CHAPTER 1

INTRODUCTION
 1.1 INTRODUCTION

Mobile banking is a service provided by a bank or other financial institution that allows its
customers to conduct some financial transactions remotely using a mobile device such as a mobile
phone or tablet.

Mobile banking can be defined as “It is the act of doing financial transactions on a mobile device.
This activity can be as simple as a bank sending fraud or usage activity to a client‟s cell phone or as a
complex as a client paying bills or sending money abroad”. Mobile banking is also defined as “an
innovative method for accessing banking services via a channel where by the customers interacts with
a bank using a mobile device”.

Mobile banking refers to the use of a smart phone or other cellular device to perform online banking
tasks while away from your home computer such as monitoring account balances, transferring funds
between accounts, bill payment and locating an ATM.

The earliest mobile banking services used SMS, a service known as SMS banking. With the
introduction of smart phones with WAP support enabling the use of the mobile web in 1999, the first
European banks started to offer mobile banking on this platform to their customers. Mobile banking is
an application of mobile computing which provides customers with the support needed to be able to
bank anywhere, anytime, using a mobile hand held device and a mobile service such as short message
service (SMS).

Mobile banking facility removes the space and time limitation from banking activities such as
checking account balances or transferring money from one account to another and time saving when
we go to bank and doing some banking activities. Mobile banking is a type of execution of financial
services in the course of which within an electronic procedure. The customer uses mobile
communication technique in conjunction with mobile devices. Mobile banking refers to provision and
availment of banking and financial services with the help of mobile telecommunication devices.

Internet banking helps the customer‟s any time access to their banks. Customers should checkout their
account details, get their bank statement, perform transactions like transferring money to other
accounts and pay their bills sitting in the comfort of their homes and offices. But the biggest limitation
of internet banking is the requirement of a personnel computer with an internet connection but
definitely a big barrier, if we consider most of the developing countries of Asia like 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. The main purpose of mobile banking scores over internet banking is that it
enables “Anywhere, Anytime banking is Available” customer don‟t need access to a computer
terminal to access their bank accounts.

Mobile banking where banks provide services like account details include:

 Mini-statement and checking of account history.

 Alerts on account activity.
 Monitoring of term deposits.
 Access to loan statement.
 Insurance policy management.
 Pension plan management.

Payment and transfer include:

 Domestic and international fund transfers.

 Micro-payment handling.
 Mobile recharging.
 Commercial payment processing.
 Bill payment processing.

Banks are constantly adopting technology to expand its business and to reach different level of
customers. Apart from ATM, Internet banking and other technology enabled services, mobile banking
is one of the services provided by banks to its customers. Astonishing growth in telecommunication
sector, its penetration including rural population and technology feasibility are the major factor for the
introduction of mobile banking services. Some of the banks of the India are started providing the
mobile banking servicesto their customers that include State Bank of India, Union Bank of India,
Panjab National Bank, HDFC, ICICI, Axis Banks etc.
 1.2 SIGNIFICANCE OF THE STUDY

Mobile banking is the act of doing financial transactions on a mobile device(cell phone, tablet etc) this
activity can be as simple as a bank sending fraud or usage activity to a client‟s cell phone or
complex as a client paying bill or sending money abroad. Mobile banking includes the ability to
bank anywhere and anytime. One of the important technologies introduced in the banking industry is
mobile banking. It is an innovative method for accessing banking services via a channel where by the
customers interacts with a bank using a mobile device. It is highly beneficial for customers. Mobile
banking is an application of mobile computing which provides customers with the support needed to
be able to bank anywhere, anytime using a mobile handheld device and a mobile service such as short
message service.
 1.3 STATEMENT OF THE PROBLEM

Banking today is undergoing a radical transformation. This transformation is taking place across all
sectors of the banking industry. Technology has become an increasingly vital element in the
competitive landscape of the financial services industry. Innovations in telecommunications have led
to usage of mobile devices in banking. Mobile banking services are still in their immaturity, leaving a
great deal of room for development. There is a need therefore, to understand user‟s acceptance and
adoption of mobile banking and to identify the factors affecting their intentions to use mobile
banking.
 1.4 OBJECTIVES OF THE STUDY

The study is conducted with the following objectives:

 To identify the factors affecting adoption of mobile banking technology by customers.

 To study the customer perception towards mobile banking.

 To study the perceived utility of various mobile banking services.

 To study the barriers in using mobile banking.

 1.5 SCOPE OF THE STUDY

The scope of the study is to make an in-depth study on analysis of customer perception towards
mobile banking in Kaniyambetta Panchayath. The study aims at identifying the factors responsible for
adoption of mobile banking and understanding the customer perception and barriers towards mobile
banking. This is highly beneficially to both customers and banking institutions.
 1.6 RESEARCH METHODOLOGY

Research methodology is the description explanation and justification of various methods of

conducting research. Research is a process through which we attempt to achieve systematically and
with the support of data to answer a question, the resolution of a problem, or a greater understanding
of a phenomenon. It is the systematic way to solve problems. This process is frequently called
research methodology.

RESEARCH DESIGN

A research design is a comprehensive master plan of the study to be undertaken it is the framework, a
blue print for the research study which guides the collection and analysis of data. The research design
used for this study is descriptive because this is primarily conducted with an object to know
respondent attitude towards the various sales promotion tools and strategies adopted.

SAMPLE SIZE

The sample size of the study is limited to 50 customers

TOOLS USED

Analysis of data is carried out by tabulating the collected data in a suitable manner by which the
interpretation can be done. Statistical tool were used for analysis and interpretation of data in this
project were discussed below.

 Simple percentage
 Mean score

SIMPLE PERCENTAGE METHOD

Percentage is special kind of ratios that express the relationship of one variable in comparison to
another. Simple percentage method is used to analysis the collected data as it will make easy
comparison between two or more attributes and to find out the relative difference between two or
more attributes
 Number of respondents
Simple percentage = x 100
Total respondents

MEAN SCORE METHOD

The mean value of a score of a certain set of data is equal to the sum a values in the data divided by
the total number of value. To find out the mean score of each of the variable, the total score of each
variable is divided by the number of respondents

Total score of each variable

Mean score =
Number of respondents

METHODS OF DATA COLLECTION

 PRIMARY DATA

The primary sources of data are:

1. Through Questionnaire
2. Through Personal Interview
3. Discussions

 SECONDARY DATA

The secondary sources of data are:

1. Previous literatures related with mobile banking.

2. Internet
 1.7 LIMITATION OF THE STUDY

1. Sample size of the study is limited to 50 only.

2. The study is limited to the customers of Kaniyambetta Panchayath. Therefore, the inferences
cannot be generalised.
3. An in-depth study could not be carried out due to shortage of time.
4. Unable to communicate with people because of the corona period.
5. Time at the disposal of the researcher is limited.

1.8 CHAPTERISATION

Chapter I: Introduction

 Significance of the study

 Statement of the problem
 Objective of the study
 Scope of the study
 Research methodology
 Limitation of the study

Chapter II: Review of literature

Chapter III: Theoretical framework

Chapter IV: Data analysis and interpretation

Chapter V: Findings, suggestions and conclusion

 CHAPTER 2

REVIEW OF LITERATURE
 2.1 REVIEW OF LITERATURE

Mobile banking refers to the use of a smart phone or other cellular device to perform online banking
tasks while away from your computer such as monitoring account balance, transferring funds between
accounts, bill payments and locating an ATM

Literature review is a study involving a collection of literatures in the selected area of research in
which the scholar has limited experience. In the past, various studies relating to the customer
perception towards mobile banking have been conducted by researchers. This chapter provides the
overall view of the available literature with respect to the customer perception towards mobile
banking. The review of the related research works are described as under:

D.Vanisree (2013) conducted a study on “Mobile banking in India: Barriers in adoption and service
preferences.” Mobile banking is considered a new era in banking, in which banks are spending
considerable amount of money to have it available to their customers and to cut their operation costs.
Mobile banking is growing get there are number of issues and threats in mobile banking system. And
the major problem of mobile banking is its non-adoption by the customers.

CheahTeo et al. (2011) conducted an empirical analysis on “Factors affecting Malaysian mobile
banking adoption”. In this study factors such as perceived usefulness (PU), perceived ease of use
(PEOU), relative advantages (RA) and personal innovativeness (PI) were found to be positively
related with the intention to adopt mobile banking services. However, social norms (SN) were the
only factors found to be insignificant and perceived risk (PR) were negatively associated with the
mobile banking adoption.

Chien-Ta Bruce Ho Wen-Chuan Lin (2010) conducted a study on "Measuring the service quality
of internet banking: scale development and validation”. Develop a multiple item scale for measuring
internet banking service quality. . There are five dimensions and 17 items in the measurement scale
for measuring the service quality of internet banking. The five dimensions are named customer
service, web design, assurance, preferential treatment, and information provision

Anita Lifen Zhao and Nicole Koenig-Lewis (2010) conducted a study on “Adoption of internet
banking services in China”. In this study by looking simultaneously at the roles of trust and perceived
risk on consumers' IBS usage intention. Results indicate that there is a significant relationship
between trust and perceived risk and that both are crucial in explaining the internet banking usage
intention. Furthermore, trust in the bank is fundamental not only to reducing risk perceptions of IBS
in general but also to building trust in the banks' competence in terms of IBS activity.

Alain Yee-Loong Chong (2010) conducted a study on “The factors that affect the adoption ofonline
banking in Vietnam. In this study he tells that Perceived usefulness, perceived ease of use, trustand
government support was examined to determine if these factors are affecting online banking adoption.

Ahmed Audu (2010) conducted a study on “The relationship between the electronic banking
facilities, customers‟ employment sector and customers‟ age group choice of banks”. The results
show that there is no significant relationship between electronic banking facilities and customers‟
choice of banks

Masinge (2010) conducted a study on “The factors influencing the adoption of mobile banking
services at the bottom of the pyramid in South Africa”. In this study added perceived cost, trust and
perceived risk constructs to TAM.

Safeena et al (2010) conducted a study on “the customer‟s perception on internet banking adoption”.
The study shows that perceived usefulness, perceived ease of use, consumer awareness & perceives
risk are the important determinants of online banking adoption and have strong and positive effect on
customer to accept online banking system.

Laukkanen and Kiviniemi (2010) conducted a study on “The role of information in mobile banking
resistance”. They pointed out that information and guidance offered by a bank has the most significant
effect on decreasing the usage barrier, followed by image, value and risk barriers respectively.

Uppal R K (2010) in his work “The extent of mobile banking in Indian banking industry during
2000-2007.” The study concludes that among all e-channels, ATM, is the most effective while mobile
banking does not hold a strong position in public and old private sector but in new private sector
banks and foreign banks M-banking is good enough with nearly 50 pc average branches providing M-
banking services.

Giordani and Christos Floros (2009) conducted a study on “Internet banking services and fees: the
case of Greece.” This paper examines the internet banking services that Greek commercial banks are
offering. It also presents the associated costs and fees that customers face when using these services

Thulani D Tofara C. and Langton R. (2009) conduct a study on “The extent of adoption and usage
of internet banking by commercial banks in Zimbabwe”. The study concludes that while the majority
of the banks in Zimbabwe have adopted internet banking, usage levels have remained relatively low,
as not many customers are using this innovation in Zimbabwe.

Hua G (2009) in his study he investigate “The online banking acceptance in china by conducting an
experiment to investigate how user‟s perception about online banking is affected by the perceived
ease of use of website and the privacy policy provided by the online banking website.” The 110 under
graduate students in Chinese university are involved in the investigation.

Hwang et al. (2007) conducted a study on “Measuring customer satisfaction with internet Banking”.
E-banking has emerged as a significant and rapidly growing component of the world economic
exchange. Through e-banking the world economic exchange has been reduced to a tiny global village
in terms of its information capacity and the resources it holds which can be accessed by anybody from
anywhere in the globe.

Ahmad Zakaria Siam (2006) conducts a study on “The effects of electronic banking on bank‟s
profitability in Jordan”. How banking sector finds itself before a new fact imposed by technology
revolution and digits to change their work mechanisms from traditional means to electronic means
and the challenges banks face as a result. Furthermore, this study investigates the reasons behinds
providing electronic banking services through internet, their impact on banking services in general
and banks profitability in particular.

Laforet and Li (2005) conducted a study on “Barriers to Chinese consumer adoption of online
banking.” Laforet and Li investigated the barriers to Chinese consumer adoption of online banking
and they indicated that security was the most important factor that motivates the adoption of online
banking. Also they indicated perception of risk, computer and technological skills, lack of awareness
and understanding of the benefits, and Chinese traditional cash-carry banking culture as the main
barriers to adoption.

Jane M Kolodinsky and Jeanne M. Hogarth (2004) conducted a study on “The adoption of
electronic banking technologies by US consumers”. This paper explores factors that affect the
adoption or intention to adopt three e-banking technologies and changes in these factors over time.

Mari (2003) conducted a study on “Adoption of mobile banking in Finland.” The result from the
study indicated that certain attributes of m-banking innovation drive its usage. The attributes include;
relative advantage, compatibility, communication and triability. The investigation of complexity and
risk of using m-banking yielded no support as being barriers to adoption.
AbasanulHaque (2003) conducted a study on “the determinant factors of consumers‟ perception on
E-banking transaction in Internet banking by Malaysian bank consumers”. The research framework
was developed to testify the statistical relationships between consumer perceptions and E-banking
transaction. Factor analysis was performed to extraction and make initial decision on the number of
factors underlying asset of measured variables of interest.

CaalinGuraau (2002) conducted a study on “Online banking in transition economies: the

implementation and development of online banking systems in Romania”. Internet banking is one of
the newest Internet technology applications, which promises multiple benefits both for the financial
institutions and for clients. In the last five years a large number of banks have launched Web sites,
offering online banking services.

HeikkiKarjaluoto and MinnaMattila (2002) conducted a study on "Factors underlying attitude

formation towards online banking in Finland". The effect of different factors affecting attitude
formation towards online banking in Finland. The purpose of this paper is to determine those factors
that influence the formation of attitude towards Internet banking on the one hand, and their relation to
the use of online banking services, on the other. Attitude formation was studied by the use of a
structural equation model.
 CHAPTER 3

THEORETICAL FRAMEWORK
 3.1 THEORETICAL FRAMEWORK MEANING OF MOBILE BANKING

Mobile banking refers to the use of a smart phone or other cellular device to perform online banking
tasks while away from your home computer such as monitoring account balance, transferring funds
between accounts, bill payment and locating an ATM.

HISTORY OF MOBILE BANKING

When cell phones turned into smart phones, and began to mimic the power found in most computers,
banks have been able to provide consumers with powerful mobile banking apps that allow you to
complete your banking from wherever you are. This includes making deposits depending on the bank
and its mobile app checking funds, making bill payments, transferring or sending money. Mobile
banking differs from the payment features available on many of today's smart phones, as it provides a
sign-on link to your individual checking or savings accounts by an app you download from your
bank's website.

Once smart phones took over from cell phones, and the size and capabilities of mobile devices
increased, so did the effectiveness of mobile banking. Banks introduced mobile banking apps that
accommodated more types of cell phones, but smart phone users and advanced apps gave mobile
banking the boost that made it a safe and viable choice. Consumers preferred the easier navigation and
improved images and graphics offered by these updated, technologically advanced apps.

By 2008, even smaller banks began to offer mobile banking services and apps. By then, larger banks
and their customers were using these services regularly. By 2012, more than 21 percent of all smart
phone owners were using mobile banking in a report conducted for the Board of Governors for the
Federal

Reserve but 44 percent of that number belongs to the 18-to-29 age group, with the second largest
group 30 to 44 representing 36 percent of those who use mobile banking apps. These numbers are
expected to increase as more people rely on smart phones and tablets, and banks continue developing
apps for a variety of mobile devices. The earliest mobile banking services used SMS, a service known
as SMS banking. With the introduction of smart phones with WAP support enabling the use of the
mobile web in 1999, the first European banks started to offer mobile banking on this platform to their
customers.
Mobile banking has until recently (2010) most often been performed via SMS or the mobile web.
Apple's initial success with iPhone and the rapid growth of phones based on Google's Android
(operating system) have led to increasing use of special client programs, called apps, downloaded to
the mobile device. With that said advancements in web technologies such as
HTML5, CSS3 and JavaScript have seen more banks launching mobile web based services to
complement native applications. A recent study (May 2012) by Mapa Research suggests that over a
third of banks have mobile device detection upon visiting the banks' main website. A number of
things can happen on mobile detection such as redirecting to an app store, redirection to a mobile
banking specific website or providing a menu of mobile banking options for the user to choose from.

A perspective on the History

The first mobile banking and payment initiative was announced during 1999 (the same year that
Fundament deployed their first prototype). The first major deployment was made by a company called
Paybox (largely supported financially by Deutsche Bank). The company was founded by two young
German‟s (Mathias Entemann and EckartOrtwein) and successfully deployed the solution in
Germany, Austria, Sweden, Spain and the UK. At about 2003 more than a million people were
registered on Paybox and the company were rated by Gartner as the leader in the field. Unfortunately
Deutsche Bank withdraws their financial support and the company had to reorganise quickly. All but
the operations in Austria closed down. Another early starter and also identified as a leader in the field
was a Spanish initiative called Mobi Pago. The name was later changed to Mobi Pay and all
banks and mobile operators in Spain were invited to join. The product was launched in 2003 and
many retailers were acquired to accept the special USSD payment confirmation. Because of the
complex shareholding and the constant political challenges of the different owners, the product never
fulfilled the promise that it had. With no marketing support and no compelling reason for adoption,
this initiative is floundering at the moment. Many other large players announced initiatives and ran
pilots with big fanfare, but never showed traction and all initiatives were ultimately discontinued.
Some of the early examples are the famous vending machines at the Helsinki airport supported by a
system from Nokia. Siemens made announcements in conjunction with listed and high-flying German
e- commerce company, Brokat. Brokat also won the lucrative Vodafone contract in 2002, but crashed
soon afterwards when it runs out of funds. Israel (as can be expected) produced a large number of
mobile payment start-ups. Of the many, only one survived – Trivnet. Others like Adamtech (with a
technically sound solution called Cellpay) and Paytt disappeared after a number of pilots but without
any successful production deployments. Initiatives in Norway, Sweden and France never got
traction. France Telecom launched an ambitious product based on a special mobile phone with an
integrated card reader. The solution worked well, but never became popular because of the
unattractive, special phone that participants needed in order to perform these payments.

Mobile banking is a service provided by a bank or other financial institution that allows its customers
to conduct a range of financial transactions remotely using a mobile device such as a mobile phone or
tablet, and using software, usually called an app, provided by the financial institution for the purpose.
Mobile banking is usually available on a 24-hour basis. Some financial institutions have restrictions
on which accounts may be accessed through mobile banking, as well as a limit on the amount that can
be transacted.

Nowadays the world is fascinated by new technologies which were a dream before few days and now
become a tangible truth. People use their personal computers and different types of mobile phones to
connect to internet at anytime from anywhere to make airlines booking, shopping and even social
connecting and many other things. Thus, this revolution opens the door for many ideas which did not
exist in the last decade.

Banking industry is one of the vital fields that are reshaped by technology. Banks are competing to
provide their best to reduce the time taken to achieve processes and to keep their customers feel
comfort. They are seeking for solutions to reduce the cost of serve customers when they decide to
visit bank to inquiry about their balance or need to transfer funds. This process seems simple but
actually expensive for both the customer and bank. It keeps thousands of seconds that spent in queues
to achieve simple transactions, and thousands of papers used to print the result. Thus banks started to
exploit technology by implementing internet banking. This enabled customers to do transactions
through bank website which had a significant role in adapting customers to the idea of making
transactions remotely.

Over the last few years the mobile phones have been grown at a rapid pace. Different models and
technologies were introduced. Finally the trend of smart phones which have complicated operating
systems and huge capabilities compared to old phones. The small size of this device increases its
portability.

According to Silicon India the number of cell phone accounts to rise from 6 billion now to 7.3 billion
in 2014, compared with a global population of 7 billion. This huge number of user gives string
indicators that mobile phones will punctuate future. Mobile banking is defined as the service which
qualifies customers to receive information about their accounts and to make real transactions by using
mobile phones in a secure and reliable way. Services like balance enquiry, mini statement, currencies
rates, money transfer, bill payment, cheque book request and many other banking services.

Many proposed technologies are being used in mobile banking implementation such as short
messaging services, wireless access protocol and mobile application clients. Each technology has its
own advantages and drawbacks, but somehow they all are suffering from vulnerabilities in
infrastructure connection protocols. In contrast banks scare of disclosure customer‟s information
which can leads to catastrophic results. Thus security is an important factor in mobile banking.

Significance

Customers who use e-banking tend to be more profitable, loyal, and willing to refer their bank to
friends and family than do traditional banking customers. Online customers also maintain higher
balances, require less customer support and have lower attrition rates than offline consumers. Online
banking customers who use online bill pay and e-bill services are happier with their banks, which
translate into deepened relationships.

Benefits

E-banking offers consumers and organizations many benefits, including 24/7 access to accounts and
services. As financial institutions continue to develop online banking, customers are using more
services, such as bill payment across industries, money transfer and mobile e-banking using cell
phones and hand- held devices.

Warning

While a number of industry and governmental forces are combining to fight Internet fraud, financial
institutions continue to invest heavily in online services. The benefits are too great to turn back,
despite worries about security. Active online banking users not only show greater loyalty to their
bank, but they almost always carry higher balances. In an age where even the largest financial
institutions are willing to fight for every single customer, these benefits are huge.

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 customized information."

Mobile banking can be said to consist of three inter-related 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.

Typical mobile banking services may include:

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

Transaction

1) Funds transfers between the customer's linked accounts

2) Paying third parties,including bill payments and third party fund transfers
3) Check Remote Deposit

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

A report by the US Federal Reserve (March 2012) found that 21 percent of mobile phone owners had
used mobile banking in the past 12 months. 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.

The types of financial transactions which a customer may transact through mobile banking include
obtaining account balances and list of latest transactions, electronic bill payments, and funds transfers
between a customer's or another's accounts. Some also enable copies of statements to be downloaded
and sometimes printed at the customer's premises; and some banks charge a fee for mailing
hardcopies of bank statements.

From the bank's point of view, mobile banking reduces the cost of handling transactions by reducing
the need for customers to visit a bank branch for non- cash withdrawal and deposit transactions.
Transactions involving cash or documents (such as cheques) are not able to be handled using mobile
banking, and a customer needs to visit an ATM or bank branch for cash withdrawals and cash or
cheque deposits.

Mobile banking differs from mobile payments, which involves the use of a mobile device to pay for
goods or services at the point of scale or remotely, analogously to the use of a debit or credit
card to effect an EFTPOS payment.

The Reserve Bank of India recently informed banks to encourage mobile banking. In coming days we
will see more number of people getting addicted to the ease of mobile banking. In the internet era,
mobile banking can be considered as boon as well as bane. However, many people still are not able to
relay on mobile banking due to its exposure to risk. Here are few safety tips which you can consider.
For people who are planning to go with mobile banking, here are few advantages and disadvantages to
keep in mind.
The banking industry has enjoyed tremendous success in the application of high-end information
systems and technologies. Technological advances have reshaped the size and nature of the financial
industry, allowing it to extend beyond the traditional, brick-and-mortar concept of borrowing and
saving. Internet banking, digital wireless banking and mobile banking are an extension of the
technological progression that is now characteristic of the banking sector. Mobile banking involves
the access to, and provision of, banking and finance services through mobile devices. Features and
services offered by mobile banking can be accessed through personal digital assistants (PDAs),
pagers, cellular phones and other similar devices.

Mobile banking offers a host of traditional banking services. Mobile banking allows users to access
transactional and statement details; transfer funds between accounts; trade stocks with brokerage and
notification; make payments and confirm checks.

ADVANTAGES OF MOBILE BANKING

Nowadays, technology had a major impact in helping banks service their customers were with the
introduction of the Internet banking. Internet Banking helped give the customer's anytime access to
their banks. Customers 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.

Mobile banking provides banking services to inaccessible (mountainous and remote) areas. It provides
financial services to clients, allowing them the flexibility of accessing their account details from
anywhere in the world. According to Michael J. O &; Farrell John R. Levine and JosteinAlgroy in the
book “ Mobile Internet for Dummies, ” mobile banking is safer than Internet banking,
with fewer reported frauds. Access to mobile bank accounts requires a PIN (personal identification
number) and a secure password every time a user wishes to log in. All information sent from and
received by a mobile phone has 128-bit encryption that protects the information during its broadcast.

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 banking is a technology that allows you to access your
bank account from a mobile device, usually a cell phone. There are several benefits to this technology,
particularly for activity notification and account management while traveling.

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.

Anytime Banking:

Mobile Banking gives you the privilege of anytime and anywhere banking. One can do most of the
banking transaction after banking hours from anywhere, irrespective of whether you are travelling in
bus or auto. Whereas this ease will not be possible, if you are connected to a PC or lap top especially
when travelling.

Mobile Banking is Free:

The service provided by bank is free of charge, there is no limit for number of times you can access
your account. Various banking services provided include Account Balance Inquiry, Credit/Debit
Alerts, Bill Payment Alerts, Transaction History, Fund Transfer Facilities, Minimum Balance Alerts
etc. can be accessed from your mobile. You can transfer money instantly to another account in the
same bank using mobile banking.

Secure Banking:

Some banks assure that, by downloading the app directly from the server, the data won‟t be stored in
your mobile as well as SIM card. The app comes with advanced encryption technologies making it
safe and secure as Internet Banking.

Simplicity and usability:

The mobile banking application should be user friendly with little or no learning curve to the
customer.
Universality:

Mobile banking services should provide for transactions between one customer to another customer or
from a business to a customer or between businesses. The coverage should also include domestic,
regional and global environments.

Interoperability:

Development should be based in standards and open technologies in order to allow one implemented
system to interact with another one.

Security, privacy and trust:

Customer needs to trust his m-banking service provider that his or her account information may not be
misused.

Advantages / Benefits of Mobile banking

Mobile banking through cell phone offers many advantages for customers as well as banks. Some of
them are as follows:-

 Mobile banking has an edge over internet banking. In case of online banking, you must have
an internet connection and a computer. This is a problem in developing countries. However,
with mobile banking, connectivity is not a problem. You can find mobile connectivity in the
remotest of places also where having an internet connection is a problem.
 You can make transactions or pay bills anytime. It saves a lot of time.
 Mobile banking thorough cell phone is user friendly. The interface is also very simple. You
just need to follow the instructions to make the transaction. It also saves the record of any
transactions made.
 Cell phone banking is cost effective. Various banks provide this facility at a lower cost as
compared to banking by self.
 Banking through mobile reduces the risk of fraud. You will get an SMS whenever there is an
activity in your account. This includes deposits, cash withdrawals, funds transfer etc. You will
get a notice as soon as any amount is deducted or deposited in your account.
 Banking through cell phone benefits the banks too. It cuts down on the cost of tele- banking
and is more economical.
 Mobile banking through cell phone is very advantageous to the banks as it serves as a guide in
order to help the banks improve their customer care services.
 Banks can be in touch with their clients with mobile banking.
 Banks can also promote and sell their products and services like credit cards, loans etc. to a
specific group of customers.
 Various banking services like Account Balance Enquiry , Credit/Debit Alerts, Bill Payment
Alerts, Transaction History, Fund Transfer Facilities, Minimum Balance Alerts etc. can be
accessed from your mobile.
 You can transfer money instantly to another account in the same bank using mobile banking.
 Countries like Korea where mobile penetration is nearing saturation, mobile banking is
helping service providers increase revenues from the now static subscriber base. Banks
offering mobile access are mostly supporting some or all of the following services:
o Account Balance Enquiry
o Account Statement Enquiries.
o Cheque Status Enquiry.
o Cheque Book Requests.
o Fund Transfer between Accounts.
o Credit/Debit Alerts.
o Minimum Balance Alerts.
o Bill Payment Alerts.
o Bill Payment.
o Recent Transaction History Requests.
o Information Requests like Interest Rates/Exchange Rates.

 Account Notification
 More ways to access account
 Account security.
 Paying bills
 Funds transfer
 Security
 Compatibility
 Cost effective
Mobile banking through cell phone is really catching up. Mobile connectivity is vast and this makes
mobile banking very successful. The downside is that mobile banking isn't as good as it could be.
Mobile banking isn't as fully functional as online banking. Yet, many experts say that mobile banking
offers many benefits worth using, and some are getting increasingly better.

ANCILLARY SERVICE TO MOBILE BANKING BY BANKS:

 Top-up mobile talk time by refilling through the ATM network.

 Refill the prepaid mobile phone through the ATM/SMS
 Have separate memorandum of undertaking with other telecom companies also and sells this
product to earn commission.

It is highly potential income-generating products for banks, since the banks get commission on the
transaction amount. The main advantage to the customer is that he can refill his mobile for any
amount he desires. The process of refilling is automated and completed online. If all other banks also
integrate this facility, it will be boon to all the mobile phone banking customers to avail themselves of
the services without any interruption. Banks should innovate such services to make the product of
mobile phone banking more and more popular as a vehicle for channel migration and focus attention
on additional business.

ADVANTAGES OF MOBILE BANKING TO CUSTOMERS

 Customers need to stand at the bank counter/ front office for various enquiries about their
account.
 Customers can save their valuable time and travelling cost in reaching the bank for their
financial transactions.
 It is a mobile service to have information, all the 365 days, anytime, anywhere, about their
account.
 Customers can pay their utility bills on time and save their selves from paying penalties, since
alerts are received from the bank.

Plan funding their accounts the cheques issued to various customers, by taking advantage of balance
enquiry/ account status.

 Cheque book request can be made sitting at their work place.

ADVANTAGES OF MOBILE BANKING TO BANKERS

 Bankers can utilize the time saved by the channel migration of customers to mobile banking
for expansion of business through better marketing and sales activities.
 Bank can take advantage of the profit by way of commission for cellular companies by selling
prepaid talk time through the ATMs.
 Bank providing mobile banking services can have competitive advantage over those banks,
which are not providing this service.
 Mobile banking enables banks to reduce cost of courier, communication, paper works, etc.

DISADVANTAGES OF MOBILE BANKING

To make maximum benefit of mobile banking one should have smart phone. Some banks have
specific software for specific mobile such as iPhone and Blackberry people should download different
apps based on the smart phone they own. Many experts believe that mobile banking is more secure
than internet banking as very few virus or Trojans can exist in phone. However, that does not mean
that they are immune to any kind of threats. As phishing exist for internet banking users, there is
“Smishing” for mobile banking users. When a mobile banking user receives a fake text message
asking for bank account details from a hacker. There are also very limited anti -virus software options
for mobile devices. People are less careful with their mobile compared to laptop. You must also
update your anti-virus on the mobile if you are a frequent user of mobile banking.

These days there is nothing that you cannot do with a Smartphone. Previously mobile phones were for
mere calling and messaging, but these days they are high tech gadgets, nothing less of a computer.
You just have to name the task and a mobile phone completes it. Mobile banking is one of the
wonderful tasks that can be done using a mobile phone. Mobile banking is a technology which allows
cell phone users to access their bank accounts right from their mobile phone. Though there are many
advantages there are some disadvantages too to the mobile banking. Here are a few disadvantages of
mobile banking listed.

These days there is nothing that you cannot do with a Smartphone. Previously mobile phones were for
mere calling and messaging, but these days they are high tech gadgets, nothing less of a computer.
You just have to name the task and a mobile phone completes it. Mobile banking is one of the
wonderful tasks that can be done using a mobile phone. Mobile banking is a technology which allows
cell phone users to access their bank accounts right from their mobile phone. Though there are many
advantages there are some disadvantages too to the mobile banking. Here are a few disadvantages of
mobile banking listed.

Security

Security experts opine that mobile banking is more secure than computer banking since there are very
few viruses, Trojans etc on mobile than on computer. However, it does not mean that mobile banking
does not have any security threats. Users of mobile banking can be prone to scam similar to phishing
termed “Smishing”. It happens when a user receives a fake message asking their bank account details
from hackers who disguise as people from financial institutes. Many people were caught with this
trick and lost their money because of this scam.

Cost

If you have a compatible device then the cost of mobile banking might not matter much to you, but if
you have to pay for the data and the texting fee then it might cost you some amount of money. Some
banks will charge users an extra fee for the service and also users have to pay a fee for the software
too. If you use mobile banking regularly then all the extra charges might make a significant amount
that you will have to pay. Security experts generally agree that mobile banking is safer than computer
banking because very few viruses and Trojans exist for phones. That does not mean mobile banking is
immune to security threats, however.

Mobile banking is not available on every device. Some banks do not provide mobile banking at all.
Others require you to use a custom mobile banking application only available on the most popular
smart phones, such as the Apple iPhone and RIM Blackberry. Third-party mobile banking software is
not always supported.

The cost of mobile banking might not appear significant if you already have a compatible device, but
you still need to pay data and text messaging fees. Some financial institutions charge an extra fee for
mobile banking service, and you may need to pay a fee for software. These extra charges quickly add
up, especially if you access mobile banking often.

Challenges for a mobile banking

Key challenges in developing a sophisticated mobile banking application are:

Coverage

One of the biggest challenges of mobile banking is cellular coverage. Across the country there are a
number of different providers, but there is not necessarily nationwide coverage for these providers.
Bank users may not realize this and can end up with a large cell phone bill full of charges. Other users
may not be able to access their mobile banking at all in different parts of the country. This problem is
beyond the bank's control as the bank works with the cellular company to provide the service.

Technology:

To offer mobile banking services, financial institutions may need to upgrade their technology. Many
legacy systems are still in operation at financial institutions; these where not developed to serve real
time transactions. Different issue is that financial institution needs to offer mobile apps for every
platform like, Google Android and Apple Iphones.

Risk mitigation:

Financial institutions need to decide how to administrate risk. They will need to put limits on
transactions that can be performed per a day or month or year. They may need to limit some services
to some customers.

Regularity:

Policies which govern banking may change from country to country and may even change from
region to region inside the same country. This may also affect the adoption of mobile banking.

Engagement:

Because of deploying mobile banking project this may lead to decrease traffic at branches. Thus
financial institutions need to maintain their relationship with customers who do not need to visit
branch frequently.

Customer Authentication

It is more difficult to verify a customer's identity with mobile banking. Mobile banking allows for
little to no customer contact. In this situation it is important to use the USA Patriot Act to verify a
third party who wishes to use a mobile banking service. Money laundering is also a concern, as with
traditional banking, and must be closely monitored.
Security

As with most internet-connected devices, as well as mobile- telephonydevices, cybercrime rates are
escalating year-on-year. The types of cybercrimes which may affect mobile-banking might range from
unauthorized use while the owner is using the toilet, to remote-hacking, or even jamming or
interference via the internet or telephone network datastreams. In the banking world, currency rates
may change by the millisecond.

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.

Scalability and reliability

Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile banking
infrastructure to handle exponential growth of the customer base. 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.

Personalization

It would be expected from the mobile application to support personalization such as:

1) Preferred Language
2) Date / Time format
3) Amount format
4) Default transactions
5) Standard Beneficiary list
6) Alerts
Current operating practice and technologies:

Mobile channel platforms:

Financial institutions used variety of mobile media channels in creating mobile banking solutions.
These solutions include Short Message Services (SMS), mobile web and mobile client
applications.Each mobile media channel has its own strengths and weakness, thus it‟s important
the delivery mode for each banking services.

Short Message Service (SMS)

Most of mobile phones support SMS, thus it is beneficial for banks to develop such application to
serve the widest group of customers. And also from the customer point of view the SMS is least cost
compared to the other data packages. A simple applicationis needed to generate short messages to be
sent to customers or receive a request from customer and give response in another short message.
Also SMS can be used in hybrid solution beside mobile client or web applications as notifications.

Mobile client applications

Financial institutions and their customers are increasingly adopting advanced agent-based
technologies and other downloadable applications. These improvements in handsets will help in
developing more secure, user friendly applications and other rich features. Nevertheless there are
many other obstacles than need to be overcome before mobile application become as ubiquitous as
SMS.

Today mobile applications become very popular and they developed to provide from basic features
like messaging to complex features like playing games, mobile client applications give access to
services that require richer, faster and not necessarily high user experience.

Future functionalities in mobile banking

Based on the 'International Review of Business Research Papers' from World business Institute,
Australia, following are the key functional trends possible in world of Mobile Banking.

With the advent of technology and increasing use of smart phone 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.

 Communication enrichment: - Video Interaction with agents, advisors.

 Pervasive Transactions capabilities: - Comprehensive “Mobile wallet”
 Customer Education: - “Test drive” for demos of banking services
 Connect with new customer segment: - Connect with Gen Y – Gen Z using games and social
network ambushed to surrogate bank‟s offerings
 Content monetization: - Micro level revenue themes such as music, e-book download
 Vertical positioning: - Positioning offerings over mobile banking specific industries
 Horizontal positioning: - Positioning offerings over mobile banking across all the industries.
 Personalization of corporate banking services: - Personalization experience for multiple roles
and hierarchies in corporate banking as against the vanilla based segment based
enhancements in the current context.

ADOPTION OF MOBILE BANKING

Adoption is the acceptance and continued use of a product, service or idea. Consumers go through “a
process of knowledge, persuasion, decision and confirmation” before they are ready to adopt a
product or service. The adoption or rejection of an innovation begins when “the consumer becomes
aware of the product”. Consumers will seek out those financial products and suppliers which offer the
best value for money and they are educated about it. Hence, for adoption of mobile banking, it is
necessary that the banks offering this service make the consumers aware about the availability of such
a product and explain how it adds value relative to other products of its own or that of the
competitors. Consumers must become aware of the new brand or technology. An important
characteristic for any adoption of innovative service or product is creating awareness among the
consumers about the service/product. The amount of information consumers have about online
banking has been identified as a major factor impacting the adoption. While the use of online banking
services is fairly new experience to many people, low awareness of online banking is a major factor in
causing people not to adopt online banking.

The influence of several factors on mobile bank services adoption. Six factors were included and
those factors are:

1. Self efficacy: An individual‟s self confidence in his or her ability to perform behavior
 2. Trailability: The extent users would like an opportunity to experiment with the innovation
prior to committing to its usage.
3. Compatibility: The degree to which an innovation is viewed as being consistent with existing
values of users.
4. Complexity: The degree to which an innovation is considered relatively difficult to understand
and use.
5. Risk: The perceived sense of risk concerning disclosure of personal and financial information.
6. Relative advantage: The extent to which a person views an innovation as offering an
advantage over previous ways of performing the same task.

PERCEIVED USEFULNESS

Perceived usefulness refers to the degree to which a person believes that using a particular system
would enhance his or her job performance. It refers faster transactions, relative advantage and easy to
carry out tasks.

PERCEIVED EASE OF USE

Perceived ease of use is defined as the degree to which a person believes that using a particular
system would be free of effort. It refers easy to learn, easy to use and minimal mental effort required.

PERCEIVED RISK

Perceived risk is the uncertainty about the outcome of the use of the technology. Perceived risk refers
to four facets of risk including performance risk, security/privacy risk, time risk and financial risk.

AWARNESS

An important characteristic for any adoption of innovative service or product is creating awareness
among the consumers about the service/product. The amount of information consumers have about
online banking has been identified as a major factor impacting the adoption. While the use of online
banking services is fairly new experience to many people, low awareness of online banking is a major
factor in causing people not to adopt online banking.