Report On Mobile Banking Introduction 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 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 the European 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. 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. 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. Mobile banking today is most often performed via SMS or the Mobile Internet but can also use special programs called clients downloaded to the mobile device. 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 travelling or when they are waiting for their orders to come through in a restaurant. This case study explains us about how the use of mobile banking is increasingly in demand. Initially the banks kept their customers valuables in vaults and each bank use to deal wit their customer’s financial needs. Later Financial data networks were created for electronic transfer of funds and then came the
Automatic teller machines (ATM) which extended the electronic banking system to the customers and provided convenience for the customers as well as the banks . To make our life much simpler came the internet and web banking because of all these advancement in the technology customers rarely had to visit the banks. Internet and web banking was not the end to the ways of doing banking transactions. Recently introduced mobile banking has made banking much easier and reachable for the large number of population. It has been well established in Japan and much of Europe however it has been slow to reach the US population.
Various analyses and research studies have come out with different explanations for mobile banking not being a success in US. For example U. S cell phone users aren’t interested in this service or due to banks and wireless carriers inability to agree on who should design and control the software. Many multinational organisations like Citibank, AT & T, and Wachovia have come together to make mobile banking a success in the U. S market most banks and cell phone service providers believe that time has come for Mobile banking in the United States.
The Major concern which has been highlighted in this case is the customers concern about the security of doing banking transactions over the cell phone and to that mobile banking systems address by explaining how it is secure with the help of Six digit Pin number and also that it does not store account numbers or pins on the handset and last but not the least is secured with 128 but encryption so interception or decoding is not possible. 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. 6 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 banking products 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.
The scale at which Mobile banking has the potential to grow can be gauged by looking at the pace users are getting mobile in these big Asian economies. The explosion as most analysts say, is yet to come as India has about one of the biggest untapped markets, China and South Korea all three of these countries have 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. Facts Mobile banking is well utilized in countries of Europe and even Japan, yet it is slow to catch up in America. A study by Forrester Research found that only 10% of Americans like the idea of m banking while 35% already bank online ? Citibank had designed its own mobile banking software that can be downloaded and installed on more than 100 handsets over any carrier’s network ? Citibank has developed mobile software providing its services even Jack Henry & Associate have designed goDough which offers the same services provided at a bank. ?There is a Six digit pin number required for assessing information ?
Mobile banking has used cell phones to pay cashiers in restaurants and stores and purchase items in vending machines and buy a ride on the bus. ?Mobile banking communications is secured with 128-bit encryption so that it cannot be intercepted or decoded easily ? Mobile banking software does not store account numbers or pin numbers on the handset. ?Development in the ways banks offer different channels to access their banking and other services: •A branch, banking centre or financial centre is a retail location where a bank or financial institution offers a wide array of face-to-face service to its customers. ATM is a computerised telecommunications device that provides a financial institution’s customers a method of financial transactions in a public space without the need for a human clerk or bank teller. • Mail is part of the postal system which itself is a system wherein written documents typically enclosed in envelopes, and also small packages containing other matter, are delivered to destinations around the world. •Telephone banking is a service provided by a financial institution which allows its customers to perform transactions over the telephone. Online banking is a term used for performing transactions, payments etc. over the Internet through a bank, credit union or building society’s secure website. •Mobile banking is a method of using one’s mobile phone to conduct simple banking transactions by remotely linking into a banking network. •Video banking is a term used for performing banking transactions or professional banking consultations via a remote video and audio connection. Various Issues Of Mobile banking 1)Awareness and Advantages of Mobile Banking
After studying the case one would feel the lack of knowledge about mobile banking. A clear message has yet to be launched for people of America. When a product or a service is understood by the public, it becomes simpler for the users to utilize the products or the services more effectively. It becomes important to highlight some of the major advantages one would find in mobile banking: 1. Time Saving 2. Money Saving (in terms of opportunity cost) 3. Affordable for consumers 4. Stored messages can be accessed without network connections 5.
The biggest advantage that mobile banking offers to banks is that it drastically cuts down the costs of providing service to the customers For service providers, Mobile banking offers the next surest way to achieve growth 2)Security Concern and Awareness One of the major concerns in the 21st century has been a lot to do with security. This issue has been taken up seriously by an individual or a corporate organization. Each of them wants an assurance they would not be a breach of security.
Therefore one would see this as an important factor for individuals to use this service. Being on of the major concern, it also becomes necessary to present the following aspect to an individual. The companies would have to make the general public believe that they are totally secure with while using their services. In addition educating the people of the various security levels available in the present IT industry would help them accept this feature on their handsets faster.
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. Few Things which need to be addressed for security aspects are ? Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions ?
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. ?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.. ?User ID / Password authentication of bank’s customer. ?Encryption of the data being transmitted over the air. Encryption of the data that will be stored in device for later / off-line analysis by the customer 3)Inability to agree on design and control
As mobile banking does not have a single organization laying out measures to which a company should abide. We would seek a body which governs the layout of various companies design model. Helping the companies to stick to certain requirements or pre-requisites would help them to keep a monitor in the general mobile industry. As fraud cases and individual reliability of mobile industry without such a party would be at stake. One of the major issues for 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. Banks unable to meet the performance and reliability expectations may lose customer confidence. For example systems such as Mobile Transaction Platform which allow quick and secure mobile enabling of various banking services. 4)Handset operability Due to different mobile phone devices it is a big challenge for banks to offer mobile banking solution on any type of device.
Initial interoperability issues however have been localized, with countries like India, 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. 5)Application distribution
Because of 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. Alternate Actions 1)Awareness and Advantages of Mobile Banking •Providing customers with pre loaded m-banking services mobile phones on opening account with the governed bank. The customer could be explained about the various benefits of m-banking. Providing reward system on utilizing the m-banking services. •Advertising and explaining the mutual benefits for both the parties when a customer utilizes these services provided. •Enforcing the customer service teams to inform all the service calls about the m-banking facilities. 2)Inability to agree on design and control •Create a universal design by using SMS service verification to a common or universal number. •Create a single software either pre loaded or web downloadable to each ones mobile handset. This single software would be able to cater for all the banks making it a universal website for all banks. To centralize a Mobile Banking body to govern each and every m banking software interms of features or security. 3)Security Concern and Awareness •By advertising more about m-banking and rewarding them different scheme for utilizing m-banking. •Utilizing the facts and figures to show how the mobile world is safer mode of transaction. People could be explained that the mode of payment is so safe that the Europeans and Japanese use this medium on a day to day basis. •Providing details of the transaction once made from mobile handsets as an early confirmation for security concerns.