Mobile banking (also known as M-Banking, 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 (2007) is most often performed via SMS or the Mobile Internet but can also use special programs, called clients, downloaded to the mobile device.

Trends in mobile banking

The advent of the Internet 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.[citation needed]

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[when?] exceeds 2.5 billion (of which more than 2 billion are GSM).[citation needed]

With mobile technology, banks can offer services to their customers such as doing funds transfer while travelling, receiving online updates of stock price or even performing stock trading while being stuck in traffic. Smartphones and 3G connectivity provide some capabilities that older text message-only phones do not.

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 payments” will make up 10% of the contactless market by 2010.[2] 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.[3]

Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phones. In Asian countries like India, China, Bangladesh, Indonesia and Philippines, where mobile infrastructure is comparatively better than the fixed-

line infrastructure, and in European 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 agents, 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.

[edit] 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.

Mobile Banking Services

Mobile banking can offer services such as the following:

[edit] Account Information

1. Mini-statements and checking of account history

2. Alerts on account activity or passing of set thresholds3. Monitoring of term deposits4. Access to loan statements5. Access to card statements6. Mutual funds / equity statements7. Insurance policy management8. Pension plan management9. Status on cheque, stop payment on cheque10.Ordering check books11.Balance checking in the account12.Recent transactions13.Due date of payment (functionality for stop, change and deleting of

payments)14.PIN provision, Change of PIN and reminder over the Internet15.Blocking of (lost, stolen) cards

[edit] Payments, Deposits, Withdrawals, and Transfers

1. Domestic and international fund transfers2. Micro-payment handling3. Mobile recharging4. Commercial payment processing5. Bill payment processing6. Peer to Peer payments7. Withdrawal at banking agent8. Deposit at banking agent

Especially for clients in remote locations, it will be important to help them deposit and withdraw funds at banking agents, i.e., retail and postal outlets that turn cash into electronic funds and vice versa. The feasibility of such banking agents depends on local regulation which enables retail outlets to take deposits or not.

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.

[edit] Investments

1. Portfolio management services2. Real-time stock quotes3. Personalized alerts and notifications on security prices4. mobile banking

[edit] Support

1. Status of requests for credit, including mortgage approval, and insurance coverage

2. Check (cheque) book and card requests3. Exchange of data messages and email, including complaint submission and

tracking4. ATM Location

[edit] Content Services

1. General information such as weather updates, news2. Loyalty-related offers3. Location-based services

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.

Challenges for a Mobile Banking Solution

Key challenges in developing a sophisticated mobile banking application are :

[edit] 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 Toolkit, 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.

[edit] 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 :

1. 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.

2. 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.

3. Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions.

4. User ID / Password authentication of bank’s customer.5. Encryption of the data being transmitted over the air.6. Encryption of the data that will be stored in device for later / off-line

analysis by the customer.

[edit] Scalability & 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. 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.

[edit] 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.

[edit] Personalization

It would be expected from the mobile application to support personalization such as :

1. Preferred Language2. Date / Time format3. Amount format4. Default transactions5. Standard Beneficiary list6. Alerts

[edit] 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 bank

[edit] Non-bank-led model

The non-bank-led model is where a bank does not come into the picture (except possibly as a safe-keeper of surplus funds) and the non-bank (e.g. telco) performs all the functions.

Mobile banking: A boon

THE ADVENT of Internet has revolutionised the financial services industry, empowering organisations with new business models and alternatives to offer 24x7 accessibility to their customers. Online financial transactions have also created new players in the financial services industry, such as online banks, online brokers and wealth managers who offer personalised services. People are mobile-savvy and are always ready to try out advanced handsets and services. Mobile banking also saves time and effort.

According to a business standard survey, one out of every three persons was ready to change his/her banks to avail free mobile banking services. Around 50 per cent of the people who were surveyed used cell phones to check their bank balance. Awareness of mobile banking is also high in India. Although such players still account for a tiny percentage of the industry, it is the latest in customer

convenience in banking - to access and operate your bank account from anywhere from your cell phone. This is available on advance technology phones. One can access bank account through SMS or scripting languages like XML, HTML, SOAP and WAP. Mobile banking and ATMs use the same infrastructure.

In the recent past, banks across the globe have invested billions of dollars to build sophisticated Internet banking capabilities. As the trend is shifting to mobile banking, there is a challenge for chief information officers (CIOs) and chief technical officers (CTOs) of these banks to decide on how to leverage their investment in Internet banking and offer mobile banking, in the shortest possible time. According to financial consultancy Celent study, 35 per cent of online banking households will be using mobile banking by 2010, up from less than one per cent today. Upwards of 70 per cent 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 payments" will make up 10 per cent of the contactless market by 2010.

Mobile banking or M-banking, mbanking, SMS banking etc are terms 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 programmes called clients downloaded to the mobile device. The mobile acts as a branch of the bank by storing a database of customers. It also has a smartcard, which biometrically stores the identity of the customer such as name, address, photograph, fingerprint templates and relevant details of the savings or loan accounts held by the issuing bank. Acadamically, mobile banking is defined as: "A 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."

Apparantly, mobile banking can be said to consist of three inter-related concepts: mobile accounting; mobile brokerage and mobile financial information services.

Most services in the categories designated accounting and brokerage are transaction-based. The non-transaction-based services of an informal nature are however essential for conducting transactions - for instance, balance enquiries 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.

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 exceeds 2.5 billion, of which more than two billion are GSM. This part of the mobile commerce is very popular in countries where most of their population is unbanked. Countries like Sudan, Ghana and South Africa received this new commerce quite well. In Latin American countries like Uruguay, Paraguay, Argentina, Brazil, Venezuela, Colombia, Guatemala and recently, Mexico it started with a huge success. In Colombia it was released with Redeban. Guatemala has the support of Banco industrial. Mexico released mobile commerce with Omnilife, Bancomer and a private company (MPower Ventures).

The mobile phone culture is growing and has penetrated the urban and semi-urban population in India. The number of mobile users is estimated to have far surpassed the number of Internet users. Recently, in India there has been a phenominal growth in the use of mobile banking applications with leading banks adopting mobile transaction platform and the Central Bank (RBI ) publishing guidelines for mobile banking operations.

Two important yet quite unrelated events in the evolution of mobile payments in India occurred in 2008. Firstly, the new credit policy of the RBI came along with guidelines for facilitating mobile payments. Secondly, according to Dr Raghu Raghuraman's CSFR report mobile banking is the most promising front end technology for broadening the access of finance in the country. Taken together are defining moments in the recognition of mobile now as an accepted channel

for banking and commerce and clearing the way for its rapid and mass deployment across the country by the financial sector. Technology related regulation can never keep pace with the fast paced nature of technological innovations and progress, nor fully define it. Regulation here has to have a light touch, so as not to throttle innovation, yet which serves public interest.

In the same order, mobile banking is getting wider acceptance, but the convenience it offers has its own share of risk. It is therefore even more important to be aware of the safeguards for the secure usage of this medium for financial transactions. Thousands of people from rural areas across Indian states are likely to get their social security pension and wages paid under the National Rural Employment Guarantee Act (NREGA) scheme with the help of mobiles in the near future.

Mobile banking pilots and full-scale operations are being conducted across different states of Indian Union and the entire ecosystem is being managed by the government with the help of the Reserve Bank of India, banks, leading telecom operators and technology implementation partners. The ecosystem is important since banking regulations in India currently do not allow cash for exchange of another 'unit' such as 'airtime' in the case of mobiles. Only banks and the indian post (through money orders) are currently allowed such transfers.

The country's financial regulatory body, Reserve Bank of India has relaxed the norms for mobile banking by raising the caps on fund transfers as well as mobile-based payments. Continuing with its earlier announced draft guidelines for mobile banking services in India, RBI has increased fund-transfer limit from Rs 2,500 a day to Rs 5,000 a day. The regulator has also provided a cap of Rs 10,000 for purchases through mobile. The move was made after requests from banks to raise the limits for mobile banking transactions. According to RBI, banks should ensure mobile banking services to customers of all network operators. Long term goal of mobile banking is to enable funds transfer from account in one bank to any other account in the same or other bank in real time. The Central Bank is also planning to relax the registration procedure for mobile banking on a case-to-case

basis, when banks apply for their licenses. Presently, banks are required to get a form signed by all their customers.

These guidelines definitely provide the vision of our regulator in terms of ensuring a secure payments environment. The specific focus on security is very welcome and the changes made to the transaction limits moving towards only daily limits will allow more flexibility to the customers for their payments as well as the banks for defining their risk parameters. An Rs 10000 limit for purchase of goods/services covers most of the basic transactions except purchase of electronic/ high end luxury goods, or air ticketing. However, it is hoped that this would be relaxed to a certain degree at some later stage once the confidence is gathered in the system to bring in all commerce into the mobile payments net.

Mobile-payment firms are expecting a further relaxation of norms after the successful roll-out of mbanking products. Industry players have been positive about the changes and expect mobile banking to become more practical and broader in its scope. The increase in limits is a significant change, which shows RBI's intention of making the medium a universally acceptable payment tool. Further, the relaxation in the registration process is a positive step since one needs to keep the customers' convenience in mind for new initiatives like these.

Mobile banking, which is catching up fast in the cities and hinterland, is not only helping the government to take a step forward towards fulfilling its aim of having one bank account for every household, but also saving crores of rupees by way of reduced transaction costs. The government incurs a transaction cost of Rs 12 to 13 for every Rs 100 it shells out, mobile banking helps to reduce the cost to a mere Rs 2. RBI estimates that around 40 per cent of Indians lack access to formal financial services and is largely 'unbanked'.

History of mobile banking..

The first mobile banking and payment initiatives was announced during 1999 (the same year that Fundamo deployed their first prototype). The first major deployment was made by a company called Paybox (largely supported financially

by Deutsche Bank). The company was founded by two young German’s (Mathias Entemann and Eckart Ortwein) and successfully deployed the solution in Germany, Austria, Sweden, Spain and the UK. At about 2003 more than a million people were registered on Paybox and the company were rated by Gartner as the leader in the field. Unfortunately Deutsche Bank withdraw their financial support and the company had to reorganise quickly. All but the operations in Austria closed down.Another early starter and also identified as a leader in the field was a Spanish initiative (backed by BBVA and Telephonica), called Mobi Pago. The name was later changed to Mobi Pay and all banks and mobile operators in Spain were invited to join. The product was launched in 2003 and many retailers were acquired to accept the special USSD payment confirmation. Because of the complex shareholding and the constant political challenges of the different owners, the product never fulfilled the promise that it had. With no marketing support and no compelling reason for adoption, this initiative is floundering at the moment.Many other large players announced initiatives and ran pilots with big fanfare, but never showed traction and all initiatives were ultimately discontinued. Some of the early examples are the famous vending machines at the Helsinki airport supported by a system from Nokia. Siemens made announcements in conjunction with listed and high-flying German e-commerce company, Brokat. Brokat also won the lucrative Vodafone contract in 2002, but crashed soon afterwards when it run out of funds.Israel (as can be expected) produced a large number of mobile payment start-ups. Of the many, only one survived – Trivnet. Others like Adamtech (with a technically sound solution called Cellpay) and Paytt disappeared after a number of pilots but without any successful production deployments.Initiatives in Norway, Sweden and France never got traction. France Telecom launched an ambitious product based on a special mobile phone with an integrated card reader. The solution worked well, but never became popular because of the unattractive, special phone that participants needed in order to perform these payments.Since 2004, mobile banking and payment industry has come of age. Successful

deployments with positive business cases and big strategic impact have been seen recently.

Mobile Banking Risks..

Many banks now offer you the option to perform various banking transactions on your cell phone; this is called mobile banking. You can check balances and receive updates when your funds are low. The number of mobile banking users is projected to grow to over 40 million by 2012, according to the research firm Tower Group. But with convenience sometimes comes risk. There are a number of vulnerabilities that may be involved when you use your phone to process bank transactions.

No Anti-Virus Programs

Many mobile phones are like mini-computers, yet they do not have the same capability as regular computers to host anti-virus and anti-spyware programs. The phone will not be able to recognize a situation where your device's files and programs have been compromised by malware. So when you perform banking activities on your mobile phone frequently, you could be leaving yourself vulnerable to spying.

Text Message Security

Some mobile banking services text you updates regarding your account. These text messages are not encrypted, so any third party, including strangers and the people around you, can read them. If you leave your phone unattended or lose it, someone can easily access information about your account by reading your message inbox. However, one way to prevent this problem it to set a password on your phone so that you are the only person who can view your text messages. You can also delete the messages as soon as you finish reading them.

Hard to Prove Fraud

If your phone falls into the wrong hands and someone is able to process transactions using the device, there is no telling what your bank will do. It could be difficult to prove that you were not the person who performed the

action on your phone. Because mobile banking is a relatively new service, some banks do not yet have clear procedures to address this potential problem.

Advantage of mobile banking..

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 $2.36 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 relevance importance and future of P2P payment.

Pretty much any payment if you analyse it in the end is a person to person (P2P) payment. We have grown used to the majority of these payments happening in cash. "Oh, by the way, here is the $10 that I owe you..." This is way that we have paid each other for centuries and we will have difficulty changing. Today, a small percentage of these payments do happen by means of other mechanisms (cheque payments, on-line electronic transfers, etc.). But the majority still is executed by means of cash transactions.

Of course, this is because cash has a number of characteristics that ensures that this work so well:

Cash is immediate (As soon as I got paid the money, I can use it again). Cash is irreversable (If I have the money, nobody can reverse the

transaction without my consent and or knowledge) Cash transactions are cheap (to the consumer, but not to the eco-system) Cash does not require a name (KYC) attached to it.

In a recent study performed by eCom Advisers (Read here), almost half of the respondents in the survey indicated that they would want to have an electronic mechanism to replace cash and checks as a person to person payment mechanism. Why is this the case?

Cash is pretty inconvenient in many ways It is impossible to do P2P payments in realtime and over a distance Electronic payments can be more secure, more predictable and actually at a

lower cost (for the eco-system) than cash.

With the advances in mobile payments, the deployment of suitable infrastructure and (most important) education, it is highly likely that cash will start to be replaced as the P2P payment tool of choice. This may not take too long to happen.

Mobile banking is changing bank customer behaviour

It is now accepted as being a reality for banking: mobile will be a part of the future of how banking will be delivered to consumers. As was the case with ATM's, it is highly likely that consumer's behaviour related to their interaction with banks will change, as mobile banking usage picks up. Something else that we can have fun with speculating...

Based on prelimanry research and other evidence, it does seem as if the growth of mobile banking leads to a reduction in visits by customers to branches and a reduction of calls to contact centres. This is of course good news as this will directly lead to a reduction in cost. Some observations also seem to suggest that consumers do more transactions now. It is as if the ease with which mobile banking allows consumers to do transactions, stimulate them to do more. But what are some of the other changes that we could also expect?

Consumers will be more aware of their money (or the lack of it). I believe that consumers will become more educated about spending and saving money. People will budget better and become more savvy to manage and use their money.

More sophisticated mechanisms to stimulate impulse buying will become prevalent. This will change spending patterns and the effectiveness of alternative sales and marketing approaches.

As mobile banking systems become more mainstream, more advanced applications will be developed (making use of cellular characteristics like location based services for instance). This will lead to opportunities where new social and entertainment behaviour patterns will be triggered.

Mobile banking will change the competitor profile regarding banks and also non-banks starting to offer financial services. This will mean that customers will start buying their banking products somewhere else (than traditional banks) and even expect it to be bundled with other products.

Implications of the Cybersource acquisition for mobile banking

Visa announce last month that they would be acquiring Cybersource for cash. (Read here). The move to acquire this company is clearly an effort to extend the security of VISA payments. Cybersource provides merchant functionality to almost three hundred thousand companies and owns intellectual property that reduce fraud in card payment transactions in the on-line world. During the briefing session, it was reported that Gerry Sweeney (Visa's head of global e-commerce and authentication) said that mobile is clearly a growing and important channel for them. Why did he say that?

Also in another article, Michael Walsh, president and CEO of CyberSource is quoted as saying: “... the platform is built in such a way that adding new mobile capabilities would be fairly seamless “ (Read here). It seems clear that there has been some discussion about the mobile banking implications of this acquisition. Seeing that it is not spelled out what it means, it offers a great opportunity to speculate. This is a few of the scenarios that I could think of:

Visa offers a hosted mobile banking solution to issuing banks in a similar way that they offer alert services today.

Cybersource is in the process of developing a mobile based, secure authorisation mechanism that will allow card not present transactions to be

secured by means of a phone. Alternatively, VISA is considering standardising on some dual authorisation mechanism that will be licensed to vendors (Cybersource being the first one).

VISA and Cybersource is working on a "hub" that will sit between mobile and clearing systems. If a bank connects to this "hub" mobile banking transactions will receive priority and value added services (security enhancements)

Some of the features of new NFC phones will be supported by VISA switches.

Identity theft and the opening of mobile banking accounts

This blog entry was triggered by a research report produced by Javelin on financial fraud in the US (read here). What caught my eye was that a measurable number of fraudulent transactions could be attributed to opening fraudulent mobile banking accounts.

I suppose this is a new hole where a fraudster can use a phone to connect a phone login to an existing bank account and in this way get access to the funds in the bank account. Mobile banking is at its most vulnerable at the point of registration. It is important to ensure that the very high security available on mobile phones not be compromised by a weak registration process.

The best way to ensure that a bank account is not compromised is to only allow "over-the-counter" registration. Only if a bank-employee has verified ID documents is it possible to register a client for mobile banking. This is of course an expensive process and complex from a client's perspective. Another mechanism is to use the ATM-network to perform mobile banking registrations. This is a secure way, as the registration would require a card present and the PIN selection can be transmitted in a very secure way.

Yet, many banks cannot deploy these mechanisms and often allow clients to

register on-line. This means that the registration process is much weaker (because of the limitations of the Internet). This is the weak link in connecting a phone to a bank account. If the need to allow mobile banking registration on the Internet, fraudulent registrations will occur.

The Use of Mobile Phones in Education in Developing Countries

The study is intended to help to raise awareness among key decisionmakers in the public, private and civil society sectors about the potential importance of the use of low cost mobile devices -- especially mobile phones -- to help benefit a variety of educational objectives. By documenting the existing landscape of initiatives in this area and emerging 'good practice', it is also hoped that this work will serve as a common base for further analytical work in this area, and inform the impending explosion of development of new hardware, software and business services occurring on mobile devices, to the benefit of these educational objectives.

This activity is one component of a larger 'mobile flagship' program at the World Bank consisting of studies and activities related to mobile services and applications in selected sectors, including “Mobile Banking Users and Non Users Behavior Study”; “Extending Mobile Applications in Africa through Social Networking"; and “Mobile Applications for Sectoral Development”.

Activity Description

Drawing on examples of the use of mobile phones and related handheld technologies for educational purposes in advanced economies like Korea, Japan, the U.K., the United States and Finland, and an emerging evidence base of pilot projects from countries as diverse as Tanzania, Kenya, the Philippines, Mongolia, China and South Africa, this study proposes to:

1. Map the existing universe of projects and initiatives exploring the use of mobile phones in education in developing countries.

2. Map the existing and potential uses of mobile phones in this regard, comparing and contrasting such uses with other ICT devices..

3. Document lessons learned so far from key initiatives in this area, proposing tentative guidance for policymakers and various stakeholder groups in this fast moving area.

4. Propose a conceptual framework and way forward for further analytical work to aid in the documentation and rigorous impact cost and impact assessment of the use of mobile phones in education.

While ‘education’ is the focus here, the area of inquiry is not be limited to the formal education sector itself. Lifelong learning and educational outreach activities utilizing the mobile phone to benefit the health and agricultural sectors will also fall within the scope of this study. This work will draw heavily on organizations and expertise active in these areas on-the-ground.

The results of this study will be disseminated and discussed at a landmark global event on mobile applications sponsored by the World Bank as part of the 'mobile flagship' initiative, involving sets of key stakeholders from the public, private and civil society sectors.

Background and Context

Going forward, isn't it more likely that the ICT tool of choice for students in developing countries will be the mobile phone, and not the computer?

This is a question of hot debate in many circles. Whatever the eventual resolution of this debate (and no doubt it will not yield a simple either/or answer), there are still precious few widespread examples of the use of phones for education purposes inside or outside of classrooms in developing countries that have been well documented, and fewer still that have been evaluated with any sort of rigor.

28% of Africans now have a mobile phone subscription, according to data released by the ITU earlier this year, part of a larger trend that sees two out of every three mobile subscribers around the world living in a developing country. The flagship ITU publication Measuring the Information Society notes that two-thirds of the world's cell phone subscriptions are in developing nations, with Africa, which has a 2% subscriber rate as recently as 2000, growing the fastest. And it is not only adults who are making use of this new technology. Recent survey work at a low-income high school in South Africa's Samora Machel township (for example) suggests that mobile penetration among youth in some places might be higher than one might suspect.

While the explosive use of mobile phones in developing countries is well-documented -- and undeniable -- and evidence is emerging that phones are slowly making their way into the hands of teens, just what this might mean for the delivery of education in developing countries is a little less clear.

Five years ago infoDev commissioned work to map out what was known about the nascent topic of ‘mobile banking’, and the resulting study, the first of its kind, helped frame the issues for donor agencies, governments, NGOs and private sector firms alike. ‘M-banking’ has exploded since then, and this study proposes to do for the use of mobile phones in education what the earlier infoDev study did for the use of mobile phones in the financial services sector. We are at a similar point now with where we were with m-banking five years ago, and this study will provide guidance for World Bank technical assistance and investment activities related to the much-hyped potential for the use of mobile phones in education. There is an opportunity here to contribute to the global knowledgebase in the very early stages of what is poised to become a potentially massive area of investment by ministries of education, civil society and (especially) the private sector in the decade to come.

Nascent efforts are underway to explore various aspects of the emerging phenomenon of the use of mobile phones in education, but no institution has stepped forward to help catalyze global collaboration and cooperation around research directions and agenda setting in this area. This work will tap the expertise and convening power of a number of key partner organizations and experts active in this area.

This work, expected to run through December 2010, is being funded by the Korean ICT Trust Fund at the World Bank. Updates on this project will be posted periodically on the World Bank's ICT and Education blog, EduTech.