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  1. 1. 2009 International Association of Computer Science andConference Technology - Spring Conference 2009 IACSIT Spring Information Prospects of technological advancements in banking sector using Mobile Banking and position of India Mahesh .K. harma , Dr. Ritvik Dubey Senior Lecturer , Department of Computer Science , Amrapali Institute of Management , Haldwani (Uttarakhand)- India , sharmamkhld@gmail.com Senior Lecturer , Department of Management Studies , Amrapali Institute of Management , Haldwani –India Abstract The paper concludes with a discussion of the future for The internet and the mobile phone that two m-banking services. technological advancements that have profoundly Keywords mobile commerce, mobile banking, strategy, markets, affected all of us in the last decade now on boom . The technology acceptance, benefits, m-banking, m-power, products of this association are mobile data services. mobile communications Using a variety of platforms, services are being 1. Introduction created to enable mobile devices to perform many activities of the traditional internet, albeit in a reduced Information technology analyst firm, the Meta Group, recently reported that "financial institutions will not format for mobile devices. One area of activity is offer online , internet or core banking will become mobile banking (one of the first areas of commercial marginalized, a large sophisticated and highly competitive Internet Banking Market is developed transaction on the wireless internet). Banking is an now and banks should ready to face this new area that has extended in many different ways in challenges like : recent years, including telephone and online banking. · Demand side pressure due to increasing access to M-banking provides yet another channel for banking low cost electronic services. services, and in emerging markets, provides some · Emergence of open standards for banking functionality. possibility for becoming a primary channel. Mobile · Growing customer awareness and need of banking, a symbiosis of technology and financial transparency. · Close integration of bank services with web based E- services, is the hottest area of development in the commerce or even disintermediation of services banking sector and is expected to replace the through direct electronic payments (E- Cash). · More convenient international transactions due to the debit/credit card system ,online or netbanking in future fact that the Internet along with general deregulation . In the past two years, the number of people using trends, eliminate geographic boundaries. · Increased users of mobile phone all over the world , mobiles has increased three times, as compared to the so there is a new need of mobile banking . use of debit/credit card holders. And, 85 per cent -90 per cent of mobile users do not own credit cards , 1.1 Moving account using mobile banking There are 47 million mobile users, with 2 million Imagine being stuck in a traffic jam, unable to reach being added every month. Despite such potential for your bank and get details of the last three convenience and business opportunity, few people use transactions. Actually, you neednt worry. You can now bank on your mobile. Send an SMS to your mobiles even for simple banking queries. Present banks customer service number and within a few paper is focused on about mobile banking , its use and seconds get the details. All you need is a mobile phone and a PIN from your bank [2] . But theres applications in bank sector . The technology required more to mobile banking than making a query. You in mobile banking and some barriers like can go much beyond that like : Shop on your mobiles and pay through your interoperability, fraud and security will be discussed bank account from it," [Mpower of ABN also in this paper . This paper examines the strategic Amro ]. "The account that travels with you". With mobile implications of m-banking and the strategic banking facilities, one can bank from anywhere, at positioning of m-banking services in different markets. anytime and in any condition or anyhow. The system is either through SMS or through WAP.978-0-7695-3653-8/09 $25.00 © 2009 IEEE 291DOI 10.1109/IACSIT-SC.2009.13
  2. 2. Mobile Banking is the hottest area of development in In India, new generation private banks and foreignthe banking sector and is expected to replace the banks have been promoting Mobile banking . Whilecredit/debit card system in future. In past two years,mobile banking users has increased three times if we capitalizing on the fact that mobile phones are in greatcompare the use of either debit card or credit card. demand for being available as low as at Rs.1500 andMove over 85-90% mobile users do not own creditcards. affordable to majority of people, these banks use this1.2 Internet banking Vs Mobile banking channel to promote their retail banking activities.In case of Internet banking , online banking activity is Mobile banking is the provision of banking servicecarried out with the help of bank’s website and has which is provided through a mobile network andsimplified the transactions. A customer can know the accessed through a mobile phone ( No need ofbalance amount in his account; easily transfer funds PC/Internet ) . It allows a customer to do bankingfrom one account to another and even can make online transactions without making a call through the use ofpurchases while sitting in the comforts of his home. short message service facility. In fact, all the facilitiesInternet banking facility is no doubt a big leap in the which one would be enjoying through Internet bankingbanking sector, as the customer can conduct channel can be enjoyed now through mobile phone.transactions, like transferring of funds from one One can obtain necessary information related to hisaccount to another without the intervention of bank account like balance details, enquire check status,officials. share price, etc. through mobile phone bankingInternet banking needs personal computer or a laptop service. Not only this, a customer can also conductwith an Internet connection. Majority of people cannot transactions through this service, like transfer of fundsafford to have a PC or a laptop. As far as connectivity from one account to another, applying for obtaining ais concerned, the BSNL is the common Internet loan etc. Mobile banking service can also be beneficialService Provider (ISP) and it has been always at the for building personalized relationships between thereceiving end for poor quality of such services. With bank and its customers.connectivity problems, it is not an easy job to get 3. Mobile banking infrastructureconnected to a bank’s website and conduct e- Mobile banking uses the same infrastructure like thetransactions. It results in the wastage of time as well as ATM solution. But it is extremely easy andmoney for a customer here who takes a risk to bank on inexpensive to implement. It reduces the cost ofInternet banking. operation for bankers in comparison to the use ofLike in J&K and Uttarakhand state, this banking ATMs.channel is not so popular and acceptable to the people Using compact HTML and WAP technologies, thehere owing to many factors like poor connectivity, following operations can be conducted througherratic power supply, low income level of people of advanced mobile phones which can is further viewedthe state, etc. Since both the state are geographically in on channels such as the Internet via the Channela remote location, which has restricted the use of Manager.internet banking facility in the region, it is the mobile  Bill paymentsbanking which can revolutionize banker-customer  Fund transfersrelationship. And banking transactions done at the  Check balancesclick of a mobile phone button are affordable by all.  Any many more which is also available inEven as this concept is already in place, but the fact SMS Bankingremains that such channel of transactions is not being In countries like Korea, two SIM Card is usedpromoted and people are not aware of this kind of in mobile phones. One for the telephonicfacility. purpose and the other for banking. Bank2. Prospects of mobile banking for Indian account data is encrypted on a smart-cardbanks 292
  3. 3. chip. About 3.3 million transactions were Mobile Banking is one of the popular Mobile servicesreported by Bank of Korea in 2004 . that are utilized by Indians. While 47.7% of Indian4. Mobile banking in India cellphone users are aware of mobile banking services,ICICI Bank has introduced iMobile, a mobileapplication that allows customers to use it in a manner only 7.4% of them actually use the facilities. The levelsimilar to the Internet banking transactions, including of awareness was highest in Delhi (72.8%), followedtransferring funds to ICICI and non ICICI Bank by 65% in Chennai and 63.4% in Chandigarh.accounts, pay utility bills and apply for insurancepremiums. The facility is being offered free of charge, Cellphone users in Ahmedabad, Hyderabad and Puneand covers Savings accounts, Demat, Credit Card and were the least aware, with awareness levels of 3.4%,Loan accounts. This is a significant move, coming 11% and 18.5%, respectively. Also, while none of thefrom India’s largest private sector bank (and secondlargest, overall, after State Bank of India). ET adds respondents reported using the facility in Ahmedabadthat 22 percent of the bank’s transactions last year and Hyderabad, Pune showed a much higher usagewere via the Internet, up from 2 percent five years ago. trend—5.3%. Interestingly, despite a #3 position inThe application can be downloaded by SMS.According to a survey done by Sybase 365 ,a mobile terms of awareness, Chandigarh was much below intechnology Company, out of the total Indian mobile the usage table, with a hit ratio of only 0.6%. Have aphone customers surveyed, 81% are aware of mobile look on given table :banking for checking their account balances and 49%said they had used it. Are you aware of mobile banking and do you use it? All Delhi Bangalore Kolkata Mumbai Chennai Ahmedabad Trivandrum Hyderabad Pune ChandigarhAware? 48 73 45 58 36 65 3 58 11 19 63Use? 7 12 15 8 3 13 0 4 0 5 1All figures in percentage Source: Voice & DataSample Size: 754 mobile phone subscribers across 10 cities Table 1Followings are the outcome of a survey done byDataquest on Mobile banking awareness in India : Have you heard about mobile banking? Base: 360 IT industry and corporate usersWhich option would you prefer—Mobile or of mobile phones and banks offering M-bankingonline BankingBase: 360 IT industry and corporate users of mobilephones and banks offering M-banking 293
  4. 4. to adopt an innovation. Following resistance can measured with five barriers namely usage barrier, value barrier, risk barrier, tradition barrier and image barrier. An Internet survey done on 1,540 responses from the non-users of mobile banking ,the results of the cluster analysis showed that different bank customers do indeed have different reasons for resisting mobile banking. The results indicate thatWould you like to use mobile banking services? older and less educated people and those who areBase: 265 respondents not aware of m-bankingservices Source: entrepreneurs, farmers or retired are significantly more opposed to banking innovations than the other5. Regulations members of a social system. Moreover, youngerConcerned over the safety of transaction through people who are working in a good, well-paidcellular phones, the Reserve Bank proposed to come profession do not perceive mobile banking to be asout with a regulatory and oversight framework for risky as do other online customers.mobile banking. Stating that the use of mobile Anxiety about sharing personal data is the biggestcommunication for banking transaction would assume barrier to consumer acceptance of mobile banking and commerce , Additional barriers togreater importance in future, the RBIs draft Financial adoption of mobile banking can be :Sector Technology vision 2008-10 document said,  More exposure to fraud and financial scams ."efforts would be channelised to provide for standards  Worry about losing a device containingfor such systems and suitable regulatory/oversightframework." The draft vision document on which RBI valuable informationhas invited public comment within one month, further  Concern about costs :said large scale spread of mobile telephony has opened o Some are “extremely concerned”up new vistas for banking in the form of mobilebanking and the potential in this new sphere is about the current cost of non-enormous. commercial transactions (e.g.,The electronic funds transfers are only slowly gaining sending an SMS, MMS, viewing aground and acceptance of electronic processing modesis yet to make great in roads even in the government web page of banks ).and mobile banking will help to fasten this . o Some are “very concerned” about6. Barriers such costs.But there are bigger barriers. Interoperability, fraud The issue of security is the most important factor thatand security are other major concerns. To secureinteroperability and enhanced usability, versatile chips motivated bank consumer adoption of online banking.are a must, which can connect several banks and Main barriers to online banking were the perception ofcarriers simultaneously. Mobile banking might take risks, computer and technological skills andoff in India if banks initially offer some services forfree. traditional cash-carry banking culture in India . TheToday mobile communications technologies offer vast barriers to mobile banking adoption were lack ofadditional value for consumers banking transactions awareness and understanding of the benefits provideddue to their always-on functionality and the option tobank virtually any time and anywhere. However, by mobile banking.before being adopted, all innovations face varioustypes of resistance that may paralyse customers desire 294
  5. 5. 7. Conclusion http://www.bankofengland.co.uk/publications/quarterl ybulletin/qb030403.pdfMobile banking is a tool that allows anywhere [2]Atkins, W “Will mobile get moving?” The Banker,banking. Mobile banking facility allows a customer to 4 November 2004, available on www.thebanker.comuse his mobile phone for carrying out banking [3] Claessens, S, Glaessner and Klingebiel et al (2003)transactions while traveling, during duty hours, at “Electronic Finance: reshaping the financial landscape around the world” World Bank, available onhome, during parties etc. Since mobile phones are http://www.worldbank.org/research/interest/confs/upccheaper than a PC or a laptop and affordable to oming/papersjuly11/E-finance.pdf [4]CPSS (2004) Survey of e-money and internet andmajority of the people irrespective of their financial mobile payments, BIS, available onposition, this mode of banking channel can prove more www.bis.orgeffective for a bank in state like Uttarakhand and J&K [5]Cracknell, D (2004) “E-Banking for the Poor:to reach out to its customers. During the last three Panacea, Potential and Pitfalls”, available via www.microsave.orgyears, the popularity of mobile phones in India is [6]Gray, V (2005) “Evaluating the Cost of the handsetgrowing at a tremendous pace and the banks can take and mobile telephony as a barrier to uptake”, Presentation 6 December 2005, available fromadvantage by using this mode of selling their products http://www.itu.int/ITUD/ict/papers/2005/ITU_Gray_Fand services and at the same time make more and INAL_web.ppt [7] Gray, V (2005) “The un-wired continent: Africa’smore customers to conduct transactions electronically mobile success story”, available fromwithout coming to the bank branch. This will be a win- http://www.itu.int/ITU-D/ict/papers/index.html [8]Lyman, T, G Ivatury and S Staschen (2006) “Thewin situation for banks as well as the customers. Use of Agents in Branchless Distribution forPrecisely, in this era of high competition where the Poor”, CGAP Occasional Paper, forthcoming [9] Millard, S & V. Saporta (2005) “Central Bank andretention of customers is a huge task for the banks, payment systems: Past, present, future”,this mode of innovative channel for conducting Background Paper to Bank of England Conference on Future of Payments May 2005banking transactions would also act as a marketingtool for the banks to promote their products andservices.However, we have seen that the use of mobile phonefor banking transactions in India has been limitedamong the customers. This has been due to thecomplexities arising in understanding the procedure.So, it is the responsibility of banks in promoting thisservice through education and awareness among thepeople where its ease of use and security ishighlighted. Besides, they have to simplify theprocedures for using this mode of e-banking and makeit more user-friendly for its adoption in large numbers.There is a huge opportunity for banks to bring themiddle and the lower middle class segment ofcustomers under the ambit of mobile banking. Thebanks can drastically cut down their transaction costby offering mobile banking facility to its customersand at the same time strengthen their relationship withcustomers.References[1]Allen, H (2003) “Innovations in retail payments: e-payments”, Bank of England QuarterlyBulletin, Winter, available on 295