Mobile apps in banking industry

Introduction -

Banking is one of the largest financial institutions constantly explores the opportunity of technology enabled services to provide better customer experience and convenience. Technology plays an important role in banking sector. Mobile phone is a common technology device that became part of every individual in the information era. Mobile Banking is an emerging alternate channel for providing banking services. The main advantage of Mobile Banking is that the people in remote area can also access the banking services at ease. This has become possible with the reach of mobile devices in the rural areas where the device can be purchased. The penetration of mobile in India has made rapid change in communication system. Apart from the reach of communication device; revolution in mobile technology like 2G, 3G, 4G are created more Market where the potential people are adopting the latest technologies. Operating system used in mobile device also plays an important role in development of Apps for easy access of various services.

Mobile banking model- Mobile Banking can be broadly classified into Bank-led model and Mobile Service Provider Led Model.

Mobile Service Provider Model - in this the mobile customers those who don‘t even having the access of traditional bank account can do banking transactions through their mobile service provider.

Bank led model-In the bank led model, only customers of a bank can avail the mobile banking service from the bank. With these facilitates, the customers can do various banking transactions as per their convenience.

Mobile banking services can be classified into-

1) SMS Banking-it refers utilizing banking services through SMS from the registered mobile number of the customer.

2) Application or Software oriented-it refers downloading the application developed by the bank for utilizing the mobile banking service that works in traditional mobile handsets.

3) Browser based mobile banking- it refers Internet based mobile banking where the communication made to internet application which is optimized for mobile handsets.

4) Mobile Apps-it refers mobile applications developed for Smart phones using Android, Windows, Java, etc.

The services offered under the mobile banking vary from one bank to another. The common services are Balance Enquiry, Mini Statement, Money Transfer and Utility Bill Payments.

Mobile phone is an ideal medium through which banks can deliver a wide variety of services.

Banks also classify these services based on how information flows. A pull transaction is one in which a mobile phone user actively requests a service or information from the bank. For example, inquiring about an account balance is a pull transaction. So is transferring funds, paying a bill or requesting a transaction history. Because banks must respond or take some action based on the user request, pull transactions are considered two-way exchanges.

A push transaction, on the other hand, is one in which the bank sends information based on a set of rules. A minimum balance alert is a good example of a push transaction. The customer defines the

rule "Tell me when my balance gets below $100" and the bank generates an automatic message any time that rule applies. Similar alerts can be sent whenever there is a debit transaction or a bill payment. As these examples illustrate, push transactions are generally one way, from the bank to the customer.

You can also classify mobile banking based on the nature of the service. Transaction-based services, such as a funds transfer or a bill payment, involve movement of funds from one source to another. Inquiry-based services don’t. They simply require a response to a user query. The chart below summarizes these various types of mobile banking services.

Push Pull

TransactionFunds transfer

Bill payment

Share trade

Check order

InquiryMinimum balance alert

Credit/debit alert

Bill payment alert

Account balance inquiry

Account statement inquiry

Check status inquiry

Transaction history

Clearly, push transactions are not as complex as their pull counterparts. Mobile banking solutions also vary in their degree of complexity, and some only offer a fraction of the services you would find in a bricks-and-mortar branch. In this respect, mobile banking isn't always full-service banking. The factors that affect this are the type of phone being used, the service plan of the mobile subscriber and the technology framework of the bank. We’ll look at these technologies next.

Wireless Application Protocol (WAP)

WAP is the technology architecture that makes accessing Internet pages possible from a mobile phone. Because it includes the concepts of browsers, servers, URLs and gateways,

WAP provides a user experience that echoes Internet banking conducted on a home computer. This is an attractive feature to many banks, who also appreciate the fact that customers don’t have to download any proprietary software to enjoy robust access to a full line of services and transactions.

WAP banking does have its disadvantages:

The browsers that run on mobile phones must work on a very small screen. As a result, banks must create "mobile-friendly" sites that work more efficiently in cramped quarters. Even with such accommodations, the number of clicks required to complete a task can be prohibitive.

WAP banking requires a smart phone or a PDA, but such devices represent less than 10 percent of the phones in use. Even if a customer has a WAP-enabled phone, he or she can elect not to sign up for the more costly data plans required for Internet access.

Mobile phones lack the level of anti-virus and personal firewall protection now considered standard on PCs.

Two-way communication isn't possible. Customers can initiate a dialog, but banks can’t.

Standalone Mobile Application

Some banks are now providing a downloadable client that mobile subscribers can use to access bank services. These mobile applications offer a reliable channel and enable users to conduct even complex transactions. They also allow banks to customize the interface and brand it accordingly.

Although this solution likely represents the future of mobile banking, there are some issues. First, users are forced to download, install and learn a proprietary application. Not only that, the application must be customized to each mobile phone on which it will reside, greatly increasing development costs. And just like the mobile browsers used in WAP banking, these standalone applications are vulnerable to attacks, have limited availability and can only accommodate customer-initiated communication.

As a financial institution prepares for the mobile banking revolution, it must weigh the advantages and disadvantages of these various solutions to decide which one best meets the needs of its customers and its own technology infrastructure. In the next section, we’ll look at the specific mobile banking solutions of two leading banks.

Banks are constantly adopting technology to expand its business and to reach different level of customers. Apart from ATM, Internet banking and other technology enabled services Mobile Banking is one of the services provided by banks to its customers. Astonishing growth in telecommunication sector, its penetration including rural population and technology feasibility are the major factors for the introduction of Mobile banking services.

HOW ORGANIZATIONS CAN ADD VALUE TO BUSINESS PROCESS:

Banks perform various functions.

1) Activities an primary functions of banks-Fixed term deposits

Current A/c deposits

Recurring deposits

Saving A/c deposits

Tax saving deposits

Lending money

Loans and advances

Cash credit

2) Secondary functions-

Agency functions: Bank pays on behalf of its customers as an agent and gets paid fee for agency functions such as

Payment of taxes and bills, collection of funds through bills, transfer of funds, sales and purchase of share and debentures, collection/payment of dividend or transactions, general utility services(locker facilities)

Credit creation: A bank creates credit on the basis of its primary deposits. It further lends the money which people has deposited with the bank also charge interest on this money, which is much higher than what it actually pays to depositor. Thus bank generates money for itself.

ADVANTAGES OF MOBILE BANKING:

A very effective way of improving customer service could be to inform customers better. Credit card fraud is one such area. A bank could, through the use of mobile

Technology inform owners each time purchases above a certain value have been made on their card. This way the owner is always informed when their card is used, and how much money was taken for each transaction.

Similarly, the bank could remind customers of outstanding loan repayment dates, dates for the payment of monthly Instalments or simply tell them that a bill has

Been presented and is up for payment. The customers can then check their balance on the phone and authorize the required amounts for payment.

The customers can also request for additional information. They can automatically view deposits and withdrawals as they occur and also pre- schedule payments to be made or cheques to be issued. Similarly, one could also request for services like stop cheque or issue of a cheque book over one’s mobile phone.

There are number of reasons that should persuade banks in favor of mobile phones. They are set to become a crucial part of the total banking services experience for

The customers. Also, they have the potential to bring down costs for the bank itself. Through mobile messaging and other such interfaces, banks provide value added services to the customer at marginal costs.

Such messages also bear the virtue of being targeted and personal making the services offered more effective. They will also carry better results on account of better customer profiling.

Yet another benefit is the anywhere/anytime characteristics of mobile services. A mobile is almost always with the customer. As such it can be used over a vast

Geographical area. The customer does not have to visit the bank ATM or a branch to avail of the bank’s services. Research indicates that the number of footfalls at a bank’s branch has fallen down drastically after the installation of ATMs. As such with mobile services, a bank will need to hire even less employees as people will no longer need to visit bank branches apart from certain occasions.

The banks add to this personalized communication through the process of automation. For instance, if the customer asks for his account or card balance after conducting a transaction, the installed software can send him an automated reply informing of the same. These automated replies thus save the bank the need to hire additional employees for servicing customer needs.