The document discusses the prospects of mobile banking in India. It provides an overview of mobile banking, how it differs from internet banking, and its current state and potential in India. Some key points: - Mobile banking allows customers to conduct banking transactions through their mobile phones instead of needing a computer or internet access. - It has grown significantly in India in recent years, though awareness and adoption rates still vary widely across regions. - Major private and foreign banks have begun promoting mobile banking services, seeing opportunities due to India's large mobile phone user base. - While regulations and concerns around security, interoperability and fraud present barriers, mobile banking has potential to expand access to banking for many underserved populations

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 needn't worry. You can
now 'bank' on your mobile. Send an SMS to your
mobiles even for simple banking queries. Present bank's 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 there's
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 291
DOI 10.1109/IACSIT-SC.2009.13

2. Mobile Banking is the hottest area of development in In India, new generation private banks and foreign
the banking sector and is expected to replace the
banks have been promoting Mobile banking . While
credit/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 great
compare the use of either debit card or credit card.
demand for being available as low as at Rs.1500 and
Move over 85-90% mobile users do not own credit
cards. affordable to majority of people, these banks use this
1.2 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 service
carried out with the help of bank’s website and has which is provided through a mobile network and
simplified the transactions. A customer can know the accessed through a mobile phone ( No need of
balance amount in his account; easily transfer funds PC/Internet ) . It allows a customer to do banking
from one account to another and even can make online transactions without making a call through the use of
purchases while sitting in the comforts of his home. short message service facility. In fact, all the facilities
Internet banking facility is no doubt a big leap in the which one would be enjoying through Internet banking
banking 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 his
account to another without the intervention of bank account like balance details, enquire check status,
officials. share price, etc. through mobile phone banking
Internet banking needs personal computer or a laptop service. Not only this, a customer can also conduct
with an Internet connection. Majority of people cannot transactions through this service, like transfer of funds
afford to have a PC or a laptop. As far as connectivity from one account to another, applying for obtaining a
is concerned, the BSNL is the common Internet loan etc. Mobile banking service can also be beneficial
Service Provider (ISP) and it has been always at the for building personalized relationships between the
receiving 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 infrastructure
connected to a bank’s website and conduct e-
Mobile banking uses the same infrastructure like the
transactions. It results in the wastage of time as well as
ATM solution. But it is extremely easy and
money for a customer here who takes a risk to bank on
inexpensive to implement. It reduces the cost of
Internet banking.
operation for bankers in comparison to the use of
Like 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, the
here owing to many factors like poor connectivity,
following operations can be conducted through
erratic power supply, low income level of people of
advanced mobile phones which can is further viewed
the state, etc. Since both the state are geographically in
on channels such as the Internet via the Channel
a remote location, which has restricted the use of
Manager.
internet banking facility in the region, it is the mobile
 Bill payments
banking which can revolutionize banker-customer
 Fund transfers
relationship. And banking transactions done at the
 Check balances
click of a mobile phone button are affordable by all.
 Any many more which is also available in
Even as this concept is already in place, but the fact
SMS Banking
remains that such channel of transactions is not being
In countries like Korea, two SIM Card is used
promoted and people are not aware of this kind of
in mobile phones. One for the telephonic
facility.
purpose and the other for banking. Bank
2. Prospects of mobile banking for Indian
account data is encrypted on a smart-card
banks
292

3. chip. About 3.3 million transactions were Mobile Banking is one of the popular Mobile services
reported by Bank of Korea in 2004 .
that are utilized by Indians. While 47.7% of Indian
4. Mobile banking in India
cellphone users are aware of mobile banking services,
ICICI Bank has introduced iMobile, a mobile
application that allows customers to use it in a manner only 7.4% of them actually use the facilities. The level
similar to the Internet banking transactions, including of awareness was highest in Delhi (72.8%), followed
transferring funds to ICICI and non ICICI Bank
by 65% in Chennai and 63.4% in Chandigarh.
accounts, pay utility bills and apply for insurance
premiums. The facility is being offered free of charge, Cellphone users in Ahmedabad, Hyderabad and Pune
and 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 the
from India’s largest private sector bank (and second
largest, overall, after State Bank of India). ET adds respondents reported using the facility in Ahmedabad
that 22 percent of the bank’s transactions last year and Hyderabad, Pune showed a much higher usage
were via the Internet, up from 2 percent five years ago.
trend—5.3%. Interestingly, despite a #3 position in
The application can be downloaded by SMS.
According to a survey done by Sybase 365 ,a mobile terms of awareness, Chandigarh was much below in
technology Company, out of the total Indian mobile the usage table, with a hit ratio of only 0.6%. Have a
phone 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 Chandigarh
Aware? 48 73 45 58 36 65 3 58 11 19 63
Use? 7 12 15 8 3 13 0 4 0 5 1
All figures in percentage Source: Voice & Data
Sample Size: 754 mobile phone subscribers across 10 cities
Table 1
Followings are the outcome of a survey done by
Dataquest on Mobile banking awareness in India :
Have you heard about mobile banking?
Base: 360 IT industry and corporate users
Which option would you prefer—Mobile or of mobile phones and banks offering M-banking
online Banking
Base: 360 IT industry and corporate users of mobile
phones and banks offering M-banking
293

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 that
Would you like to use mobile banking services? older and less educated people and those who are
Base: 265 respondents not aware of m-banking
services Source: entrepreneurs, farmers or retired are significantly more
opposed to banking innovations than the other
5. Regulations
members of a social system. Moreover, younger
Concerned over the safety of transaction through
people who are working in a good, well-paid
cellular phones, the Reserve Bank proposed to come
profession do not perceive mobile banking to be as
out 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 biggest
communication for banking transaction would assume barrier to consumer acceptance of mobile
banking and commerce , Additional barriers to
greater importance in future, the RBI's 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 containing
for such systems and suitable regulatory/oversight
framework." The draft vision document on which RBI valuable information
has 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 mobile
banking 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 a
ground and acceptance of electronic processing modes
is 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” about
6. Barriers
such costs.
But there are bigger barriers. Interoperability, fraud
The issue of security is the most important factor that
and security are other major concerns. To secure
interoperability 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 of
carriers simultaneously. Mobile banking might take
risks, computer and technological skills and
off in India if banks initially offer some services for
free. traditional cash-carry banking culture in India . The
Today mobile communications technologies offer vast barriers to mobile banking adoption were lack of
additional value for consumers' banking transactions
awareness and understanding of the benefits provided
due to their always-on functionality and the option to
bank virtually any time and anywhere. However, by mobile banking.
before being adopted, all innovations face various
types of resistance that may paralyse customers' desire
294

5. 7. Conclusion http://www.bankofengland.co.uk/publications/quarterl
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banking transactions would also act as a marketing
tool for the banks to promote their products and
services.
However, we have seen that the use of mobile phone
for banking transactions in India has been limited
among the customers. This has been due to the
complexities arising in understanding the procedure.
So, it is the responsibility of banks in promoting this
service through education and awareness among the
people where its ease of use and security is
highlighted. Besides, they have to simplify the
procedures for using this mode of e-banking and make
it more user-friendly for its adoption in large numbers.
There is a huge opportunity for banks to bring the
middle and the lower middle class segment of
customers under the ambit of mobile banking. The
banks can drastically cut down their transaction cost
by offering mobile banking facility to its customers
and at the same time strengthen their relationship with
customers.
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