Mobile Banking
Encyclopedia
Mobile banking is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone
or Personal Digital Assistant (PDA). The earliest mobile banking services were offered over SMS
. With the introduction of the first primitive smart phones with WAP
support enabling the use of the mobile web
in 1999, the first European banks started to offer mobile banking on this platform to their customers.
Mobile banking has until recently (2010) most often been performed via SMS or the Mobile Web. Apple's initial success with iPhone
and the rapid growth of phones based on Google's
Android (operating system) have led to increasing use of special client programs, called apps, downloaded to the mobile device.
According to this model Mobile Banking can be said to consist of three inter-related concepts:
Most services in the categories designated Accounting and Brokerage are transaction-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.
Mobile phone banking may also be used to help in business situations as well as financial
has enabled new ways to conduct banking business, resulting in the creation of new institutions, such as online banks, online brokers and wealth managers. Such institutions 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 subscribers exceeded 2 billion in September 2005, and now (2009) exceeds 2.5 billion (of which more than 2 billion are GSM).
According to a study by financial consultancy Celent, 35% of online 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 mobile phones. Mobile banking will eventually allow users to make payments at the physical point of sale
. "Mobile contactless payment
s” will make up 10% of the contactless market by 2010.
Another study from 2010 by Berg Insight forecasts that the number of mobile banking users in the US will grow from 12 million in 2009 to 86 million in 2015. The same study also predicts that the European market will grow from 7 million mobile banking users in 2009 to 115 million users in 2015.
Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phone
s. In Asian countries like India
, China
, Bangladesh
, Indonesia
and Philippines
, where mobile infrastructure is comparatively better than the fixed-line infrastructure, and in Europe
an 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.
s, i.e., retail or postal outlets that process financial transactions on behalf telcos or banks. The banking agent
is an important part of the mobile banking business model since customer care, service quality, and cash management will depend on them. Many telcos will work through their local airtime resellers. However, banks in Colombia, Brazil, Peru, and other markets use pharmacies, bakeries, etc.
These models differ primarily on the question that who will establish the relationship (account opening, deposit taking, lending etc.) to the end customer, the Bank or the Non-Bank/Telecommunication Company (Telco). Another difference lies in the nature of agency agreement between bank and the Non-Bank. Models of branchless banking can be classified into three broad categories - Bank Focused, Bank-Led and Nonbank-Led.
A specific sequence of SMS
messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. When depositing money, the merchant receives cash and the system credits the client's bank account or mobile 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 merchant's account.
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.
With the advent of technology and increasing use of smartphone and tablet based devices, the use of Mobile Banking functionality would enable customer connect across entire customer life cycle much comprehensively than before. With this scenario, current mobile banking objectives of say building relationships, reducing cost, achieving new revenue stream will transform to enable new objectives targeting higher level goals such as building brand of the banking organization. Emerging technology and functionalities would enable to create new ways of lead generation, prospecting as well as developing deep customer relationship and mobile banking world would achieve superior customer experience with bi-directional communications.
Illustration of objective based functionality enrichment In Mobile Banking
, a 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, 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.
On January 2009, Mobile Marketing Association
(MMA) Banking Sub-Committee, chaired by CellTrust and VeriSign Inc., published the Mobile Banking Overview for financial institutions in which it discussed the advantages and disadvantages of Mobile Channel Platforms such as Short Message Services (SMS
), Mobile Web, Mobile Client Applications, SMS with Mobile Web and Secure SMS.
The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network :
One-time password
(OTPs) are the latest tool used by financial and banking service providers in the fight against cyber fraud. Instead of relying on traditional memorized passwords, OTPs are requested by consumers each time they want to perform transactions using the online or mobile banking interface. When the request is received the password is sent to the consumer’s phone via SMS. The password is expired once it has been used or once its scheduled life-cycle has expired.
Because of the concerns made explicit above, it is extremely important that SMS gateway providers can provide a decent quality of service for banks and financial institutions in regards to SMS
services. Therefore, the provision of service level agreements (SLAs) is a requirement for this industry; it is necessary to give the bank customer delivery guarantees of all messages, as well as measurements on the speed of delivery, throughput, etc. SLAs give the service parameters in which a messaging solution is guaranteed to perform.
s and CTO
s 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 phenomenal growth in the use of Mobile Banking applications, with leading banks adopting Mobile Transaction Platform and the Central Bank
publishing guidelines for mobile banking operations.
is also popular in countries where most of their population is unbanked
. In most of these places, banks can only be found in big cities, and customers have to travel hundreds of miles to the nearest bank.
In Iran, banks such as Parsian
, Tejarat
, Mellat, Saderat, Sepah, Edbi, and Bankmelli offer the service. Banco Industrial provides the service in Guatemala. Citizens of Mexico
can access mobile banking with Omnilife, Bancomer and MPower Venture.
Kenya
's Safaricom
(part of the Vodafone Group) has the M-Pesa
Service, which is mainly used to transfer limited amounts of money, but increasingly used to pay utility bills as well. In 2009, Zain
launched their own mobile money transfer business, known as ZAP, in Kenya and other African countries. In Somalia
, the many telecom companies provide mobile banking, the most prominent being Hormuud Telecom
and its ZAAD service.
Telenor Pakistan has also launched a mobile banking solution, in coordination with Taameer Bank, under the label Easy Paisa, which was begun in Q4 2009. Eko India Financial Services
, the business correspondent of State Bank of India
(SBI) and ICICI Bank
, provides bank accounts, deposit, withdrawal and remittance services, micro-insurance, and micro-finance facilities to its customers (nearly 80% of whom are migrants or the unbanked section of the population) through mobile banking.
In a year of 2010, mobile banking users soared over 100 percent in Kenya
, China
, Brazil
and USA with 200 percent, 150 percent, 110 percent and 100 percent respectively.
Dutch-Bangla Bank (www.dutchbanglabank.com) launches the very first mobile banking service in Bangladesh on 31 March, 2011. This service is launched with ‘Agent’ and ‘Network’ support from mobile operators, Banglalink and Citycell. Sybase 365, a subsidiary of Sybase, Inc. has provided software solution. There are around 160 million people in Bangladesh, of which, only 13 per cent have bank accounts. With this solution, Dutch-Bangla Bank can now reach out to the rural and unbanked population, of which, 45 per cent are mobile phone users. Under the service, any mobile handset with subscription to any of the six existing mobile operators of Bangladesh would be able to utilize the service. Under the mobile banking services, bank-nominated ‘Agents’ perform banking activities on behalf of the banks, like opening mobile banking account, providing cash services (receipts and payments) and dealing with small credits. Cash withdrawal from a mobile account can also be done from an ATM validating each transaction by ‘mobile phone & PIN’ instead of ‘card & PIN’. Other services that are being delivered through mobile banking system are person-to-person (e.g. fund transfer), person-to-business (e.g. merchant payment, utility bill payment), business-to-person (e.g. salary/commission disbursement), government-to-person (disbursement of government allowance) transactions.
Mobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
or Personal Digital Assistant (PDA). The earliest mobile banking services were offered over SMS
SMS
SMS is a form of text messaging communication on phones and mobile phones. The terms SMS or sms may also refer to:- Computer hardware :...
. With the introduction of the first primitive smart phones with WAP
Wireless Application Protocol
Wireless Application Protocol is a technical standard for accessing information over a mobile wireless network.A WAP browser is a web browser for mobile devices such as mobile phones that uses the protocol.Before the introduction of WAP, mobile service providers had limited opportunities to offer...
support enabling the use of the mobile web
Mobile Web
The Mobile Web refers to the use of Internet-connected applications, or browser-based access to the Internet from a mobile device, such as a smartphone or tablet computer, connected to a wireless network....
in 1999, the first European banks started to offer mobile banking on this platform to their customers.
Mobile banking has until recently (2010) most often been performed via SMS or the Mobile Web. Apple's initial success with iPhone
IPhone
The iPhone is a line of Internet and multimedia-enabled smartphones marketed by Apple Inc. The first iPhone was unveiled by Steve Jobs, then CEO of Apple, on January 9, 2007, and released on June 29, 2007...
and the rapid growth of phones based on Google's
Google
Google Inc. is an American multinational public corporation invested in Internet search, cloud computing, and advertising technologies. Google hosts and develops a number of Internet-based services and products, and generates profit primarily from advertising through its AdWords program...
Android (operating system) have led to increasing use of special client programs, called apps, downloaded to the mobile device.
A mobile banking conceptual model
In one academic 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 market transactions, 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 are transaction-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.
Mobile phone banking may also be used to help in business situations as well as financial
Trends in mobile banking
The advent of the InternetInternet
The Internet is a global system of interconnected computer networks that use the standard Internet protocol suite to serve billions of users worldwide...
has enabled new ways to conduct banking business, resulting in the creation of new institutions, such as online banks, online brokers and wealth managers. Such institutions 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
GSM Association
The GSM Association is an association of mobile operators and related companies devoted to supporting the standardizing, deployment and promotion of the GSM mobile telephone system...
and Ovum
Ovum Ltd.
Ovum Ltd. is an independent analyst and consultancy firm headquartered in London, specializing in global coverage of IT, and telecommunications industries. It began operations in 1985 and by 2005 claimed to be the largest technology analyst firm that was headquartered outside of the United States...
, the number of mobile subscribers exceeded 2 billion in September 2005, and now (2009) exceeds 2.5 billion (of which more than 2 billion are GSM).
According to a study by financial consultancy Celent, 35% of online banking
Online banking
Online banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.-Features:...
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 mobile phones. Mobile banking will eventually allow users to make payments at the physical point of sale
Point of sale
Point of sale or checkout is the location where a transaction occurs...
. "Mobile contactless payment
Contactless payment
Contactless payment systems are credit cards and debit cards, key fobs, smartcards or other devices which use RFID for making secure payments. The embedded chip and antenna enable consumers to wave their card or fob over a reader at the point of sale. Some suppliers claim that transactions can be...
s” will make up 10% of the contactless market by 2010.
Another study from 2010 by Berg Insight forecasts that the number of mobile banking users in the US will grow from 12 million in 2009 to 86 million in 2015. The same study also predicts that the European market will grow from 7 million mobile banking users in 2009 to 115 million users in 2015.
Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phone
Mobile phone
A mobile phone is a device which can make and receive telephone calls over a radio link whilst moving around a wide geographic area. It does so by connecting to a cellular network provided by a mobile network operator...
s. In Asian countries like India
India
India , officially the Republic of India , is a country in South Asia. It is the seventh-largest country by geographical area, the second-most populous country with over 1.2 billion people, and the most populous democracy in the world...
, China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, Bangladesh
Bangladesh
Bangladesh , officially the People's Republic of Bangladesh is a sovereign state located in South Asia. It is bordered by India on all sides except for a small border with Burma to the far southeast and by the Bay of Bengal to the south...
, Indonesia
Indonesia
Indonesia , officially the Republic of Indonesia , is a country in Southeast Asia and Oceania. Indonesia is an archipelago comprising approximately 13,000 islands. It has 33 provinces with over 238 million people, and is the world's fourth most populous country. Indonesia is a republic, with an...
and Philippines
Philippines
The Philippines , officially known as the Republic of the Philippines , is a country in Southeast Asia in the western Pacific Ocean. To its north across the Luzon Strait lies Taiwan. West across the South China Sea sits Vietnam...
, where mobile infrastructure is comparatively better than the fixed-line infrastructure, and in Europe
Europe
Europe is, by convention, one of the world's seven continents. Comprising the westernmost peninsula of Eurasia, Europe is generally 'divided' from Asia to its east by the watershed divides of the Ural and Caucasus Mountains, the Ural River, the Caspian and Black Seas, and the waterways connecting...
an 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.
Mobile banking business models
A wide spectrum of Mobile/branchless banking models is evolving. However, no matter what business model, if mobile banking is being used to attract low-income populations in often rural locations, the business model will depend on banking agentBanking agent
A banking agent is a retail or postal outlet contracted by a financial institution or a mobile network operator to process clients’ transactions...
s, i.e., retail or postal outlets that process financial transactions on behalf telcos or banks. The banking agent
Banking agent
A banking agent is a retail or postal outlet contracted by a financial institution or a mobile network operator to process clients’ transactions...
is an important part of the mobile banking business model since customer care, service quality, and cash management will depend on them. Many telcos will work through their local airtime resellers. However, banks in Colombia, Brazil, Peru, and other markets use pharmacies, bakeries, etc.
These models differ primarily on the question that who will establish the relationship (account opening, deposit taking, lending etc.) to the end customer, the Bank or the Non-Bank/Telecommunication Company (Telco). Another difference lies in the nature of agency agreement between bank and the Non-Bank. Models of branchless banking can be classified into three broad categories - Bank Focused, Bank-Led and Nonbank-Led.
Bank-focused model
The bank-focused model emerges when a traditional bank uses non-traditional low-cost delivery channels to provide banking services to its existing customers. Examples range from use of automatic teller machines (ATMs) to internet banking or mobile phone banking to provide certain limited banking services to banks’ customers. This model is additive in nature and may be seen as a modest extension of conventional branch-based banking.Bank-led model
The bank-led model offers a distinct alternative to conventional branch-based banking in that customer conducts financial transactions at a whole range of retail agents (or through mobile phone) instead of at bank branches or through bank employees. This model promises the potential to substantially increase the financial services outreach by using a different delivery channel (retailers/ mobile phones), a different trade partner (telco / chain store) having experience and target market distinct from traditional banks, and may be significantly cheaper than the bank-based alternatives. The bank-led model may be implemented by either using correspondent arrangements or by creating a JV between Bank and Telco/non-bank. In this model customer account relationship rests with the bankNon-bank-led model
The non-bank-led model is where a bank has a limited role in the day-to-day account management. Typically its role in this model is limited to safe-keeping of funds. Account management functions are conducted by a non-bank (e.g. telco) who has direct contact with individual customers.Account Information
- Mini-statements and checking of account history
- Alerts on account activity or passing of set thresholds
- Monitoring of term deposits
- Access to loan statements
- Access to card statements
- Mutual fundMutual fundA mutual fund is a professionally managed type of collective investment scheme that pools money from many investors to buy stocks, bonds, short-term money market instruments, and/or other securities.- Overview :...
s / equity statements - Insurance policy management
- Pension plan management
- Status on cheque, stop payment on cheque
- Ordering cheque books
- Balance checking in the account
- Recent transactions
- Due date of payment (functionality for stop, change and deleting of payments)
- PIN provision, Change of PIN and reminder over the Internet
- Blocking of (lost, stolen) cards
Payments, Deposits, Withdrawals, and Transfers
- Domestic and international fund transfers
- Micro-payment handling
- Mobile recharging
- Commercial payment processing
- Bill payment processing
- Peer to Peer payments
- Withdrawal at banking agentBanking agentA banking agent is a retail or postal outlet contracted by a financial institution or a mobile network operator to process clients’ transactions...
- Deposit at banking agentBanking agentA banking agent is a retail or postal outlet contracted by a financial institution or a mobile network operator to process clients’ transactions...
A specific sequence of SMS
Short message service
Short Message Service is a text messaging service component of phone, web, or mobile communication systems, using standardized communications protocols that allow the exchange of short text messages between fixed line or mobile phone devices...
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 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 merchant's account.
Investments
- Portfolio management services
- Real-time stock quotes
- Personalized alerts and notifications on security prices
Support
- Status of requests for credit, including mortgage approval, and insurance coverage
- Check (cheque) book and card requests
- Exchange of data messages and email, including complaint submission and tracking
- ATM Location
Content Services
- General information such as weather updates, news
- Loyalty-related offers
- Location-based serviceLocation-based serviceA Location-Based Service is an information or entertainment service, accessible with mobile devices through the mobile network and utilizing the ability to make use of the geographical position of the mobile device....
s
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.
Future functionalities in Mobile Banking
Based on the 'International Review of Business Research Papers' from World business Institute, Australia, following are the key functional trends possible in world of Mobile Banking.With the advent of technology and increasing use of smartphone and tablet based devices, the use of Mobile Banking functionality would enable customer connect across entire customer life cycle much comprehensively than before. With this scenario, current mobile banking objectives of say building relationships, reducing cost, achieving new revenue stream will transform to enable new objectives targeting higher level goals such as building brand of the banking organization. Emerging technology and functionalities would enable to create new ways of lead generation, prospecting as well as developing deep customer relationship and mobile banking world would achieve superior customer experience with bi-directional communications.
Illustration of objective based functionality enrichment In Mobile Banking
- Communication enrichment: - Video Interaction with agents, advisors.
- Pervasive Transactions capabilities: - Comprehensive “Mobile wallet”
- Customer Education: - “Test drive” for demos of banking services
- Connect with new customer segment: - Connect with Gen Y – Gen Z using games and social network ambushed to surrogate bank’s offerings
- Content monetization: - Micro level revenue themes such as music, e-book download
- Vertical positioning: - Positioning offerings over mobile banking specific industries
- Horizontal positioning: - Positioning offerings over mobile banking across all the industries
- Personalization of corporate banking services: - Personalization experience for multiple roles and hierarchies in corporate banking as against the vanilla based segment based enhancements in the current context.
- Build Brand: - Built the bank’s brand while enhancing the “Mobile real estate”.
Challenges for a Mobile Banking Solution
Key challenges in developing a sophisticated mobile banking application are :Handset operability
There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solution on any type of device. Some of these devices support Java ME and others support SIM Application ToolkitSIM Application Toolkit
SIM Application Toolkit is a standard of the GSM system which enables the Subscriber Identity Module to initiate actions which can be used for various value-added services....
, a WAP browser, or only SMS
SMS
SMS is a form of text messaging communication on phones and mobile phones. The terms SMS or sms may also refer to:- Computer hardware :...
.
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, 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.
On January 2009, Mobile Marketing Association
Mobile marketing association
The Mobile Marketing Association is a global non-profit trade association established to foster growth of mobile marketing. The MMA's stated goals are to clear obstacles to market development, establish mobile media [guidelines and best practices] for sustainable growth, and evangelize the use of...
(MMA) Banking Sub-Committee, chaired by CellTrust and VeriSign Inc., published the Mobile Banking Overview for financial institutions in which it discussed the advantages and disadvantages of Mobile Channel Platforms such as Short Message Services (SMS
SMS
SMS is a form of text messaging communication on phones and mobile phones. The terms SMS or sms may also refer to:- Computer hardware :...
), Mobile Web, Mobile Client Applications, SMS with Mobile Web and Secure SMS.
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 :
- 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.
- AuthenticationAuthenticationAuthentication is the act of confirming the truth of an attribute of a datum or entity...
of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions. - User ID / Password authenticationAuthenticationAuthentication is the act of confirming the truth of an attribute of a datum or entity...
of bank’s customer. - EncryptionEncryptionIn cryptography, encryption is the process of transforming information using an algorithm to make it unreadable to anyone except those possessing special knowledge, usually referred to as a key. The result of the process is encrypted information...
of the data being transmitted over the air. - EncryptionEncryptionIn cryptography, encryption is the process of transforming information using an algorithm to make it unreadable to anyone except those possessing special knowledge, usually referred to as a key. The result of the process is encrypted information...
of the data that will be stored in device for later / off-line analysis by the customer.
One-time password
One-time password
A one-time password is a password that is valid for only one login session or transaction. OTPs avoid a number of shortcomings that are associated with traditional passwords. The most important shortcoming that is addressed by OTPs is that, in contrast to static passwords, they are not vulnerable...
(OTPs) are the latest tool used by financial and banking service providers in the fight against cyber fraud. Instead of relying on traditional memorized passwords, OTPs are requested by consumers each time they want to perform transactions using the online or mobile banking interface. When the request is received the password is sent to the consumer’s phone via SMS. The password is expired once it has been used or once its scheduled life-cycle has expired.
Because of the concerns made explicit above, it is extremely important that SMS gateway providers can provide a decent quality of service for banks and financial institutions in regards to SMS
SMS
SMS is a form of text messaging communication on phones and mobile phones. The terms SMS or sms may also refer to:- Computer hardware :...
services. Therefore, the provision of service level agreements (SLAs) is a requirement for this industry; it is necessary to give the bank customer delivery guarantees of all messages, as well as measurements on the speed of delivery, throughput, etc. SLAs give the service parameters in which a messaging solution is guaranteed to perform.
Scalability & Reliability
Another challenge for the CIOChief information officer
Chief information officer , or information technology director, is a job title commonly given to the most senior executive in an enterprise responsible for the information technology and computer systems that support enterprise goals...
s and CTO
Chief technical officer
A chief technology officer is an executive-level position in a company or other entity whose occupant is focused on scientific and technological issues within an organization....
s 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 phenomenal growth in the use of Mobile Banking applications, with leading banks adopting Mobile Transaction Platform and the Central Bank
Reserve Bank of India
The Reserve Bank of India is the central banking institution of India and controls the monetary policy of the rupee as well as US$300.21 billion of currency reserves. The institution was established on 1 April 1935 during the British Raj in accordance with the provisions of the Reserve Bank of...
publishing 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 :- Preferred Language
- Date / Time format
- Amount format
- Default transactions
- Standard Beneficiary list
- Alerts
Mobile banking in the world
Mobile banking is used in many parts of the world with little or no infrastructure, especially remote and rural areas. This aspect of mobile commerceMobile Commerce
Mobile Commerce, also known as M-Commerce or mCommerce, is the ability to conduct commerce using a mobile device, such as a mobile phone, a Personal Digital Assistant , a smartphone, or other emerging mobile equipment such as dashtop mobile devices...
is also popular in countries where most of their population is unbanked
Unbanked
The unbanked are citizens of a country who do not have their own bank account. Along with the underbanked, they may rely on alternative financial services for their financial needs, where these are available.-The unbanked in the United States:...
. In most of these places, banks can only be found in big cities, and customers have to travel hundreds of miles to the nearest bank.
In Iran, banks such as Parsian
Parsian Bank
Parsian Bank is Iran's largest private bank, headquartered in Tehran, Iran. Founded in February, 2002 as a nongovernmental bank, Parsian Bank now has 174 branches across Iran, 104 of which are in Tehran. The bank entered the Tehran Stock Exchange in 2004...
, Tejarat
Tejarat Bank
Tejarat Bank is an Iranian Bank. Its name means Trade Bank.-History:Tejarat Bank was founded in 1979 by the integration of Bank Bazargani, five domestic commercial banks, and six previous multi-nationality banks which were active in international and domestic fields.-See also:*Banking and...
, Mellat, Saderat, Sepah, Edbi, and Bankmelli offer the service. Banco Industrial provides the service in Guatemala. Citizens of Mexico
Mexico
The United Mexican States , commonly known as Mexico , is a federal constitutional republic in North America. It is bordered on the north by the United States; on the south and west by the Pacific Ocean; on the southeast by Guatemala, Belize, and the Caribbean Sea; and on the east by the Gulf of...
can access mobile banking with Omnilife, Bancomer and MPower Venture.
Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
's Safaricom
Safaricom
Safaricom, Ltd is a leading mobile network operator in Kenya. It was formed in 1997 as a fully owned subsidiary of Telkom Kenya. In May 2000, Vodafone group Plc of the United Kingdom, the world's largest telecommunication company, acquired a 40% stake and management responsibility for the...
(part of the Vodafone Group) has the M-Pesa
M-Pesa
M-PESA is the product name of a mobile-phone based money transfer service for Safaricom, which is a Vodafone affiliate. It was initially developed by Sagentia before transitioning to IBM...
Service, which is mainly used to transfer limited amounts of money, but increasingly used to pay utility bills as well. In 2009, Zain
Zain
-People:*as a given name in general , orwith a first name of Zain*Zain Abbas , a Pakistan-born cricketer*Zain Amat , a Singaporean trapshooter*Zain Awan , an India-born Arab TV journalist...
launched their own mobile money transfer business, known as ZAP, in Kenya and other African countries. In Somalia
Somalia
Somalia , officially the Somali Republic and formerly known as the Somali Democratic Republic under Socialist rule, is a country located in the Horn of Africa. Since the outbreak of the Somali Civil War in 1991 there has been no central government control over most of the country's territory...
, the many telecom companies provide mobile banking, the most prominent being Hormuud Telecom
Hormuud Telecom
Hormuud Telecom Somalia Inc. is a privately held telecommunications company established in April 2002 in Somalia. It has its headquarters in Mogadishu.-Overview:More than 600 Somali investors have shares in Hormuud Telecom...
and its ZAAD service.
Telenor Pakistan has also launched a mobile banking solution, in coordination with Taameer Bank, under the label Easy Paisa, which was begun in Q4 2009. Eko India Financial Services
Eko India Financial Services
Eko India Financial Services Pvt. Ltd. is an Indian financial service company, which is a business correspondent service for State Bank of India and ICICI Bank, India's top two largest banks, and provides no-frills bank accounts and deposit, withdrawal and remittance services to customers ...
, the business correspondent of State Bank of India
State Bank of India
The State Bank of India is the largest Indian banking and financial services company with its headquarters in Mumbai, India. It is state-owned. The bank traces its ancestry to British India, through the Imperial Bank of India, to the founding in 1806 of the Bank of Calcutta, making it the oldest...
(SBI) and ICICI Bank
ICICI Bank
ICICI Bank Ltd. is India's second largest financial services company headquartered in Mumbai, India. It offers a wide range of banking products and financial services to corporate and retail customers through a variety of delivery channels and through its specialised subsidiaries in the areas of...
, provides bank accounts, deposit, withdrawal and remittance services, micro-insurance, and micro-finance facilities to its customers (nearly 80% of whom are migrants or the unbanked section of the population) through mobile banking.
In a year of 2010, mobile banking users soared over 100 percent in Kenya
Kenya
Kenya , officially known as the Republic of Kenya, is a country in East Africa that lies on the equator, with the Indian Ocean to its south-east...
, China
China
Chinese civilization may refer to:* China for more general discussion of the country.* Chinese culture* Greater China, the transnational community of ethnic Chinese.* History of China* Sinosphere, the area historically affected by Chinese culture...
, Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
and USA with 200 percent, 150 percent, 110 percent and 100 percent respectively.
Dutch-Bangla Bank (www.dutchbanglabank.com) launches the very first mobile banking service in Bangladesh on 31 March, 2011. This service is launched with ‘Agent’ and ‘Network’ support from mobile operators, Banglalink and Citycell. Sybase 365, a subsidiary of Sybase, Inc. has provided software solution. There are around 160 million people in Bangladesh, of which, only 13 per cent have bank accounts. With this solution, Dutch-Bangla Bank can now reach out to the rural and unbanked population, of which, 45 per cent are mobile phone users. Under the service, any mobile handset with subscription to any of the six existing mobile operators of Bangladesh would be able to utilize the service. Under the mobile banking services, bank-nominated ‘Agents’ perform banking activities on behalf of the banks, like opening mobile banking account, providing cash services (receipts and payments) and dealing with small credits. Cash withdrawal from a mobile account can also be done from an ATM validating each transaction by ‘mobile phone & PIN’ instead of ‘card & PIN’. Other services that are being delivered through mobile banking system are person-to-person (e.g. fund transfer), person-to-business (e.g. merchant payment, utility bill payment), business-to-person (e.g. salary/commission disbursement), government-to-person (disbursement of government allowance) transactions.