chapter 3 mobile bankingmobile banking technologies...

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CHAPTER - 3

MOBILE BANKING TECHNOLOGIES AND VARIOUS ADOPTION MODELS

This chapter contains the Mobile banking technologies, Empirical and

Theory based Mobile banking adoption models. These models like TAM,TRA, TPB,

DTPB and IDT indicates were regularly engaged to examine all influences factors

of Mobile banking adoption and other Mobile banking technologies like IVR, WAP,

SMS, USSD,J2ME etc. originate core determinants to defines the adoption of Mobile

banking facility and its chapter also contains the Components and Associates of

Mobile banking and participations of Mobile banking services.

3.1 Mobile Banking Integration

The Mobile banking technology is the most similar to the Web banking

paradigm. It requires an application either a Browser based like Opera Mini, Firefox,

Internet Explorer and a more advanced mobile phones to run it. A Smartphone is a

Mobile device with more superior computing capability and internet access

applications. A Smart device has a large display menu with internet facility and a

highly version Operating system like android, capable of running general purpose

applications. In Mobile banking services a lot of integration is involved in different

activities.

There are Four Primary Players involves in delivery of a Mobile banking

services to the Customers.

� A Bank Organization

A financial establishment a bank invests finance deposited by Customers,

pays it out as per requirement and bank accept deposits, clear check/money and

other financial transactions to customers.

Mobile Banking Technologies and...... 26

� The Customer

The Bank Organizations and Mobile Network Operator appears as to have

taken an interest and realized the potential value of exploring the Mobile device

amongst their respective customer bases. Some private and public banks can realize

the full potential of Mobile banking facility by offering customers experiences.

� The Mobile Network Operator

The Customer is provided the Mobile Banking services through the Mobile

Network Operator.

� The Mobile Banking Technologies Vendors

The Mobile banking Technologies vendors to communicate with customers

via SMS banking that are allowed by banks. The bank facilities like Credit limit

alert, notification of transactions or other alert messages provided by Mobile

banking. Mobile banking clients can withdraw money from authorized banks when

an ATM machine is not available. They can use SMS to transfer money between

accounts, pay various bills and also move money between private individuals.

3.2 Components of Mobile Banking Platform

There are following four Components of Mobile Banking Platform.

� Application Development Environment(ADE)

The Application Development Environment offers the actual service to the

Customers, such like Banking Menus and Commands. The Application Development

Environment promotes the intelligence delivered to the customers Handset, both side

Client or Server Side.

� Network Bearer Channels(NBC)

The Network Bearer Channels carries main data and other Services. The aim

of the Network Bearer Channels is to carry the contents of the Bearer Channel

visibly between the endpoints of the call. The Bearer Channel is the Channel that

carries the main data and to facilitate the usage of the network’s bearer channels and

the mobile service would require integration into an MNO.


� Data Repository Store (DRS)

For the processing of financial transactions the data store has enough

customer information like Customer Name, Account Number and Total Amount etc.

The data repository would also have sufficient information to validate the Customer in

each and every transaction. By housing transactional and Consumer data, the

Repository would also facilitate Customer Care and the settlement of certain

financial transactions that use the Application Development Environment to fulfill

services.

� Financial Switch (FS)

The Financial Switch would act as the mediator to the banking system.

Directions composed by the Application Development Environment through the

MNO interface and using data from the data repository are translated through the

financial switch into a transaction format.

Figure: 3.1 Components of Mobile Banking Platform

Mobile Banking

Components

Data Repository

Application Development

Financial Switch

Network bearer


3.3 Mobile Banking Technologies

Mobile Banking Technologies can be categorized into two environments:

3.3.1 Server Side Technology:

Server-Side Technologies are those applications built on a server side away

from the customers SIM or Mobile devices. In Server-Side Applications, customer

data that enables the processing of transactions are typically stored in a highly

secured environment, on a Server Side. Examples of Server-Side Technologies are

Interactive Voice Response (IVR), Short Messaging Service (SMS), Wireless

Access Protocol (WAP) and Unstructured Supplementary Service Data (USSD).

Mobile Banking is being deployed using Mobile applications developed on

one of the following six technologies.

� Interactive Voice Response(IVR)

Interactive Voice Response is the conventional technology. This is the form

of customer face to face interaction Mobile banking technology. Interactive Voice

Response is an automated telephonic System that interacts with Callers; collect

information and routes calls to the appropriate recipient.

An IVR system takes a combination of voice telephone input and touch-tone

keypad selection. IVR provides appropriate responses in the form of voice, fax,

e-mail and through other media. IVR applications are programs that control and

respond to calls on the IVR platform. IVR applications can either be developed by

an enterprise, by an IVR development shop or by other IT companies that offers IVR

applications.

Interactive Voice Response have a pre specified numbers and IVR service

operates through pre-specified numbers that banks advertise to their customers.

Customer's make a call at the IVR pre specified number and are usually greeted by a

stored electronic message followed by a menu of different options. Customers can

choose any required options by pressing the corresponding number in their keypads

and then interpret the corresponding information.


An IVR system consisting of telephonic device, Software applications, Back-

end servers, which include databases, mainframes, Java platform or other application

servers, third Party information services and a supporting infrastructure.

IVR includes some below information like:

• Banks and Stock account balances related information.

• Money transfers related information.

• Office calls routing, Call Center forwarding and Entry transactions

information.

• Telephony infrastructure includes Telephone lines, Call switching tools and

Call Center Automatic Distributors etc.

Limitations of IVR

IVR has some major limitations.

� IVR can be used only for Enquiry based services.

� 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.

Steps of Using IVR

There are following steps of using IVR Technology:

� Firstly IVR allows a telephone caller, to select options from a voice menu of

banking and interact with the mobile device.

� After that a pre-recorded voice menu is displayed and the caller presses a

number for example Press 1 button for Yes, press 2 button for No indication"

on a telephone keypad to select an option.

� Then Speech recognition machine can also understand the caller's simple

spoken answer such as "Yes", "No" or a number as a valid response to the

voice menu.

� After three steps IVR requires registered customers to make a call to a

pressed telephone number and be answered by a pre-recorded voice that

represent a various menu options to the bank customer.


� After that The IVR system would then take the necessary directions from the

customer by recording the tones of the customers enters on the key pad like

Yes/No or through spoken commands and creates an instruction that is given

to the service provider.

� The service provider would use the customer Mobile number forwarded by

the network operator to identify as verification.

Figure: 3.2 Interactive Voice Responses (IVR)

� Short Messaging Service(SMS)

SMS Banking allows firstly access own bank accounts and then carry out

various banking transactions and services. The SMS facility conducts the following

operations using the messaging services of service provider.

• Balance Enquiry

• Last Few Transactions

• Cheque Paid Status

• Suspend ATM / Debit Card

• Loan Balance Enquiry

• Deposit Service

SMS Banking sends many alert facilities to customers. There are two types

of services available, SMS PUSH Alerts and SMS PULL Alerts.


A) SMS PUSH Alert Services:

• To send an alert message when the account balance goes above the

maximum balance specified by the customers.

• To send an alert when the transaction amount credited is Rs. 5,000 and above

or the amount specified by the customer, whichever is higher.

• To send reminding alert seven days before the maturity of the term deposit

accounts and reminding alert seven days before the installment due date for

the loan accounts.

• To send an alert when the transaction amount is debited and when a cheque

is bounced.

• To send the end of day balance of the specified account given by the

customer.

B) SMS PULL Alert Services:

• Account Balance enquiry

• Mini Statement request

• Various E- Bill payments

• Foreign currency exchange rates enquiry

• Fixed deposit interest rates enquiry.

• Transfers between customers own accounts

• Requesting for an debit credit card to be suspended

• De-activating a credit or debit card when it is lost

An SMS based service is hosted on a SMS gateway at further connects to the

Mobile service providers SMS Centre. This Figure 3.3 shows the infrastructure of

SMS Technology:


Figure: 3.3 Short Messaging Service (SMS)

� Wireless Access Protocol (WAP)

Wireless Access Protocol uses a similar concept that used in Internet banking.

Banks maintain WAP sites which customer's access using a WAP compatible

browser like Google Chrome, Vista etc. on their Mobile phones. WAP sites offer the

familiar form based interface and can also implement security quite effectively.

WAP specifies an application framework and protocols for wireless devices.

A WAP based service requires hosting a WAP gateway. Mobile Application

users access the bank's site through the WAP gateway to carry out transactions much

like Internet users access a web portal for accessing the banks services. The banks

customers can now have an anytime, anywhere access to a secure reliable service

that allows them to access all enquiries, transaction based services and also more

complex transaction like trade in securities through their Mobile devices.

WAP specifies an application framework and protocols for wireless devices.

WAP is a kind of fusion of Mobile Networking Technologies and Internet

Technologies.

The key features of WAP including programming models and Wireless

Markup Language. This language is especially for specifying and displaying content


on WAP devices.WML is part of the WAP application environment which requires

the use of WML.WML works with the Wireless Access Protocol. This browser is

cognizant of the limited capabilities of WAP devices like small displays, Limited

processing power, Limited memory, Narrow bandwidth connection and Limited

battery use without recharging. Wireless Telephony Application provides extensions

for telephony services like call features control mechanisms, voice mail, messaging,

phone-book management etc.

The following figure 3.4 demonstrates the framework for enabling Mobile

applications over WAP. The Mobile applications are stored on a WAP server. The

WAP Gateway forms an access point to the internet from the Mobile service center.

Figure: 3.4 Wireless Access Protocol (WAP)

� Unstructured Supplementary Service Data (USSD)

USSD is a session based technique and can provide an interactive dialog

between the users and a certain set of applications. USSD is a menu driven technique

of SMS where a customer would receive a text menu on their Mobile phone. USSD

is a data bearer channel in the GSM network like SMS, it transports small messages

of upto 160 characters between the Mobile handset and the network.

USSD is a standard based technique has same features like SMS technique.

USSD requires no pre-configuration on the customer SIM or handset and it is

already built into most GSM networks. Mobile Network Operators do, however,


need to commercialize the product by establishing the necessary bearer channel

billing capability and promoting the use of USSD for value added services. Both

sides of the dialogue happen during a session whereas an SMS based interaction is

broken into each segment of communication between the client and the service.

There are two types of communication allows in USSD Technique:

• USSD1 only allows one way communication to the network. The interaction

between the user and the service would be broken into each communication

segments, like SMS segments.

• USSD2 allows two way communications between the user and the network.

It would be held in the same session and allow for a flowing conversation

between the user and the service. This is similar to e-mail and instant

messaging. E-mail waits for the recipient to read and respond while as instant

messaging allows for immediate dialogue.

3.3.2 Client-Side Technology

Client Side Technology is those applications, solutions and services offerings

built or embedded on a consumer SIM or Mobile handset. Examples of Client-Side

Applications are SIM Based Applications Toolkit (SAT) and Java 2 Micro Edition

(J2ME). In Client-Side Applications, the customer data is typically stored on the

application or entered by the customer side and encrypted by the application in the

SIM. Most of Mobile banking services can be deployed using more than one

technology or channel.

� SIM Based Applications Toolkit (SAT)

The SIM Based Application Toolkit is a standard of the GSM system which

enables the SIM to initiate actions which can be used for various value added

services. The SIM Application Toolkit consists of a set of commands programmed

into the SIM card which define how the SIM should interact directly with

the customer and initiates commands independently of the handset and the network.


This enables the SIM to build up an interactive exchange between a network

application and the end user. The SIM also gives commands to the handset, such as

‘display menu’.

� Java 2 Micro Edition(J2ME)

Standalone Mobile application is a Java 2 Micro Edition (J2ME) Technique.

It holds out the most promise as they are most suitable to implement complex

banking transactions like trading in securities.

If Mobile client wants to use Standalone Mobile Application on their Mobile

device, which require to be downloaded on that device, which further requires the

Mobile device to support one of the many development environments like J2ME or

Qualcomm's BREW. J2ME is fast attractive technique to deploy the Mobile

applications and requires the Mobile phone to support Java platform. They can be

easily customized according to the user interface complexity supported by the Mobile.

The Demerit of Mobile application clients is that the applications need to be

customized to each Mobile phone on which it might finally run. J2ME connect

together the Application Programming Interface for Mobile phones which have the

similar functionalities. API Specify a set of functions that complete a specific task

and allowed to interact with specific software components

Merit of using a Mobile application client is that it can implement a very

secure and reliable channel of communication with end-to end encryption.

3.4 Mobile Banking Adoption Models:

The following Six Mobile Banking Adoption Models:

3.4.1 The Theory of Reasoned Action (TRA)

The Theory of Reasoned Action (TRA) proposed by Fishbein and Ajzen in

1975.This Model predict the people behavior in a specific situation. It is a well-

known model in the social psychology domain. According to TRA Model a person’s


actual behavior is driven by the intention to perform the behavior. Individual attitude

towards the behavior and subjective norms are the ‘loading factors’ towards

behavioral intention. Attitude is a person’s positive or negative feeling and tendency

towards an idea or behavior. Subjective norm is defined as an individual's perception

of whether people important to the individual think the behavior should be

performed. This below figure 3.5 represents the TRA Model structure.

Figure: 3.5 Theory of Reasoned Action (TRA)

3.4.2 Technology Acceptance Model (TAM)

TAM Model is an adaptation of the Theory of Reasoned Action (TRA)

Model to the field of IS. This TAM Model was proposed by Venkatesh et. al. in

2003. TAM posits that perceived usefulness and perceived ease of use determine an

individual's intention to use a system with intention to use serving as a mediator of

actual system use. Perceived usefulness is also seen as being directly impacted by

perceived ease of use. Researchers have simplified TAM by removing the attitude

construct found in TRA from the current specification. Attempts to extend TAM

have generally taken one of three approaches:

First approach is introducing factors from related models. Second approach

is introducing additional or alternative belief factors And Third approach is

examining antecedents and moderators of perceived usefulness and perceived ease

of use (Wixom and Todd, 2005).


Both models TRA and TAM models have strong behavioral elements and

assume that when someone forms an intention to act, that they will be free to act

without limitation. In practice constraints such as limited ability, time, environmental

or organizational limits and unconscious habits will limit the freedom to act. This

below figure 3.6 shows the TAM Model.

Figure: 3.6 Technology Acceptance Model (TAM)

3.4.3 Improved Technology Acceptance Model 2 (TAM 2)

A study of the adoption of telemedicine technology by physician using TAM

has found relatively low explanation power of TAM of attitude and intention (Hu et

al., 1999). The researchers suggested that integration of TAM with other IT

acceptance models or incorporating additional factors could help to improve the

specificity and explanatory utility in a specific area.

Researchers have begun to use TAM to examine the possible antecedents of

Perceived Usefulness and Perceived Ease of Use toward microcomputer usage

(Igbaria, Guimaraes, Davis, Iivari, and Maragahh, 1995). In order to address this

issue, Venkatesh and Davis (1996) used three experiments to investigate the

determinants of Perceived Ease of Use. The results showed that general Computer

Self-Efficacy significantly affects Perceived Ease of Use at all time, while Objective

Usability of the system affects user’s perception after they have direct experience

with the system. However, one criticism of the current TAM studies is that there are


very few investigations target at the study of the factors (the external variables) that

affect the PU and PEOU (Gefen and Keil, 1998).

Venkatesh and Davis (2000) developed and tested a TAM2 model by

including a number of determinants to Perceived Usefulness into the new model .It is

a theoretical extension of the Technology Acceptance Model that explains Perceived

Usefulness and Usage Intentions in terms of social influence processes (Subjective

Norm, Voluntariness, and Image) and cognitive instrumental processes (Job Relevance,

Output Quality, Result Demonstrability and Perceived Ease of Use). Longitudinal data

were collected from four different organizations that spanned a range of industries,

organizational contexts, functional areas (ranging from small accounting service firm,

medium-sized manufacturing firm, to the personal financial services department of a

large financial services firm) and types of system being introduced. The results

showed that all the above-mentioned social influences and cognitive instrumental

processes have significantly influenced user acceptance of the systems. This below

Figure 3.7 shows the outline of TAM 2.

Figure: 3.7 Improved Technology Acceptance Model 2 (TAM 2)


3.4.4 Diffusion of Innovations Theory (DIT)

Next another well established theory research model for user adoption is

DIT. It is proposed by Rogers in 1962, 1983, 1995. Innovation diffusion theory is

achieved through user’s acceptance and use of new innovative ideas or things

(Zaltman and Stiff, 1973). The theory explains among many things such like the

process of the innovation decision process, the determinants of rate of adoption and

various categories of adopters. It helps predict the likelihood and the rate of an

innovation being adopted. Rogers (1995) proposed an innovation’s relative advantage,

compatibility, complexity, trialability and observability were found to explain 49 to

87 percent of the variance in the rate of its adoption.

3.4.5 Theory of Planned Behavior Model (TPB)

Theory of planned behavior is defined by Fishbein and Ajzen, 1980. Theory

of planned behavior posits that individual behavior is driven by behavioral intentions

where behavioral intentions are a function of an individual's attitude towards the

behavior, the subjective norms surrounding the performance of the behavior and the

individual perception of the ease of use with which the behavior can be performed.

Attitude towards the behavior is defined as the individual's positive or

negative feelings about performing a behavior of person. It is determined through an

assessment of one's beliefs regarding the consequences arising from a behavior and

an evaluation of the desirability of these consequences. Formally, overall attitude

can be assessed as the sum of the individual consequence x desirability assessments

for all expected consequences of the behavior.

Subjective norm is defined as an individual's perception of whether people

important to the individual think the behavior should be performed. The contribution

of the opinion of any given referent is weighted by the motivation that an individual

has to comply with the wishes of that referent. Hence, overall subjective norm can

be expressed as the sum of the individual perception x motivation assessments for all

relevant referents.


Behavioral control is defined as one's perception of the difficulty of

performing a behavior. TPB views the control that people have over their behavior

as lying on a continuum from behaviors that are easily performed to those requiring

considerable effort, resources etc. The below figure 3.8 shows the TPB Model.

Figure: 3.8 Theory of Planned Behavior Model (TPB)

3.4.6 Unified Theory of Acceptance and Use of Technology (UTAUT)

Venkatesh et al. (2003) proposed the Unified theory of acceptance and Use

of technology (UTAUT) Model. This model is composition of eight famous models

like - TRA, TAM, Motivational Model, TPB, Combined TAM-TPB, PC Utilization,

IDT and Social Cognitive Theory models. The UTAUT aims to explain user

intentions to use an information system and subsequent usage behavior. The theory

holds that four key constructs such as Performance expectancy, effort expectancy,

social influence and facilitating conditions are direct determinants of usage intention

and behavior. Gender, Age, experience and voluntariness of use are posited to

moderate the impact of the four key constructs on usage intention and behavior.


Figure: 3.9 The Unified Theory of Acceptance and Use of Technology (UTAUT)

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