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The last time that technology had a major impact in helping banks service their customers was with the introduction of the Internet banking. Internet Banking helped to give the customer's anytime access to their banks. Customer's could check out their account details, get their bank mobile phone banking is the domain of a lucky few with constantly changing customer preferences and a greater emphasis placed on mobility, it could soon become a mainstream ability. Mobile-phone owners currently have access to mobile banking but choose not to utilise it. This is predicated to change by 2014, when 45 percent of users will actually use it. 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. "Mobile banking is quickly moving from infancy to commonplace, which will help separate the winners from losers in banks' ability to attract and keep technology-loving consumers," "Consumers are hungry for the 'always-on' and 'real time' ability to monitor and manage their money, and mobile banking serves that need better than any other." One of the factors driving the mobile banking surge is the increased usage of smart-phones, such as the iPhone, 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. It will also work in tandem with online banking, with mobile banking being used as a "remote control" and ''online'' as a detailed form of control panel for more complex transactions.By 2014, the percentage of people using mobile banking will equate to approximately 99 million US adults conducting mobile banking transactions at least once per year. 52 percent of these customers are reckoned to be using smart-phones. "Mobile banking is quickly becoming an essential consumer capability," said Mark Schwanhausser, Financial Services Channels Analyst speaking to Cellular News. Mobile banking is a credible channel, but usage in developed markets will remain low IT spending on mobile banking is continuing, 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
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CONTENT PREFACE ACKNOWLEDGEMENT INTRODUCTION OBJECTIVE OF THE STUDY METHODOLOGY OF THE STUDY LIMITATIONS INTRODUCTION TO MOBILE BANKING. A MOBILE BANKING CONCEPTUAL MODEL. CONSIDERATION BANKING WHEN IMPLEMENTING MOBILE
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FEATURES OF MOBILE BANKING TRENDS IN MOBILE BANKING MOBILE BANKING BUSINESS MODEL MOBILE BANKING SERVICES. UTILITY OF MOBILE BANKING FROM BANK’S
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PERSPECTIVE. 15 16 17 MOBILE BANKING DISTRIBUTION CHANNEL TECHNOLOGIES ENABLING MOBILE BANKING. ADVANTAGES AND DISADVANTAGES OF BANKING. 18. 19. 20 MARKETING FOR MOBILE BANKING CHALLENGES FOR MOBILE BANKING FEATURES OF MOBILE COMMERCE 35 36 38 27 29 34
Mobile Banking 21 EMPLOYMENT OF MOBILE TECHNOLOGIES IN BANKING SECTOR 22 23 24 25 26 27 MOBILE BANKING IN BANGLADESH MOBILE BANKING IN THE WORLD THE FUTURE OF MOBILE BANKING RECOMMENDATION CONCLUSION REFERENCE 42 42 44 46 47 48 40
PR E FAC E
First of all I would like to be grateful to the Almighty Allah, the merciful and the munificent who helped me to complete this term paper.
Over the last few years, the mobile and wireless market has been one of the fastest growing markets in the world and it is still growing at a rapid pace. This opens up huge markets for financial institutions interested in offering value added services. With mobile technology, bank scan offer a wide range of services to their customers such as doing funds transfer while traveling, receiving online updates of stock price or even performing stock trading while being stuck in traffic. Mobile devices, especially smart-phones, are the most promising way to reach the masses and to create “stickiness” among current customers, due to their ability to provide services anytime, anywhere, with high rate of penetration and potential to grow.
In this term paper I tried to explain the basic concepts, services offered, market survey and technology which enables Mobile Banking.
Department of Management Studies. Mobile banking 5 . who gave me the permission. University of Chittagong. Associate Professor. opportunity and immense support by stimulating suggestions and encouragement that helped me in all the time of research for and writing of this term paper. Sharmeen Ahmed. Mrs. Shelina Akhter. INTRODUCTION The kind of banking and financial service that gives a real-time mobile access to customer on the move is called mobile banking the services being offered through mobile phone. I am deeply indebted to my honorable teacher.Mobile Banking ACKNOWLEDGEMENT I want to take the opportunity to express my gratitude to all those people who have been instrumental in making this term paper successful. Dr. I would like to thank my honorable chairman Prof. Department of Management Studies. I would like to express my gratitude to all those who gave me the possibility to complete this term paper. University of Chittagong.
The information which includes checking of account balance. It was clear at the start itself that this would be a battle focused not on technology. Which prompt them to act in a proactive manner so as to stay competitive in the business world. the usage of mobile banking services is increasing. that bridge has been reached and many are beginning to walk those cautious steps across it. While the trend is growing. cellular phone. threw up very low usage numbers. changing primary operation account. lack of awareness of services. request for current periods’ account statement to the mailed and access summaries of last three transactions performed on the account.000 for mobile banking services in 2000.000 today who SMS from their banking. there are over 120. This value added services has very little human interface and private banks have started offering this service. but on the mindset of the target audience. e-commerce as a medium of purchasing and transacting has not 6 . the client has to fill up form at any of bank’s branches and bank informs the cellular service provider to activate the module instantly.Mobile Banking to the banking activity that is carried out on mobile (cell) phones that is banking is enabled even while a person is on the move. request for a Cheque book. “Dataquest. facsimile machine. The dependence of people on computing devices such as computers. Even our survey despite targeting a respondent profile that would bring in more positive answers than negative (see methodology). Also. and fast against dataquest’s estimated user base of under 10. pager. At the same time it has also thrown challenges to modern enterprises. The mobile banking refers to the facility allowed by certain banks in India whereby the mobile phone holder can undertake certain banking transaction through their mobile phones. information exchange takes place at great speed. Yes. To avail the service. Such growth has made the real time exchange of information a reality. The constant innovation happening in the realm of electronic banking and financial services has contributed to a new development called ‘mobile banking’ this may be attributed to the forth coming demand from the mobile workforce. e-mail and internet is growing at galloping rate. Over two years after the launch of mobile banking services in the country. In modern times. apart from perceived security issues are inhibiting faster takeoff. The increasingly growing number of mobile workforce has really given a cutting edge to the progress of the electronic banking. The number of people using mobile banking services has increased. The customer is required to type a text message on the mobile phone which travel through the server of the cell phone service provider to bank’s internet service. stop payment instruction. information is retrieved and routed back the same way in 15-30 second.
to the value-added services that most operators offer today” The Internet is revolutionizing the way the financial industry conducts business. very limited. and therefore. and getting better. in itself. and the basket of mobile banking offerings is. The recent price cuts are also likely to help. Forget their battles on the mobile telephony front from the consumer’s point of view. “say banking experts.Mobile Banking really caught on. high-value client. there’s GSM. adding that this will lead to “increasing willingness to move on to mobile. The good news the technology backbone is in place. gain competitive advantage and increase customer loyalty while also attracting new. The ability to perform banking transactions online banks and brokers who offer personalized services through their web portals. This increased competition is driving traditional financial institutions to find new ways to add value to their product and services. OBJECTIVE OF THE STUDY 7 . he never had it so good. empowering organization with new business model and new ways to interact with customers. There’s CDMA.
enable new revenue opportunities for financial services organizations. then is how to turn these possibilities into a reality for the customers.Mobile Banking Mobile and wireless technology. combined with the wide variety of portable devices available today. attract prime customers and enhance loyalty. to receiving notification of a change in stock price while having lunch. METHODS OF THE STUDY 8 . This provides a new channel that can be used to refresh and expand the customer base. banks can offer a wide possibility of services to their customers. from the freedom of paying bills while stuck in traffic. the challenge. With mobile and wireless technology.
Only two banks and three mobile phone operators are trying to implement this. Interviews are mostly taken through emails and in some cases through telephone and Internet chat. The process is still in a tender age. Design proposed solution. INTRODUCTION TO MOBILE BANKING 9 . That’s why a real impact of mobile banking Bangladesh can’t be picked up by this study. As there are only two banks implementing it.Mobile Banking Following methods have been used to accomplish this proposed solution: Basic principles of existing banking system (Bangladesh) Study the major drawbacks of existing system by interviewing the current employees of different banks. LIMITATIONS Mobile Banking is a very much new concept in our country. most of the time I had to rely on web based data for the study. Study the existing IT infrastructure of Bangladesh in context of Bank by interviewing the developer of different banking software vendors Study the Online Banking system from different resources that are available in different websites. books and online journals Some of the what-if analysis has been used to measure performance of the proposed solution.
but definitely a big barrier if we consider most of the developing countries of Asia like Bangladesh. China and Korea. Internet Banking helped give the customers anytime access to their banks. Bangladesh. payments. Mobile usage has seen an explosive growth in most of the Asian economies like India. Mobile Banking addresses this fundamental limitation of Internet Banking. etc. via a mobile device such as a mobile phone. they can now do so on the go – when they are waiting for their bus to work. India and China. sitting in the comfort of their homes and offices. According to the Cellular Operators' 10 . The main reason that Mobile Banking scores over Internet Banking is that it enables 'Anywhere Anytime Banking'. The last time that technology had a major impact in helping banks service their customers was with the introduction of the Internet banking. the biggest limitation of Internet Banking is the requirement of a PC with an Internet connection. as it reduces the customer requirement to just a mobile phone. However. account transactions. etc. not a big obstacle if we look at the US and the European countries. Customers could check out their account details. 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. SMS Banking. get their bank statements. Customer's could check out their account details. 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. 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. when they are traveling or when they are waiting for their orders to come through in a restaurant. and pay their bills. Still.. It was Internet Banking. perform transactions like transferring money to other accounts. and now mobile banking promises to take it to the next level.) is a term used for performing balance checks. which ushered in a new era in banking convenience by bringing the entire operations to the computer.Mobile Banking Mobile Banking (also known as M-Banking. perform transactions like transferring money to other accounts and pay their bills sitting in the comfort of their homes and offices. Internet Banking helped to give the customer's anytime access to their banks. m-banking.
China. While many operators. as well as banks. integrity. with a few precautions and safety measures. users can have a safer mbanking experience. it never became popular due to security concerns. in case of a loss/theft of mobile phone. In September 2004 it added about 1. authenticity and non-reputability'. you should also inform the bank. The 11 . The PIN is valid only for the corresponding phone number.6 million in the August 2004. which means users cannot access their accounts using other hand-sets. inform the mobile phone operator as well as the bank to block the banking application. However. Similarly. Thus. apart from perceived security issues. is yet to come as India has about one of the biggest untapped markets. had introduced mobile banking applications. Change your m-PIN regularly and do not share it with anyone. South Korea is targeted to reach about 42 million mobile users by the end of 2005. Reserve Bank of India has set-up the Mobile Payments Forum of India (MPFI). a 'Working Group on Mobile Banking' to examine different aspects of Mobile Banking (M-banking). if you change your hand-set or SIM card. personal loan defaults have reached 9% and banks will be very wary of giving you a credit card on the mobile. which already witnessed the mobile boom. Though RBI has specified norms for the banks to provide secure technology and ensure 'confidentiality. The number of people using mobile banking services has jumped from under 10. With RBI tightening liquidity. lack of awareness of services. Mobile banking has been at the threshold of a revolution for some time.Mobile Banking Association of India (COAI) the mobile subscriber base in India hit 40.85 million more. The explosion as most analysts say.000 in two years. 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. is expected to have about 300 million mobile users by the end of 2004. There is yet another reason why the service will not spread like wild fire .the credit environment. should be memorized and the PINmailer destroyed immediately. The m-PIN. which is issued by the bank. which have been offering unsecured and secured loans with minimal or no customer verification. RBI has been tightening the banks. All three of these countries have seen gradual roll-out of mobile banking services. are inhibiting faster take-off.000 to 120. security remains a major concern as well as a hurdle. While the trend is growing.
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 12 .e.Mobile Banking Group had focused on three major areas of M-banking. privacy and security Ubiquitous . anytime and any currency Low or zero cost of usage Interoperability between different network operators. and (iii) Regulatory and supervisory issues.. Each stake-holder group has the following expectations: a) To meet the following expectations of Consumer: Personalized service Minimal learning curve Trust. i.anywhere. (ii) Business issues. (i) Technology and security issues.
Mobile Banking Being able to customize the service Real time status of the mobile payment service Minimum settlement and payment time c) To meet the following expectations of Telecom Network Providers: Generating new income by increase in traffic Increased Average Revenue Per User (ARPU) and reduced churn (increased loyalty) Become an attractive partner to content providers d) To meet the following expectations of Mobile Device Manufacturers: Large market adoption with embedded mobile payment application Low time to market Increase in Average Revenue Per User (ARPU) e) To meet the following expectations of Banks: Network operator independent solutions Payment applications designed by the bank Exceptional branding opportunities for banks Better volumes in banking .more card payments and less cash transactions Customer loyalty f) To meet the following expectations of Software & Technology Providers: Large markets g) To meet the following expectations of Government: 13 .
an additional 32% of respondents plan to offer mobile services in the next 12-24 months. customers adopting mobile services remains modest. 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. The ratio of mobile banking users.e. security demands and operator tariff systems. Expected growth With 34% of banks (globally) currently offering mobile services to customers. 53% of US banks expect to be offering mobile services in the next 12-24 months. 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.Mobile Banking Revenue through taxation of m-payments Standards Enthusiasm for mobile banking services 66% of respondents in the survey considered that mobile banking provides an excellent opportunity to enhance existing customer service. 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. 14 . i. Our challenges are all based on standardization measures with regard to browsers. However this growth will not come without modification of existing processes.
CONSIDERATION WHEN IMPLEMENTING MOBILE BANKING The creation of mobile services is more efficient and effective when financial institution enters in alliance with mobile operators. Information services. The scope of offered services may include facilities to conduct bank and stock market transactions. The appropriate choice for each player depends on their combined customer base and the share of market each one brings to the alliance. on the other hand.for instance. may be offered as an independent module. balance inquiries might be needed before committing a money remittance.and financial services with the help of mobile telecommunication devices. 15 ." According to this model 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.Mobile Banking A MOBILE BANKING CONCEPTUAL MODEL Mobile banking is defined as: "Mobile Banking refers to provision and availment of banking. Mobile phone banking may also be used to help in business situations. The non-transaction-based services of an informational nature are however essential for conducting transactions . to administer accounts and to access customized information. The accounting and brokerage services are therefore offered invariably in combination with information services.
The decision about the most appropriate alliance to chose will depend on the particular of the bank implementing the mobile services and the availability of appropriate partners for telecommunication operation. There are currently in the market several solution based upon different technology and budget requirements. 16 . or strategic adventure in the operating area. an alliance with one telecommunication company and initially closed to user outside the combined customer base.Mobile Banking The choices are then if one bank should establish alliance with one or many mobile operator. Mobile telephony is used through mobile phones. would prefer to implement open system alliance and try to capture a larger market share. Banks with not so large customer base or that do not want to risk being the first movers in a closed system. This will allow the alliance to lock in big customers before other players begin to enter the market. In the same way when choosing wireless platform the critical consideration are the connectivity with the back –end system and the market several solutions in a short period of time. The theories on the evolution of these types of alliances show that the most usual beginning is from one to one. FEARURES OF MOBILE BANKING Mobile Customers: . However. the dominant strategy will converge in the long term to a many to many alliance model. At least one or two condition is needed to maintain the closed system working: a critical mass of customers.those who use ‘mobile telephony’ use mobile banking service. For large bank the most convenient strategy is to begin with a closed system.
Mobile Banking M – Commerce: . funds transfer etc. Over the last few years. an application duly filled is to be submitted to the bank. Technology based: . Mobile banking makes use of internet for transmission. the number of mobile subscribers exceeded 2 billion in September 2005.mobile banking is a part of m – Commerce whereby business and trade takes place through mobile on-line.5 billion (of which more than 2 billion are GSM). mobile banking is extended only to individual customer having account with any branch of a particular bank that offers internet banking facility. According to the GSM Association and Ovum. although such players still account for a tiny percentage of the industry. account verification. 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. it is also required that the customer is registered as on internet banking customer.At present. transaction & delivery of banking services. The application is invariably made available in the official website of the bank. Further. 17 .Mobile banking offers the entire internet-based banking services such as online account opening. empowering organizations with new business models and new ways to offer 24x7 accessibility to their customers. The ability to offer financial transactions online has also created new players in the financial services industry. such as online banks. online brokers and wealth managers who offer personalized services.Mobile banking are based on technology of development. The network provider the required software support. Eligibility: . and now exceeds 2.In order to avail the facility of mobile banking. Those mobile users who became on line internet users do M – Commerce. TRENDS IN MOBILE BANKING The advent of the Internet has revolutionized the way the financial services industry conducts business. Services: . Application: .
As the trend is shifting to mobile banking. This opens up huge markets for financial institutions interested in offering value added services. and should top 20 million units (of over 800 million sold) in 2006 alone. where mobile phone penetration is very high (at least 80% of consumers use a mobile phone). With mobile technology. In the last 4 years. Indonesia and Philippines. banks across the globe have invested billions of dollars to build sophisticated internet banking capabilities. and in European countries. 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. Bangladesh. high rate of penetration and potential to grow. where mobile infrastructure is comparatively better than the fixed-line infrastructure. 35% of online banking households will be using mobile banking by 2010. The proliferation of the 3G (third generation of wireless) and widespread implementation expected for 2003–2007 will generate the development of more sophisticated services such as multimedia and links to m-commerce services. mobile banking is likely to appeal even more. Mobile banking will eventually allow users to make payments at the physical point of sale. mobile banking will be the "killer application" for the next generation of mobile technology. In Asian countries like India. shipment of smartphones is growing fast. 18 . According to the German mobile operator Mobilcom. Mobile devices. China. "Mobile contactless payments” will make up 10% of the contactless market by 2010. Upwards of 70% of bank center call volume is projected to come from mobile phones. are the most promising way to reach the masses and to create “stickiness” among current customers. up from less than 1% today. especially smartphones. in the shortest possible time. banks can offer a wide range of services to their customers such as doing funds transfer while travelling. due to their ability to provide services anytime. Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phones. According to Gartner.Mobile Banking According to a study by financial consultancy Celent. anywhere. receiving online updates of stock price or even performing stock trading while being stuck in traffic.
no matter what business model.Bank Focused. However. i. Examples range from use of automatic teller machines (ATMs) to internet banking or mobile phone banking to provide certain limited banking services to banks’ customers. and may be significantly cheaper 19 .) to the end customer. service quality. the business model will depend on banking agents. The banking agent is an important part of the mobile banking business model since customer care.. the Bank or the NonBank/Telecommunication Company (Telco). This model promises the potential to substantially increase the financial services outreach by using a different delivery channel (retailers/ mobile phones). deposit taking. bakeries. Peru. Bank-focused model The bank-focused model emerges when a traditional bank uses non-traditional low-cost delivery channels to provide banking services to its existing customers. Many telcos will work through their local airtime resellers. Bank-led model The bank-led model offers a distinct alternative to conventional branch-based banking in that customer conducts financial transactions at a whole range of retail agents (or through mobile phone) instead of at bank branches or through bank employees. Models of branchless banking can be classified into three broad categories . However. lending etc. retail or postal outlets that process financial transactions on behalf telcos or banks. banks in Colombia. Bank-Led and Nonbank-Led. These models differ primarily on the question that who will establish the relationship (account opening. if mobile banking is being used to attract low-income populations in often rural locations.Mobile Banking MOBILE BANKING BUSINESS MODEL A wide spectrum of Mobile/branchless banking models is evolving. Brazil.e. Another difference lies in the nature of agency agreement between bank and the Non-Bank. and other markets use pharmacies. and cash management will depend on them. a different trade partner (telco / chain store) having experience and target market distinct from traditional banks. etc. This model is additive in nature and may be seen as a modest extension of conventional branch-based banking.
Balance checking in the account 12. Insurance policy management 8. Status on cheque.g. Recent transactions 13. Mini-statements and checking of account history 2. telco) who has direct contact with individual customers. Access to loan statements 5. Ordering check books 11. Mutual funds / equity statements 7. MOBILE BANKING SERVICES Mobile banking can offer services such as the following: Account Information 1. stop payment on cheque 10. Pension plan management 9. Monitoring of term deposits 4. Due date of payment (functionality for stop. The bank-led model may be implemented by either using correspondent arrangements or by creating a JV between Bank and Telco/non-bank. Access to card statements 6. change and deleting of payments) 20 . Typically its role in this model is limited to safe-keeping of funds. Account management functions are conducted by a non-bank (e.Mobile Banking than the bank-based alternatives. Alerts on account activity or passing of set thresholds 3. In this model customer account relationship rests with the bank Non-bank-led model The non-bank-led model is where a bank has a limited role in the day-to-day account management.
Change of PIN and reminder over the Internet 15. Personalized alerts and notifications on security prices 21 . Portfolio management services 2. i.e. Domestic and international fund transfers 2. the merchant hands the client cash and debits the client's account. Commercial payment processing 5. When depositing money. Withdrawal at banking agent 8. Deposit at banking agent Especially for clients in remote locations. the merchant receives cash and the system credits the client's bank account or mobile wallet. A specific sequence of SMS messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. and Transfers 1. Deposits. it will be important to help them deposit and withdraw funds at banking agents. The feasibility of such banking agents depends on local regulation which enables retail outlets to take deposits or not. Micro-payment handling 3. Withdrawals. retail and postal outlets that turn cash into electronic funds and vice versa. Blocking of (lost.. Real-time stock quotes 3. Peer to Peer payments 7.Mobile Banking 14. Mobile recharging 4. In the same way the client can also withdraw money at the merchant: through exchanging SMS to provide authorization. stolen) cards Payments. Investments 1. Bill payment processing 6. PIN provision.
General information such as weather updates. mobile banking will be attractive mainly to the younger. A third of mobile phone users say that they may consider performing some kind of financial transaction through their mobile phone. gives us two kind of services:.” pull” when the customer explicitly request a service or information from the bank so a request for your last five transaction statement is a pull based offering. Loyalty-related offers 3. including complaint submission and tracking 4. for example your banks send out an alert when your account balance goes below a thousand level.Transaction based on enquiry based so a request for your bank statement is an enquiry based service and a request for your fund’s transfer to some other account is a transaction based services transaction based services are also differentiated from enquiry based 22 . Check (cheque) book and card requests 3. Exchange of data messages and email.Mobile Banking Support 1. including mortgage approval. news 2. more "tech-savvy" customer segment. The other way to categorize the mobile banking services by the nature of the service. One way to classify this service depending on the originator of a service session is the push/pull nature. ATM Location Content Services 1. and insurance coverage 2. Status of requests for credit. ‘Push’ is when the bank sends out information based upon an agreed set of rules. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment. Location-based services Based on a survey conducted by Forrester.
Even though.Classification of Services DEVICES Mobile phone and palm pilot are the most important wireless devices. 23 . Based upon the above classifications are arrive at the following services listed below:Push Based Pull based Transaction Based Fund Transfer Bill Payment Other Financial Services like share Enquiry Based Credit / Debit Alerts Minimum Balance Alerts Bill payment alerts trading Account enquiry Account enquiry Cheque Status enquiry Cheque book request Recent history transaction statement Balance Table:.Mobile Banking services in the sence that they require additional security across the channel from the mobile phone to the banks date servers. there is solution for both type of devices and some banks use both mechanisms to deliver their service. mobile phone has more potentially due to its rate of penetration especially countries.
SMS is a low-cost mechanism for nonvoice communication. Table:.Technology 24 . It is a more friendly due to its web enabled capacity. specially in emerging markets.Mobile Banking The following table presents the technology and advantages and disadvantages of both: Device Technology Advantages/Disadvantages Mobile phone is a more effective way to reach the “unbanked masses”. Texts are not much user-friendly. Especially important in countries SMS Where communication is still expensive. Screen and keyboard will limit functionality. It will be expensive for the WAP customer(pricing per minute). Mobile phone Pricing is per message send it.
of course. Technical developments coupled with the process of Globalization.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. however. have made it possible for banks to offer their services in far-flung areas without investing money to build branches and hire additional staff. economically prosperous customers. have reduced entry barriers so that the number of available reputed brands has increased significantly. thereby intensifying the competition. 25 . It is therefore necessary to retain the existing customer base while simultaneously acquiring new. for instance the use of credit cards while abroad. On the other hand it is faced with increased competition on its home turf. the Globalization and the technological developments. is a two-way street: On the one hand. Intensified Competition in the Banking Sector: Bank products are of immaterial nature sold increasingly with the help of computer networks spanning across the globe The global networks provide the customer with world-wide services. 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. a bank gets access to new markets. 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. To master this combination of opportunities and challenges banks need – apart from business consolidation and cooperation – organic growth. This opportunity. Even though the brand-name remains a critical factor on account of the need for trust in banking business. The creation of an EU-wide single domestic market has led to intensification of competition in the EU in all business fields including in the banking sector. The ongoing Globalization has further intensified the competition.
anytime service. this group can be expected to enter in short to medium-run a professional carrier so that it needs to be cultivated in order to retain customers of this age-group even after they enter professional lives. many members of this group are known to be involved in stock market activities.and innovation friendly. 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. home loans for young families. generally in the age-group of 26-50 years. puts it: “Today’s customers want to organise banking transactions while on the move. today. 26 . From the banks’ perspective this group is particularly attractive on account of its relative economic prosperity and the need for financial services. c) The Business People: This group of customers. is thought to be the most important one for Mobile Banking. b) The Young Adults: Also this segment is thought to be technology. they represent the prospective clientele of tomorrow and need to be cultivated in the middle to long-term marketing strategy of the banks. They need to be professionally often on the move and carry mobile devices to ensure accessibility.Banks are responding to this development by introducing mobile services. Further. Members of this group are generally well educated and economically well-off. Private Customers Director at Postbank. This group is technology-savvy and willing to experiment with innovative products and services. For this reason they are ideal candidates to use services offered via mobile devices. Though the youngsters as a group are hardly relevant for banks from a financial perspective. a leading German bank.g. often on the move. e.Mobile Banking Adapting to Requirements of Core Target Groups: Banks. are increasingly confronted with technology-savvy customers who are often on the move. As Wolfgang Klein. irrespective of opening hours”. demand ubiquitous. Though this group too is financially not very strong. The youngsters.
However. these services also have their own utility for the banks. Further. The efficiency of a distribution channel can be measured by its fulfillment of three major objectives.Mobile Banking In order to fulfill the requirements of these customer groups banks tend to look at Mobile Banking as a promising option. which are closely related to each other. MOBILE BANKING AS DISTRIBUTION CHANNEL Mobile Banking enhances the number of existing channels of distribution that a bank employs to offer its services. 27 . a favorable reputation of the firm’s logistical capacities may help generate additional orders.This objective is arrived by increasing operational efficiency so that those losses are minimized that are caused by delays in catering to customer orders. Increasing Sales Volume One of the primary tasks of a distribution channel is to increase the volume of demand for products at profitable prices .
All these advantages create a WIN-WIN-WIN situation for the technology: End-users benefit from greater control of their personal finances. the technology has taken off on slow pace. data usage and." said Mr. Mobile operators benefit from increased customer stickiness. ATM. phone. on Airtel. Vodafone. Bankers are of the opinion that mobile banking gives the banks an opportunity to expand their customer base without incurring additional infrastructure costs. ICICI Bank. the bank made its mobile banking service available on GSM hand-sets. General Manager. Due to a large number of advantages. Mobile phones can be safer as compared to physical cards as they are pin-protected. "We conducted a pilot in Delhi and received close to a thousand responses. Sachin Khandelwal. Despite lots of security issues related to mobile banking and lack of awareness on part of consumers. And recently. among others). thereby minimizing the risk of misuse.Mobile Banking UK-based Barclays is one of the largest corporate money managers in the world. and these advantages have over-powered all the disadvantages of the technology. Head-Cards Product Group. Customers can choose between Hindi and English. customer experimentation with other forms of mobile content. Further. and Idea networks in forty cities. The bank launched its consumer banking services in India last year. 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. 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. as well as time saved by not having to access account details via other channels (Internet. 28 . Mobile banking could be used to make remittances from person to person. Barclays aims to include more languages and extend it to CDMA hand-sets as well. banking purposes and to make payments for purchases or services provided. potentially. still it will be a big hit in coming years.
IVR (Interactive Voice Response) IVR or Interactive Voice Response service operates through pre-specified numbers that banks advertise to their customers. 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. SMS (Short Messaging Service) 3.from "online banking" applications to one with richer interfaces and multiple mobile payment capabilities. and are then read out the corresponding information. 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. 1. Customers can choose options by pressing the corresponding number in their keypads. 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). TECHNOLOGIES ENABLING MOBILE BANKING Technically speaking most of these services can be deployed using more than one channel. 29 . Over the next five years. we expect uptake of mobile banking services to be robust among mobile subscribers. Presently. Standalone Mobile Application Clients 1. IVR (Interactive Voice Response) 2. WAP (Wireless Access Protocol) 4. Also. Mobile banking based on IVR has some major limitations that they can be used only for Enquiry based services. mostly using a text to speech program. Mobile Banking is being deployed using mobile applications developed on one of the following four channels. users and the banks. mobile banking deployments will develop significantly .Mobile Banking Given this win-win-win situation.
However there has been considerable noise on multiple Asterisk related forums over the stability of Asterisk based systems. However there have been few instances where even transaction-based services have been made available to customer using SMS. The way this works is that the customer requests for information by sending an SMS containing a service command to a pre-specified number. SMS (Short Messaging Service) SMS uses the popular text-messaging standard to enable mobile application based banking. 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. Banks looking to go the low cost way should consider evaluating Asterisk. 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. For instance.Mobile Banking One way to enable IVR is by deploying a PBX system that can host IVR dial plans. customers of the Bank of Punjab can make fund transfer by sending the SMS ‘ TRN(A/c No)(PIN No)(Amount)'. 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. For example. including the low end. 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. which are most popular in countries like India and China are SMS enabled. Most of the services rolled out by major banks using SMS have been limited to the Enquiry based ones. which is an open source Linux PBX system Asterisk. cheaper one's. The main advantage of deploying mobile applications over SMS is that almost all mobile phones. 2. 30 .
WAP sites offer the familiar form based interface and can also implement security quite effectively. There are a couple of hosted IP based SMS gateways available in the market and also some open source ones like Kannel . Banks maintain WAP sites which customer's access using a WAP compatible browser on their mobile phones. Bank of America offers a WAP based service channel to its customers in Hong Kong. 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 31 . The banks customers can now have an anytime. 3.Mobile Banking An SMS based service is hosted on a SMS gateway that further connects to the Mobile service providers SMS Centre. WAP (Wireless Access Protocol) WAP uses a concept similar to that used in Internet banking.
They can be easily customized according to the user interface complexity supported by the mobile. and served on demand. The WAP Gateway forms an access point to the internet from the mobile network. Mobile Application users access the bank's site through the WAP gateway to carry out transactions. 4.Mobile Banking A WAP based service requires hosting a WAP gateway. mobile applications enable the implementation of a very secure and reliable channel of communication. The following figure demonstrates the framework for enabling mobile applications over WAP. STANDALONE 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. The actually forms that go into a mobile application are stored on a WAP server. J2ME is fast becoming 32 . In addition. which further requires the mobile device to support one of the many development environments like J2ME or Qualcomm's BREW. One requirement of mobile applications clients is that they require to be downloaded on the client device before they can be used. much like internet users access a web portal for accessing the banks services.
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. However countries like Bangladesh face a serious obstacle in the proliferation of such clients as few users have mobiles. which support J2ME or BREW. Quite a few mobile software product companies have rolled out solutions. Reliance has unveiled one of the most ambitious data services deployment program in the country.Mobile Banking an industry standard to deploy mobile applications and requires the mobile phone to support Java. J2ME ties together the API for mobile phones which have the similar functionality in what it calls 'profiles'. The mobile user downloads and installs the wireless I-banco application on their J2ME pone. On the other hand a country like South Korea with 33 . 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. However. mostly because of the proprietary nature of its business and because of the steep prices it charges for its development tools. which support J2ME. Reliance Infocomm has about 7. 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. 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.01 million users all of which have handsets. the rapid proliferation of mobile phones which support different functionality has resulted in a huge number of profiles. However. one of the biggest CDMA players in the telecom industry. Out of J2ME and BREW. 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. which are further significantly driving up development costs. One such product is Wireless I-banco . which enable J2ME mobile applications based banking. 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.
Mobile Banking its tech-savvy population has a widespread adoption of the higher-end mobiles.10 each. 34 . Also service providers are increasingly using the complexity of their supported mobile banking services to attract new customers and retain old ones. 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. For example an average teller or phone transaction costs about $2. User needs to have a data plan. mobile banking is helping service providers increase revenues from the now static subscriber base. whereas an electronic transaction costs only about $0. Mobile banking offers the next surest way to achieve growth.36 each. 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. allows end user to access corporate association. Countries like Korea where mobile penetration is nearing saturation. For service providers. credit cards etc. Additionally. DISADVANTAGES OF MOBILE BANKING Many non-standards variables including handsets. browsers and operating system. which support application development. Inconsistent user experience due to varying connection speed and different handset. which may be a barrier to adoption among price sensitive demographics. secure connection can be established on most of the mobile browsers.
currently the best user experience.Mobile Banking No “offline” (out of the coverage) capability. but will not be able to support the full breath of transaction-based services. depending on the capabilities of a mobile phone. However. 35 . and if South Korea's foray into mass mobile banking is any indication. According to the Gartner Group. in terms of cost and time. Mobile Application based banking is poised to be a big m-commerce feature. A WAP based service can let go of the need to customize usability to the profile of each mobile phone. However. Banks going mobile the first time need to tread the path cautiously. 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. However. the trade-off being that it cannot take advantage of the full breadth of features that a mobile phone might offer. 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. in markets like India where a bulk of the mobile population users' phones can only support SMS based services. a leading wireless computing consulting organization. The biggest decision that Banks need to make is the channel that they will support their services on. mobile banking could well be the driving factor to increase sales of high-end mobile phones. MARKETING FOR MOBILE BANKING Mobile banking is poised to become the big killer mobile application arena. Mobile application standalone clients bring along the burden of supporting multiple mobile device profiles. Mobile banking through an SMS based service would require the lowest amount of effort. mobile banking services will have to support a minimum of 50 different device profiles in the near future. Nevertheless. is possible only by using a Standalone client. this might be the only option left. Mobile banking has the potential to do to the mobile phone what E-mail did to the Internet.
while focus on areas such as South Africa have defaulted to the USSD as a basis of communication achievable with any phone. as very few countries have more than one mobile banking service provider. 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. The desire for interoperability is largely dependent on the banks themselves. In practice it is too early in the service lifecycle for interoperability to be addressed within an individual country. Security Security of financial transactions. 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. Some of these devices support J2ME and others support WAP browser or only SMS. where installed applications (Java based or native) provide better security. money movements between service providers will naturally adopt the same standards as in the banking world. being executed from some remote location and transmission of financial information over the air. banking interfaces are well defined and money movements between banks follow the IS0-8583 standard. In practice. with countries like India using portals like R-World to enable the limitations of low end java based phones. As mobile banking matures.Mobile Banking 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. Initial interoperability issues however have been localized. are the most complicated challenges that need to be addressed 36 .
wireless network service providers and the banks' IT departments. Authentication of the device with service provider before initiating a transaction. There are systems such as Mobile Transaction Platform which allow quick and secure mobile enabling of various banking services. 6. If the bank is offering smart-card based security. Banks unable to meet the performance and reliability expectations may lose customer confidence. 5. 4.Mobile Banking jointly by mobile application developers. User ID / Password authentication of bank’s customer. Encryption of the data that will be stored in device for later / off-line analysis by the customer. their expectations from the solution will increase. As customers will find mobile banking more and more useful. Physical part of the hand-held device. Security of any thick-client application running on the device. 3. the customer may be sitting in any part of the world (true anytime. the hacker should require at least an ID/Password to access the application. This would ensure that unauthorized devices are not connected to perform financial transactions. the physical security of the device is more important. In case the device is stolen. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network: 1. 2. 37 . with leading banks adopting Mobile Transaction Platform and the Central Bank publishing guidelines for mobile banking operations. 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. anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion. Encryption of the data being transmitted over the air. Recently in India there has been a phenomenal growth in the use of Mobile Banking applications. With mobile banking.
Alerts FEATURES OF MOBILE COMMERCE Mobile Commerce is characterized by some unique features that equip it with certain advantages against conventional forms of commercial transactions. Personalization It would be expected from the mobile application to support personalization such as : 1.Mobile Banking Application distribution Due to the nature of the connectivity between bank and its customers. Default transactions 5. 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). 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. Preferred Language 2. However. Standard Beneficiary list 6. Date / Time format 3. there could be many issues to implement this approach such as upgrade / synchronization of other dependent components. Amount format 4. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches (so called "Over The Air" updates). ii) Immediacy: Closely related to the feature of ubiquity is the possibility of real-time 38 .
local and personal. i. stock market information.g. complicated and potentially inefficient authentication process redundant. 39 . allow companies to offer goods and services to the user specific to his current location. iv) Instant connectivity: Ever since the introduction of the General Packet Radio Service (GPRS) mobile devices are constantly “online”.e. LBS can thus cater to consumers’ needs and wishes for localised content and services.Mobile Banking availment of services (the “anytime” feature). This feature is particularly attractive for services that are time-critical and demand a fast reaction. as time-consuming dialup or boot processes are not necessary. which he wants to be kept informed about. The SIM is registered with the network operator and the owner is thus unambiguously identifiable. 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. at the “right” time. e. vi) Simple authentication procedure: Mobile devices function with an electronic chip called Subscriber Identity Module (SIM). by the virtue of its ability to be immediate. new avenues for business. in touch with the network (the “always-on” feature). iii) Localisation: Positioning technologies. such as the Global Positioning System (GPS). v) Pro-active functionality: Mobile Commerce opens. This feature brings convenience to the user. and services. The clear identification of the user in combination with an individual Personal Identification Number (PIN) makes any furthertimeconsuming. The user may choose the products.
to administer accounts and to access customized information. The scope of offered services may include facilities to conduct bank and stock market transactions. often with very promising results.Mobile Banking EMPLOYMENT OF MOBILE TECHNOLOGIES IN THE BANKING SECTOR A cornerstone of Mobile Commerce is built by Mobile Banking. Unlike in the past. 11]. These services may be categorized as following: 40 . when banks offering mobile services suffered a severe setback due to lack of customer interest and unripe technologies. The offered services may include transaction facilities as well as other related services that cater primarily to informational needs revolving around financial activities. These facts point toward a positive shift in the customer perception of Mobile Banking.” Mobile Banking. reduce costs or to increase customer satisfaction. the time seems to be now ripe for (re-)launching mobile services. On the other hand. 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. Mobile Banking is usually defined as carrying out banking business with the help of mobile devices such as mobile phones or PDAs [8. includes a wide range of services. technological developments like Universal Mobile Telecommunications System (UMTS) have provided a new platform for realistic mobile applications. registering an impressive growth of nearly 200% vis-à-vis 2003. as defined above. It comprises of services in the field of accounting. the utilization of transaction-based MFS of Finland-based Nordea bank grew by 30% in 2004. For instance. Mobile Banking is increasingly being employed by many banks around the world to generate additional revenues. brokerage and financial information.The number of France’s Société Générale customers using mobile services crossed the mark of one million in year 2004. the availment of bank-related financial services via mobile devices.
pull and push basis. i. independent module. mobile financial services of non-informational nature that revolve around a securities account.Mobile Banking Mobile Accounting Mobile Accounting is sometimes characterized as transaction-based banking services that revolve around a bank account and are availed using mobile devices . anywhere access to information .and financial services. A more precise definition of Mobile Accounting would therefore characterize it as “availment of account-specific banking services of non-informational nature”. Mobile Brokerage. Mobile Brokerage Brokerage. on both. Mobile Brokerage can be thus defined as transactionbased. refers to intermediary services related to the bourse. 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. too.e.g. The information may be customized on the basis of preferences given by the customer and sent with a frequency decided by him. 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. 41 .Not all Mobile Accounting services are however necessarily transaction-based.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. Information services are an integral part of Mobile Accounting and Mobile Brokerage but they may also be offered as a stand-alone.and financial services of informational nature . ideally. selling and purchasing of stocks. Mobile Financial Information can be offered without offering Mobile Accounting or Mobile Brokerage but vice versa is not feasible. in the context of banking. e. The information should be provided. Mobile Financial Information services include subsets from both banking and financial services and are meant to provide the customer with anytime. Mobile Financial Information Mobile Financial Information refers to non-transaction based banking.
In 2009. banks can only be found in big cities. Dutch Bangla Bank Ltd tied up with mobile phone operator ‘ Banglalink’ and ‘ Citycell’ and BRAC Bank tied up with mobile phone operator ‘ Robi’ to give this services to customers. Tejarat. Eko India Financial Services. banks such as Parsian. Banco Industrial provides the service in Guatemala. which is mainly used to transfer limited amounts of money. The idea is very much new here. known as ZAP. under the label Easy Paisa. Mellat. Zain launched their own mobile money transfer business. the most prominent being Hormuud Telecom and its ZAAD service. Only two banks started mobile banking here. This aspect of mobile commerce is also popular in countries where most of their population is unbanked. In Somalia. With Dutch Bangla Bank a customer can make five transactions a day with a maximum of taka five thousand per transaction.Mobile Banking MOBILE BANKING IN BANGLADESH Bangladesh has just entered in the era of mobile banking. MOBILE BANKING IN THE WORLD Mobile banking is used in many parts of the world with little or no infrastructure. which was begun in Q4 2009. In most of these places. Sepah. and Bankmelli offer the service. Only Dhaka city is under coverage of mobile banking facility now. Bancomer and MPower Venture. Saderat. In Iran. in Kenya and other African countries. One percent commission will be charged for each deposit amount and two percent commission will be charged for each withdraw amount. the many telecom companies provide mobile banking. Soon the network will expand to the whole country. especially remote and rural areas. but increasingly used to pay utility bills as well. in coordination with Taameer Bank. Kenya's Safaricom (part of the Vodafone Group) has the M-Pesa Service. Edbi. Citizens of Mexico can access mobile banking with Omnilife. Telenor Pakistan has also launched a mobile banking solution. 42 . and customers have to travel hundreds of miles to the nearest bank.
cn. as of February 2011. Brazil and USA with 200 percent. mobile banking reached a penetration rate of 52. In a year of 2010. and micro-finance facilities to its customers (nearly 80% of whom are migrants or the unbanked section of the population) through mobile banking. China. micro-insurance.Mobile Banking the business correspondent of State Bank of India (SBI) and ICICI Bank. and users' personal monthly income level continues to rise. compared to 36. 110 percent and 100 percent respectively According to the "2011 China Mobile Banking Industry User Survey" recently issued in Beijing by Chinese mobile internet portal 3G. 43 . withdrawal and remittance services. deposit. The report also shows that the industry is making inroads amongst the middle-age demographic. provides bank accounts. 150 percent.2% among Chinese mobile internet users.8% in July 2010. mobile banking users soared over 100 percent in Kenya.
Mobile Banking The Industrial and Commercial Bank of China's mobile banking services led the industry with a penetration rate of 35. THE FUTURE OF MOBILE BANKING The growth of mobile banking technology is increasingly hard to ignore. According to the survey.1%. while nearly half made payments no larger than RMB 500. More than 10% of users reported making payments in excess of RMB 10. followed by China Construction Bank with 35% in second place.000. security was named a key concern by more than 60% of mobile banking users. "Your bank in your pocket.moving from basic user functionality to full mobile finance. Micropayments remained the strongest application of mobile banking services.000. Analyst firm Javelin Strategy & Research reports that nearly 50 percent of all mobile users in the United States will be using mobile banking within four years and that nearly 50 percent of iPhone and other smartphone users already use mobile financial services today. While this is a fraction of the full 44 . With 2010 being the year in which mobile banking broke into the mainstream." Where We Are Now The majority of banks currently are in transition between their introductory mobile solutions and a second generation of offerings with greater capabilities. 2011 will be the year in which financial institutions will look to capitalize on the full potential of the mobile channel -. or. while other banks trailed far behind. with over 70% of users' largest payments remaining under RMB 1. The introductory mobile offerings most banks deploy closely mirror users' online experiences.
This "connectivity" is crucial to delivering fully mobile banking. online. "actionable alerts. Many financial industry analysts. consumers demand it. remote check-deposit capture technologies such as those offered by Mitek. transaction-driven alerts is one of the keys for financial institutions to provide value to their customers and to drive adoption and usage of mobile banking. definitive ROI).e-mail. banks can capitalize on the full capabilities of the mobile phone as a consolidation point of all other existing bank channels -. mobile banking providers must establish open ways to access these different sources of information. By opening up the mobile channel to multiple back-end and third-party systems or networks such as VisaNet. customer service. including Javelin. coordination of a "business workflow" across different banking systems is required. an actionable alert is sent to the customer. While the mobile channel still is far from being definitively proven. In order to accomplish this. In order to provide authoritative value to customers and produce strong adoption (and with it. For instance. who can then instantly transfer funds by responding to the alert. mobile payments hubs such as CashEdge or PayPal. Banks are moving from one-way alerts and simple notifications to proactive content in the form of realtime. Where We're Going As mobile banking gives firms the ability to fully engage in conversations with customers through their mobile devices. twoway. This will 45 ." These are personalized.Mobile Banking potential of the mobile channel. or contextual marketing systems capable of determining when to present offers. believe that the delivery of real-time. two-way alerts that enable customers to quickly and easily take action directly on their mobile devices in response to previously set alert thresholds or financial events as defined by the consumer. and mobile-specific SMS or push notification alerts. third-generation mobile banking solutions must empower institutions to use the mobile channel as an extension of and integrative point for existing technologies. it is an essential stepping-stone to move users from the branch and online banking to their own handsets for financial interaction. if a customer's account balance falls below a predefined threshold.
and add new handheld devices. Besides the lack of resources and expertise. Many financial institutions and mobile vendors today. the outsourcing of the wireless services can solve most of the impediments they would face. 46 . or because they signed binding contracts with core financial technology providers in order to rush a baseline mobile solution to market. either because they developed a non-scalable. Improve the time to implement the services. Cost and budget can be predicated with more accuracy. however. The advantages of using standard protocol are attainable mainly through open system. like credit unions. non-adaptable elementary mobile solution. other reasons for outsourcing are: Financial institution will not divert from it core business. still are tied to basic core functionality. configure and add new services. RECOMMENDATION Some guidelines and consideration banks need to follow implementing wireless banking are: Application servers should be easy to install.Mobile Banking instantly resolve consumer issues and complete tasks faster and more economically -. Integration with other servers and back end services must be easy to implement. Client application must be easy to install.making alerts fully actionable. customized. The smart mobile banking solutions of tomorrow must anticipate the future expectations of consumers and recognize the potential that the mobile channel represents -.a technology set to increase customer loyalty and satisfaction via conversation creation. For smaller financial institution.
The foremost significance of Mobile Banking would therefore be of a defensive nature. Mobile Banking would be employed to thwart negative differentiation vis-à-vis rivals. 47 . Mobile Banking seems to possess the potential to become one of the widely spread and accepted application in the field of Mobile Commerce. innovative services. Its main contribution. i. It might even help attracting new customers. to become a standard service offered by every bank worth its name. Developments in the banking sector. We may expect to see Mobile Banking go into the footsteps of Online Banking. e. increased competition on account of technological developments coupled with the process of globalization have produced new challenges for banks.Mobile Banking Wireless services will use the latest in technology. has gained non-negligible relevance for banks today.e. can be expected to take place in the strategic field as it is all set to become an instrument of differentiation. as has been demonstrated. Instead of providing a positive differentiation. Further. Mobile Banking presents an opportunity for banks to retain their existing. Mobile Banking presents a chance to generate additional revenues. Many banks recognize this threat and are already taking preventive measures by introducing mobile services. technology-savvy customer base by offering value-added. particularly in the backdrop of its high acceptance across commercially important sections of the society. however.g. CONCLUSION Mobile Banking.
.mobilecommercedaily.com 9. www. www..slideshare.cibc.creditnet...com/.com/2011/...pdf 8. in: Technology Management for the Global Future . https://www. 12.wikipedia..com/onlinebanking/index.2011 2.mobile_banking 4. en. www.com/ 13.org/.co.com/pdf/Mobile_Banking.php 6.uk › Personal Banking › Mobile Banking Services 3.infogile.com/ca/legal/mobile-banking-security.html 5. Tiwari./mobile-banking-growing-in-popularity-19930032.com › Insta Banking 7. mobithinking.cfm?.. www. Stephan and Herstatt./new-business-models-in-mobile-banking 14. Buse. Vaidya (2011): “Emerging Trends on Functional Utilization of Mobile Banking in Developed Markets in Next 3-4 Years 16.com/mobile-marketing-tools/latest-mobile-stats 10. http://www./mobile-payment-value-chain-and-business-models.Mobile Banking REFERENCE 1. www.. www.barclays.marbridgeconsulting.cgap.statebankofindia.net/. technology.org/wiki/Mobile_banking. 15./social-media-statistics-by-the-numbers-june. 48 ..icicibank. Cornelius (2006): Mobile Banking as Business Strategy: Impact of Mobile Technologies on Customer Behaviour and its Implications for Banks.bankofamerica.Proceedings of PICMET '06.com/marbridgedaily/2011-03- 30/article/44783/chinas_mobile_banking_penetration_reaches_52 11. www. Rajnish.banking2020. www. www.
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