Mobile Banking refers to the 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. Mobile banking is usually available on a 24-hour basis. Some financial institutions have restrictions on which accounts may be retrieved through mobile banking, as well as a limit on the amount that can be transacted. Mobile banking is dependent on the availability of an internet or data connection to the mobile device.Mobile banking before 2010 was most often performed via SMS.
Mobile banking does not handle transactions involving cash, and a customer needs to visit an ATM or bank branch for cash withdrawals or deposits. Many apps now have a distant deposit option; using the device’s camera to digitally transmit cheques to their financial institution. From the bank’s point of view, mobile banking reduces the cost of handling transactions by reducing the need for customers to visit a bank branch for non-cash withdrawal and deposit transactions.
Unlike the related internet banking it uses software, usually called an app, provided by the financial institution for the purpose. However, the use of telephone banking services has been declining in favour of internet banking since internet banking became available in the early 2000s, and further eroded with the advent of mobile banking in the 2010s.
Mobile banking and internet banking are very different. Although the purpose of both the facilities is same, the functionality differs. Mobile banking can be operated from any mobile, even the most basic one (through SMS). In smartphones mobile banking can be operated through GPRS and/or sms. Fund transferred (NEFT) through mobile banking takes less time (as you do not have to register the beneficiary). But it can be operated only through a registered mobile (mobile number registered with the bank).
Initially,in early 2000,banks offered phone banking which enabled the customer to carry out certain transactions using his/her phone (landline and non-smart mobile phone).Basic services, balance enquiry, request for cheque books, payment of utility bills,etc., were offered through the tele-banking services. However with the advent of CBS (core banking system), things have changed and the banks offered net banking services.
Once the computer telephony integration (CTI) technology improved manifold, the banking services shifted into the PDAs; now it is called mobile banking and is carried out through the apps offered by the banks. These interface apps use the mobile phone network to communicate with the bank servers.It enables all the major services normally requested by the customers.This enabled the customers to avail of banking services while on the move.Thus telebanking was the precursor to convenience banking, followed by the net banking (it extended the banking hours beyond normal working hours of the banks) and then came the mobile banking, which offered banking services on the move.
Challenges
- Handset accessibility: There is a large number of different mobile phone devices and it is a big challenge for banks to offer a mobile banking solution on any and every type of device. Some of these devices support Java ME and others support SIM Application Toolkit, a WAP browser, or only SMS.
- Security: As with most internet-connected devices, mobile-telephony also is increasingly vulnerable to cybercrime.
- Scalability and reliability: Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base.
- Application distribution: Due to the nature of the connectivity between the 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.
- User adaptation: Studies have shown that a factor of great concern about mobile banking becoming more widely used, is a banking customer’s unwillingness to adapt.
- Personalization: It would be expected that the mobile application support personalisation such as preferred language, amount format, default transactions, standard beneficiary list, alerts.