MOBILE BANKING

UNIVERSITY OF MUMBAI
PROJECT ON: MOBILE BANKING

PROJECT BY: SWAMI BHAVSAR T.Y.BCOM (BANKING &INSURANCE) SEMESTER-V 2009-2010

PROJECT GUIDE PROF.-MUKESH KANOJIYA

M.K.SANGHVI COLLEGE OF COMMERCE &ECONOMICS VILE PARLE (WEST) Mumbai 400056
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MOBILE BANKING

DECLARATION

I Ms. SWAMI BHAVSAR Student of T.Y.BCom (Banking & Insurance- Semester V) of Malini Kishor Sanghvi College of Commerce & Economics, hereby declare that I have completed the project on ‘MOBILE BANKING’ in the academic year 2009-2010. The information submitted is true and original to the best of my knowledge.

Date of submission ----------------------

Signature of student --------------------

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MOBILE BANKING

CERTIFICATE

This is to certify that SWAMI BHAVSAR of T.Y.B.com (BANKING & INSURANCE – SEMESTER-V) of Malini Kishor Sanghvi College of Commerce & Economics has successfully completed the project on “MOBILE BANKING” in the academic year 2009-2010. The information is true & original to the best of our knowledge.

Signature of Principal (Dr. (Mrs) Krushna Gandhi)

Signature of Project Guide (Mr.Mukesh kanojya)

Signature of Co-ordinator (Purvi Dholakia)

College seal

Signature of External Examiner
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my family & friends without whose support my project would not have been possible.MOBILE BANKING ACKNOWLEDGEMENT Any accomplishment requires efforts of many people & this work is no different. K. I would also like to express my gratitude towards the library staff of M. 4 .Y.Purvi Dholakia. With a deep sense of gratitude. MUKESH KANOJYA for his support in preparation of project report. I wish to express my sincere thanks to my project guide Prof. T.Bcom (Banking & Insurance) coordinator for giving me the opportunity to work on this project. I take the opportunity to thank Prof. I am grateful to the UNIVERSITY OF MUMBAI to have introduced this final project of our curriculum. SANGHVI COLLEGE.

"Just as the iPod changed the music industry and their business models. as well as the race between phone companies to develop the basic thin-client capabilities dubbed "wrapper applications" designed to integrate financial services into mobile online sites. such as the iPhone." one of the factors driving the mobile banking surge. mobile-phone owners currently have access to mobile banking but choose not to utilise it. it could soon become a mainstream ability. when 45 percent of users will actually use it. It will also work in tandem with online banking. 52 percent of these customers are reckoned to be using smart-phones. is the increased usage of smart-phones. the percentage of people using mobile banking will equate to approximately 99 million US adults conducting mobile banking transactions at least once per year. with mobile banking being used as a "remote control" and ''online'' as a detailed form of control panel for more complex transactions.MOBILE BANKING EXECUTIVE SUMMARY The last time that technology had a major impact in helping banks service their customers was with the introduction of the Internet banking. Financial Services Channels Analyst speaking to Cellular News. our data shows that iPhone users are changing the banking industry by leading the way in monitoring and managing finances through mobile devices. Customer's could check out their account details. "Mobile banking is quickly becoming an essential consumer capability." said Mark Schwanhausser. This is predicated to change by 2014." "Consumers are hungry for the 'always-on' and 'real time' ability to monitor and manage their money." 5 . advancing technologies will enable mobile banking to become a convenient and quick way for consumers to check their balance as well as pay for goods. get their bank mobile phone banking is the domain of a lucky few with constantly changing customer preferences and a greater emphasis placed on mobility. By 2014. "Mobile banking is quickly moving from infancy to commonplace. and mobile banking serves that need better than any other. which will help separate the winners from losers in banks' ability to attract and keep technology-loving consumers. Internet Banking helped to give the customer's anytime access to their banks.

Assessing the mobile banking market opportunity in developing regions Investment programs have been launched to stimulate mobile banking services in developing countries Charting the emergence of mobile banking services in developing countries Other operators are seeking to mirror the success of M-PESA Serving the unbanked in developed regions is also a natural fit for mobile banking services Mobile banking services will replace traditional remittance flow methods Summarizing the market opportunity for mobile banking IMPACTS ON BANKS In 2009. but usage in developed markets will remain low IT spending on mobile banking is continuing. mobile banking features in the channel strategy plans of most retail banks Mobile banking channel is not a high priority channel for IT investment in 2009 Retail banks must be willing to play the long game in order to achieve decent revenues Banks will need to prepare themselves for inevitable operational and 6 . the mobile banking ecosystem is entering its next phase of development in 2009 Catering to the unbanked will have a positive influence on the growth of mobile banking. but it is not the highest priority channel Mobile banking’s greatest opportunity involves serving the needs of the unbanked Retail banks and technology vendors must be prepared to play the long game MARKETOPPORTUNITY Mobile banking has struggled in Europe and North America: will this change in 2009/10? The difficult economic climate is refocusing the attention of consumers to their personal finances Mobile banking devices and interfaces have thankfully improved.MOBILE BANKING Mobile banking is a credible channel. thereby enhancing the user experience After multiple false starts.

perform transactions like transferring money to other accounts and pay their bills sitting in the comfort of their homes and offices. 7 .MOBILE BANKING technological impacts Banks must ensure they make adequate security provisions for mobile banking services Banks will have to share revenues from mobile services with others in the ecosystem statements.

MOBILE BANKING

INDEX SR NO 1. 2. 3. 4. 5. 6. 7. CONTENT INTRODUCTION TO BANKING. TYPES OF BANKS. INTRODUCTION TO MOBILE BANKING. A MOBILE BANKING CONCEPTUAL MODEL. TRENDS IN MOBILE BANKING. MOBILE BANKING SERVICES. UTILITY OF MOBILE BANKING FROM BANK’S PERSPECTIVE. 8. MOBILE BANKING AS DISTRIBUTION CHANNEL. 9. 10. TECHNOLOGIES ENABLING MOBILE BANKING. ADVANTAGES AND DISADVANTAGES OF MOBILE BANKING. 11. 12. 13. 14. 15. 16. 17. MARKETING FOR MOBILR BANKING CHALLENGES FOR MOBILE BANKING FEATURES OF MOBILE BANKING EMPLOYMENT OF MOBILE TECHNOLOGIES IN BANKING SECTOR MOBILE BANKING IN THE WORLD CASE ANALYSIS CONCLUSION 39 40-42 43 44-45 46 47-48 49
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WEBLIOGRAPHY

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BIBLIOGRAPHY
QUESTIONNAIRE

INTRODUCTION
INRODUCTION TO BANKING
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MOBILE BANKING

The Indian banking can be broadly categorized into nationalized (government owned), private banks and specialized banking institutions.The Reserve Bank of India acts a centralized body monitoring any discrepancies and shortcoming in the system. Since the nationalization of banks in 1969, the public sector banks or the nationalized banks have acquired a place of prominence and has since then seen tremendous progress. The need to become highly customer focused has forced the slow-moving public sector banks to adopt a fast track approach. The unleashing of products and services through the net has galvanized players at all levels of the banking and financial institutions market grid to look anew at their existing portfolio offering. Conservative banking practices allowed Indian banks to be insulated partially from the Asian currency crisis.Indian banks are now quoting al higher valuation when compared to banks in other Asian countries (viz. Hong Kong, Singapore, Philippines etc.) that have major problems linked to huge Non Performing Assets (NPAs) and payment defaults. Co-operative banks are nimble footed in approach and armed with efficient branch networks focus primarily on the ‘high revenue’ niche retail segments. The Indian banking has finally worked up to the competitive dynamics of the ‘new’ Indian market and is addressing the relevant issues to take on the multifarious challenges of globalization. Banks that employ IT solutions are perceived to be ‘futuristic’ and proactive players capable of meeting the multifarious requirements of the large customers base. Private banks have been fast on the uptake and are reorienting their strategies using the internet as a medium The Internet has emerged as the new and challenging frontier of marketing with the conventional physical world tenets being just as applicable like in any other marketing medium.

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MOBILE BANKING The Indian banking has come from a long way from being a sleepy business institution to a highly proactive and dynamic entity. rural development etc.e. These co-operatives. 223 banks are in the public sector and 51 are in the private sector. They also have various tax sops because of their holding pattern and lending structure and hence have lower overheads. housing loans. The banking in India is highly fragmented with 30 banking units contributing to almost 50% of deposits and 60% of advances. 11 . The private sector bank grid also includes 24 foreign banks that have started their operations here. the co-operative banks too have invested heavily in information technology to offer high-end computerized banking services to its clients. This enables them to give a marginally higher percentage on savings deposits. The Indian banking can be broadly categorized into nationalized. truck finance etc. Under the ambit of the nationalized banks come the specialized banking institutions. The nationalized banks (i. Industry estimates indicate that out of 274 commercial banks operating in India. borrowing and lending). unlike commercial banks these co-operative banks do not lend on the basis of a prime lending rate. rural banks focus on areas of agriculture.. Indian nationalized banks (banks owned by the government) continue to be the major lenders in the economy due to their sheer size and penetrative networks which assures them high deposit mobilization. private banks and specialized banking institutions. This transformation has been largely brought about by the large dose of liberalization and economic reforms that allowed banks to explore new business opportunities rather than generating revenues from conventional streams (i.e. Many of these cooperative banks diversified into specialized areas (catering to the vast retail audience) like car finance. in order to keep pace with their public sector and private counterparts. government-owned banks) continue to dominate the Indian banking arena. It is the foremost monitoring body in the Indian financial sector. The Reserve Bank of India act as a centralized body monitoring any discrepancies and shortcoming in the system.

Trends are now changing as banks (both public and private) have now started focussing on NBFC domains like long and medium-term finance.MOBILE BANKING TYPES OF BANKS 1998-99 State Bank of India and Associates Nationalized Banks Domestic Private Sector Banks New Domestic Private Sector Banks Foreign Banks 08 19 25 09 29 Complementing the roles of the nationalized and private banks are the specialized financial institutions or Non Banking Financial Institutions (NBFCs). IPO financing to etc. With their focused portfolio of products and services. to meet the multifarious needs of the business community. etc. apart from financial consultancy services. working cap requirements. these Non Banking Financial Institutions act as an important catalyst in contributing to the overall growth of the financial services sector. IPO finance. 12 . facilitate mergers and acquisitions. NBFCs offer loans for working capital requirements.

hassle-free housing loan schemes. there are 11 national level land 46 state level financial and investment institutions that cater to long term funding requirements of the industry. educational loans and flexi-deposit 13 . These two segments form the pivot around which banks operate. banks offer working capital funds to corporate. corporations to set up their projects. PROJECT FINANCE Banks offer long term and short terms loans to business houses. In India. These economic reforms and the entry of private players saw nationalized banks revamp their service and product portfolio to incorporate new. WORKING CAPITAL In order to meet the diverse needs and requirements of the business community. The project finance segment is highly competitive with various players offering innovative schemes to entice corporate. Working capital finance is specialized line of business and is largely dominated by the commercial banks. The Indian banking finally woke up to the surging demands of the ever-discerning Indian consumer. The need to become highly customer focused (generated by high competitive levels) forced the slow-moving public sector banks to adopt a fast track approach.MOBILE BANKING COMMERCIAL FINANCING The commercial financing model in Indian banking can be broadly categorized into project finance and working capital finance. the public sector banks too went for major image changes (including corporate brand building exercises) and customer friendly schemes. These customer friendly programs included revamping of the product and service portfolio by introducing new product & service schemes (like credit cards. These loans are disbursed after the approval from the banks’ core credit validating committee. innovative customer-centric schemes. The Indian banking saw dramatic changes in the last decade or so ever since the advent of liberalization and India’s integration with the world economy. Taking a leaf out of the private sector banks.

Marketing and brand building programs were also given a new thrust in the new liberalized banking scenario. These banks have generally been established by promoters of repute or by ‘high value’ domestic financial institutions. to optimally service the customer. NEW GENERATION BANKING He liberalize policy of Government of India permitted entry to private sector in the banking. image makeovers etc. Promotional budgets were hiked to cater to the new and large discerning target audience. educational loans etc.MOBILE BANKING schemes) integration of the branch network by using advance networking technology and customer personalization programs (through ATMs and anytime banking etc. car finance. Direct marketing. Many banks have started capitalizing on the recent stock market surge by adding (Initial Public Offering) IPO financing options and schemes in their product mix. Internet marketing. Verify the focus has always been centered around the customer – understanding his needs. Banks were now keen on marketing their products and service though various mediums to reach their core customers. hoarding. press ads. IPO finance has received a positive response from the investors and is becoming popular amongst the business community. like housing loans. the industry has witnessed the entry of nine new generation private banks. The major differentiating parameter that distinguishes these banks from all the other banks in the Indian banking is the level of service that is offered to the customer. The popularity of these banks can be gauged by the fact that 14 . WANs. television sponsorships. feeding the customer (with his or her consent) with product and service information and thereby enticing him towards the bank’s product – service portfolio.). became an integral part of a bank’s marketing mix. many public sector banks have ploughed back funds to invest heavily in technology upgrades and systems like LANs. VSATs etc. Permission marketing became the new strategy that banks began to propound i.e. banks repositioned themselves in specialized fields. To meet the personalized needs of the customer and in order to differentiate its services. preempting him and consequently delighting him with various configuration of benefits and a wide portfolio of products and services. The objective of all these strategies was very clear – to bridge the service & product gap that was inherent in the banking system. To cater to the increasing customer demands and the surge in business volumes.

these banks have leveraged on their strengths and competencies viz. Management. these banks have gained considerable customer confidence and consequently have shown impressive growth rates. Most of the banks in this category are concentrated in the highgrowth urban areas in metros (that account for approximately 70% of the total banking business ). the private banks corner almost four per cent share of the total share of deposits. A strategy that has allowed these banks to concentrate on few reliable high net worth companies and individuals rather than cater to the mass market. operational efficiency and flexibility. Today. These well-chalked out integrates strategy plans have allowed most of these banks to deliver superlative levels of personalized services. 15 .MOBILE BANKING in a short span of time. superior product positioning and higher employee productivity skills. With the Reserve Bank of India allowing these banks to operate 70% of their businesses in urban areas. this statutory requirement has translated into lower deposit mobilization costs and higher margins relative to public sector banks. The private banks with their focused business and service portfolio have a reputation of being niche players in the industry. With efficiency being the major focus.

MOBILE BANKING 16 .

m-banking. and now mobile banking promises to take it to the next level. Mobile banking addresses this fundamental limitation of Internet Banking. However the biggest limitation of Internet banking is the requirement of a PC with an Internet connection. The last time that technology had a major impact in helping banks service their customers was with the introduction of the Internet banking. but definitely a big barrier if we consider most of the developing countries of Asia like China and India. which ushered in a new era in banking convenience by bringing the entire operations to the computer. and pay their bills. Internet Banking helped give the customers anytime access to their banks. get their bank statements.. account transactions. Mobile Banking addresses this fundamental limitation of Internet Banking. China and Korea. 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. Customers could check out their account details. via a mobile device such as a mobile phone. Mobile usage has seen an explosive growth in most of the Asian economies like India. as it reduces the customer requirement to just a mobile phone. Customer's could check out their account details.) is a term used for performing balance checks. It was Internet Banking.MOBILE BANKING INTRODUCTION TO MOBILE BANKING Mobile Banking (also known as M-Banking. perform transactions like transferring money to other accounts. payments. SMS Banking. Internet Banking helped to give the customer's anytime access to their banks. perform transactions like transferring money to other accounts and pay their bills sitting in the comfort of their homes and offices. 17 . but definitely a big barrier if we consider most of the developing countries of Asia like India and China. However. etc. not a big obstacle if we look at the US and the European countries. sitting in the comfort of their homes and offices. etc. as it reduces the customer requirement to just a mobile phone. The main reason that Mobile Banking scores over Internet Banking is that it enables 'Anywhere Anytime Banking'.

it never became popular due to security concerns. While many operators.MOBILE BANKING Mobile usage has seen an explosive growth in most of the Asian economies like India. RBI has been tightening the banks. lack of awareness of services. According to the Cellular Operators' Association of India (COAI) the mobile subscriber base in India hit 40. Mobile banking has been at the threshold of a revolution for some time. While the trend is growing. as well as banks. they can now do so on the go – when they are waiting for their bus to work.the credit environment.85 million more.6 million in the August 2004. when they are traveling or when they are waiting for their orders to come through in a restaurant.000 in two years. 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. 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. China and Korea. had introduced mobile banking applications. Still. There is yet another reason why the service will not spread like wild fire . Customers now don't need access to a computer terminal to access their banks. 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. All three of these countries have seen gradual roll-out of mobile banking services.000 to 120. The number of people using mobile banking services has jumped from under 10. China. apart from perceived security issues. the main reason that Mobile Banking scores over Internet Banking is that it enables ‘Anywhere Banking'. 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. In September 2004 it added about 1. which have been offering unsecured and secured loans with minimal or no customer 18 . The explosion as most analysts say. which already witnessed the mobile boom. are inhibiting faster take-off. is yet to come as India has about one of the biggest untapped markets.

a 'Working Group on Mobile Banking' to examine different aspects of Mobile Banking (M-banking). anytime and any currency • Low or zero cost of usage 19 . The m-PIN. authenticity and non-reputability'. Change your m-PIN regularly and do not share it with anyone. with a few precautions and safety measures. Similarly.e. With RBI tightening liquidity. However. Each stake-holder group has the following expectations: a) To meet the following expectations of Consumer: • Personalized service • Minimal learning curve • Trust. and (iii) regulatory and supervisory issues.. Though RBI has specified norms for the banks to provide secure technology and ensure 'confidentiality.MOBILE BANKING verification. personal loan defaults have reached 9% and banks will be very wary of giving you a credit card on the mobile.anywhere. security remains a major concern as well as a hurdle. which is issued by the bank. integrity. Thus. The PIN is valid only for the corresponding phone number. you should also inform the bank. users can have a safer m-banking experience. (ii) business issues. if you change your hand-set or SIM card. should be memorized and the PIN-mailer destroyed immediately. i. (i) technology and security issues. which means users cannot access their accounts using other hand-sets. The Group had focused on three major areas of Mbanking. in case of a loss/theft of mobile phone. privacy and security • Ubiquitous . Reserve Bank of India has set-up the Mobile Payments Forum of India (MPFI). inform the mobile phone operator as well as the bank to block the banking application.

MOBILE BANKING • 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 20 .

International factors European and Asia-Pacific regions are considerably ahead of the US in terms of mobile banking provision – only 10% of US banking organizations taking part in the study currently offer mobile banking against 57% in Europe Expected growth 21 . according to its President (Mobile Services). 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. which will flash daily updates on agricultural practices and weather forecasts free of cost. Sanjay Kapoor.MOBILE BANKING • 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. Enthusiasm for mobile banking services 66% of respondents in the survey considered that mobile banking provides an excellent opportunity to enhance existing customer service. These handsets would be loaded with green SIM cards. too. is in the process of tying-up with two leading banks to extend its mobile remittance services to rural areas. Bharti Airtel. the cooperative department will provide mobile hand-sets to farmers at marginal price through its out-lets in the rural areas. Under this initiative. Airtel has already partnered with the Indian Farmers' Fertilizers Cooperative Limited (IFFCO) to set up IFFCO Kisan Sanchar Limited in Rajasthan.

security demands and operator tariff systems.e. an additional 32% of respondents plan to offer mobile services in the next 12-24 months.MOBILE BANKING With 34% of banks (globally) currently offering mobile services to customers. However this growth will not come without modification of existing processes: Our challenges are all based on standardization measures with regard to browsers. balance inquiries might be needed before committing a money remittance." 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.for instance. i. to administer accounts and to access customised information. The ratio of mobile banking users.The scope of offered services may include facilities to conduct bank and stock market transactions. but is predicted to grow over the next two years with 58% of banks currently offering mobile banking expecting that at least 1 in 10 customers will be using mobile banking by 2010. 53% of US banks expect to be offering mobile services in the next 12-24 months. 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. giving potential parity to mobile service provision across the globe by 2010 (see Figure 1) The suggestion of considerable momentum for mobile banking over the next two years should be received warmly by mobile providers and bankers alike. The non-transaction-based services of an informational nature are however essential for conducting transactions . 22 . customers adopting mobile services remains modest.

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. they often don't address important aspects like scalability and system responses to unpredicted actions or break-downs. Even if pilots work. because they are just not viable. Important legal aspects are also often not addressed yet at this stage. For some or other reason. These are sometimes addressed in the few prototypes that migrate to pilot. on the other hand. Many different business processes are required if a system is to be deployed in a production environment. Information services. service activation to name only a few.MOBILE BANKING The accounting and brokerage services are therefore offered invariably in combination with information services. This should include registration. Pilots seldom uncovers the real system challenges and at best highlights key elements regarding user experience. or have been ill conceived or badly deployed. Everyone of them believing that they have stumbled on the ultimate approach. maybe thousands of subscribers performing transactions in a controlled environment with limited functionality. What looked easy during pilot now turns out to be a nightmare of realities. pre-production. pilot. The lifespan of all good ideas can be broken into five phases: concept. 23 . 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. A pilot usually consists of a few hundred. And it is actually quite easy to demonstrate simple mobile banking functionality in a prototype environment. prototype. Some of the challenges that often have not even been identified and hence solved are issues related to integration. may be offered as an independent module. Few ideas ever reach the stage of commercial deployment. The reality is that very few of these ever progress past the rudimentary prototype stage. dispute resolutions. mobile banking has been over-saturated with concepts and to some degree with prototypes. commercial deployment. During the pre-production stage business processes and system reliability and robustness should be attended to. regulatory/legal and usability. In examples that we have seen in the market some deployments have neglected key processes leading to very difficult deployments and disillusioned clients.

24 . empowering organizations with new business models and new ways to offer 24x7 accessibility to their customers. We have seen what works and what does not. online brokers and wealth managers who offer personalized services. although such players still account for a tiny percentage of the industry. The ability to offer financial transactions online has also created new players in the financial services industry. 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.MOBILE BANKING 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. An this is where we at Fundamo can really contribute to making a difference in deploying successful mobile payment/banking solutions. such as online banks. We have built powerful business modeling tools and have helped many customers to culminate with commercially successful deployments of novel ideas.

With mobile technology. Mobile devices. Mobile banking will eventually allow users to make payments at the physical point of sale. up from less than 1% today. are the most promising way to reach the masses and to create “stickiness” among current customers. receiving online updates of stock price or even performing stock trading while being stuck in traffic. high rate of penetration and potential to grow. mobile banking is likely to appeal even more. the number of mobile subscribers exceeded 2 billion in September 2005. mobile banking will be the "killer application" for the next generation of mobile technology. anywhere.MOBILE BANKING Over the last few years. According to a study by financial consultancy Celent. where mobile phone penetration is very high (at least 80% of consumers use a mobile phone). According to Gartner. shipment of 25 . In Asian countries like India. 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. Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phones. This opens up huge markets for financial institutions interested in offering value added services. due to their ability to provide services anytime. "Mobile contactless payments” will make up 10% of the contactless market by 2010. China. Indonesia and Philippines. According to the GSM Association and Ovum. banks can offer a wide range of services to their customers such as doing funds transfer while travelling. and in European countries. Bangladesh. Upwards of 70% of bank center call volume is projected to come from mobile phones.5 billion (of which more than 2 billion are GSM). where mobile infrastructure is comparatively better than the fixed-line infrastructure. and now exceeds 2. 35% of online banking households will be using mobile banking by 2010. especially smartphones. According to the German mobile operator Mobilcom.

banks across the globe have invested billions of dollars to build sophisticated internet banking capabilities. 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. In the last 4 years. As the trend is shifting to mobile banking. in the shortest possible time.MOBILE BANKING smartphones is growing fast. and should top 20 million units (of over 800 million sold) in 2006 alone. 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. MOBILE BANKING SERVICES Mobile banking can offer services such as the following: 26 .

change and deleting of payments) 14. 3. Due date of payment (functionality for stop. and Transfers 1. Status on cheque.e. retail and postal outlets that turn cash into electronic funds and vice versa. 6. 4.MOBILE BANKING Account Information 1. 5. 4. 5.. 2. 2. The feasibility of such banking agents depends on local regulation which enables retail outlets to take deposits or not. Blocking of (lost. Withdrawal at banking agent 8. Deposit at banking agent Especially for clients in remote locations. Change of PIN and reminder over the Internet 15. Recent transactions 13. Deposits. Mutual funds / equity statements 7. Domestic and international fund transfers Micro-payment handling Mobile recharging Commercial payment processing Bill payment processing Peer to Peer payments 7. Ordering check books 11. i. 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 27 . Balance checking in the account 12. Pension plan management 9. it will be important to help them deposit and withdraw funds at banking agents. 3. Mini-statements and checking of account history Alerts on account activity or passing of set thresholds Monitoring of term deposits Access to loan statements Access to card statements 6. Insurance policy management 8. stop payment on cheque 10. stolen) cards Payments. Withdrawals. PIN provision.

Status of requests for credit. Exchange of data messages and email. the merchant hands the client cash and debits the client's account. ATM Location Content Services 1. Check (cheque) book and card requests 3. for example your banks sends out an alert when your account balance goes below a threshold level. ‘Push' is when the bank sends out information based upon an agreed set of rules.MOBILE BANKING withdrawal transaction at the agent. mobile banking will be attractive mainly to the younger. Personalized alerts and notifications on security prices Support 1. Portfolio management services 2. Loyalty-related offers 3. news 2. General information such as weather updates. In the same way the client can also withdraw money at the merchant: through exchanging sms to provide authorization. the merchant receives cash and the system credits the client's bank account or mobile wallet. and insurance coverage 2. One way to classify these services depending on the originator of a service session is the ‘Push/Pull' nature. When depositing money. Real-time stock quotes 3. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment. including mortgage approval. Location-based services Based on a survey conducted by Forrester. Investments 1. 28 . A third of mobile phone users say that they may consider performing some kind of financial transaction through their mobile phone. more "tech-savvy" customer segment. including complaint submission and tracking 4.

The other way to categorize the mobile banking services. basically they use these services as a marketing tool to advertise there services on this basis. Prices are coming down and services and features are now considerably easier to handle on the mobile. has finally become a fast. EDGE or 3G data transmission standards and has large. by the nature of the service. The new generation of mobile phones offers the speedy GPRS. 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. Mobile Banking. . user-friendly and affordable service. in particular. high-definition colour displays.MOBILE BANKING ‘Pull' is when the customer explicitly requests a service or information from the bank. Here are few giants of telecom industries in India who are offering Mobile Banking in various states. 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 transactionbased service. gives us two kind of services – Transaction based and Enquiry Based. so a request for your last five transactions statement is a Pull based offering. India's leading telecom companies started their services for Mobile Banking. 29 .

for instance the use of credit cards while abroad.The global networks provide the customer with world-wide services. of course. This opportunity. Intensified Competition in the Banking Sector: Bank products are of immaterial nature sold increasingly with the help of computer networks spanning across the globe. have reduced entry barriers so that the number of available reputed brands has increased significantly. however. On the other hand it is faced with increased competition on its home turf. 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. thereby intensifying the competition. is a two-way street: On the one hand. have made it possible for banks to offer their services in far-flung areas without investing money to build branches and hire additional staff. To master this combination of opportunities and challenges banks need – apart from business consolidation and cooperation – organic growth. The ongoing Globalisation has further intensified the competition.MOBILE BANKING 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. 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. 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. Technical developments coupled with the process of Globalisation. 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. economically prosperous customers. It is therefore necessary to retain the existing customer base while simultaneously acquiring new. a bank gets access to new markets. 30 .

irrespective of opening hours”. are increasingly confronted with technology-savvy customers who are often on the move. Though the youngsters as a group are hardly relevant for banks from a financial perspective.Banks are responding to this development by introducing mobile services. many members of this group are known to be involved in stock market activities. this group can be expected to enter in short 31 .and innovation friendly. Further. Though this group too is financially not very strong. The youngsters. puts it: “Today’s customers want to organise banking transactions while on the move. b) The Young Adults: Also this segment is thought to be technology. today. anytime service. This group is technology-savvy and willing to experiment with innovative products and services. demand ubiquitous. Private Customers Director at Postbank. As Wolfgang Klein. they represent the prospective clientele of tomorrow and need to be cultivated in the middle to long-term marketing strategy of the banks. often on the move.MOBILE BANKING Adapting to Requirements of Core Target Groups: Banks. Core target groups of Mobile Banking are often divided in three categories: a) The Youngsters: the segment of 14-18 years old youth has acquired an important role in the growth of mobile telecommunications and related services. a leading German bank.

Mobile Banking as Distribution Channel Mobile Banking enhances the number of existing channels of distribution that a bank employs to offer its services. c) The Business People: this group of customers. these services also have their own utility for the banks. home loans for young families. However. For this reason they are ideal candidates to use services offered via mobile devices.MOBILE BANKING 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. a 32 . They need to be professionally often on the move and carry mobile devices to ensure accessibility.This objective is arrived by increasing operational efficiency so that those losses are minimized that are caused by delays in catering to customer orders. is thought to be the most important one for Mobile Banking.g. In order to fulfil the requirements of these customer groups banks tend to look at Mobile Banking as a promising option. 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 . generally in the agegroup of 26-50 years. e. Further. The efficiency of a distribution channel can be measured by its fulfilment of three major objectives. Members of this group are generally well educated and economically well-off. From the banks’ perspective this group is particularly attractive on account of its relative economic prosperity and the need for financial services.

MOBILE BANKING favourablereputation of the firm’s logistical capacities may help generate additional orders. List of Operators and Circles enabled for the Mobile Banking Service are as below: - 33 .

" While ICICI Bank offers its services on GPRS and secure SMS. which is independent of GPRS. echoes the sentiment.MOBILE BANKING IDBI's CTO. Barclays Bank's Hello Money is based on Unstructured Supplementary Service Data (USSD) platform. "Over 12% of our Internet Banking users use our Mobile Banking services as well. 34 . Neeraj Bhai.

Due to large number of advantages. Mobile banking could be used to make remittances from person to person. Despite lots of security issues related to mobile banking and lack of awareness on part of consumers. the bank made its mobile banking service available on GSM hand-sets. Customers can choose between Hindi and English. ATM. Vodafone. ICICI Bank. and Idea networks in forty cities. "We conducted a pilot in Delhi and received close to a thousand responses. phone. General Manager. And recently. Mobile phones can be safer as compared to physical cards as they are pin-protected. Further. Sachin Khandelwal. It would also help in financial inclusion as it would provide a large number of unbanked people access to banking services • • Banks would save a huge amount of money on card issuance and merchant acquiring with zero point of sale cost. among others). Bankers are of the opinion that mobile banking gives the banks an opportunity to expand their customer base without incurring additional infrastructure costs. All these advantages create a WIN-WIN-WIN situation for the technology: • End-users benefit from greater control of their personal finances. Head-Cards Product Group. 35 . The bank launched its consumer banking services in India last year. as well as time saved by not having to access account details via other channels (Internet. ICICI Bank has tied-up with Airtel and m-Chek to load a virtual credit card on a mobile phone to carry on complete banking transactions as well as for making payments. still it will be a big hit in coming years. thereby minimizing the risk of misuse. and these advantages have over-powered all the disadvantages of the technology. the technology has taken off on slow pace." said Mr.MOBILE BANKING UK-based Barclays is one of the largest corporate money managers in the world. banking purposes and to make payments for purchases or services provided. Barclays aims to include more languages and extend it to CDMA hand-sets as well. on Airtel.

MOBILE BANKING • Mobile operators benefit from increased customer stickiness.from "online banking" applications to one with richer interfaces and multiple mobile payment capabilities. The successful evolution of mobile banking and payments will be on the basis of the ability of financial institutions and mobile operators to balance ease of use with security. Over the next five years. customer experimentation with other forms of mobile content. potentially. users and the banks. TECHNOLOGIES ENABLING MOBILE BANKING 36 . mobile banking deployments will develop significantly . we expect uptake of mobile banking services to be robust among mobile subscribers. data usage and. Given this win-win-win situation.

However there has been considerable noise on multiple Asterisk related forums over the stability of Asterisk based systems. Mobile banking based on IVR has some major limitations that they can be used only for Enquiry based services. IVR (Interactive Voice Response) SMS (Short Messaging Service) WAP (Wireless Access Protocol) Standalone Mobile Application Clients 1. Companies planning to use Asterisk for their IVR solutions should certainly do a rigorous evaluation of its capabilities before committing their long term future on it. Also. IVR is more expensive as compared to other channels as it involves making a voice call which is generally more expensive than sending an SMS or making data transfer (as in WAP or Standalone clients).MOBILE BANKING Technically speaking most of these services can be deployed using more than one channel. due to its open source nature has caught on in a big way and is being sold as an PBX solutions by quite a few companies commercially. 1. Customers can choose options by pressing the corresponding number in their keypads. which is an open source Linux PBX system Asterisk. Presently.SMS (Short Messaging Service) 37 . 2. One way to enable IVR is by deploying a PBX system that can host IVR dial plans. mostly using a text to speech program. 4. Banks looking to go the low cost way should consider evaluating Asterisk . and are then read out the corresponding information.IVR (Interactive Voice Response) IVR or Interactive Voice Response service operates through pre-specified numbers that banks advertise to their customers. Mobile Banking is being deployed using mobile applications developed on one of the following four channels. 3. 2. Customer's make a call at the IVR number and are usually greeted by a stored electronic message followed by a menu of different options.

For example. The way this works is that the customer requests for information by sending an SMS containing a service command to a prespecified number. The bank responds with a reply SMS containing the specific information. customers of the HDFC Bank in India can get their account balance details by sending the keyword ‘HDFCBAL' and receive their balance information again by SMS. An SMS based service is hosted on a SMS gateway that further connects to the Mobile service providers SMS Centre. The main advantage of deploying mobile applications over SMS is that almost all mobile phones. For instance. However there have been few instances where even transaction-based services have been made available to customer using SMS. One of the major reasons that transaction based services have not taken of on SMS is because of concerns about security and because SMS doesn't enable the banks to deliver a custom user interface to make it convenient for customers to access more complex services such as transactions.MOBILE BANKING SMS uses the popular text-messaging standard to enable mobile application based banking. customers of the Bank of Punjab can make fund transfer by sending the SMS ‘ TRN(A/c No)(PIN No)(Amount)'. 38 . There are a couple of hosted IP based SMS gateways available in the market and also some open source ones like Kannel . Most of the services rolled out by major banks using SMS have been limited to the Enquiry based ones. which are most popular in countries like India and China are SMS enabled. including the low end. cheaper one's.

MOBILE BANKING MOBILE SERVICE CENTRE 39 .

and served on demand. The banks customers can now have an anytime. Bank of America offers a WAP based service channel to its customers in Hong Kong. Mobile Application users access the bank's site through the WAP gateway to carry out transactions. WAP (Wireless Access Protocol) WAP uses a concept similar to that used in Internet banking. Banks maintain WAP sites which customer's access using a WAP compatible browser on their mobile phones.MOBILE BANKING 3. much like internet users access a web portal for accessing the banks services. anywhere access to a secure reliable service that allows them to access all enquiry and transaction based services and also more complex transaction like trade in securities through their phone A WAP based service requires hosting a WAP gateway. 40 . The WAP Gateway forms an access point to the internet from the mobile network. WAP sites offer the familiar form based interface and can also implement security quite effectively. The actualy forms that go into a mobile application are stored on a WAP server. The following figure demonstrates the framework for enabling mobile applications over WAP.

which are further significantly driving up development costs. However. The major disadvantage of mobile application clients is that the applications needs to be customized to each mobile phone on which it might finally run.STANALONE MOBILE APPLICATION CLIENTS Standalone mobile applications are the ones that hold out the most promise as they are most suitable to implement complex banking transactions like trading in securities. mostly because of the 41 . Nokia has gone an additional mile by providing an open online market place for developers where they can sell their applications to major cellular operators around the world. J2ME seems to have an edge right now as Nokia has made the development tools open to developers which has further fostered a huge online community focused in developing applications based on J2ME. BREW on the other hand has seen limited popularity among the developer community. This scale of this problem can be gauged by the fact that companies implementing mobile application clients might need to spend as much as 50% of their development time and resources on just customizing their applications to meet the needs of different mobile profiles. One requirement of mobile applications clients is that they require to be downloaded on the client device before they can be used. the rapid proliferation of mobile phones which support different functionality has resulted in a huge number of profiles.MOBILE BANKING 4. which further requires the mobile device to support one of the many development environments like J2ME or Qualcomm's BREW. In addition. Out of J2ME and BREW. J2ME ties together the API for mobile phones which have the similar functionality in what it calls 'profiles'. J2ME is fast becoming an industry standard to deploy mobile applications and requires the mobile phone to support Java. They can be easily customized according to the user interface complexity supported by the mobile. mobile applications enable the implementation of a very secure and reliable channel of communication.

The J2ME client connects to the wireless I-banco server through the service providers GSM network to enable users to access information about their accounts and perform transactions. which support J2ME. which enable J2ME mobile applications based banking. One such product is Wireless I-banco . However countries like India face a serious obstacle in the proliferation of such clients as few users have mobiles. one of the biggest CDMA players in the Indian telecom industry. On the other hand a country like South Korea with its tech-savvy population has a widespread adoption of the higher-end mobiles.MOBILE BANKING proprietary nature of its business and because of the steep prices it charges for its development tools. 42 . However. The mobile user downloads and installs the wireless Ibanco application on their J2ME pone. which support J2ME or BREW. Quite a few mobile software product companies have rolled out solutions.01 million users all of which have handsets. Reliance Infocomm has about 7. One of the other big advantages of using a mobile application client is that it can implement a very secure channel with end-to-end encryption. Reliance has unveiled one of the most ambitious data services deployment program in the country. which support application development.

10 each.browsers and operating system. user experience of browsing the internet from a mobile device is familiar and offers a rich UI experience. this new channel gives the bank ability to cross-sell up-sell their other complex banking products and services such as vehicle loans. secure connection can be established on most of the mobile browsers. 3.MOBILE BANKING ADVANTAGES OF MOBILE BANKING The biggest advantage that mobile banking offers to banks is that it drastically cuts down the costs of providing service to the customers. Countries like Korea where mobile penetration is nearing saturation. whereas an electronic transaction costs only about $0. For service providers. credit cards etc. mobile banking is helping service providers increase revenues from the now static subscriber base. 2. allows end user to access corporate association. Also service providers are increasingly using the complexity of their supported mobile banking services to attract new customers and retain old ones. DISADVANTAGES OF MOBILE BANKING • Many non-standards variables including handsets. Additionally. Mobile banking offers the next surest way to achieve growth. For example an average teller or phone transaction costs about $2. 43 . 1.36 each.

in markets like India where a bulk of the mobile population users' phones can only support SMS based services. On the other hand a market heavily segmented by the type and complexity of mobile phone usage might be good place to roll of WAP based mobile applications. No “offline” (out of the coverage) capability. MARKETING FOR MOBILE BANKING Mobile banking is poised to become the big killer mobile application arena.MOBILE BANKING • • • Inconsistent user experience due to varying connection speed and different handset. Mobile application standalone clients bring along the burden of supporting multiple mobile device profiles. currently the best user experience. Mobile banking through an SMS based service would require the lowest amount of effort. However. However. According to the Gartner Group. a leading wireless computing consulting organization. User needs to have a data plan. 44 . The biggest decision that Banks need to make is the channel that they will support their services on. A WAP based service can let go of the need to customize usability to the profile of each mobile phone. the trade-off being that it cannot take advantage of the full breadth of features that a mobile phone might offer. this might be the only option left. is possible only by using a Standalone client. Banks going mobile the first time need to tread the path cautiously. mobile banking services will have to support a minimum of 50 different device profiles in the near future. but will not be able to support the full breath of transaction-based services. in terms of cost and time.which may be a barrier to adoption among price sensetive demographics. depending on the capabilities of a mobile phone. However.

Nevertheless. Initial interoperability issues however have been localized. while focus on areas such as South Africa have defaulted to the USSD as a basis of communication achievable with any phone. Mobile Application based banking is poised to be a big mcommerce feature. CHALLENGES FOR MOBILE BANKING Key challenges in developing a sophisticated mobile banking application are : Handset operability There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solution on any type of device. and if South Korea's foray into mass mobile banking is any indication. with countries like India using portals like R-World to enable the limitations of low end java based phones. mobile banking could well be the driving factor to increase sales of high-end mobile phones.MOBILE BANKING Mobile banking has the potential to do to the mobile phone what E-mail did to the Internet. Some of these devices support J2ME and others support WAP browser or only SMS. The desire for interoperability is largely dependent on the banks themselves. 45 . Bank's need to take a hard and deep look into the mobile usage patterns among their target customers and enable their mobile services on a technology with reaches out to the majority of their customers. 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.

Physical part of the hand-held device. money movements between service providers will naturally adopt the same standards as in the banking world. are the most complicated challenges that need to be addressed jointly by mobile application developers. Security of any thick-client application running on the device. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network : 1. the physical security of the device is more important. 2. wireless network service providers and the banks' IT departments. As mobile banking matures. as very few countries have more than one mobile banking service provider. In practice it is too early in the service lifecycle for interoperability to be addressed within an individual country. If the bank is offering smart-card based security. the hacker should require at least an ID/Password to access the application. In practice. banking interfaces are well defined and money movements between banks follow the IS0-8583 standard. being executed from some remote location and transmission of financial information over the air.MOBILE BANKING 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. 46 . Security Security of financial transactions. In case the device is stolen.

anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion. there could be many issues to implement this approach such as upgrade / synchronization of other dependent components. the customer may be sitting in any part of the world (true anytime. 4. 47 . their expectations from the solution will increase. 5. Banks unable to meet the performance and reliability expectations may lose customer confidence. 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. Encryption of the data that will be stored in device for later / off-line analysis by the customer. This would ensure that unauthorized devices are not connected to perform financial transactions. As customers will find mobile banking more and more useful. However. Scalability & Reliability Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base. Recently in India there has been a phenomenal growth in the use of Mobile Banking applications. 6. Encryption of the data being transmitted over the air. User ID / Password authentication of bank’s customer.MOBILE BANKING 3. With mobile banking. with leading banks adopting Mobile Transaction Platform and the Central Bank publishing guidelines for mobile banking operations. Authentication of the device with service provider before initiating a transaction. Application distribution Due to the nature of the connectivity between bank and its customers. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches (so called "Over The Air" updates). There are systems such as Mobile Transaction Platform which allow quick and secure mobile enabling of various banking services.

3. including Electronic Commerce: i) Ubiquity: Ubiquity means that the user can avail of services and carry out transactions largely independent of his current geographic location (the “anywhere” feature). 2. 6. 4. Preferred Language Date / Time format Amount format Default transactions Standard Beneficiary list Alerts Features of Mobile Commerce Mobile Commerce is characterised by some unique features that equip it with certain advantages against conventional forms of commercial transactions. 48 . 5.MOBILE BANKING Personalization It would be expected from the mobile application to support personalization such as : 1.

MOBILE BANKING ii) Immediacy: Closely related to the feature of ubiquity is the possibility of real-time availment of services (the “anytime” feature). LBS can thus cater to consumers’ needs and wishes for localised content and services. such as the Global Positioning System (GPS).e. in touch with the network (the “always-on” feature). as timeconsuming dialup or boot processes are not necessary. at the “right” time. The user may choose the products. local and personal. and services. iii) Localisation: Positioning technologies. by the virtue of its ability to be immediate. This feature brings convenience to the user.g. v) Pro-active functionality: Mobile Commerce opens. The Short Message Service (SMS) can be used to send brief text messages to customers ensuring that the “right” (relevant) information is provided to the user at the “right” place. i. allow companies to offer goods and services to the user specific to his current location. which he wants to be kept informed about. e. stock market information. vi) Simple authentication procedure: Mobile devices function with an electronic chip called 49 . This feature is particularly attractive for services that are time-critical and demand a fast reaction. iv) Instant connectivity: Ever since the introduction of the General Packet Radio Service (GPRS) mobile devices are constantly “online”. new avenues for business.

On the other hand. The SIM is registered with the network operator and the owner is thus unambiguously identifiable. the utilisation of transaction-based MFS of Finland-based Nordea bank grew by 30% in 2004. Mobile Banking is usually defined as carrying out banking business with the help of mobile devices such as mobile phones or PDAs [8. The offered services may include transaction facilities as well as other related services that cater primarily to informational needs revolving around financial activities. brokerage and financial information. Unlike in the past. the time seems to be now ripe for (re-)launching mobile services.The number of France’s Société Générale customers using mobile services crossed the mark of one million in year 2004. These facts point toward a positive shift in the customer perception of Mobile Banking. 11]. registering an impressive growth of nearly 200% vis-à-vis 2003. complicated and potentially inefficient authentication process redundant. It comprises of services in the field of accounting. Mobile Banking is increasingly being employed by many banks around the world to generate additional revenues. The clear identification of the user in combination with an individual Personal Identification Number (PIN) makes any furthertime-consuming. reduce costs or to increase customer satisfaction. often with very promising results. Employment of Mobile Technologies in the Banking Sector A cornerstone of Mobile Commerce is built by Mobile Banking. technological developments like Universal Mobile Telecommunications System (UMTS) have provided a new platform for realistic mobile applications. the availment of bank-related financial services via mobile devices. For instance.MOBILE BANKING Subscriber Identity Module (SIM). The scope of offered services 50 . when banks offering mobile services suffered a severe setback due to lack of customer interest and unripe technologies. 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.

includes a wide range of services. Mobile Brokerage. Mobile Brokerage can be thus defined as transactionbased.g.” Mobile Banking. 51 .and financial services.Not all Mobile Accounting services are however necessarily transaction-based. in the context of banking. A more precise definition of Mobile Accounting would therefore characterize it as “availment of account-specific banking services of non-informational nature”. too. selling and purchasing of stocks. to administer accounts and to access customized information. e. Mobile Brokerage Brokerage. These services may be categorised as following: Mobile Accounting Mobile Accounting is sometimes characterized as transaction-based banking services that revolve around a bank account and are availed using mobile devices .MOBILE BANKING may include facilities to conduct bank and stock market transactions. Mobile Accounting services may be divided in two categories to differentiate between services that are essential to operate an account and services that are essential to administer an account. refers to intermediary services related to the bourse. as defined above. mobile financial services of non-informational nature that revolve around a securities account. may be divided in two categories to differentiate between services that are essential to operate a securities account and services that are essential to administer that account.

Kenya's Safaricom (Part of the Vodafone Group) has had the very popular M-Pesa Service . ideally. but has been increasingly used to pay utility bills.and financial services of informational nature . pull and push basis. i. 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 . edbi and bankmelli offer this service. Paraguay. Tejarat. The information may be customised on the basis of preferences given by the customer and sent with a frequency decided by him. Argentina.e. Sepah.Bancomer and a private company(MPower Ventures). MOBILE BANKING IN THE WORLD This part of the mobile commerce is very popular in countries where most of their population is unbanked. Zain in 2009 launched their own mobile money transfer business known as ZAP in Kenya and other African countries 52 . Colombia.MOBILE BANKING Mobile Financial Information Mobile Financial Information refers to non-transaction based banking.In Iran banks like Parsian. Mellat. on both. independent module. In Latin America countries like Uruguay. Saderat. Mexico released the mobile commerce with Omnilife. The information should be provided. Mobile Financial Information can be offered without offering Mobile Accounting or Mobile Brokerage but vice versa is not feasible.Countries like Sudan.In Colombia was released with Redeban. Guatemala and recently Mexico started with a huge success.Information services are an integral part of Mobile Accounting and Mobile Brokerage but they may also be offered as a stand-alone. Guatemala have the support of Banco industrial. Venezuela. Brazil.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. Ghana and South Africa received this new commerce very well.mainly used to transfer limited amounts of money.

By October 2004 there were already about 53 . South Korea is showing the way. The big push came when LG Telecom Ltd.. 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 icing on the cake came with the ability of these chip enabled cell phones to be used simultaneously as cash cards.MOBILE BANKING CASE ANALYSIS LG Telecom. the smallest of Korea's three mobile service providers teamed up with the Kookmin bank to launch the ‘Bank on' service. 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. South Korea In terms of the evolution of services being offered on mobile applications.

Using the menu based user interface. mobile users select the application. Reliance Infocomm. Reliance used a novel way to overcome the memory limitations of lower-end mobile phones. from restaurant bills.The Reliance application platform.000 infrared readers adapted to take payment directly from mobile phone handsets in Korea. which hampered deploying of multiple standalone J2ME based clients. which connects them to the Reliance servers. Users can now use their cell phones to pay for everything. These applications are then executed locally on the mobiles. 54 . India When Reliance Infocomm. (at the time the mobile market in India was still in its infancy. travel tickets. also known as R-World brought Java compatibility even to the lower end phones. users access a single menu based application called R-World. India rolled out its CDMA network. which they want to run and download them over-the-air to their cell phones. Instead of storing applications statically on their cell phones. and data services were almost never heard off) it made sure that all handsets supported Java. merchandise and even haircuts.MOBILE BANKING 100.

Mobile Banking presents a chance to generate additional revenues. to provide a host of their enquiry and transaction based mobile banking services through its R-World environment. Mobile Banking presents an opportunity for banks to retain their existing. 55 . It might even help attracting new customers. Conclusions Mobile Banking. technology-savvy customer base by offering value-added. increased competition on account of technological developments coupled with the process of globalisation have produced new challenges for banks. Developments in the banking sector. innovative services.g. Further.MOBILE BANKING From mid-2004 Reliance tied up with two of the popular private sector banks. as has been demonstrated. e. has gained non-negligible relevance for banks today. HDFC and ICICI.

particularly in the backdrop of its high acceptance across commercially important sections of the society. We may expect to see Mobile Banking go into the footsteps of Online Banking.MOBILE BANKING Its main contribution.com/mobile/mobile-banking 56 . http://brandonmcgee. Many banks recognize this threat and are already taking preventive measures by introducing mobile services. however. http://www. to become a standard service offered by every bank worth its name. can be expected to take place in the strategic field as it is all set to become an instrument of differentiation. Mobile Banking would be employed to thwart negative differentiation vis-à-vis rivals.tutorial-reports. i.blogspot. Mobile Banking seems to possess the potential to become one of the widely spread and accepted application in the field of Mobile Commerce. The foremost significance of Mobile Banking would therefore be of a defensive nature.e.com/ 2. Webliography 1. Instead of providing a positive differentiation.

www.com 5. Book:.Ecommerce in Indian Banks 2.wikipedia.com Bibliography 1.org/wiki/Mobile_banking 4. www.axisbank.directeasy. Magazines: . Business world 57 .Professional Banker The ICEAI University 3.MOBILE BANKING 3. http://en.

MOBILE BANKING 4. Economic times Questionnaire from the point of view of Customers using Mobile Banking Service: Name:Profession:Age:In which bank you hold account with:- 58 .

Such a services offered by them. Whether you were Already aware of it. 59 .MOBILE BANKING  Does your bank provide Mobile Banking service? Yes No  Do you use the Mobile banking facility provided by your bank? Yes No  If you are aware of Mobile banking then frequently how do you perform your banking transaction? By personally visiting the bank Through Mobile  How are you introduced to the concept Mobile Banking? By the bank you already had an account with Whether any other Bank approached you and Informed about it.

MOBILE BANKING  Do you find that doing transaction through Mobile banking is more comfortable? Yes No  How much safe you feel Mobile Banking is? Fully safe Unsafe Safer to some extent  Are you aware of Different types of risk that are involved in while doing transaction through Mobile Banking? Yes No  Do you regularly changes your password of login ID’s? Yes No  Do you think that Traditional Banking System must be replaced by Mobile Banking? Yes No 60 .

MOBILE BANKING Questionnaire from the point of view of Banks Name of the Bank:Branches:-  Does your bank provide Mobile Banking? Yes No 61 .

MOBILE BANKING  Before providing Mobile Banking facilities does your bank provide any training for your employees? Yes No  Do you face any problem while implementing Mobile Banking? Yes No If yes type of problem faced by you? Technical Problem Administrative Problem Any other  Do you face any resistance from your employees while implementing Mobile Banking system? Yes No If yes extend of resistance Less Very Little  More Do all the employees in your bank like the change of adapting to Mobile Banking system? 62 .

MOBILE BANKING Yes No  Is there an increase in number of customers after introducing Mobile Banking? Yes No  How many customer of your bank uses Mobile Banking? 10 – 30% 30 – 50% 50 – 70% 70 – 90% 90 & above  How do you convince your customer to use Mobile Banking facility?  What kinds of facilities do you provide to your customer to ensure safety of their transaction? 63 .

MOBILE BANKING  Which kind of banking system does your bank prefers the most? Traditional Banking System Mobile Banking System  Do you think Mobile Banking is achieving the Banks objective? Yes No 64 .

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