It is the conceptual framework within which the study is
conducted and deals with the procedures used in the study for the purpose of investigation.
Research Methodology in the context of the topic includes the partial study of the Bank
Account holders of Delhi city; it will also include various professionals
and businessmen who are having their mobile banking accounts.
34%
Males
Females
66%
Age
4%
16%
17%
18-25
26-35
36-45
46-60
34%
29% 60+
Qualification
7%
29%
22%
12th
Graduate
Post Graduate
42% Professional
INFERENCE:
About 66% of the respondents are males. This study found a predominance of males among
Internet users in DELHI. This indicates that the percentage of male Internet users is higher than
the female internet users the respondents are relatively young, i.e. 34% between 26 and 35 years
old. This is a consistent study, which found that most Internet users are youths (less than 18
years old: 16 %) and young adults. Respondents with post graduation were 42% followed by
22% of graduate respondents and 29% with professional degrees. In terms of profession, service
forms the largest group with 44% respondents while students (28%) form the next largest group.
Bank
41%
59% Public
Private
M-Banking Users
35%
Yes
65%
No
ANNEXURE 1
Questionnaire
1. Name:
2. Gender:
Male Female
3. Age Group:
o 18-25
o 26-35
o 36-45
o 46-60
o 60+
4. Educational Qualification:
o 12th
o Graduate
o Post Graduate
o Professional
5. Occupation:
o Student
o Service
o Business man
o Retired Individual
o Others please specify:
o Yes
o No
o Yes
o No
9. What is the name of the bank you have an internet banking account with?
10. What is the most important reason that you choose this particular bank?
11. How long have you been using the M-Banking services?
o 5 to 6 times/week
o 2 to 3 times /week
o Once in a week
o Once in a month
o Occasionally