m -banking 9166919000
TRANSCRIPT
-
8/2/2019 M -BANKING 9166919000
1/64
MOBILE BANKING
Project Report
On
MOBILE BANKING
Submitted in partial fulfillment for the Award of
degree of
Master of Business Administration
2011-2012
Submitted by
Submitted to Mahendra choudhary
1
-
8/2/2019 M -BANKING 9166919000
2/64
MOBILE BANKING
Mam. Jagariti singh MBA IVth sem
Faculty Guide
DECLARATION
I AM MAHENDRA CHOUDHARY Student of MBA
MARKETING/IT Semester IV) of GYAN VIHAR UNIVERSITY, hereby declare
that I have completed the project on MOBILE BANKING in the academic year
20011-2012. The information submitted is true and original to the best of my
knowledge.
Date of submission Signature of student
---------------------- --------------------
2
-
8/2/2019 M -BANKING 9166919000
3/64
MOBILE BANKING
CERTIFICATE
This is to certify that MAHENDRA CHOUDHARY of MBA (B SEMESTER-
IV) of GYAN VIHAR UNIVERSITY has successfully completed the project on
MOBILE BANKING in the academic year 2011-2012. The information is true
& original to the best of our knowledge.
Signature of Project Guide
(Mam. JAGARITI SINGH)
Signature of Co-ordinator
( Mam. renu pareek)
3
-
8/2/2019 M -BANKING 9166919000
4/64
MOBILE BANKING
ACKNOWLEDGEMENT
Any accomplishment requires efforts of many people & this work is no different. I
am grateful to the GYAN VIHAR UNIVERSITY to have introduced this final
project of our curriculum.
With a deep sense of gratitude, I wish to express my sincere thanks to my project
guide Mam. JAGRITI SINGH for his support in preparation of project report.
I take the opportunity to thank GYAN VIHAR UNIVERSITY, for giving me the
opportunity to work on this project.
I would also like to express my gratitude towards the library staff of GYAN
VIHAR UNIVERSITY, my family & friends without whose support my project
would not have been possible.
4
-
8/2/2019 M -BANKING 9166919000
5/64
MOBILE BANKING
EXECUTIVE SUMMARY
The last time that technology had a major impact in helping banks servicetheir customers was with the introduction of the Internet banking. InternetBanking helped to give the customer's anytime access to their banks.Customer's could check out their account details, get their bank mobile phonebanking is the domain of a lucky few with constantly changing customerpreferences and a greater emphasis placed on mobility, it could soon becomea 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 userswill actually use it. advancing technologies will enable mobile banking tobecome a convenient and quick way for consumers to check their balance aswell as pay for goods.
"Mobile banking is quickly moving from infancy to commonplace, which willhelp separate the winners from losers in banks' ability to attract and keeptechnology-loving consumers," "Consumers are hungry for the 'always-on' and'real time' ability to monitor and manage their money, and mobile bankingserves that need better than any other."
one of the factors driving the mobile banking surge, is the increased usage ofsmart-phones, such as the iPhone, as well as the race between phonecompanies to develop the basic thin-client capabilities dubbed "wrapperapplications" designed to integrate financial services into mobile online sites.
It will also work in tandem with online banking, with mobile banking beingused as a "remote control" and ''online'' as a detailed form of control panel formore complex transactions.
By 2014, the percentage of people using mobile banking will equate toapproximately 99 million US adults conducting mobile banking transactions atleast once per year. 52 percent of these customers are reckoned to be usingsmart-phones.
"Mobile banking is quickly becoming an essential consumer capability," saidMark Schwanhausser, Financial Services Channels Analyst speaking to CellularNews.
5
-
8/2/2019 M -BANKING 9166919000
6/64
MOBILE BANKING
"Just as the iPod changed the music industry and their business models, ourdata shows that iPhone users are changing the banking industry by leadingthe way in monitoring and managing finances through mobile devices."
Mobile banking is a credible channel, but usage in developed markets willremain lowIT spending on mobile banking is continuing, but it is not the highest prioritychannelMobile bankings greatest opportunity involves serving the needs of theunbankedRetail banks and technology vendors must be prepared to play the long game
MARKETOPPORTUNITY
Mobile banking has struggled in Europe and North America: will this change in2009/10?The difficult economic climate is refocusing the attention of consumers to theirpersonal finances Mobile banking devices and interfaces have thankfullyimproved, thereby enhancing the user experience After multiple false starts,the mobile banking ecosystem is entering its next phase of development in
2009 Catering to the unbanked will have a positive influence on the growth ofmobile banking.
Assessing the mobile banking market opportunity in developing regionsInvestment programs have been launched to stimulate mobile bankingservices in developing countries Charting the emergence of mobile bankingservices in developing countriesOther operators are seeking to mirror the success of M-PESA Serving theunbanked in developed regions is also a natural fit for mobile banking servicesMobile banking services will replace traditional remittance flow methods
Summarizing the market opportunity for mobile banking
IMPACTS ON BANKS
In 2009, mobile banking features in the channel strategy plans of most retailbanksMobile banking channel is not a high priority channel for IT investment in 2009Retail banks must be willing to play the long game in order to achieve decent
6
-
8/2/2019 M -BANKING 9166919000
7/64
MOBILE BANKING
revenuesBanks will need to prepare themselves for inevitable operational andtechnological impactsBanks must ensure they make adequate security provisions for mobile bankingservices
Banks will have to share revenues from mobile services with others in theecosystem statements, perform transactions like transferring money to otheraccounts and pay their bills sitting in the comfort of their homes and offices.
7
-
8/2/2019 M -BANKING 9166919000
8/64
MOBILE BANKING
INDEX
SR NO CONTENT PAGE NO
1. INTRODUCTION TO BANKING. 8-9
2. TYPES OF BANKS. 10-133. INTRODUCTION TO MOBILE BANKING. 14-18
4. A MOBILE BANKING CONCEPTUAL MODEL. 19-20
5. TRENDS IN MOBILE BANKING. 21-22
6. MOBILE BANKING SERVICES. 23-25
7. UTILITY OF MOBILE BANKING FROM BANKS
PERSPECTIVE.
26-27
8. MOBILE BANKING AS DISTRIBUTION
CHANNEL.
28-31
9. TECHNOLOGIES ENABLING MOBILE
BANKING.
32-37
10. ADVANTAGES AND DISADVANTAGES OF
MOBILE BANKING.
38
11. MARKETING FOR MOBILR BANKING 39
12. CHALLENGES FOR MOBILE BANKING 40-42
13. FEATURES OF MOBILE BANKING 43
14. EMPLOYMENT OF MOBILE TECHNOLOGIES
IN BANKING SECTOR
44-45
15. MOBILE BANKING IN THE WORLD 46
16. CASE ANALYSIS 47-48
17. CONCLUSION 49
8
-
8/2/2019 M -BANKING 9166919000
9/64
MOBILE BANKING
18. WEBLIOGRAPHY 50
19. BIBLIOGRAPHY 51
20. QUESTIONNAIRE 52-57
INTRODUCTION
INRODUCTION TO BANKING
9
-
8/2/2019 M -BANKING 9166919000
10/64
MOBILE BANKING
The Indian banking can be broadly categorized into nationalized (government
owned), private banks and specialized banking institutions.The Reserve Bank
of India acts a centralized body monitoring any discrepancies and
shortcoming in the system. Since the nationalization of banks in 1969, thepublic sector banks or the nationalized banks have acquired a place of
prominence and has since then seen tremendous progress. The need to
become highly customer focused has forced the slow-moving public sector
banks to adopt a fast track approach. The unleashing of products and
services through the net has galvanized players at all levels of the banking
and financial institutions market grid to look anew at their existing portfolio
offering. Conservative banking practices allowed Indian banks to be insulated
partially from the Asian currency crisis.Indian banks are now quoting al
higher valuation when compared to banks in other Asian countries (viz. Hong
Kong, Singapore, Philippines etc.) that have major problems linked to huge
Non Performing Assets (NPAs) and payment defaults. Co-operative banks are
nimble footed in approach and armed with efficient branch networks focus
primarily on the high revenue niche retail segments.
The Indian banking has finally worked up to the competitive dynamics of the
new Indian market and is addressing the relevant issues to take on the
multifarious challenges of globalization. Banks that employ IT solutions are
perceived to be futuristic and proactive players capable of meeting the
multifarious requirements of the large customers base. Private banks have
been fast on the uptake and are reorienting their strategies using the
internet as a medium The Internet has emerged as the new and challenging
frontier of marketing with the conventional physical world tenets being just
as applicable like in any other marketing medium.
The Indian banking has come from a long way from being a sleepy business
10
-
8/2/2019 M -BANKING 9166919000
11/64
MOBILE BANKING
institution to a highly proactive and dynamic entity. This transformation has
been largely brought about by the large dose of liberalization and economic
reforms that allowed banks to explore new business opportunities rather
than generating revenues from conventional streams (i.e. borrowing and
lending). The banking in India is highly fragmented with 30 banking unitscontributing to almost 50% of deposits and 60% of advances. Indian
nationalized banks (banks owned by the government) continue to be the
major lenders in the economy due to their sheer size and penetrative
networks which assures them high deposit mobilization.
The Indian banking can be broadly categorized into nationalized, private
banks and specialized banking institutions.
The Reserve Bank of India act as a centralized body monitoring any
discrepancies and shortcoming in the system. It is the foremost monitoringbody in the Indian financial sector. The nationalized banks (i.e. government-
owned banks) continue to dominate the Indian banking arena. Industry
estimates indicate that out of 274 commercial banks operating in India, 223
banks are in the public sector and 51 are in the private sector. The private
sector bank grid also includes 24 foreign banks that have started their
operations here. Under the ambit of the nationalized banks come the
specialized banking institutions. These co-operatives, rural banks focus on
areas of agriculture, rural development etc.,
unlike commercial banks these co-operative banks do not lend on the basisof a prime lending rate. They also have various tax sops because of their
holding pattern and lending structure and hence have lower overheads. This
enables them to give a marginally higher percentage on savings deposits.
Many of these cooperative banks diversified into specialized areas (catering
to the vast retail audience) like car finance, housing loans, truck finance etc.
in order to keep pace with their public sector and private counterparts, the
co-operative banks too have invested heavily in information technology to
offer high-end computerized banking services to its clients.
11
-
8/2/2019 M -BANKING 9166919000
12/64
MOBILE BANKING
TYPES OF BANKS
1998-99
State Bank of India and
Associates08
Nationalized Banks 19
Domestic Private Sector
Banks25
New Domestic Private Sector
Banks09
Foreign Banks 29
Complementing the roles of the nationalized and private banks are the
specialized financial institutions or Non Banking Financial Institutions
(NBFCs). With their focused portfolio of products and services, these Non
Banking Financial Institutions act as an important catalyst in contributing to
the overall growth of the financial services sector. NBFCs offer loans for
working capital requirements, facilitate mergers and acquisitions, IPO
finance, etc. apart from financial consultancy services. Trends are now
changing as banks (both public and private) have now started focussing on
NBFC domains like long and medium-term finance, working caprequirements. IPO financing to etc. to meet the multifarious needs of the
business community.
12
-
8/2/2019 M -BANKING 9166919000
13/64
MOBILE BANKING
COMMERCIAL FINANCING
The commercial financing model in Indian banking can be broadly
categorized into project finance and working capital finance. These two
segments form the pivot around which banks operate.
PROJECT FINANCE
Banks offer long term and short terms loans to business houses,
corporations to set up their projects. These loans are disbursed after the
approval from the banks core credit validating committee. In India, there
are 11 national level land 46 state level financial and investment institutions
that cater to long term funding requirements of the industry. The projectfinance segment is highly competitive with various players offering
innovative schemes to entice corporate.
WORKING CAPITAL
In order to meet the diverse needs and requirements of the business
community, banks offer working capital funds to corporate. Working capital
finance is specialized line of business and is largely dominated by the
commercial banks. The Indian banking saw dramatic changes in the last
decade or so ever since the advent of liberalization and Indias integrationwith the world economy. These economic reforms and the entry of private
players saw nationalized banks revamp their service and product portfolio to
incorporate new, innovative customer-centric schemes. The Indian banking
finally woke up to the surging demands of the ever-discerning Indian
consumer. The need to become highly customer focused (generated by high
competitive levels) forced the slow-moving public sector banks to adopt a
fast track approach. Taking a leaf out of the private sector banks, the public
sector banks too went for major image changes (including corporate brand
building exercises) and customer friendly schemes. These customer friendly
programs included revamping of the product and service portfolio byintroducing new product & service schemes (like credit cards, hassle-free
housing loan schemes, educational loans and flexi-deposit schemes)
integration of the branch network by using advance networking technology
and customer personalization programs (through ATMs and anytime banking
etc.). Many banks have started capitalizing on the recent stock market surge
by adding (Initial Public Offering) IPO financing options and schemes in their
13
-
8/2/2019 M -BANKING 9166919000
14/64
MOBILE BANKING
product mix. IPO finance has received a positive response from the investors
and is becoming popular amongst the business community. The objective of
all these strategies was very clear to bridge the service & product gap that
was inherent in the banking system. To cater to the increasing customer
demands and the surge in business volumes, many public sector banks haveploughed back funds to invest heavily in technology upgrades and systems
like LANs, WANs, VSATs etc.
Marketing and brand building programs were also given a new thrust in the
new liberalized banking scenario. Promotional budgets were hiked to cater
to the new and large discerning target audience. Banks were now keen on
marketing their products and service though various mediums to reach their
core customers. Direct marketing, Internet marketing, hoarding, press ads,
television sponsorships, image makeovers etc. became an integral part of a
banks marketing mix. To meet the personalized needs of the customer and
in order to differentiate its services, banks repositioned themselves in
specialized fields, like housing loans, car finance, educational loans etc. to
optimally service the customer. Permission marketing became the new
strategy that banks began to propound i.e. feeding the customer (with his or
her consent) with product and service information and thereby enticing him
towards the banks product service portfolio.
NEW GENERATION BANKING
He liberalize policy of Government of India permitted entry to private sector
in the banking, the industry has witnessed the entry of nine new generation
private banks. The major differentiating parameter that distinguishes these
banks from all the other banks in the Indian banking is the level of service
that is offered to the customer. Verify the focus has always been centered
around the customer understanding his needs, preempting him and
consequently delighting him with various configuration of benefits and a wide
portfolio of products and services. These banks have generally beenestablished by promoters of repute or by high value domestic financial
institutions. The popularity of these banks can be gauged by the fact that in
a short span of time, these banks have gained considerable customer
confidence and consequently have shown impressive growth rates. Today,
the private banks corner almost four per cent share of the total share of
deposits. Most of the banks in this category are concentrated in the high-
14
-
8/2/2019 M -BANKING 9166919000
15/64
MOBILE BANKING
growth urban areas in metros (that account for approximately 70% of the
total banking business ). With efficiency being the major focus, these banks
have leveraged on their strengths and competencies viz. Management,
operational efficiency and flexibility, superior product positioning and higher
employee productivity skills.The private banks with their focused business and service portfolio have a
reputation of being niche players in the industry. A strategy that has allowed
these banks to concentrate on few reliable high net worth companies and
individuals rather than cater to the mass market. These well-chalked out
integrates strategy plans have allowed most of these banks to deliver
superlative levels of personalized services. With the Reserve Bank of India
allowing these banks to operate 70% of their businesses in urban areas, this
statutory requirement has translated into lower deposit mobilization costs
and higher margins relative to public sector banks.
15
-
8/2/2019 M -BANKING 9166919000
16/64
MOBILE BANKING
16
-
8/2/2019 M -BANKING 9166919000
17/64
MOBILE BANKING
INTRODUCTION TO MOBILE BANKING
Mobile Banking (also known as M-Banking, m-banking, SMS Banking, etc.) is a
term used for performing balance checks, account transactions, payments,
etc., via a mobile device such as a mobile phone. It was Internet Banking,
which ushered in a new era in banking convenience by bringing the entire
operations to the computer, and now mobile banking promises to take it to the
next level.
Internet Banking helped give the customers anytime access to their banks.
Customers could check out their account details, perform transactions like
transferring money to other accounts, and pay their bills, sitting in the comfortof their homes and offices. However, the biggest limitation of Internet Banking
is the requirement of a PC with an Internet connection, not a big obstacle if we
look at the US and the European countries, but definitely a big barrier if we
consider most of the developing countries of Asia like India and China.
Mobile Banking addresses this fundamental limitation of Internet Banking, as it
reduces the customer requirement to just a mobile phone. Mobile usage has
seen an explosive growth in most of the Asian economies like India, China and
Korea. The main reason that Mobile Banking scores over Internet Banking is
that it enables 'Anywhere Anytime Banking'.
The last time that technology had a major impact in helping banks service
their customers was with the introduction of the Internet banking. Internet
Banking helped to give the customer's anytime access to their banks.
Customer's could check out their account details, get their bank statements,
perform transactions like transferring money to other accounts and pay their
bills sitting in the comfort of their homes and offices.
However the biggest limitation of Internet banking is the requirement of a PC
with an Internet connection, not a big obstacle if we look at the US and theEuropean countries, but definitely a big barrier if we consider most of the
developing countries of Asia like China and India. Mobile banking addresses
this fundamental limitation of Internet Banking, as it reduces the customer
requirement to just a mobile phone.
17
-
8/2/2019 M -BANKING 9166919000
18/64
MOBILE BANKING
Mobile usage has seen an explosive growth in most of the Asian economies
like India, China and Korea. In fact Korea boasts about a 70% mobile
penetration rate and with its tech-savvy populace has seen one of the most
aggressive rollouts of mobile banking services.
Still, the main reason that Mobile Banking scores over Internet Banking is that
it enables Anywhere Banking'. Customers now don't need access to a
computer terminal to access their banks, they can now do so on the go when
they are waiting for their bus to work, when they are traveling or when they
are waiting for their orders to come through in a restaurant.The scale at which Mobile banking has the potential to grow can be gauged by
looking at the pace users are getting mobile in these big Asian economies.
According to the Cellular Operators' Association of India (COAI) the mobile
subscriber base in India hit 40.6 million in the August 2004. In September
2004 it added about 1.85 million more. The explosion as most analysts say, is
yet to come as India has about one of the biggest untapped markets. China,
which already witnessed the mobile boom, is expected to have about 300
million mobile users by the end of 2004. South Korea is targeted to reach
about 42 million mobile users by the end of 2005. All three of these countrieshave seen gradual roll-out of mobile banking services, the most aggressive
being Korea which is now witnessing the roll-out of some of the most
advanced services like using mobile phones to pay bills in shops and
restaurants.
Mobile banking has been at the threshold of a revolution for some time. While
many operators, as well as banks, had introduced mobile banking applications,
it never became popular due to security concerns. The number of people using
mobile banking services has jumped from under 10,000 to 120,000 in two
years. While the trend is growing, lack of awareness of services, apart fromperceived security issues, are inhibiting faster take-off.
There is yet another reason why the service will not spread like wild fire - the
credit environment. RBI has been tightening the banks, which have been
offering unsecured and secured loans with minimal or no customer
18
-
8/2/2019 M -BANKING 9166919000
19/64
MOBILE BANKING
verification. With RBI tightening liquidity, personal loan defaults have reached
9% and banks will be very wary of giving you a credit card on the mobile.
Though RBI has specified norms for the banks to provide secure technology
and ensure 'confidentiality, integrity, authenticity and non-reputability',
security remains a major concern as well as a hurdle. However, with a fewprecautions and safety measures, users can have a safer m-banking
experience. The m-PIN, which is issued by the bank, should be memorized and
the PIN-mailer destroyed immediately. Change your m-PIN regularly and do
not share it with anyone. The PIN is valid only for the corresponding phone
number, which means users cannot access their accounts using other hand-
sets. Thus, in case of a loss/theft of mobile phone, inform the mobile phone
operator as well as the bank to block the banking application. Similarly, you
should also inform the bank, if you change your hand-set or SIM card.
Reserve Bank of India has set-up the Mobile Payments Forum of India (MPFI), a
'Working Group on Mobile Banking' to examine different aspects of Mobile
Banking (M-banking). The Group had focused on three major areas of M-
banking, i.e.,
(i) technology and security issues,
(ii) business issues, and
(iii) regulatory and supervisory issues.
Each stake-holder group has the following expectations: -
a) To meet the following expectations of Consumer: -
Personalized service
Minimal learning curve
Trust, privacy and security
Ubiquitous - anywhere, anytime and any currency
Low or zero cost of usage
Interoperability between different network operators, banks and devices
Anonymity of payments like cash
19
-
8/2/2019 M -BANKING 9166919000
20/64
MOBILE BANKING
Person to person transfers
b) To meet the following expectations of Merchant: -
Faster transaction time
Low or zero cost in using the system
Integration with existing payment systems
High security
Being able to customize the service
Real time status of the mobile payment service
Minimum settlement and payment time
c) To meet the following expectations of Telecom Network Providers: -
Generating new income by increase in traffic
Increased Average Revenue Per User (ARPU) and reduced churn
(increased loyalty)
Become an attractive partner to content providers
d) To meet the following expectations of Mobile Device Manufacturers: -
Large market adoption with embedded mobile payment application
Low time to market
Increase in Average Revenue Per User (ARPU)
e) To meet the following expectations of Banks: -
Network operator independent solutions
Payment applications designed by the bank
Exceptional branding opportunities for banks
Better volumes in banking - more card payments and less cash
transactions
20
-
8/2/2019 M -BANKING 9166919000
21/64
MOBILE BANKING
Customer loyalty
f) To meet the following expectations of Software & Technology Providers:
Large markets
g) To meet the following expectations of Government: -
Revenue through taxation of m-payments
Standards
There are lots of evidences that not only big cities are using mobile banking,
but even thousands of people from rural areas across 12 states are also likely
to get their social security pension and wages paid under the National Rural
Employment Guarantee Act (NREGA) Scheme with the help of mobiles over the
coming few months. Bharti Airtel, too, is in the process of tying-up with twoleading banks to extend its mobile remittance services to rural areas,
according to its President (Mobile Services), Sanjay Kapoor.
Airtel has already partnered with the Indian Farmers' Fertilizers Cooperative
Limited (IFFCO) to set up IFFCO Kisan Sanchar Limited in Rajasthan. Under this
initiative, the cooperative department will provide mobile hand-sets to farmers
at marginal price through its out-lets in the rural areas. These hand-sets would
be loaded with green SIM cards, which will flash daily updates on agricultural
practices and weather forecasts free of cost.
Enthusiasm for mobile banking services66% of respondents in the survey considered that mobile banking provides anexcellent opportunity to enhance existing customer service.
International factorsEuropean and Asia-Pacific regions are considerably ahead of the US in terms ofmobile banking provision only 10% of US banking organizations taking partin the study currently offer mobile banking against 57% in Europe
Expected growthWith 34% of banks (globally) currently offering mobile services to customers,an additional 32% of respondents plan to offer mobile services in the next 12-24 months.
21
-
8/2/2019 M -BANKING 9166919000
22/64
MOBILE BANKING
53% of US banks expect to be offering mobile services in the next 12-24months, giving potential parity to mobile service provision across the globe by2010 (see Figure 1)The suggestion of considerable momentum for mobile banking over the nexttwo years should be received warmly by mobile providers and bankers alike.
The ratio of mobile banking users, i.e. customers adopting mobile servicesremains modest, but is predicted to grow over the next two years with 58% ofbanks currentlyoffering mobile banking expecting that at least 1 in 10 customers will be usingmobile banking by 2010. However this growth will not come withoutmodification of existing processes:Our challenges are all based on standardization measures with regard tobrowsers,security demands and operator tariff systems.
A MOBILE BANKING CONCEPTUAL MODEL
Mobile banking is defined as:
"Mobile Banking refers to provision and availment of banking- and financial
services with the help of mobile telecommunication devices.The scope of
offered services may include facilities to conduct bank and stock markettransactions, to administer accounts and to access customised information."
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 aretransaction-based. The non-transaction-based services of an informational
nature are however essential for conducting transactions - for instance,
balance inquiries might be needed before committing a money remittance.
The accounting and brokerage services are therefore offered invariably in
combination with information services. Information services, on the other
hand, may be offered as an independent module.
22
-
8/2/2019 M -BANKING 9166919000
23/64
MOBILE BANKING
The lifespan of all good ideas can be broken into five phases: concept,
prototype, pilot, pre-production, commercial deployment. Few ideas ever
reach the stage of commercial deployment, because they are just not viable,
or have been ill conceived or badly deployed. For some or other reason,
mobile banking has been over-saturated with concepts and to some degree
with prototypes. The idea of utilising the phone for financial transactions are
so obvious that every man and his dog have developed a new concept or have
submitted a patent somewhere. Everyone of them believing that they have
stumbled on the ultimate approach.
The reality is that very few of these ever progress past the rudimentary
prototype stage. And it is actually quite easy to demonstrate simple mobile
banking functionality in a prototype environment. Some of the challenges that
often have not even been identified and hence solved are issues related to
integration, regulatory/legal and usability. These are sometimes addressed inthe few prototypes that migrate to pilot.
A pilot usually consists of a few hundred, maybe thousands of subscribers
performing transactions in a controlled environment with limited functionality.
Even if pilots work, they often don't address important aspects like scalability
and system responses to unpredicted actions or break-downs. What happens
in the case of transactions that have been lost and how does the system
respond to situations where a component is not available. Important legal
aspects are also often not addressed yet at this stage. Pilots seldom uncovers
the real system challenges and at best highlights key elements regarding user
experience.
During the pre-production stage business processes and system reliability and
robustness should be attended to. Many different business processes are
required if a system is to be deployed in a production environment. This
should include registration, dispute resolutions, service activation to name
only a few. In examples that we have seen in the market some deployments
have neglected key processes leading to very difficult deployments and
disillusioned clients. What looked easy during pilot now turns out to be anightmare of realities.
It is only when a solution is deployed commercially that they most important
element of any idea is tested: Can it make money? Mobile banking solutions
that are not profitable will fail ultimately. An this is where we at Fundamo can
really contribute to making a difference in deploying successful mobile
23
-
8/2/2019 M -BANKING 9166919000
24/64
MOBILE BANKING
payment/banking solutions. We have seen what works and what does not. We
have built powerful business modeling tools and have helped many customers
to culminate with commercially successful deployments of novel ideas. We
have seen many competing products fail because they were not commercially
viable
TRENDS IN MOBILE BANKING
The advent of the Internet has revolutionized the way the financial services
industry conducts business, empowering organizations with new business
models and new ways to offer 24x7 accessibility to their customers.
The ability to offer financial transactions online has also created new
players in the financial services industry, such as online banks, online brokersand wealth managers who offer personalized services, although such players
still account for a tiny percentage of the industry.
Over the last few years, the mobile and wireless market has been one of the
fastest growing markets in the world and it is still growing at a rapid pace.
According to the GSM Association and Ovum, the number of mobile
24
http://en.wikipedia.org/wiki/Financial_transactionhttp://en.wikipedia.org/w/index.php?title=GSM_Association&action=edit&redlink=1http://en.wikipedia.org/wiki/Ovumhttp://en.wikipedia.org/w/index.php?title=GSM_Association&action=edit&redlink=1http://en.wikipedia.org/wiki/Ovumhttp://en.wikipedia.org/wiki/Financial_transaction -
8/2/2019 M -BANKING 9166919000
25/64
MOBILE BANKING
subscribers exceeded 2 billion in September 2005, and now exceeds 2.5 billion
(of which more than 2 billion are GSM).
According to a study by financial consultancy Celent, 35% ofonline banking
households will be using mobile banking by 2010, up from less than 1% today.
Upwards of 70% of bank center call volume is projected to come from mobilephones. Mobile banking will eventually allow users to make payments at the
physical point of sale. "Mobile contactless payments will make up 10% of
the contactless market by 2010.
Many believe that mobile users have just started to fully utilize the data
capabilities in their mobile phones. In Asian countries like India, China,
Bangladesh, Indonesia and Philippines, where mobile infrastructure is
comparatively better than the fixed-line infrastructure, and in European
countries, where mobile phone penetration is very high (at least 80% of
consumers use a mobile phone), mobile banking is likely to appeal even more.
This opens up huge markets for financial institutions interested in offering
value added services. With mobile technology, banks can offer a wide range of
services to their customers such as doing funds transfer while travelling,
receiving online updates of stock price or even performing stock trading
while being stuck in traffic. According to the German mobile operator
Mobilcom, mobile banking will be the "killer application" for the nextgeneration of mobile technology.
Mobile devices, especially smartphones, are the most promising way to
reach the masses and to create stickiness among current customers, due totheir ability to provide services anytime, anywhere, high rate of penetration
and potential to grow. According to Gartner, shipment of smartphones is
growing fast, and should top 20 million units (of over 800 million sold) in 2006
alone.
25
http://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/w/index.php?title=Celent&action=edit&redlink=1http://en.wikipedia.org/wiki/Online_bankinghttp://en.wikipedia.org/wiki/Point_of_salehttp://en.wikipedia.org/wiki/Contactless_paymenthttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Bangladeshhttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Philippineshttp://en.wikipedia.org/wiki/Europehttp://en.wikipedia.org/wiki/Stock_tradinghttp://en.wikipedia.org/wiki/Smartphonehttp://en.wikipedia.org/wiki/Gartnerhttp://en.wikipedia.org/wiki/GSMhttp://en.wikipedia.org/w/index.php?title=Celent&action=edit&redlink=1http://en.wikipedia.org/wiki/Online_bankinghttp://en.wikipedia.org/wiki/Point_of_salehttp://en.wikipedia.org/wiki/Contactless_paymenthttp://en.wikipedia.org/wiki/Mobile_phonehttp://en.wikipedia.org/wiki/Indiahttp://en.wikipedia.org/wiki/Chinahttp://en.wikipedia.org/wiki/Bangladeshhttp://en.wikipedia.org/wiki/Indonesiahttp://en.wikipedia.org/wiki/Philippineshttp://en.wikipedia.org/wiki/Europehttp://en.wikipedia.org/wiki/Stock_tradinghttp://en.wikipedia.org/wiki/Smartphonehttp://en.wikipedia.org/wiki/Gartner -
8/2/2019 M -BANKING 9166919000
26/64
MOBILE BANKING
In the last 4 years, banks across the globe have invested billions of dollars to
build sophisticated internet banking capabilities. As the trend is shifting to
mobile banking, there is a challenge for CIOs and CTOs of these banks to
decide on how to leverage their investment in internet banking and offer
mobile banking, in the shortest possible time.
The proliferation of the 3G (third generation of wireless) and widespread
implementation expected for 20032007 will generate the development of
more sophisticated services such as multimedia and links to m-commerce
services.
MOBILE BANKING SERVICES
Mobile banking can offer services such as the following:
Account Information
26
http://en.wikipedia.org/wiki/3Ghttp://en.wikipedia.org/wiki/3G -
8/2/2019 M -BANKING 9166919000
27/64
MOBILE BANKING
1. Mini-statements and checking of account history
2. Alerts on account activity or passing of set thresholds
3. Monitoring of term deposits
4. Access to loan statements
5. Access to card statements
6. Mutual funds / equity statements
7. Insurance policy management
8. Pension plan management
9. Status on cheque, stop payment on cheque
10. Ordering check books
11. Balance checking in the account
12. Recent transactions
13. Due date of payment (functionality for stop, change and deleting
of payments)
14. PIN provision, Change of PIN and reminder over the Internet15. Blocking of (lost, stolen) cards
Payments, Deposits, Withdrawals, and Transfers
1. Domestic and international fund transfers
2. Micro-payment handling
3. Mobile recharging
4. Commercial payment processing
5. Bill payment processing
6. Peer to Peer payments
7. Withdrawal at banking agent
8. Deposit at banking agent
Especially for clients in remote locations, it will be important to help them
deposit and withdraw funds at banking agents, i.e., retail and postal outlets
that turn cash into electronic funds and vice versa. The feasibility of such
banking agents depends on local regulation which enables retail outlets to
take deposits or not.
A specific sequence ofSMS messages will enable the system to verify if the
client has sufficient funds in his or her wallet and authorize a deposit or
withdrawal transaction at the agent. When depositing money, the merchant
receives cash and the system credits the client's bank account or mobile
27
http://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Banking_agenthttp://en.wikipedia.org/wiki/Banking_agenthttp://en.wikipedia.org/wiki/Short_message_servicehttp://en.wikipedia.org/wiki/Mutual_fundhttp://en.wikipedia.org/wiki/Banking_agenthttp://en.wikipedia.org/wiki/Banking_agenthttp://en.wikipedia.org/wiki/Short_message_service -
8/2/2019 M -BANKING 9166919000
28/64
MOBILE BANKING
wallet. In the same way the client can also withdraw money at the merchant:
through exchanging sms to provide authorization, the merchant hands the
client cash and debits the client's account.
Investments1. Portfolio management services
2. Real-time stock quotes
3. Personalized alerts and notifications on security prices
Support
1. Status of requests for credit, including mortgage approval, and
insurance coverage
2. Check (cheque) book and card requests3. Exchange of data messages and email, including complaint submission
and tracking
4. ATM Location
Content Services
1. General information such as weather updates, news
2. Loyalty-related offers
3. Location-based services
Based on a survey conducted by Forrester, mobile banking will be attractive
mainly to the younger, more "tech-savvy" customer segment. A third of mobile
phone users say that they may consider performing some kind of financial
transaction through their mobile phone. But most of the users are interested in
performing basic transactions such as querying for account balance and
making bill payment.
One way to classify these services depending on the originator of a service
session is the Push/Pull' nature. Push' is when the bank sends out information
based upon an agreed set of rules, for example your banks sends out an alert
when your account balance goes below a threshold level. Pull' is when the
customer explicitly requests a service or information from the bank, so a
request for your last five transactions statement is a Pull based offering. .
28
-
8/2/2019 M -BANKING 9166919000
29/64
MOBILE BANKING
The other way to categorize the mobile banking services, by the nature of the
service, gives us two kind of services Transaction based and Enquiry Based.
So a request for your bank statement is an enquiry based service and a
request for your fund's transfer to some other account is a transaction-based
service. Transaction based services are also differentiated from enquiry based
services in the sense that they require additional security across the channel
from the mobile phone to the banks data servers.
The new generation of mobile phones offers the speedy GPRS, EDGE or 3G
data transmission standards and has large, high-definition colour displays.
Prices are coming down and services and features are now considerably easier
to handle on the mobile. Mobile Banking, in particular, has finally become a
fast, user-friendly and affordable service. India's leading telecom companies
started their services for Mobile Banking, basically they use these services as
a marketing tool to advertise there services on this basis. Here are few giantsof telecom industries in India who are offering Mobile Banking in various
states.
29
-
8/2/2019 M -BANKING 9166919000
30/64
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 banksperspective. It is therefore imperative to understand
the business environment in which banks operate and to identify customer
groups that the banks may seek to target via Mobile Banking.
Intensified Competition in the Banking Sector:
Bank products are of immaterial nature sold increasingly with the help of
computer networks spanning across the globe.The global networks provide the
customer with world-wide services, for instance the use of credit cards while
abroad. The creation of an EU-wide single domestic market has led tointensification of competition in the EU in all business fields including in the
banking sector.
The ongoing Globalisation has further intensified the competition. Technical
developments coupled with the process of Globalisation, have made it possible
for banks to offer their services in far-flung areas without investing money to
build branches and hire additional staff.
This opportunity, of course, is a two-way street: On the one hand, a bank gets
access to new markets.
On the other hand it is faced with increased competition on its home turf. Tomaster this combination of opportunities and challenges banks need apart
from business consolidation and cooperation organic growth. It is therefore
necessary to retain the existing customer base while simultaneously acquiring
new, economically prosperous customers. Seen in conjunction with the price-
sensitivity of customers and the resultant low relevance of the brand-name
banks are compelled to introduce innovative services that potentially attract
prospective customers while retaining others. Even though the brand-name
remains a critical factor on account of the need for trust in banking business,
the Globalisation and the technological developments, however, have reduced
entry barriers so that the number of available reputed brands has increasedsignificantly; thereby intensifying the competition.
30
-
8/2/2019 M -BANKING 9166919000
31/64
MOBILE BANKING
Adapting to Requirements of Core Target Groups:
Banks, today, are increasingly confronted with technology-savvy customers
who are often on the move. As Wolfgang Klein, Private Customers Directorat
Postbank, a leading German bank, puts it: Todays customers want to
organise banking transactions while on the move, irrespective of opening
hours.Banks are responding to this development by introducing mobile
services. 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. This group is
technology-savvy
and willing to experiment with innovative products and services. The
youngsters, often on the
move, demand ubiquitous, anytime service. Though the youngsters as a group
are hardlyrelevant for banks from a financial perspective, they represent the prospective
clientele of
tomorrow and need to be cultivated in the middle to long-term marketing
strategy of the
banks.
b) The Young Adults: Also this segment is thought to be technology- and
innovation friendly.
Though this group too is financially not very strong, many members of this
group are knownto be involved in stock market activities. Further, this group can be expected
to enter in short
to medium-run a professional carrier so that it needs to be cultivated in order
to retain
customers of this age-group even after they enter professional lives.
31
-
8/2/2019 M -BANKING 9166919000
32/64
MOBILE BANKING
c) The Business People: this group of customers, generally in the age-group
of 26-50 years, is
thought to be the most important one for Mobile Banking. Members of this
group are
generally well educated and economically well-off. They need to be
professionally often on
the move and carry mobile devices to ensure accessibility. For this reason
they are ideal
candidates to use services offered via mobile devices. From the banks
perspective this group
is particularly attractive on account of its relative economic prosperity and the
need for
financial services, e.g. home loans for young families.
In order to fulfil the requirements of these customer groups banks tend to look
at Mobile Banking as apromising option. However, these services also have their own utility for the
banks.
Mobile Banking as Distribution Channel
Mobile Banking enhances the number of existing channels of distribution that
a bank employs to offer its services. The efficiency of a distribution channel
can be measured by its fulfilment of three major objectives, which are closely
related to each other.
Increasing Sales VolumeOne of the primary tasks of a distribution channel is to increase the volume of
demand for products at profitable prices .This objective is arrived by
increasing operational efficiency so that those losses are minimized that arecaused by delays in catering to customer orders. Further, a
favourablereputation of the firms logistical capacities may help generate
additional orders.
32
-
8/2/2019 M -BANKING 9166919000
33/64
MOBILE BANKING
List of Operators and Circles enabled for the Mobile Banking Service
are as below: -
33
-
8/2/2019 M -BANKING 9166919000
34/64
MOBILE BANKING
IDBI's CTO, Neeraj Bhai, echoes the sentiment, "Over 12% of our Internet
Banking users use our Mobile Banking services as well."
While ICICI Bank offers its services on GPRS and secure SMS, Barclays Bank's
Hello Money is
based on Unstructured Supplementary Service Data (USSD) platform, which is
independent of GPRS.
34
-
8/2/2019 M -BANKING 9166919000
35/64
MOBILE BANKING
UK-based Barclays is one of the largest corporate money managers in the
world. The bank launched its consumer banking services in India last year. And
recently, the bank made its mobile banking service available on GSM hand-
sets, on Airtel, Vodafone, and Idea networks in forty cities. Customers can
choose between Hindi and English. Further, Barclays aims to include more
languages and extend it to CDMA hand-sets as well.
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. "We conducted a pilot in Delhi and received close to a thousand
responses. Mobile phones can be safer as compared to physical cards as they
are pin-protected, thereby minimizing the risk of misuse," said Mr. Sachin
Khandelwal, General Manager, Head-Cards Product Group, ICICI Bank.
Despite lots of security issues related to mobile banking and lack of awareness
on part of consumers, the technology has taken off on slow pace, still it will be
a big hit in coming years. Due to large number of advantages, and these
advantages have over-powered all the disadvantages of the technology. All
these advantages create a WIN-WIN-WIN situation for the technology: -
End-users benefit from greater control of their personal finances, as well
as time saved by not having to access account details via otherchannels (Internet, phone, ATM, among others).
Bankers are of the opinion that mobile banking gives the banks an
opportunity to expand their customer base without incurring additional
infrastructure costs. 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. Mobile banking could be
used to make remittances from person to person, banking purposes and
to make payments for purchases or services provided.
35
-
8/2/2019 M -BANKING 9166919000
36/64
MOBILE BANKING
Mobile operators benefit from increased customer stickiness, data usage
and, potentially, customer experimentation with other forms of mobile
content.
Given this win-win-win situation, we expect uptake of mobile banking services
to be robust among mobile subscribers, users and the banks.
Over the next five years, mobile banking deployments will develop
significantly - from "online banking" applications to one with richer interfaces
and multiple mobile payment capabilities. The successful evolution of mobile
banking and payments will be on the basis of the ability of financial institutions
and mobile operators to balance ease of use with security.
TECHNOLOGIES ENABLING MOBILE BANKING
36
-
8/2/2019 M -BANKING 9166919000
37/64
MOBILE BANKING
Technically speaking most of these services can be deployed using more than
one channel. Presently, Mobile Banking is being deployed using mobile
applications developed on one of the following four channels.
1. IVR (Interactive Voice Response)
2. SMS (Short Messaging Service)
3. WAP (Wireless Access Protocol)
4. Standalone Mobile Application Clients
1.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 messagefollowed by a menu of different options. Customers can choose options by
pressing the corresponding number in their keypads, and are then read out
the corresponding information, mostly using a text to speech program.
Mobile banking based on IVR has some major limitations that they can be used
only for Enquiry based services. Also, IVR is more expensive as compared to
other channels as it involves making a voice call which is generally more
expensive than sending an SMS or making data transfer (as in WAP or
Standalone clients).
One way to enable IVR is by deploying a PBX system that can host IVR dial
plans. Banks looking to go the low cost way should consider evaluating
Asterisk , which is an open source Linux PBX system
Asterisk, 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. However
there has been considerable noise on multiple Asterisk related forums over the
stability ofAsterisk based systems. 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.
2.SMS (Short Messaging Service)
37
http://www.asterisk.org/http://www.asterisk.org/http://www.asterisk.org/http://www.asterisk.org/http://www.asterisk.org/http://www.asterisk.org/ -
8/2/2019 M -BANKING 9166919000
38/64
MOBILE BANKING
SMS uses the popular text-messaging standard to enable mobile application
based banking. The way this works is that the customer requests for
information by sending an SMS containing a service command to a pre-
specified number. The bank responds with a reply SMS containing the specific
information.
For example, 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. Most of the services rolled out by major banks using
SMS have been limited to the Enquiry based ones.
However there have been few instances where even transaction-based
services have been made available to customer using SMS. For instance,
customers of the Bank of Punjab can make fund transfer by sending the SMS
TRN(A/c No)(PIN No)(Amount)'.
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.
The main advantage of deploying mobile applications over SMS is that almost
all mobile phones, including the low end, cheaper one's, which are most
popular in countries like India and China are SMS enabled.
An SMS based service is hosted on a SMS gateway that further connects to theMobile service providers SMS Centre. There are a couple of hosted IP based
SMS gateways available in the market and also some open source ones like
Kannel .
38
http://www.hdfcbank.com/ri/RI-EAGE-MobileBanking-withSMS.htmhttp://bankofpunjab.com/mobilebanking_center.htmhttp://www.kannel.org/http://www.hdfcbank.com/ri/RI-EAGE-MobileBanking-withSMS.htmhttp://bankofpunjab.com/mobilebanking_center.htmhttp://www.kannel.org/ -
8/2/2019 M -BANKING 9166919000
39/64
MOBILE BANKING
MOBILE SERVICE CENTRE
39
-
8/2/2019 M -BANKING 9166919000
40/64
MOBILE BANKING
3. WAP (Wireless Access Protocol)
WAP uses a concept similar to that used in Internet banking. Banks maintain
WAP sites which customer's access using a WAP compatible browser on theirmobile phones. WAP sites offer the familiar form based interface and can also
implement security quite effectively.
Bank of America offers a WAP based service channel to its customers in Hong
Kong. The banks customers can now have an anytime, anywhere access to a
secure reliable service that allows them to access all enquiry and transaction
based services and also more complex transaction like trade in securities
through their phone
A WAP based service requires hosting a WAP gateway. Mobile Applicationusers 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 following figure demonstrates the framework for enabling mobile
applications over WAP. The actualy forms that go into a mobile application are
stored on a WAP server, and served on demand. The WAP Gateway forms an
access point to the internet from the mobile network.
40
http://www.sun.com/mobility/documents/Bank_of_America.pdfhttp://www.sun.com/mobility/documents/Bank_of_America.pdf -
8/2/2019 M -BANKING 9166919000
41/64
MOBILE BANKING
4.STANALONE MOBILE APPLICATION CLIENTS
Standalone mobile applications are the ones that hold out the most promise as
they are most suitable to implement complex banking transactions like trading
in securities. They can be easily customized according to the user interface
complexity supported by the mobile. In addition, mobile applications enable
the implementation of a very secure and reliable channel of communication.
One requirement of mobile applications clients is that they require to be
downloaded on the client device before they can be used, which furtherrequires the mobile device to support one of the many development
environments likeJ2ME or Qualcomm's BREW.J2ME is fast becoming an
industry standard to deploy mobile applications and requires the mobile phone
to support Java.
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.
J2ME ties together the API for mobile phones which have the similar
functionality in what it calls 'profiles'. However, the rapid proliferation of
mobile phones which support different functionality has resulted in a huge
number of profiles, which are further significantly driving up development
costs. 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.
Out ofJ2ME and BREW,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 onJ2ME.
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. BREW on the other hand has seen limited
popularity among the developer community, mostly because of the proprietary
nature of its business and because of the steep prices it charges for its
development tools.
41
http://java.sun.com/j2me/http://brew.qualcomm.com/brew/en/http://java.sun.com/j2me/http://java.sun.com/j2me/http://java.sun.com/j2me/http://java.sun.com/j2me/http://brew.qualcomm.com/brew/en/http://java.sun.com/j2me/http://java.sun.com/j2me/http://brew.qualcomm.com/brew/en/http://java.sun.com/j2me/http://brew.qualcomm.com/brew/en/http://java.sun.com/j2me/http://java.sun.com/j2me/http://java.sun.com/j2me/http://java.sun.com/j2me/http://brew.qualcomm.com/brew/en/http://java.sun.com/j2me/http://java.sun.com/j2me/http://brew.qualcomm.com/brew/en/ -
8/2/2019 M -BANKING 9166919000
42/64
MOBILE BANKING
Quite a few mobile software product companies have rolled out solutions,
which enableJ2ME mobile applications based banking. One such product isWireless I-banco . The mobile user downloads and installs the wireless I-banco
application on theirJ2ME pone. TheJ2ME 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. 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.
However countries like India face a serious obstacle in the proliferation of suchclients as few users have mobiles, which supportJ2ME or BREW. However, one
of the biggest CDMA players in the Indian telecom industry, Reliance
Infocomm has about 7.01 million users all of which have handsets, which
support J2ME. Reliance has unveiled one of the most ambitious data services
deployment program in the country. On the other hand a country like South
Korea with its tech-savvy population has a widespread adoption of the higher-
end mobiles, which support application development.
42
http://java.sun.com/j2me/http://www.hsenid.com/PR15-Oct-03.htmlhttp://java.sun.com/j2me/http://java.sun.com/j2me/http://java.sun.com/j2me/http://brew.qualcomm.com/brew/en/http://java.sun.com/j2me/http://www.hsenid.com/PR15-Oct-03.htmlhttp://java.sun.com/j2me/http://java.sun.com/j2me/http://java.sun.com/j2me/http://brew.qualcomm.com/brew/en/ -
8/2/2019 M -BANKING 9166919000
43/64
MOBILE BANKING
ADVANTAGES OF MOBILE BANKING
The biggest advantage that mobile banking offers to banks is that it drastically
cuts down the costs of providing service to the customers. For example an
average teller or phone transaction costs about $2.36 each, whereas an
electronic transaction costs only about $0.10 each. Additionally, this new
channel gives the bank ability to cross-sell up-sell their other complex bankingproducts and services such as vehicle loans, credit cards etc.
For service providers, Mobile banking offers the next surest way to achieve
growth. Countries like Korea where mobile penetration is nearing saturation,
mobile banking is helping service providers increase revenues from the now
static subscriber base. Also service providers are increasingly using the
complexity of their supported mobile banking services to attract new
customers and retain old ones.
1. user experience of browsing the internet from a mobile device is familiar
and offers a rich UI experience.
2. allows end user to access corporate association.
3. secure connection can be established on most of the mobile browsers.
DISADVANTAGES OF MOBILE BANKING
Many non-standards variables including handsets,browsers andoperating system.
Inconsistent user experience due to varying connection speed and
different handset.
User needs to have a data plan,which may be a barrier to adoption
among price sensetive demographics.
43
-
8/2/2019 M -BANKING 9166919000
44/64
MOBILE BANKING
No offline (out of the coverage) capability.
MARKETING FOR MOBILE BANKING
Mobile banking is poised to become the big killer mobile application arena.
However, Banks going mobile the first time need to tread the path cautiously.
The biggest decision that Banks need to make is the channel that they willsupport their services on.
Mobile banking through an SMS based service would require the lowest
amount of effort, in terms of cost and time, but will not be able to support the
full breath of transaction-based services. However, in markets like India where
a bulk of the mobile population users' phones can only support SMS based
services, this might be the only option left.
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. A WAP based service can let go of the need to customize
usability to the profile of each mobile phone, the trade-off being that it cannot
take advantage of the full breadth of features that a mobile phone might offer.
Mobile application standalone clients bring along the burden of supporting
multiple mobile device profiles. According to the Gartner Group, a leading
wireless computing consulting organization, mobile banking services will have
to support a minimum of 50 different device profiles in the near future.
However, currently the best user experience, depending on the capabilities of
a mobile phone, is possible only by using a Standalone client.
Mobile banking has the potential to do to the mobile phone what E-mail did to
the Internet. Mobile Application based banking is poised to be a big m-
commerce feature, and if South Korea's foray into mass mobile banking is any
indication, mobile banking could well be the driving factor to increase sales of
high-end mobile phones. Nevertheless, Bank's need to take a hard and deep
44
-
8/2/2019 M -BANKING 9166919000
45/64
MOBILE BANKING
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.
CHALLENGES FOR MOBILE BANKINGKey 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.
Some of these devices support J2ME and others support WAP browser or only
SMS.
Initial interoperability issues however have been localized, with countries like
India using portals like R-World to enable the limitations of low end java based
phones, while focus on areas such as South Africa have defaulted to the USSD
as a basis of communication achievable with any phone.
The desire for interoperability is largely dependent on the banks themselves,
where installed applications(Java based or native) provide better security, are
easier to use and allow development of more complex capabilities similar to
those of internet banking while SMS can provide the basics but becomes
difficult to operate with more complex transactions.
There is a myth that there is a challenge of interoperability between mobile
banking applications due to perceived lack of common technology standards
for mobile banking. In practice it is too early in the service lifecycle for
interoperability to be addressed within an individual country, as very few
countries have more than one mobile banking service provider. In practice,
45
http://en.wikipedia.org/wiki/SMShttp://en.wikipedia.org/wiki/SMS -
8/2/2019 M -BANKING 9166919000
46/64
MOBILE BANKING
banking interfaces are well defined and money movements between banks
follow the IS0-8583 standard. As mobile banking matures, money movements
between service providers will naturally adopt the same standards as in the
banking world.
Security
Security of financial transactions, being executed from some remote location
and transmission of financial information over the air, are the most
complicated challenges that need to be addressed jointly by mobile
application developers, wireless network service providers and the banks' IT
departments.
The following aspects need to be addressed to offer a secure infrastructure for
financial transaction over wireless network :
1. Physical part of the hand-held device. If the bank is offering smart-card
based security, the physical security of the device is more important.
2. Security of any thick-client application running on the device. In case the
device is stolen, the hacker should require at least an ID/Password to
access the application.3. Authentication of the device with service provider before initiating a
transaction. This would ensure that unauthorized devices are not
connected to perform financial transactions.
4. User ID / Password authentication of banks customer.
5. Encryption of the data being transmitted over the air.
46
http://en.wikipedia.org/wiki/Authenticationhttp://en.wikipedia.org/wiki/Authenticationhttp://en.wikipedia.org/wiki/Encryptionhttp://en.wikipedia.org/wiki/Authenticationhttp://en.wikipedia.org/wiki/Authenticationhttp://en.wikipedia.org/wiki/Encryption -
8/2/2019 M -BANKING 9166919000
47/64
MOBILE BANKING
6. Encryption of the data that will be stored in device for later / off-line
analysis by the customer.
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. With mobile banking, the customer may be sitting in any part of the
world (true anytime, anywhere banking) and hence banks need to ensure that
the systems are up and running in a true 24 x 7 fashion. As customers will find
mobile banking more and more useful, their expectations from the solution will
increase. Banks unable to meet the performance and reliability expectations
may lose customer confidence. There are systems such as Mobile
Transaction Platform which allow quick and secure mobile enabling of
various banking services. Recently in India there has been a phenomenalgrowth in the use of Mobile Banking applications, with leading banks adopting
Mobile Transaction Platform and the Central Bankpublishing guidelines for
mobile banking operations.
Application distribution
Due to the nature of the connectivity between bank and its customers, it
would be impractical to expect customers to regularly visit banks or connect to
a web site for regular upgrade of their mobile banking application. It will be
expected that the mobile application itself check the upgrades and updates
and download necessary patches (so called "Over The Air" updates). However,
there could be many issues to implement this approach such as upgrade /
synchronization of other dependent components.
Personalization
It would be expected from the mobile application to support personalization
such as :
1. Preferred Language
47
http://en.wikipedia.org/wiki/Encryptionhttp://en.wikipedia.org/wiki/Chief_information_officerhttp://en.wikipedia.org/wiki/Chief_technical_officerhttp://en.wikipedia.org/w/index.php?title=Mobile_Transaction_Platform&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Mobile_Transaction_Platform&action=edit&redlink=1http://en.wikipedia.org/wiki/Reserve_Bank_of_Indiahttp://en.wikipedia.org/wiki/Encryptionhttp://en.wikipedia.org/wiki/Chief_information_officerhttp://en.wikipedia.org/wiki/Chief_technical_officerhttp://en.wikipedia.org/w/index.php?title=Mobile_Transaction_Platform&action=edit&redlink=1http://en.wikipedia.org/w/index.php?title=Mobile_Transaction_Platform&action=edit&redlink=1http://en.wikipedia.org/wiki/Reserve_Bank_of_India -
8/2/2019 M -BANKING 9166919000
48/64
MOBILE BANKING
2. Date / Time format
3. Amount format
4. Default transactions
5. Standard Beneficiary list
6. Alerts
Features of Mobile Commerce
Mobile Commerce is characterised by some unique features that equip it withcertain advantages against conventional forms of commercial transactions,
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).
ii) Immediacy: Closely related to the feature of ubiquity is the possibility ofreal-time
availment of services (the anytime feature). This feature is particularly
attractive for
services that are time-critical and demand a fast reaction, e.g. stock market
information.
48
-
8/2/2019 M -BANKING 9166919000
49/64
MOBILE BANKING
iii) Localisation: Positioning technologies, such as the Global Positioning
System (GPS),
allow companies to offer goods and services to the user specific to his current
location.
LBS can thus cater to consumers needs and wishes for localised content and
services.
iv) Instant connectivity: Ever since the introduction of the General Packet
Radio Service
(GPRS) mobile devices are constantly online, i.e. in touch with the network
(the
always-on feature). This feature brings convenience to the user, as time-
consuming dialup
or boot processes are not necessary.
v) Pro-active functionality: Mobile Commerce opens, by the virtue of its
ability to be
immediate, local and personal, new avenues for business. The user may
choose the
products, and services, which he wants to be kept informed about. The Short
Message
Service (SMS) can be used to send brief text messages to customers ensuring
that the
right (relevant) information is provided to the user at the right place, at
the right
time.
vi) Simple authentication procedure: Mobile devices function with an
electronic chip called
Subscriber Identity Module (SIM). The SIM is registered with the network
operator andthe owner is thus unambiguously identifiable. The clear identification of the
user in
combination with an individual Personal Identification Number (PIN) makes any
furthertime-consuming, complicated and potentially inefficient authentication
process redundant.
49
-
8/2/2019 M -BANKING 9166919000
50/64
MOBILE BANKING
Employment of Mobile Technologies in the
Banking Sector
A cornerstone of Mobile Commerce is built by Mobile Banking, the availment of
bank-related
financial services via mobile devices. It comprises of services in the field of
accounting, brokerage and financial information. Mobile Banking is
increasingly being employed by many banks around the world to generate
additional revenues, reduce costs or to increase customer satisfaction, often
with very promising results. For instance, the utilisation of transaction-based
MFS of Finland-based Nordea bank grew by 30% in 2004.The number of
Frances Socit Gnrale customers using mobile services crossed the mark
of one million in year 2004, registering an impressive growth of nearly 200%
vis--vis 2003. These facts point toward a positive shift in the customerperception of Mobile Banking. On the other hand, technological developments
like Universal Mobile Telecommunications System (UMTS) have provided a
new platform for realistic mobile applications.
Unlike in the past, when banks offering mobile services suffered a severe
setback due to lack of
customer interest and unripe technologies, the time seems to be now ripe for
(re-)launching mobile services. Mobile Banking is usually defined as carrying
out banking business with the help of mobile devices such as mobile phones or
PDAs [8; 11]. The offered services may include transaction facilities as well as
other related services that cater primarily to informational needs revolving
around financial activities. Considering these factors we can define Mobile
Banking as following:
Mobile Banking refers to provision and availment of bank-related financial
services
with the help of mobile telecommunication devices. The scope of offered
services
may include facilities to conduct bank and stock market transactions, toadminister
accounts and to access customized information.
Mobile Banking, as defined above, includes a wide range of services. These
services may be
categorised as following:
50
-
8/2/2019 M -BANKING 9166919000
51/64
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 .Not all Mobile Accounting services are however necessarily
transaction-based. A more precise definition of Mobile Accounting wouldtherefore characterize it as availment of account-specific banking services of
non-informational nature. 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.
Mobile Brokerage
Brokerage, in the context of banking- and financial services, refers to
intermediary services related to the bourse, e.g. selling and purchasing of
stocks. Mobile Brokerage can be thus defined as transactionbased, mobile
financial services of non-informational nature that revolve around a securities
account. Mobile Brokerage, too, may be divided in two categories to
differentiate between services that are essential to operate a securities
account and services that are essential to administer that account.
Mobile Financial Information
Mobile Financial Information refers to non-transaction based banking- and
financial services of
51
-
8/2/2019 M -BANKING 9166919000
52/64
MOBILE BANKING
informational nature . Mobile Financial Information services include subsets
from both banking and financial services and are meant to provide the
customer with anytime, anywhere access to
information .The information may either concern the bank and securities
accounts of the customer or it may be regarding market developments with
relevance for that individual customer. The information may be customised on
the basis of preferences given by the customer and sent with a frequency
decided by him. The information should be provided, ideally, on both, pull and
push basis.Information services are an integral part of Mobile Accounting and
Mobile Brokerage but they may also be offered as a stand-alone, independent
module, i.e. Mobile Financial Information can be offered without offering
Mobile Accounting or Mobile Brokerage but vice versa is not feasible.
MOBILE BANKING IN THE WORLD
This part of the mobile commerce is very popular in countries where most of
their population is unbanked.Countries like Sudan, Ghana and South Africa
received this new commerce very well.
In Latin America countries like Uruguay, Paraguay, Argentina, Brazil,
Venezuela, Colombia, Guatemala and recently Mexico started with a huge
success.In Colombia was released with Redeban.In Iran banks like Parsian,
Tejarat, Mellat, Saderat, Sepah, edbi and bankmelli offer this service.
Guatemala have the support of Banco industrial.
Mexico released the mobile commerce with Omnilife,Bancomer and a privatecompany(MPower Ventures). Kenya's Safaricom (Part of the Vodafone Group)
has had the very popular M-Pesa Service - mainly used to transfer limited
amounts of money, but has been increasingly used to pay utility bills. Zain in
2009 launched their own mobile money transfer business known as ZAP in
Kenya and other African countries
52
http://en.wikipedia.org/wiki/Mobile_commercehttp://en.wikipedia.org/wiki/Mexicohttp://en.wikipedia.org/wiki/Bancomerhttp://en.wikipedia.org/wiki/Kenyahttp://en.wikipedia.org/wiki/M-Pesahttp://en.wikipedia.org/wiki/Mobile_commercehttp://en.wikipedia.org/wiki/Mexicohttp://en.wikipedia.org/wiki/Bancomerhttp://en.wikipedia.org/wiki/Kenyahttp://en.wikipedia.org/wiki/M-Pesa -
8/2/2019 M -BANKING 9166919000
53/64
MOBILE BANKING
CASE ANALYSIS
LG Telecom, South Korea
In terms of the evolution of services being offered on mobile applications,
South Korea is showing the way.
The big push came when LG Telecom Ltd., the smallest of Korea's three mobile
service providers teamed up with the Kookmin bank to launch the Bank on'
service. Under this scheme mobile users were able to use smart chips
embedded in cell phones for accessing all of the transaction and enquiry
based services. The chip-based service automated the authentication of users
when they accessed their bank's financial services to make the whole process
much faster and convenient. The icing on the cake came with the ability of
these chip enabled cell phones to be used simultaneously as cash cards.By
October 2004 there were already about 100,000 infrared readers adapted totake payment directly from mobile phone handsets in Korea.
Users can now use their cell phones to pay for everything, from restaurant
bills, travel tickets, merchandise and even haircuts.
53
-
8/2/2019 M -BANKING 9166919000
54/64
MOBILE BANKING
Reliance Infocomm, India
When Reliance Infocomm, India rolled out its CDMA network, (at the time the
mobile market in India was still in its infancy, and data services were almost
never heard off) it made sure that all handsets supported Java.The Reliance
application platform, also known as R-World brought Java compatibility even to
the lower end phones.
Reliance used a novel way to overcome the memory limitations of lower-end
mobile phones, which hampered deploying of multiple standalone J2ME basedclients. Instead of storing applications statically on their cell phones, users
access a single menu based application called R-World, which connects them
to the Reliance servers. Using the menu based user interface, mobile users
select the application, which they want to run and download them over-the-air
to their cell phones. These applications are then executed locally on the
mobiles.
From mid-2004 Reliance tied up with two of the popular private sector banks,
HDFC and ICICI, to provide a host of their enquiry and transaction based
mobile banking services through its R-World environment.
54
-
8/2/2019 M -BANKING 9166919000
55/64
MOBILE BANKING
Conclusions
Mobile Banking, as has been demonstrated, has gained non-negligible
relevance for banks today.
Developments in the banking sector, e.g. increased competition on account of
technological
developments coupled with the process of globalisation have produced new
challenges for banks.
Mobile Banking presents an opportunity for banks to retain their existing,
technology-savvy customer base by offering value-added, innovative services.
It might even help attracting new customers.
Further, Mobile Banking presents a chance to generate additional revenues.
Its main contribution, however, can be expected to take place in the strategic
field as it is all set to become an instrument of differentiation. Many banks
recognize this threat and are already taking preventive measures by
introducing mobile services. The foremost significance of Mobile Banking
would therefore be of a defensive nature. Instead of providing a positivedifferentiation, Mobile Banking would be employed to thwart negative
differentiation vis--vis rivals.
Mobile Banking seems to possess the potential to become one of the widely
spread and accepted application in the field of Mobile Commerce, particularly
in the backdrop of its high acceptance across commercially important sections
of the society. We may expect to see Mobile Banking go into the footsteps of
55
-
8/2/2019 M -BANKING 9166919000
56/64
MOBILE BANKING
Online Banking, i.e. to become a standard service offered by every bank worth
its name.
Webliography
1. http://brandonmcgee.blogspot.com/
2. http://www.tutorial-reports.com/mobile/mobile-banking
3. http://en.wikipedia.org/wiki/Mobile_banking
4. www.directeasy.com
5. www.axisbank.com
56
http://brandonmcgee.blogspot.com/http://brandonmcgee.blogspot.com/http://www.tutorial-reports.com/mobile/mobile-bankinghttp://en.wikipedia.org/wiki/Mobile_bankinghttp://www.directeasy.com/http://brandonmcgee.blogspot.com/http://www.tutorial-reports.com/mobile/mobile-bankinghttp://en.wikipedia.org/wiki/Mobile_bankinghttp://www.directeasy.com/ -
8/2/2019 M -BANKING 9166919000
57/64
MOBILE BANKING
Bibliography
1. Book:- Ecommerce in Indian Banks
2. Magazines: - Professional Banker The ICEAI University
3. Business world
4. Economic times
57
-
8/2/2019 M -BANKING 9166919000
58/64
MOBILE BANKING
Questionnaire from the point of view of Custome