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Mobile Banking:

Emerging Trends and Challenges in Banking Sector

Dissertation submitted to University of Mumbai in Partial

Fulfillment for the award of Master of Management Studies

in Finance

By

Mumtaz G.Tadvi

Roll No-56

Under the Guidance of

Dr.M.I.Khan

VIVA INSTITUTE OF MANAGEMENT STUDIES

(Affiliated to University of Mumbai, Approved by AICTE New

Delhi)INDIA.

Month 1st Oct to 1st March Year 2010-2011

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DECLARATION

I Mumtaz G.Tadvi that the dissertation entitles “Mobile Banking:

Emerging Trends and Challenges in Banking Sector” submitted to the

University of Mumbai in Partial fulfillment for the award the Degree of Master

OF Management studies in Finance is an original work and that the

dissertation has not previously formed the basis for award of other degree,

Diploma, Associateship, Fellowship or other title

3

Format for Evaluation of Dissertation

1. Name of the Candidate : Mumtaz G.Tadvi

2. Registration / Seat Number : 56

3. Name / Code of the subject :

4. Title of the Dissertation : Mobile Banking: Emerging Trends and

Challenges in Banking Sector”

Sr.

No.

Parameters Maximum

Marks

Marks

Awarded

1 Situation Analysis & Problem Definition 10

2 Literature Review (secondary Data) 10

3 Methodology of Study 20

4 Data Analysis 20

5 Conclusions & Recommendations 15

6 Guide’s Assessment of Project progress by

student.

10

7 Viva Voce 15

Total 100

6. Name & Address of the Evaluator:

7. Signature of Evaluator with Date:

8. Signature of the Head of the Institution with seal:

4

Sr.No CONTENT PAGE NO

1. Introduction of Mobile Banking : Emerging

Trends and Challenges of Banking Sector

6

2 Introduction of Mobile Banking.

• Objective

• Research Methodology

• Literature Review

7-9

3 Mobile Banking transactions in India – RBI

Operative Guidelines for Banks

• Regulatory & Supervisory Issues

• Registration of customers for mobile

service

• Technology and Security Standards

• Inter-operability

10-12

4 Mobile Banking: A Wallet for all Pockets 13-16

5 ICICI Mobile Banking

• ICICI Bank Registration

• Facilities available in SMS Enquiry

• Mobile Banking Facility of ICICI Bank;

17-21

6 A Mobile Banking Conceptual Model 22

5

7 Present growth trend of mobile banking 23-30

8 Mobile banking business models

• Bank-focused model

• Bank-led model

• Non-bank-led model

31-32

9 Mobile Banking Services

• Account Information • Payments, Deposits, Withdrawals, and Transfers

• Investments • Content Services • Support

32-34

10 Mobile Banking in India

• Micro payments

• Smart Money G-Cash Mobile Remittance Microfinance through Mobile Technology

35-36

11 Intensified Competition in the Banking Sector:

37

12 Technologies Enabling Mobile Banking

• IVR (Interactive Voice Response)

• SMS (Short Messaging Service)

• WAP (Wireless Access Protocol)

38-39

13 Advantages and Disadvantages of banking sector

40

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14 Opportunities For Mobile Banking

• Cost Of Handsets

• Goal Of Financial Inclusion

• Reduction In Terms Of Transaction Costs

• Cost Advantage

• Rbi Allows Cash Withdrawal Via Mobile; Increases Transaction Limit

41-45

15 Challenges For Mobile Banking 46-47

16 Mobile Banking Solution and application

• Handset operability • Security • Scalability & Reliability • Application distribution • Personalization

48-50

17 Mobile Banking –The Future 50-54

18 Mobile banking in the world 55

19 Conclusion: 56-57

20 Bibliography 57

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Mobile Banking:

Emerging Trends and Challenges in Banking Sector

ABSTRACT:

Technology holds the key to the future success of every sector & this is true for banking

sector as well. Internet, wireless technology and global straight-through processing have

created a paradigm shift in the banking industry. The explosive growth of both the

Internet and mobile and wireless technology is solely responsible for this. Mobile

Banking has really evolved and is going to revolutionize the way the financial industry

conducts business. Mobile banking is the evolutionary step after Internet banking. It is an

additional service bolted on top of an existing solution, making access to services more

immediate and reducing customer reliance on branch infrastructure or access to the

Internet. Presently Mobile banking pilots and full-scale operations are being conducted

across 12 states, 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. Given that mobile phones in India have become affordable,

wherein a user can now go mobile for as low as Rs. 1,500, mobile banking can be a

powerful tool to bank the un-banked. Mobile banking is poised to become the big killer

mobile application arena. The authors have made an attempt to understand the present

growth, trends & future challenges for the technological revolution brought about by

Mobile Banking in Banking sector in India.

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INTRODUCTION:

India has one of the most expansive banking systems in the world. A combination of

scheduled commercial banks, Regional rural banks and specialized financial institutions

cover a large section of society in India. Despite these focused efforts, it is estimated that

close to 65 percent of the country’s population still falls in the “unbanked” category due

to various reasons, including geographical isolation and lack of basic infrastructure. To

overcome this issue banks along with telecom majors come up with a probable solution in

form of Mobile Banking.

Mobile banking, a symbiosis of technology and financial services, is the hottest area of

development in the banking sector and is expected to replace the debit/credit card system

in future. Mobile banking has the potential to bring a whole host of people that have

no/little access to land lines/internet connections onto the electronic platform – an

innovative way to generate financial inclusion.

Mobile banking (also known as M-Banking, mbanking, SMS 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 have led to increasing use of special client programs,

called apps, downloaded to the mobile device.

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After Internet Banking, Mobile Banking or M-Banking has become the buzz word in the

industry. It's a fact that Internet Banking has given a boost and has shown a successful

way to consider it as a good alternative procedure against physical branch banking. Now

where ever you are, you can access your bank account and you can do lot more things

like checking your account balance, transfer money to some other account, pay your

utility bills online and so on, just by comfortably sitting at your home or office. But, the

technical disadvantage of Internet Banking is, you have to have internet connectivity and

a computer. Definitely it's not a big hindrance in US or Europe or in the other developed

countries, but if one considers the developing economies, then it's a genuine problem and

more specifically in the tier II cities.

OBJECTIVE:

1. To understand the trends of Mobile banking in India.

2. To understand the opportunities & challenges faced by Mobile Banking in current

scenario.

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3. To understand the future prospects and growth of mobile banking in banking

industry.

RESEARCH METHODOLOGY:

The present study has been descriptive; the data for this study were obtained from

secondary sources. The secondary has been collected from various references which

already existed in published form; part of the paper is based on literature review the

method comprising of collecting all the available papers relating to the mobile banking

and selecting relevant papers / books for the review purpose. Selection of the paper is

done on the basis of their relevance and contribution to the body of knowledge. The

authors have made an attempt to do a primary

reading of the selected papers which will constitute the core of this review study. Finally

the papers were selected and reviewed in order to capture various dimensions of mobile

banking.

LITERATURE REVIEW:

The gains from liberalization and economic development must percolate to all the

segments in the country and every citizen has to be the beneficiary. Development of

Telecommunication and the communications infrastructure is an essential precondition

for making available the benefits of liberalization to the rural masses and for further

powering the engine of growth of the nation. "Information is critical to the social and

economic activities that comprise the development process. Telecommunications, as

a means of sharing information, is not simply a connection between people, but a

link in the chain of the development process itself." [Hudson 1995]. A number of

studies have documented the positive impact of mobile phone adoption on rural

development.

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Mobile Banking transactions in India – RBI

Operative Guidelines for Banks

Introduction

Mobile phones as a delivery channel for extending banking services have off-late been

attaining greater significance. The rapid growth in users and wider coverage of mobile

phone networks have made this channel an important platform for extending banking

services to customers. With the rapid growth in the number of mobile phone subscribers

in India (about 261 million as at the end of March 2008 and growing at about 8 million a

month), banks have been exploring the feasibility of using mobile phones as an

alternative channel of delivery of banking services. Some banks have started offering

information based services like balance enquiry, stop payment instruction of cheques,

transactions enquiry, location of the nearest ATM/branch etc. Acceptance of transfer of

funds instruction for credit to beneficiaries of same/or another bank in favor of pre-

registered beneficiaries have also commenced in a few banks. In order to ensure a level

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playing field and considering that the technology is relatively new, Reserve Bank has

brought out a set of operating guidelines for adoption by banks.

For the purpose of these Guidelines, “mobile banking transactions” is undertaking

banking transactions using mobile phones by bank customers that involve credit/debit to

their accounts. It also covers accessing the bank accounts by customers for non-monetary

transactions like balance enquiry etc.

Regulatory & Supervisory Issues

1. Only banks which are licensed and supervised in India and have a physical presence in

India will be permitted to offer mobile banking services.

2. The services shall be restricted only to customers of banks and holders of debit/credit

cards issued as per the extant Reserve Bank of India guidelines.

3. Only Indian Rupee based domestic services shall be provided. Use of mobile banking

services for cross border transfers is strictly prohibited.

4. Banks may also use the services of Business Correspondent appointed in compliance

with RBI guidelines, for extending this facility to their customers.

5. The guidelines issued by the Reserve Bank on ‘Risks and Controls in Computers and

Telecommunications’ vide circular DBS.CO.ITC.BC. 10/ 31.09.001/ 97-98 dated 4th

February 1998 will apply mutatis mutandis to mobile banking.

6. The guidelines issued by Reserve Bank on “Know Your Customer (KYC)”, “Anti

Money Laundering (AML)” and Combating the Financing of Terrorism (CFT) from time

to time would be applicable to mobile based banking services also.

7. Only banks who have implemented core banking solutions would be permitted to

provide mobile banking services.

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8. Banks shall file Suspected Transaction Report (STR) to Financial Intelligence Unit –

India (FID-IND) for mobile banking transactions as in the case of normal banking

transactions.

Registration of customers for mobile service

1. Banks shall put in place a system of document based registration with mandatory

physical presence of their customers, before commencing mobile banking service.

2. On registration of the customer, the full details of the Terms and Conditions of the

service offered shall be communicated to the customer.

Technology and Security Standards

1. Information Security is most critical to the business of mobile banking services and its

underlying operations. Therefore, technology used for mobile banking must be secure and

should ensure confidentiality, integrity, authenticity and non-repudiability.

Inter-operability

1. Banks offering mobile banking service must ensure that customers having mobile

phones of any network operator is in a position to avail of the service. Restriction, if any,

to the customers of particular mobile operator(s) is permissible only during the initial

stages of offering the service, up to a maximum period of six months subject to review.

2. The long term goal of mobile banking framework in India would be to enable funds

transfer from account in one bank to any other account in the same or any other bank on a

real time basis irrespective of the mobile network a customer has subscribed to. This

would require inter-operability between mobile banking service providers and banks and

development of a host of message formats. To ensure inter-operability between banks,

and between their mobile banking service providers banks shall adopt the message

formats like ISO 8583, with suitable modification to address specific needs

.

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MOBILE BANKING:

"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 customized information.”

Mobile Banking: A Wallet for all Pockets

Mobile Banking (also known as M-Banking, m-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. It was Internet Banking, which ushered in a new era in banking convenience by bringing the entire operations to the computer, and now mobile banking promises to take it to the next level.

Internet Banking helped give the customers anytime access to their banks. Customers could check out their account details, perform transactions like transferring money to other accounts, and pay their bills, sitting in the comfort of their homes and offices. However, the biggest limitation of Internet Banking is the requirement of a PC with an Internet connection, not a big obstacle if we look at the US and the European countries, but definitely a big barrier if we consider most of the developing countries of Asia like India and China.

Mobile Banking addresses this fundamental limitation of Internet Banking, as it reduces the customer requirement to just a mobile phone. Mobile usage has seen an explosive growth in most of the Asian economies like India, China and Korea. The main reason that Mobile Banking scores over Internet Banking is that it enables 'Anywhere Anytime Banking'.

According to Cellular Operators Association of India (COAI), the mobile subscribers' base in India hit 40.6 Million in August 2004, and it will be almost 80 Million in 2008, i.e., nearly double. We all expect 2009 set to be a big year

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for Mobile Banking. After a slow start at the turn of the millennium, it would seem this time around, that the devices, the networks, and the users have finally started using "Mobile Banking". The majority of the Indian banks, whether nationalized bank or privatized, are already involved in offering mobile services to their customers. Several banks have even tied-up with mobile phone operators and service providers to carry out transactions on mobile phones. While some banks allow simple account -related queries on mobile phones, some have gone a step further and stored the debit and credit cards on mobile phones as well to enable various transactions.

Four banks - SBI, HDFC, ICICI and Corporation Bank - have partnered with India's largest operator - Bharti Airtel - to offer m-banking. RCOM has tied up with ICICI Bank, HDFC Bank, Axis Bank and IDBI Bank. Bharti Airtel has launched its mobile banking and plans to rope in about 100 major banks in India by end 2008.

But despite the addition of around seven million mobile users every month, bank officials feel it is too early to gauge the success of mobile banking in India. "Mobile banking is still in its nascent stage, and we will have to wait and watch if it really changes the way

we bank," officials from various banks echo.

Mobile banking has been at the threshold of a revolution for some time. While many operators, as well as banks, had introduced mobile banking applications, it never became popular due to security concerns. The number of people using mobile banking services has jumped from under 10,000 to 120,000 in two years. While the trend is growing, lack of awareness of services, apart from perceived security issues, are inhibiting faster take-off.

There is yet another reason why the service will not spread like wild fire - the credit environment. RBI has been tightening the banks, which have been offering unsecured and secured loans with minimal or no customer verification. With RBI tightening liquidity, personal loan defaults have reached 9% and banks will be very wary of giving you a credit card on the mobile.

Though RBI has specified norms for the banks to provide secure technology and ensure 'confidentiality, integrity, authenticity and non-reputability', security remains a major concern as well as a hurdle. However, with a few precautions and safety measures, users can have a safer m-banking experience. The m-PIN, which is issued by the bank, should be memorized and the PIN-mailer destroyed immediately. Change your m-PIN regularly and do not share it with anyone. The PIN is valid only for the corresponding phone number,

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which means users cannot access their accounts using other hand-sets. Thus, in case of a loss/theft of mobile phone, inform the mobile phone operator as well as the bank to block the banking application. Similarly, you should also inform the bank, if you change your hand-set or SIM card.

Reserve Bank of India has set-up the Mobile Payments Forum of India (MPFI), a 'Working Group on Mobile Banking' to examine different aspects of Mobile Banking (M-banking). The Group had focused on three major areas of M-banking, i.e., 1. technology and security issues, 2. business issues, and 3.regulatory and supervisory issues.

One way to classify these services depending on the originator of a service session is the 'Push / Pull' your last five transactions statement is a Pull-based offering.

The other way to categorize the mobile banking services, gives us two kind of services - 'Transaction-Based' and 'Enquiry -Based'. So a request for your bank statement is an enquiry-based service and a request for your fund's transfer to some other account is a transaction-based service.

The new generation of mobile phones offers the speedy GPRS, EDGE or 3G data transmission standards and has large, high-definition colour displays. Prices are coming down and services and features are now considerably easier to handle on the mobile. Mobile Banking, in particular, has finally become a fast, user-friendly and affordable service. India's leading telecom companies started their services for Mobile Banking, basically they use these services as a marketing tool to advertise there services on this basis. Here are few giants of telecom industries in India who are offering Mobile Banking in various states.

IDBI's CTO, Neeraj Bhai, echoes the sentiment, "Over 12% of our Internet Banking users use our Mobile Banking services as well." While ICICI Bank offers its services on GPRS and secure SMS, Barclays Bank's Hello Money is Based on Unstructured Supplementary Service Data (USSD) platform, which is independent of GPRS. nature. 'Push' is when the bank sends out information based upon an agreed set of rules; for example, your bank sends out an alert when your account balance goes below a threshold level. 'Pull' is when the customer explicitly requests a service or information from the bank, so a request for

UK-based Barclays is one of the largest corporate money managers in the

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world. The bank launched its consumer banking services in India last year. And recently, the bank made its mobile banking service available on GSM hand-sets, on Airtel, Vodafone, and Idea networks in forty cities. Customers can choose between Hindi and English. Further, Barclays aims to include more languages and extend it to CDMA hand-sets as well.

ICICI Bank has tied-up with Airtel and m-Chek to load a virtual credit card on a mobile phone to carry on complete banking transactions as well as for making payments. "We conducted a pilot in Delhi and received close to a thousand responses. Mobile phones can be safer as compared to physical cards as they are pin-protected, thereby minimizing the risk of misuse," said Mr. Sachin Khandelwal, General Manager, Head-Cards Product Group, ICICI Bank.

Despite lots of security issues related to mobile banking and lack of awareness on part of consumers, the technology has taken off on slow pace, still it will be a big hit in coming years. Due to large number of advantages, and these advantages have over-powered all the disadvantages of the technology. All these advantages create a WIN-WIN-WIN situation for the technology: -

• End-users benefit from greater control of their personal finances, as well as time saved by not having to access account details via other channels (Internet, phone, ATM, among others).

• Bankers are of the opinion that mobile banking gives the banks an opportunity to expand their customer base without incurring additional infrastructure costs. It would also help in financial inclusion as it would provide a large number of unbanked people access to banking services.

• Banks would save a huge amount of money on card issuance and merchant acquiring with zero point of sale cost. Mobile banking could be used to make remittances from person to person, banking purposes and to make payments for purchases or services provided.

• Mobile operators benefit from increased customer stickiness, data usage and, potentially, customer experimentation with other forms of mobile content.

Given this win-win-win situation, we expect uptake of mobile banking services to be robust among mobile subscribers, users and the banks.

Over the next five years, mobile banking deployments will develop significantly - from "online banking" applications to one with richer interfaces and multiple mobile payment capabilities. The successful evolution of mobile

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banking and payments will be on the basis of the ability of financial institutions and mobile operators to balance ease of use with security.

I certainly am looking forward to the convenience of banking on my mobile. But, now that banks will have our mobile numbers (it was optional to give it to banks earlier), could it mean more unwantedcalland SMS from banks?

ICICI Mobile Banking

Recently, a joint initiative has been announced by ICICI Bank and Vodafone to introduce mobile banking services in India. Under this tie-up, Vodafone and ICICI Bank will offer mobile users a wide range of financial products like savings accounts, credit products and pre-paid instruments. Banks have been allowed by RBI to appoint for-profit companies as their business correspondents (BCs). This joint initiative between ICICI Bank and Vodafone has been possible due to this change in RBI’s policy.

According to Chanda Kochhar, the CEO and Managing Director of ICICI Bank, the bank is very excited about this partnership with Vodafone because it will help the bank to strengthen its base all over the country. On the other hand, Marten Pieters, the CEO and Managing Director of Vodafone Essar, said that RBI’s move to allow for-profit companies to be business correspondents is a good initiative that will offer the country’s population better access to financial services. However, detailed information about the deal’s financial aspect is not available

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ICICI Mobile Banking facility has completely simplified the way in which we perform a number of banking activities. ICICI has launched its mobile banking application for the convenience of the customers in the country. By getting ICICI Bank mobile banking application, now you could conduct various banking operations from anywhere at any time using your mobile phone. Whether you are in side a movie theater, at a meeting or on a holiday, you can easily access your bank account and make transactions and transfer with your mobile phone.

ICICI Bank Registration

Ø Collect SMS Banking application from your home branch, fill in and submit the same to them.

Ø After that, register for SMS Enquiry through same Mobile Phone by sending SMS Registration message as given below.

Ø Customer ID can be obtained from the Branch for the purpose of using SMS Enquiry facility. Please note down same.

Ø Details of Mobile numbers (With country code) from which SMS enquiry facility is accessed should be invariably mentioned very clearly in the application.

Facilities available in SMS Enquiry

Following facilities available under SMS Enquiry.

Ø Registration for SMS Banking Ø Balance Enquiry in CASA Ø Change of primary account Ø Term Deposit details enquiry Ø Issued Cheque status Ø Cheque stop request Ø View of last 5 transactions Ø De-register for SMS Banking

1. Please note down your account numbers in full (14 digits) of your operative account numbers and term deposit numbers. If these

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particulars are not available with you, please get the same from the Branch.

2. Remember your customer ID for sending SMS Enquiries since all your requests are serviced based on customer ID only.

3. If the Mobile Number is recorded in the branch against the Customer ID, the customer can straight away register for this service by sending registration message through SMS.

Mobile Banking Facility of ICICI Bank;

Bank Account

Fund transfer

Bill payment

Balance enquiry

See last 5 transactions

Request cheque book

Cheque status enquiry

Credit Card

Balance details

Payment due date

Last payment details

Reward point status

Demat

Holding enquiry

Transaction status

Bill enquiry

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ISIN enquiry

Loan

Loan agreement copy

Reset letter

Provisional income tax certificate

Rescheduled letter

Final income tax certificate

Other Services

Locate branch

Locate ATM

Phone banking number

Prepaid mobile recharge

Status of service request

To enjoy the mobile phone banking services, you are required to download iMobile, which is the secure mobile banking application software offered by ICICI Bank. Using iMobile application, you can enjoy a number of banking operations just with the help of your mobile phone. This advanced application is the key to faster and easier banking service. One can also watch the mobile banking demo by visiting the official website of the bank. ICICI Bank mobile banking form is easily available at several branches of the bank.

iMobile brings an advanced clients based interface that allows the customers to access their account information and perform certain operations. This application offers menu-based banking which is safe and very convenient for the customers. iMobile is compatible with GPRS as well as SMS channels and it can work well with any CDMA or GSM operator according to the availability for access of your selected channel.

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In order to obtain the mobile banking application, your mobile phone should be a Java, Windows, Blackberry of Brew enabled handset. You are also required to register your mobile number for ICICI Bank mobile banking facility. To register your number, go to one of the nearest bank branch and fill up an application form then send it to the address provided in the form. For more information on how to download the mobile banking application, visit the official bank website.

ICICI Mobile Banking Customer Service Number – Following Numbers are provided for customers reference to know about ICICI Mobile Banking.

ICICI Mobile Banking Customer Service Number: 5676766 or 9837142424

If you have Bank Account Transaction related queries can make use of the following Mobile banking Numbers

•To check your Balance type ‘SMS IBAL’ and send sms to 5676766 or 9837142424.(only for primary account)

Example : SMS IBAL

For Non-Primary Account type ‘SMS IBAL(space)Last 6 digits of Account Number’, and send SMS to 5676766 or 9837142424

Example : SMS IBAL 029422

•To check your Last 3 Transactions type ‘SMS ITRAN’ and send sms to 5676766 or 9837142424(only for Primary Account)

Example : SMS ITRAN

For Non-Primary Account type ‘SMS ITRAN (space)Last 6 digits of Account Number’, and send SMS to 5676766 or 9837142424

Example : SMS ITRAN 029422

•To check your Cheque Status type ‘SMS ICSI(space)Cheque No’ and send sms to 5676766 or 9837142424.(only for Primary Account)

Example : SMS ICSI 775211

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For Non-Primary Account type ‘SMS ICSI(space)Cheque No (space)Last 6 digits of Account Number’, and send SMS to 5676766 or 9837142424

Example : SMS ICSI 775211 029422

•To Stop your cheque Request type ‘SMS ISCR(space)Cheque No’ and send sms to 5676766 or 9837142424.(only for primary account)

Example : SMS ISCR 775211

For Non-Primary Account type ‘SMS ISCR(space)Cheque No (space)Last 6 digits of Account Number’, and send SMS to 5676766 or 9837142424

Example : SMS ISCR 775211 029422

•To check your cheque Book Request type ‘SMS ICBR’ and send sms to 5676766 or 9837142424.(only for primary account)

Example : SMS ICBR

For Non-Primary Account type ‘SMS ICBR(space)Last 6 digits of Account Number’, and send SMS to 5676766 or 9837142424

Example : SMS ICBR 029422

•To Change Primary Account type ‘SMS ICPA(space)Last 6 digits of New Account Number’, and send SMS to 5676766 or 9837142424

Example : SMS ICPA 069111

•To View Presented Bills type ‘SMS IVIEW(space)Biller Nickname’, and send SMS to 5676766 or 9837142424

A Mobile Banking Conceptual Model

In one academic model mobile banking is defined as:

Mobile Banking refers to provision and an ailment of banking- and financial services with the help of mobile telecommunication devices. The scope of offered services may

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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

Present growth trend of mobile banking

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. Mobile phones have

become an essential communication tool for almost every individual. Advent of

mCommerce has managed to take mobile VAS to next level, adding tremendous value to

telecommunication industry. Mobile banking which is an integral part of mCommerce

has become very popular among mobile users ever since its existence in 2007. It creates

new, convenient communication and fast financial transactional channel for mobile users

which is accessible from anywhere, anytime.

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Checking account information, balance available, credit/debit card information, cheque

status, setting alerts , payment reminders, locating ATMs and bank branches, accessing

mini statement, accessing loan and equity statements, insurance policy management,

placing orders for cheque books etc via mobile phones are some of the services offered in

mobile banking. With multiple access channels such as SMS, downloadable client,

mobile Internet (WAP) mobile banking is encouraging mobile users more to explore the

service. Banking has been improvised with the invent of mobile banking.

Mobile banking services –insights and reports

Based on data gathered in April 2009 for Feb/March mobile banking urban Indian

customers checking account balance is the most frequently cited reason for using mobile

banking. 40 million Urban Indians used their mobile phones to check their bank account

balances followed by viewing last three transactions. ICICI bank continues to maintain its

leadership extending in mobile space, 42% of all mobile banking users bank with ICICI,

followed by HDFC (25.3%).

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Mobile banking report: “Most popular services and income profile” (Two month

ended March 2009, Urban Indian Mobile Phone Users).

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. 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 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.

Figure -1 Statistics on most popular mobile banking services

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Filtering the data further to understand which income groups in urban India use mobile

banking more. As depicted in the chart below, mobile banking is most used by

subscribers falling in Rs. 1 Lakh to Rs. 2.99 Lakhs income bracket followed by less than

Rs 1 Lakh income bracket.Therefore it is observed, mobile banking is more popular

among low income group of mobile users than higher income group of mobile users.

Figure - 2 Mobile banking users – Income profile

Many believe that mobile users have just started to fully utilize data capabilities in their

mobile phones. Service providers are every day coming up with new services, providing

methods to make the solution more easy to use, implementing techniques to improve

security, launch of 3G is providing higher data transfer rate and invention of new phones

more frequently is driving mobile users towards subscribing to mobile banking services.

In India, where mobile subscribers far exceed fixed line subscribers because of better

mobile infrastructure in comparison to fixed line infrastructure has made mobile banking

much more appealing in India today. Various players involved in providing mobile

banking services (banks, financial institutions, service providers, operators etc) are

therefore expecting a potential growth in mobile banking industry in India.

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India, over 400 million mobile subscribers, with ~ 11-12 million new mobiles subscribers

added every month to subscriber base, is one of the fastest growing telecom markets in

the world. Each day, many more mobile users are getting attracted to using the various

mobile VAS offered by their service providers.

Approx 9.3 million urban Indians used their mobile phones to access the Internet for

quarter ending June 2009, a reach of approximately 3.3%. Number of people accessing

the net via mobile phones has witnessed a 6% growth from quarter ending May 2009.

This report provides the most up to date analysis of the mobile banking market including

a six year forecasting suite projecting vital data on mobile banking subscriber take up,

mobile banking user-level messaging traffic, user-level transaction volumes and gross

transaction values for "Push" Mobile Banking Information Services, and Pull" Services –

MBPP (Mobile Bill Payment and Presentment) transactional banking.

As well as comparing and contrasting the various mobile banking applications and

software vendors this detailed study also includes over 12 detailed case studies and 15

vendor profiles and

a number of in depth interviews with leading mobile commerce application and financial

system vendors, banks and consultancies

Mobile banking a convenient medium for banking transaction in India

Almost all the public sector banks and private sector banks are offering mobile banking

services this has also helped the banks to attract more customer. On the other hand the

customers find mobile banking convenient.

There have been instances where mobile banking has proved to be the convenient

medium for information. In one such instance Mr N. Ramesh, a staffer of Infosys

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received the SMS - “Your account is debited by Rs 15,000.” Bank timely action saved N.

Ramesh from losing Rs 2.5 lakh in his ICICI Bank account. One of his servants has

fraudulently used his debit card.

In another incidence Mr H.V. Murthy, would have transferred Rs 5,000 to his son's

account who study in BITS, Pilani- Goa campus, but he got held up on the highway on

his way to Visakhapatnam due to the Telangana trouble.

In such type of incidence mobile banking has been very useful in saving money of the

bank customers, as banks alerted their customers on time which saved them from losing

their money.

In India around thirty-two banks have got approval for offering mobile banking services,

out of these 21 banks have started offering these services.

The banks who have initiated these services are mostly private banks and these banks are

in the process of introducing new technologies to improve services, on the other hand

some of the public sector banks have started following the private banks.

The Reserve Bank of India is also encouraging the general public to use mobile banking

services in view of this, to boost these offering, the RBI has few days back increased the

cap on daily mobile transactions to Rs 50,000 from the earlier limit of Rs 5,000.

A spokesperson from ICICI Bank told Business Line, “We have witnessed an increasing

trend of customers registering for mobile banking.” In 2003 bank had launched mobile

banking facility for its customers and since then it has been offering various mobile

banking options, now eight million customers have registered for mobile banking

services.

ICICI Bank has various options, from simple SMS alerts to a rich client-based

application, iMobile, through which customers can practically do all Internet banking

transactions using mobile phones. The spokesperson informed, “We would like to

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enhance the number of transactional services to make mobile a main banking channel for

customers.”

Mr. Sanjeev Patel, EVP & Head, Direct Banking channels, HDFC Bank informed HDFC

Bank customers carry out both types of financial transactions fund transfers and

merchants payments. Thus both type of financial transactions done stands to equal. He

said, “The balance enquiry and mini statement constitute 98 per cent of the non-financial

Mobile Banking transactions.”

He stated, HDFC Bank has over five million registered users and it will continue to

introduce new services such as banking for unbanked/rural customer, secure online

payments using ‘card on mobile', etc, apart from extending the existing services under

NetBanking suite on the mobile.

Now public sector banks (PSBs) have started looking at this as a value addition to their

services. Amongst PSBs State Bank of India is the first one to introduce mobile banking

facility and has seen a sharp increase in customers registering for mobile banking. Last

fiscal there were around 6,000 bank customers using mobile banking services.

By September bank’s mobile banking using customer base increased to over 51,000.

Bank witnessed increase in the number of transactions also it increased from about

68,000 to over 5.5 lakh during the same period. Mr Shiva Kumar, Chief General

Manager, SBI, Hyderabad, informed, “It is growing because of inherent advantages.”

A senior official of Allahabad Bank pointed out many of the public sector banks are

focusing on rural customers and large number of rural customers are not aware about

mobile banking services this could be reason behind the slow growth of these banks.

Recently, while speaking at the India Telecom conference earlier this month, Dr K.C.

Chakraborty, Deputy Governor of RBI said,

“We recognize that mobile phone can be an important mode for propagation of financial

inclusion in the country. The coverage of mobile phones and the use of such instruments

by all section of the population can be exploited for extending financial services to the

excluded populations.”

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He also pointed out that banks are mostly setting eyes on high net worth customers who

book their airline tickets and do large ticket transactions through mobile banking. He

asked, “Why are banks not facilitating low value transactions”? He said now banks

should take up a challenge to encourage low value transactions through these services.

India has one of the most expansive banking systems in the world. A combination of

scheduled commercial banks, Regional rural banks and specialized financial institutions

cover a large section of society in India. Despite these focused efforts, it is estimated that

close to 65 percent of the country’s population still falls in the “unbanked” category due

to various reasons, including geographical isolation and lack of basic infrastructure. To

overcome this issue banks along with telecom majors come up with a probable solution in

form of Mobile Banking.

Mobile banking, a symbiosis of technology and financial services, is the hottest area of

development in the banking sector and is expected to replace the debit/credit card system

in future. Mobile banking has the potential to bring a whole host of people that have

no/little access to land lines/internet connections onto the electronic platform – an

innovative way to generate financial inclusion India is marching towards m-commerce - a

world where you can make all payments by keying in instructions on your mobile phone.

In India, however, there is a limitation on the availability of functions that can be

deployed by banking customers.

Most m-banking transactions today are ‘information-based’ -- customers engage in m-

banking services like balance enquiry, last three transactions, "alerts" for strange

activities in bank accounts etc. Some banks like IDBI Bank are also offering bill-payment

services to customers through m-banking.

However, actual cash transactions like fund-transfer, payment of bills at a restaurant

among others have not yet been introduced in India. There are many reasons for this.

Firstly, as m-banking is currently SMS-based, the transaction delivery time is not

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guaranteed since it is dependent on factors like SMSC (short message service centre)

congestion and network strength in the area where the customer is located. Secondly,

there is an issue of repudiation as till date there are no clear guidelines on wireless

payments.

In the very near future, one can see m-banking leaping into a new phase. With the

advent of Java-enabled mobile devices, the shape of m-banking services is in for a

change. One would also be ensured the same amount of security and comfort as one

would be when using internet banking.

Mobile banking business models

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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.

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 bank

Non-bank-led model

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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.

Mobile Banking Services

Mobile banking can offer services such as the following:

Account Information

1. Mini-statements and checking of account history 2. Alerts on account activity or passing of set thresholds 3. Monitoring of term deposits 4. Access to loan statements 5. Access to card statements 6. Mutual funds / equity statements 7. Insurance policy management 8. Pension plan management 9. Status on cheque, stop payment on cheque 10. Ordering cheque books 11. Balance checking in the account 12. Recent transactions 13. Due date of payment (functionality for stop, change and deleting of payments) 14. PIN provision, Change of PIN and reminder over the Internet 15. Blocking of (lost, stolen) cards

Payments, Deposits, Withdrawals, and Transfers

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1. Domestic and international fund transfers 2. Micro-payment handling 3. Mobile recharging 4. Commercial payment processing 5. Bill payment processing 6. Peer to Peer payments 7. Withdrawal at banking agent 8. Deposit at banking agent

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.

Investments

1. Portfolio management services 2. Real-time stock quotes 3. Personalized alerts and notifications on security prices 4. mobile banking

Support

1. Status of requests for credit, including mortgage approval, and insurance coverage 2. Check (cheque) book and card requests 3. Exchange of data messages and email, including complaint submission and tracking

4. ATM Location

Content Services

1. General information such as weather updates, news 2. Loyalty-related offers 3. Location-based services

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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.

One way to classify these services depending on the originator of a service session is the ‘Push/Pull' nature. ‘Push' is when the bank sends out information based upon an agreed set of rules, for example your banks sends out an alert when your account balance goes below a threshold level. ‘Pull' is when the customer explicitly requests a service or information from the bank, so a request for your last five transactions statement is a Pull based offering. .

The other way to categorize the mobile banking services, by the nature of the service, gives us two kind of services – Transaction based and Enquiry Based. So a request for your bank statement is an enquiry based service and a request for your fund's transfer to some other account is a transaction-based service. Transaction based services are also differentiated from enquiry based services in the sense that they require additional security across the channel from the mobile phone to the banks data serve

.

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Mobile Banking in India

India is marching towards m-commerce - a world where you can make all payments by keying in instructions on your mobile phone. In India, however, there is a limitationon the availability of functions that can be deployed by banking customers. Most m-banking transactions today are ‘information-based’ -- customers engage in m-banking services like balance enquiry, last three transactions, "alerts" for strange activities in bank accounts etc. Some banks like IDBI Bank are also offering bill-payment services to customers through m-banking. However, actual cash transactions like fund-transfer, payment of bills at a restaurant among others have not yet been introduced in India. There are many reasons for this. Firstly, as m-banking is currently SMS-based, the transaction delivery time is not guaranteed since it is dependent on factors like SMSC (short message service centre) congestion and network strength in the area where the customer is located. Secondly, there is an issue of repudiation as till date there are no clear guidelines on wireless payments. In the very near future, one can see m-banking leaping into a new phase. With the advent of Java-enabled mobile devices, the shape of m-banking services is in for a change. One would also be ensured the same amount of security and comfort as one would be when using internet banking

Micro payments In the more affluent economies, a good infrastructure for a cashless environment is already prevalent and most people have bank accounts and access to both debit and credit facilities. These factors are incentives in the developing countries to move the population at large away from cash with introductions of low cost solutions such as micro-payments to further efficiency gains.

Smart Money The service was launched in December 2000 in co-operation with First E-Bank, which has since been acquired by Banco de Oro, and MasterCard, one of the world’s leading payment services providers. According to SMART, SMART Money was the world’s first re-loadable electronic cash wallet, linked together by their cellular network. Once cash has been transferred to the

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SMART Money account, it can be used in thousands of shops and restaurants. The cash value can also be used

to load airtime, pay utility bills, or transfer money from one SMART Money card to another.

G-Cash The service was launched in October 2004, with an initial set of three anchor services; international and domestic remittance, P2P (phone-to-phone or person-to-person) transfers and payments for retail purchases. With G-Cash, all of GLOBE’s subscribers are m-Commerce-enabled. As users do not need to have a card or bank account to be part of the service, G-Cash is able to provide M-Commerce capability to a previously underserved segment of the market, including those who currently do not do banking. Unlike SMART’s approach whereby it operates the service jointly with BDO, GLOBE on its own maintains records of all transactions and arranges settlement between the retailers and the G-Cash customers. G-Cash provides services through close to 4,900 retail outlets nationwide and more than 500 G-Cash partners.

Mobile Remittance Migrant remittances, which are personal flows from migrants to their friends and families, have become a major source of external development finance, and in the process, play an effective role in reducing poverty. Capitalizing on the benefits of such a system, remittance services can become cheaper and more convenient, thus improving financial access of migrants, their beneficiaries and the financial intermediaries in the origin countries.

Microfinance through Mobile TechnologyMicrofinance through Mobile TechnologyMicrofinance through Mobile TechnologyMicrofinance through Mobile Technology Currently, a major constraint to microfinance is the high cost of operating in remote areas. Many institutions are now working toward low-cost delivery options such as Internet banking and cashless transactions to help the rural poor. The mobile devices that could be a more efficient tool for such transactions. For people in such rural areas, using computers is often a problem due to faulty Internet connections and frequent power failures. Hence, providing micro credits through a mobile platform (SMS-based) could be the best way to reach out to the poor.

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Intensified Competition in the Banking Sector: Bank products are of immaterial nature sold increasingly with the help of computer networks spanning across the globe.The global networks provide the customer with world-wide services, for instance the use of credit cards while abroad. The creation of an EU-wide single domestic market has led to intensification of competition in the EU in all business fields including in the banking sector. The ongoing Globalisation has further intensified the competition. Technical developments coupled with the process of Globalisation, have made it possible for banks to offer their services in far-flung areas without investing money to build branches and hire additional staff. This opportunity, of course, is a two-way street: On the one hand, a bank gets access to new markets. On the other hand it is faced with increased competition on its home turf. To master this combination of opportunities and challenges banks need – apart from business consolidation and cooperation – organic growth. It is therefore necessary to retain the existing customer base while simultaneously acquiring new, economically prosperous customers. Seen in conjunction with the price-sensitivity of customers and the resultant low relevance of the brand-name banks are compelled to introduce innovative services that potentially attract prospective customers while retaining others. Even though the brand-name remains a critical factor on account of the need for trust in banking business, the Globalisation and the technological developments, however, have reduced entry barriers so that the number of available reputed brands has increased significantly; thereby intensifying the competition.

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TECHNOLOGIES ENABLING MOBILE BANKING

Technically speaking most of these services can be deployed using more than one channel. Presently, Mobile Banking is being deployed using mobile applications developed on one of the following four channels.

1. IVR (Interactive Voice Response) 2. SMS (Short Messaging Service) 3. WAP (Wireless Access Protocol) 4. Standalone Mobile Application Clients

1. IVR (Interactive Voice Response)

IVR or Interactive Voice Response service operates through pre-specified numbers that banks advertise to their customers. Customer's make a call at the IVR number and are usually greeted by a stored electronic message followed by a menu of different options. Customers can choose options by pressing the corresponding number in their keypads, and are then read out the corresponding information, mostly using a text to speech program.

Mobile banking based on IVR has some major limitations that they can be used only for Enquiry based services. Also, IVR is more expensive as compared to other channels as it involves making a voice call which is generally more expensive than sending an SMS or making data transfer (as in WAP or Standalone clients).

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One way to enable IVR is by deploying a PBX system that can host IVR dial plans. Banks looking to go the low cost way should consider evaluating Asterisk , which is an open source Linux PBX system

Asterisk, due to its open source nature has caught on in a big way and is being sold as an PBX solutions by quite a few companies commercially. However there has been considerable noise on multiple Asterisk related forums over the stability of Asterisk based systems. Companies planning to use Asterisk for their IVR solutions should certainly do a rigorous evaluation of its capabilities before committing their long term future on it.

2. SMS (Short Messaging Service)

SMS uses the popular text-messaging standard to enable mobile application based banking. The way this works is that the customer requests for information by sending an SMS containing a service command to a pre-specified number. The bank responds with a reply SMS containing the specific information.

One of the major reasons that transaction based services have not taken of on SMS is because of concerns about security and because SMS doesn't enable the banks to deliver a custom user interface to make it convenient for customers to access more complex services such as transactions.

The main advantage of deploying mobile applications over SMS is that almost all mobile phones, including the low end, cheaper one's, which are most popular in countries like India and China are SMS enabled.

An SMS based service is hosted on a SMS gateway that further connects to the Mobile service providers SMS Centre. There are a couple of hosted IP based SMS gateways available in the market and also some open source ones like Kannel .

3. WAP (Wireless Access Protocol)

WAP uses a concept similar to that used in Internet banking. Banks maintain WAP sites which customer's access using a WAP compatible browser on their mobile phones. WAP

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sites offer the familiar form based interface and can also implement security quite effectively.

Bank of America offers a WAP based service channel to its customers in Hong Kong. The banks customers can now have an anytime, anywhere access to a secure reliable service that allows them to access all enquiry and transaction based services and also more complex transaction like trade in securities through their phone

A WAP based service requires hosting a WAP gateway. Mobile Application users access the bank's site through the WAP gateway to carry out transactions, much like internet users access a web portal for accessing the banks services.

The following figure demonstrates the framework for enabling mobile applications over WAP. The actualy forms that go into a mobile application are stored on a WAP server, and served on demand. The WAP Gateway forms an access point to the internet from the mobile network.

ADVANTAGES 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.

1. user experience of browsing the internet from a mobile device is familiar and offers a rich UI experience.

2. allows end user to access corporate association.

3. secure connection can be established on most of the mobile browsers.

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DISADVANTAGES OF MOBILE BANKING

• Many non-standards variables including handsets,browsers and operating system.

• Inconsistent user experience due to varying connection speed and different handset.

• User needs to have a data plan,which may be a barrier to adoption among price sensetive demographics.

• No “offline” (out of the coverage) capability.

OPPORTUNITIES FOR MOBILE BANKING

1.COST OF HANDSETS: Handsets are priced currently at less than $25 (Rs.1000) and

call rates are less than 0.05 cents (Rs.2) per minute. Industry participants like Bharati

Airtel have already awarded a contract worth $2 billion over two-years to

Telefonaktiebolaget LM Ericsson, to expand its network in rural areas and provide

capacity management. Gartner expects 58 percent of the rural population and 95 percent

of the urban population to be covered by mobile networks by 2011. It is expected that the

predominant model is likely to be a community owned handset, a concept that has already

been tried and tested in some areas. Considering the rapid growth mobile phone usage,

offering financial services through mobiles could help thousands, especially in rural

areas, gain access financial services (banking and insurance products).

2. GOAL OF FINANCIAL INCLUSION: Financial services are critical for economic

development. In order to increase income levels, it is essential to provide access to formal

financial services for people without bank accounts. Mobile phones can deliver such

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services via mobile transactions (m-transactions) – financial transactions made using a

mobile phone without visiting a bank. M-transactions can offer an answer to the lack of

financial-service access prevalent in many emerging markets. Currently in India, 134

million households are financially excluded, which is 60 percent of country’s population.

Moreover, Financial Exclusion in Urban India is about 44 percent where as exclusion in

Rural India is about 76 percent. Among the recent Government initiatives it has been

proposed that a National Rural Financial Inclusion Plan should be launched with a clear

target to provide access to comprehensive financial services to at least 50 percent of the

financially excluded households (approximately 55.77 million) by 2012 through regional

and semi-urban branches of Commercial Banks and Regional Rural Banks. The

remaining households are to be covered by 2015. The Finance Minister in his budget for

2007-08 announced the setting up of a fund for financial inclusion of about Rs. 500 Crore

to meet cost of technology adoption. Looking at financial inclusion especially in unique

nature of states such as Uttarakhand and Himachal where a ‘money order’ economy

prevails and transferring money is problematic; mobile phone banking would prove an

effective way to expand the reach of financial service delivery. The topography in hilly

terrains is such that banks cannot open branches in every corner. Mobile banking as a

technology is certainly an answer to the growing demand for banking facility at the

village level.

3.REDUCTION IN TERMS OF TRANSACTION COSTS: 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 it crores of rupees by way of reduced transaction costs. While the

government incurs a transaction cost of Rs 12-13 for every Rs 100 it shells out, mobile

banking helps it 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'.

4.COST ADVANTAGE: Mobile banking is the cheapest way to reach the rural customer;

it costs just US$523 to US$837.5 (25,000 to 40,000 rupees) to set up a micro-banking

outlet.

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5. RBI Allows Cash Withdrawal Via Mobile; Increases Transaction Limit

The Reserve Bank of India has increased the daily transaction cap via mobile banking

to Rs 50,000 per customer for both funds transfer and transactions involving purchase of

goods and services, and instituted a per transaction cap of Rs. 5000 for funds transfer and

Rs. 10,000 for purchases. This is a significant increase over the previous set of limits: a

daily cap of Rs. 5000 per customer for funds transfer and Rs. 10,000 per customer for

purchases. In additiontransactions up to Rs. 1000 can be facilitated by banks without

end-to-end encryption.

These changes clearly seek to address two specific issues that banks have faced in

implementing mobile banking services: banks feel that end-to-end encryption for low

ticket transactions was costly, and limits of Rs. 5000 and 10,000 often do not permit

purchase of airline tickets.

6. RBI Initiatives

In its recently released report on ‘Payment Systems in India – Vision 2009-12‘, the

Reserve Bank of India has discussed initiatives it has taken and what it plans to do to

improve security of cards, make ATMs more accessible to the public, make banking more

accessible to the public, improve its efficiency, timings and reduce risks. It notes that the

future is in mobile payments and offers its outlook on alternate methods to improve the

Indian payments industry. Keeping in mind that e-commerce is a key driver for the digital

space in India, the RBIs outlook is an indication of changes that can be expected in the

next few years:

Major Projects Envisioned In The Next 1-3 Yrs by RBI for improvising mobile

banking

– National Infrastructure For Mobile Payments: RBI expects mobiles to emerge as an

important channel for payment instructions and intends to ensure real-time m-payments

are facilitated using a nation-wide infrastructure.

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– India’s Own VISA: RBI is mulling the concept of a domestic payment card

association and debit and credit cards to be called India Cards to reduce costs borne by

Indian banks to international card associations. It has also noted that the implementation

of a Point of Sales (SoS) switch in the country would eliminate the need to route

domestic transactions through a switch located outside India, which is what happens

currently. Domestic transactions account for 90% of total banking transactions in India.

– Stricter Authorisation Of Payment Systems: RBI will regulate all payment systems

in operation and authorise any new ones only if it passes an efficiency assessment: need,

technology to be used, benefits to the economy, expertise of the operator, financial

soundness, composition of management, adherence to corporate governance, compliance

with legal / regulatory guidelines. RBI will refuse authorisation and close any payment

firms if the need for them is not felt or their operations are not satisfactory.

RBI plans to place on its website the names of authorised payment firms and the

conditions of authorisation to which they are subject. It will also publish the Red Book on

Payment Systems for India in collaboration with CPSS-BIS and a Second Report on

Oversight of Payment Systems in India (the First was published in 2007).

– Settle Online Payments In 2 Days: Business Standard reports another regulation by

RBI that all online payments towards products or services should be settled by the banks

within 2 days of the transaction taking place.

– Promotion Of E-Payments, Encouraging Users & E-Governance: The report states

electronic products like RTGS (Real Time Gross Settlement), NEFT (National Electronic

Funds Transfer) and NECS (National Electronic Clearing Service) will be extended to

cover all the branches of banks, including Regional Rural Banks. All large-value and

time-critical payments will be processed only through the electronic mode. To encourage

users, positive acknowledgements to remitters confirming credit to the beneficiary’s

account for transactions initiated in NEFT will be introduced. All credits arising out of

sponsored and welfare schemes of the Central and State Governments shall be facilitated

through Electronic Benefit Transfer schemes.

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– Upgrade of Real Time Gross Settlement system for improved technological support

of funds transfer mechanism between banks. RTGS system is currently suited for low-

volume, high-value transactions.

– Computerisation: Magnetic Media Based Clearing System software will be used to

computerise processing and settlement operations at all Clearing Houses in the country.

– Cheque Truncation System (CTS) , an electronic method of processing cheques will

be rolled out at Chennai. National roll-out of CTS will be considered once this project is

operationalised.

– 24×7 banking: For those of us who have wondered when true 24×7 banking will

arrive, RBI may bring good news. It is considering extending the National Electronic

Fund Transfer system from its current operating timings of 9 am to 5 pm and Saturdays

from 9 am to 12 pm to a 24×7 availability mode or develop a new system similar to UK’s

Faster Payments Service which operates on a 24×7 basis. This is being called India

Moneyline.

– Data Storage Policy: As part of the Information System Policy framework, RBI is

working on a policy for preservation and storage of data / information generated

and maintained both in respect of the paper and electronic clearing modes.

– Umbrella Org For Retail Payment Activity: RBI will finalise the roadmap for

National Payments Corporation of India (NPCI), which has been set-up as an umbrella

organisation by the banking community to take over the retail payment system activities

in the country.

– Cheques To Be Standardised: Using OCR (Optical Character Recognition) capture of

information contained in the cheques, RBI expects to reduce incidence of frauds and limit

manual intervention through straight-through-processing.

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CHALLENGES FOR MOBILE BANKING:

A REQUIRED BEHAVIORAL CHANGE: Banks plan to capitalize on the gap

between usage of mobile in rural & urban scenario to increase further penetration. There

are 300 million mobile users, with 6 million being added every month. Despite such

potential for convenience and business opportunity, few people use mobiles for banking

queries.

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ONLY BANKS CAN OFFER MOBILE TRANSACTION SERVICES: As RBI has

already regulated that only licensed banks that a have a physical presence in India are

allowed to offer mobile-banking services. The banks are responsible for ensuring Know

Your Customer norms, and must have core banking systems in place.

ILLITERACY: Illiteracy could prove an issue when using technologies like mobile

phones, especially for tribal communities. It will take some time for rural mobile users to

understand the usage & importance of mobile banking & to gain confidence amongst

them about technological advancement. Moreover, mobile banking pre-supposes that the

mobile holder has a bank account, and thus along with providing capacity building

organizations will have to focus on financial inclusiveness. This challenge can be

overcome by service provider developing a user friendly mobile application using local

languages.

SECURITY CONCERNS: 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. Security

applications will gain a lot of ground during the period 2009-12. These applications will

include anti-theft and device recovery features via GPS. There will also be a lot of

interest in areas such as remote data locking.

REGULATIONS ON SECURITY: The RBI’s guidelines call for a two-factor

authentication for validation of a customer. The industry has reacted to this by

interpreting that two-factor authentication can be supported only by GPRS and not

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through SMS. Media has also criticized RBI by saying that the new mobile banking

regulations such as the two factor authentication do not facilitate financial inclusion since

basic mobile phones owned by majority of people in rural India do not support GPRS.

HIGH INITIAL TRANSACTION COSTS FOR BANKS: Though the initial cost bore

by banks would be on a higher side but as the customer base increases better gains could

be gained.

Mobile Banking Solution and application

The challenges in developing a sophisticated mobile banking application are:

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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 J2ME and others support 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.

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.

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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.

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.

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

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

1. Preferred Language 2. Date / Time format 3. Amount format 4. Default transactions 5. Standard Beneficiary list 6. Alerts

MOBILE BANKING –THE FUTURE

It has been some time since the first mobile payment solution was prototyped during the

late 1990's. It would be correct to say that next year mobile payments and banking have

been around for a decade. Many challenges were overcome and many deployments made.

During the past ten years many mistakes were made and a lot of money has been invested

(and lost!) to develop the industry to the current stage.

Mobile banking has come of age. The little baby is without doubt a teenager today and

many banks and mobile operators have made serious commitments to making mobile

banking real. Mobile banking moved from the maverick fringe to maintstream relevance

with many success stories and case studies. The question is, what can we expect in the

future... next year and (if it is possible to look that far in the future), the next ten years?

This is some of the things that I believe will materialize:

In the short term, it is my expectation that the following would happen

• I expect that we will see a massive increase in the number of subscribers to

mobile banking functionality. The penetration of subscribers are already quite

impressive, especially in countries like Kenya and South Africa, but this

performance will be replicated in other countries as operators and banks get better

at the products and increase investments in marketing and services.

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• As the numbers increase towards the end of the year, we will see an exponential

increase in transaction volumes, particularly phone to phone payments. The most

important catalyst for this will be the cash-in and cash-out facilities created. With

an increase in subscribers, increased value of cash held in values, transactions will

follow.

• I do not expect any mainstream standards emerging as different suppliers offer

different solutions, but I expect an increase in the ability to inter-connect different

solutions with one another. Even today it is possible to send money from a

Western Union system to a G Cash system. I expect more of these inter-

connections to be built.

• Most mainstream (relevant) banks would participate in mobile banking. At a stage

not to far in the future all banks will realize that they will have to invest in this

technology in order to stay relevant and they will.

In the longer term, I expect some of the following to occur

• Because mobile banking holds the promise of extremely secure authentication

(actual implementation of digital signatures), I expect the emergence of dedicated

identification devices. These devices will hold your identity in digital format. Any

transaction will be unlocked by this device in conjunction with your own private

key or even possibly biometrics. This device will become the most important

thing that you will have with you all the time. (Some people may even be happy

for the device to be implanted in them).

• With an exponential increase in the number of people with access to bank

accounts, more people will be able to receive money, have access to funding and

this will lead to a massive increased economic empowerment. This will directly

lead to a better life for more.

• Ultimately, I expect cash to totally disappear as people start recognizing the

problems associated with cash.

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POTENTIAL FOR GROWTH OF MOBILE BANKING IN INDIA:

There are about 68,000 bank branches in this country and 23,000 ATMs. But what’s

astounding is that the number of mobile subscribers in India, which is 85 million, is

growing by 5 million each month. So while today mobile banking is still not as widely

used, the possibilities are limitless.

Existing Mobile Phone user:

Rural Areas

Urban Areas

Source: IISS Survey

The demand for cell phones is coming mainly from rural consumers, who typically earn

less than $1,000 a year. These buyers haven't been affected by plunging stock and real-

estate prices or tighter bank lending since they typically don't own land and don't borrow.

A large majority of them don't have access to regular landline phone networks -- there are

only about 40 million landline subscribers in India -- so once cellular coverage comes to

their towns or villages they scramble to get their first phones.Mobile banking is poised to

grow rapidly in India. Mobile banking (m-banking) in India, viewed by the government

as a potent tool for financial inclusion, is yet to clear many hurdles before it can fulfil its

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objective of reaching the unbanked masses. Also the mobile density in tier II and III

cities, is 11 per cent and 10 per cent respectively.

Percentage of Household without Bank Accounts

Without Bank Accounts

Rural 59.59

Urban 36.67

Source: IISS Survey

Rural

Urban

Source: IISS Survey

To explore this opportunity several public sector banks have set up or are in the process

of setting up mobile phone-based micro banks. Major players include State Bank of India,

Union Bank of India, Axis Bank, Andhra Bank, State Bank of Hyderabad, Andhra

Pradesh Grameen Vikas Bank and Punjab National Bank. Even telecom providers such as

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Bharti Airtel and Reliance Communications, have tied up with banks to extend their

mobile remittance services to rural areas.

Several technology firms such as Ekgaon Technologies and Spanco Systems, have also

stepped up to offer mobile banking tools. NXP Technologies has done pilot projects for

micro banking in areas such as Aizwal (Mizoram), Medak (Andhra Pradesh) and

Pithoragarh (Uttarakhand).

Little World (ALW), a technology implementation partner, has collaborated with NXP

Semiconductors to design a mobile for the AP government that encloses an RFID card,

and works with ALW's micro-banking platform ZERO.

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.

Recently USA based Obopay Inc., has entered into an alliance with Bangladesh based

Grameen Solutions to deliver mobile banking services to the economically marginalized

people in Bangladesh and India. It may be noted that, Obopay Inc is a mobile-payment

service provider, while Grameen Solutions is a subsidiary of the Grameen Bank. Grameen

Solutions is set to provide the required domain expertise, while Obopay will roll out the

technology platform. The project is likely to start off at Mumbai and Bangladesh

simultaneously from October 2008.

Recently inter-ministerial group is trying to establish a framework for the delivery of

basic financial services using cell phones. (Deccan Chronical, Jan 3rd, 2010)

Mobile banking in India is in a budding stage, with the high penetration of mobile phones

acting as a growth driver. India’s existing mobile phone user base consists of 347 million

users, including 73 million rural users. . In past two years, use of mobile banking has

increased three times. Nearly 85-90% mobile users do not own credit cards and there is at

least 36% of populations who are literate but have mobile phones, though they have no

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access to credit. The mobile banking active user base will reach 2% by 2012, up from the

current 0.2%. (Celent, 2008).

Mobile banking in the world

Mobile banking has come in handy in many parts of the world with little or no Infrastructure development, especially in remote and rural areas. This part of the mobile commerce is also very 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. Countries like Sudan, Ghana and South Africa received this new commerce very well. In Latin America countries like Uruguay, Paraguay, Argentina, Brazil, Venezuela, Colombia, Guatemala and recently Mexico started with a huge success. In Colombia was released with Redesign. In Iran banks like Parsian, Tejarat, Mellat, Saderat, Sepah, edbi and bankmelli offer this service. Guatemala have the support of Banco industrial. Mexico released the mobile commerce with Omnilife, Bancomer and a private company(MPower Ventures). Kenya's Safaricom (Part of the Vodafone Group) has had the very popular M-Pesa Service - mainly used to transfer limited amounts of money, but has been increasingly used to pay utility bills. Zain in 2009 launched their own mobile money transfer business known as ZAP in Kenya and other African countries.

Telenor Pakistan has also launched Mobile banking solution, in coordination with Taameer Bank, under the label "Easy Paisa". Telenor rolled out its Mobile banking solution in Q4, 2009. It was a huge success and customers embraced the wide set of services offered. Eko India Financial Services the is business correspondent of State Bank of India (SBI) and ICICI Bank, India's top two largest banks, and provides no-frills bank accounts and deposit, withdrawal and remittance services to customers (nearly 80% of whom are migrants or the unbanked section of the population) through mobile banking., and also offer micro-insurance and micro-finance facilities to its customers.

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Conclusion:

In short we can say that Mobile banking is growing fast for three main reasons, “The first

is the improvement in Internet-based usability of mobile devices, especially for smart

phones, “Second is the fact that applications optimized for mobile devices are improving

the consumer experience and last is that certain online banking features lend themselves

to mobile, such as balances and alerts.

Mobile banking, a symbiosis of technology and financial services, is the hottest area of

development in the banking sector and is expected to replace the debit/credit card system

in future. Mobile banking has the potential to bring a whole host of people that have

no/little access to land lines/internet connections onto the electronic platform – an

innovative way to generate financial inclusion. India is marching towards m-commerce -

a world where you can make all payments by keying in instructions on your mobile

phone..

In the very near future, one can see m-banking leaping into a new phase. With the advent

of Java-enabled mobile devices, the shape of m-banking services is in for a change. One

would also be ensured the same amount of security and comfort as one would be when

using internet banking Mobile Banking, as has been demonstrated, has gained non-

negligible relevance for banks today. evelopments in the banking sector, e.g. increased

competition on account of technological developments coupled with the process of

globalisation have produced new challenges for banks.

Mobile Banking presents an opportunity for banks to retain their existing, technology-

savvy customer base by offering value-added, innovative services. It might even help

attracting new customers.Further, Mobile Banking presents a chance to generate

additional revenues.Its main contribution, however, can be expected to take place in the

strategic field as it is all set to become an instrument of differentiation. Many banks

recognize this threat and are already taking preventive measures by introducing mobile

services. The foremost significance of Mobile Banking would therefore be of a defensive

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nature. Instead of providing a positive differentiation, Mobile Banking would be

employed to thwart negative differentiation vis-à-vis rivals.

Mobile Banking seems to possess the potential to become one of the widely spread and accepted application in the field of Mobile Commerce, particularly in the backdrop of its high acceptance across commercially important sections of the society. We may expect to see Mobile Banking go into the footsteps of Online Banking, i.e. to become a standard service offered by every bank worth its name.

Bibliography

http://business.mapsofindia.com/banks-in-india/mobile-banking-scheme.html

http://www.buzzle.com/articles/mobile-banking-in-india.html

http://en.wikipedia.org/wiki/Mobile_banking

http://www.celent.com/124_2116.htm

http://dripfin.wordpress.com/2008/09/22/mobile-banking-transactions-in-india-operative-

guidelines-for-banks/

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Questionnaire from the point of view of Banks

Name of the Bank:-

Branches:-

Ø Does your bank provide Mobile Banking?

Yes No

Ø Before providing Mobile Banking facilities does your bank provide

any training for your employees?

Yes No

Ø Do you face any problem while implementing Mobile Banking?

Yes No

If yes type of problem faced by you?

Technical Problem

Administrative Problem

Any other

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Ø Do you face any resistance from your employees while

implementing Mobile Banking system?

Yes No

If yes extend of resistance

Less More

Very Little

Ø Do all the employees in your bank like the change of adapting to

Mobile Banking system?

Yes No

Ø Is there an increase in number of customers after introducing

Mobile Banking?

Yes No

Ø How many customer of your bank uses Mobile Banking?

10 – 30% 70 – 90%

30 – 50% 90 & above

50 – 70%

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Ø How do you convince your customer to use Mobile Banking

facility?

Ø What kinds of facilities do you provide to your customer to ensure

safety of their transaction?

Ø Which kind of banking system does your bank prefers the most?

Traditional Banking System

Mobile Banking System

Ø Do you think Mobile Banking is achieving the Banks objective?

Yes No

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PROGRESS REPORT NO.1

1

Name of Student

Mumtaz G.Tadvi

2

Roll No. and Year

56& 2010-2011

3

Project Title

Mobile Banking:Emerging

Trends and Challenges in Banking Sector

4

Date of Submission

30th October

5

Signature of the Student with Date

6

Signature of Guide with

Date

7 Guide’s Remarks

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Project Schedule :

15thSeptember – 29thoct:

Ø Collecting Secondary data. Ø Preparing theoretical framework of Mobile Banking: Ø Literature review.

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PROGRESS REPORT NO.2

1

Name of Student

Mumtaz G.Tadvi

2

Roll No. and Year

56& 2010-2011

3

Project Title

Mobile Banking:Emerging

Trends and Challenges in Banking Sector

4

Date of Submission

15th December

5

Signature of the Student with Date

6

Signature of Guide with

Date

7 Guide’s Remarks

67

Project Progress Report:

3rd Nov-13thdec:

Ø Research Methodology. Ø Statement of the problem. Ø Need of the Study Ø Prepared Questionnaire .

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PROGRESS REPORT NO.3

1

Name of Student

Mumtaz G.Tadvi

2

Roll No. and Year 56& 2010-2011

3

Project Title

Mobile Banking:Emerging

Trends and Challenges in Banking Sector

4

Date of Submission

31st January

5

Signature of the Student with Date

6

Signature of Guide with

Date

7

Guide’s Remarks

69

Project Progress Report:

Ø Changes made in the questionnaire. Ø Sent questionnaire to bank.

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PROFORMA FOR APPROVAL OF PROJECT SYNOPSIS 2010-2011 SEMESTER IV

(SYMMS, VIVA IMS)

Name : Mumtaz G. Tadvi

Roll No. : 56

Title of the project : Mobile Banking Emerging Trends and Challenges in Banking Sector

Subject Area : Finance

Name of the Guide : Dr M.I.Khan

Signature of the student :

Signature of the Guide :

For Office Use Only

Synopsis Guide

Approved Approved

Not Approved Not approved

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Comments/suggestions for reformation of the project:

Signature:

Date

1. Rationale for the study: Mobile banking can be accessed by mobile and people can use to their advantage and they do not have to be physically present in the banks to check the account balance. Mobile banking has made life much easier and it is a program that is used by the younger generation much more, but if you're Middle-aged or senior person, you can definitely benefit because it is really easy. On all banks which are available in India, we see that SBI is a bank that has always taken care of its customers. It offers easy to use models and methods that have helped attract people to the bank. If you are thinking what is the new offer from the bank to the client, you'll be pleased to know that mobile banking SBI is now a reality. People can now access their accounts through SBI their cell phones. But before that they need to subscribe to the process and then the whole issue will be supported. This is a special application which must be activated by the same banks and if you can do then you will be able to access your account from your cell phone. SBI mobile banking system has been introduced to help people access their bank accounts via their cell phones, and if you look at the records, we see that among the number of people using this technology are the highest youth. With the advent of time, we see that there are various gradations of latest technology and life has become much easier. The banking sector has benefited immensely from the technology of mobile banking. This is a new technology that has been done to make life easier for people and make work easier and faster official. The tech freak people can now breathe easy as it has made life much easier for people. Mobile banking technology allows a person to work with his cell phone and can also be very checking account balance. The official work can be done by the Internet itself and there is absolutely no need to be present at the bank for all official proceedings. The Internet banking has made life a lot easier than it helps people to access bank account sitting at home. If you look at the number of people using the Internet in today's world, we see that the number is indeed massive and people use it either for their personal use or for personal gain. The Internet has now given new impetus to life and helped improve people's lives. In banking Internet has had a huge impact and people are using the environment to ensure that the entire transaction process is completed very quickly. Mobile banking is the new age technology that allows a person with a bank account to access the account from mobile phones. Mobile Banking Software is used by people to access the account. This has indeed helped the people by a huge margin, because they can now have access to telephones as early as possible.

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2. Objectives of The project

4. To understand the trends of Mobile banking in India.

5. To understand the opportunities & challenges faced by Mobile Banking in current

scenario.

6. To understand the future prospects and growth of mobile banking in banking industry 7. To understand the present growth, trends & future challenges for the technological revolution brought about by Mobile Banking in Banking sector in India

5. Mobile banking is used to perform bank transactions through mobile phones

3. Research Methodology:

The present study has been descriptive; the data for this study were obtained from secondary sources. The secondary has been collected from various references which already existed in published form; part of the paper is based on literature review the method comprising of collecting all the available papers relating to the mobile banking and selecting relevant papers / books for the review purpose. Selection of the paper is done on the basis of their relevance and contribution to the body of knowledge. The authors have made an attempt to do a primary reading of the selected papers which will constitute the core of this review study. Finally the papers were selected and reviewed in order to capture various dimensions of mobile banking

4. Period of Study: The proposed study shall cover the period 1st October 2010 to 1st April 2011.

5. Sampling Universe: The sampling universe will include of some bank i.e. ICICI, SBI.

6. Sampling techniques:

The sampling technique to be used for the proposed study shall survey questionnaire will be administered on the of the bank. For this purpose convenient sampling will be used

7. Sample size

The size of sample will depend upon the availability of the Banks.

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8. Sources of Data Primary data: primary data will be collected through questionnaire, observation and in personal meeting.

Secondary data: • Websites, • Books, • Journals etc.

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