Mobile Banking

EXECUTIVE SUMMARY
The last time that technology had a major impact in helping banks service their customers was with the introduction of the Internet banking. Internet Banking helped to give the customer's anytime access to their banks. Customer's could check out their account details, get their bank mobile phone banking is the domain of a lucky few with constantly changing customer preferences and a greater emphasis placed on mobility, it could soon become a mainstream ability. Mobile-phone owners currently have access to mobile banking but choose not to utilise it. This is predicated to change by 2014, when 45 percent of users will actually use it. Advancing technologies will enable mobile banking to become a convenient and quick way for consumers to check their balance as well as pay for goods. "Mobile banking is quickly moving from infancy to commonplace, which will help separate the winners from losers in banks' ability to attract and keep technology-loving consumers," "Consumers are hungry for the 'always-on' and 'real time' ability to monitor and manage their money, and mobile banking serves that need better than any other." One of the factors driving the mobile banking surge is the increased usage of smart-phones, such as the iPhone, as well as the race between phone companies to develop the basic thin-client capabilities dubbed "wrapper applications" designed to integrate financial services into mobile online sites. It will also work in tandem with online banking, with mobile banking being used as a "remote control" and ''online'' as a detailed form of control panel for more complex transactions.By 2014, the percentage of people using mobile banking will equate to approximately 99 million US adults conducting mobile banking transactions at least once per year. 52 percent of these customers are reckoned to be using smart-phones. "Mobile banking is quickly becoming an essential consumer capability," said Mark Schwanhausser, Financial Services Channels Analyst speaking to Cellular News. Mobile banking is a credible channel, but usage in developed markets will remain low IT spending on mobile banking is continuing, but it is not the highest priority channel Mobile bankings greatest opportunity involves serving the needs of the unbanked retail banks and technology vendors must be prepared to play the long game
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INDEX

SL NO 1 2 3 4 5 6 7 8 9

CONTENT PREFACE ACKNOWLEDGEMENT INTRODUCTION OBJECTIVE OF THE STUDY METHODOLOGY OF THE STUDY LIMITATIONS INTRODUCTION TO MOBILE BANKING. A MOBILE BANKING CONCEPTUAL MODEL. CONSIDERATION BANKING WHEN IMPLEMENTING MOBILE

PAGE NO 4 5 6 8 9 9 10 15 15

10 11 12 13 14

FEATURES OF MOBILE BANKING TRENDS IN MOBILE BANKING MOBILE BANKING BUSINESS MODEL MOBILE BANKING SERVICES. UTILITY OF MOBILE BANKING FROM BANKS

16 17 19 20 25

PERSPECTIVE. 15 16 17 MOBILE BANKING DISTRIBUTION CHANNEL TECHNOLOGIES ENABLING MOBILE BANKING. ADVANTAGES AND DISADVANTAGES OF BANKING. 18. 19. 20 MARKETING FOR MOBILE BANKING CHALLENGES FOR MOBILE BANKING FEATURES OF MOBILE COMMERCE 35 36 38 27 29 34

MOBILE

Mobile Banking 21 EMPLOYMENT OF MOBILE TECHNOLOGIES IN BANKING SECTOR 22 23 24 25 26 27 MOBILE BANKING IN BANGLADESH MOBILE BANKING IN THE WORLD THE FUTURE OF MOBILE BANKING RECOMMENDATION CONCLUSION REFERENCE 42 42 44 46 47 48 40

Mobile Banking

PR E FAC E

First of all I would like to be grateful to the Almighty Allah, the merciful and the munificent who helped me to complete this term paper.

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. This opens up huge markets for financial institutions interested in offering value added services. With mobile technology, bank scan offer a wide range of services to their customers such as doing funds transfer while traveling, receiving online updates of stock price or even performing stock trading while being stuck in traffic. Mobile devices, especially smart-phones, are the most promising way to reach the masses and to create stickiness among current customers, due to their ability to provide services anytime, anywhere, with high rate of penetration and potential to grow.

In this term paper I tried to explain the basic concepts, services offered, market survey and technology which enables Mobile Banking.

Mobile Banking

ACKNOWLEDGEMENT

I want to take the opportunity to express my gratitude to all those people who have been instrumental in making this term paper successful.

I would like to express my gratitude to all those who gave me the possibility to complete this term paper. I would like to thank my honorable chairman Prof. Dr. Shelina Akhter, Department of Management Studies, University of Chittagong. I am deeply indebted to my honorable teacher, Mrs. Sharmeen Ahmed, Associate Professor, Department of Management Studies, University of Chittagong, who gave me the permission, opportunity and immense support by stimulating suggestions and encouragement that helped me in all the time of research for and writing of this term paper.

INTRODUCTION
The kind of banking and financial service that gives a real-time mobile access to customer on the move is called mobile banking the services being offered through mobile phone. Mobile banking
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Mobile Banking

to the banking activity that is carried out on mobile (cell) phones that is banking is enabled even while a person is on the move. In modern times, information exchange takes place at great speed. The dependence of people on computing devices such as computers, cellular phone, pager, facsimile machine, e-mail and internet is growing at galloping rate. Such growth has made the real time exchange of information a reality. At the same time it has also thrown challenges to modern enterprises. Which prompt them to act in a proactive manner so as to stay competitive in the business world. The constant innovation happening in the realm of electronic banking and financial services has contributed to a new development called mobile banking this may be attributed to the forth coming demand from the mobile workforce. The increasingly growing number of mobile workforce has really given a cutting edge to the progress of the electronic banking. The mobile banking refers to the facility allowed by certain banks in India whereby the mobile phone holder can undertake certain banking transaction through their mobile phones. This value added services has very little human interface and private banks have started offering this service. The customer is required to type a text message on the mobile phone which travel through the server of the cell phone service provider to banks internet service; information is retrieved and routed back the same way in 15-30 second. To avail the service, the client has to fill up form at any of banks branches and bank informs the cellular service provider to activate the module instantly. The information which includes checking of account balance, request for a Cheque book, stop payment instruction, changing primary operation account, request for current periods account statement to the mailed and access summaries of last three transactions performed on the account. The number of people using mobile banking services has increased. While the trend is growing, lack of awareness of services, apart from perceived security issues are inhibiting faster takeoff. Dataquest. It was clear at the start itself that this would be a battle focused not on technology, but on the mindset of the target audience. Over two years after the launch of mobile banking services in the country, that bridge has been reached and many are beginning to walk those cautious steps across it. Yes, the usage of mobile banking services is increasing, and fast against dataquests estimated user base of under 10,000 for mobile banking services in 2000, there are over 120,000 today who SMS from their banking. Even our survey despite targeting a respondent profile that would bring in more positive answers than negative (see methodology), threw up very low usage numbers. Also, e-commerce as a medium of purchasing and transacting has not
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really caught on, and the basket of mobile banking offerings is, in itself, very limited. The good news the technology backbone is in place, and getting better. Theres CDMA, theres GSM. Forget their battles on the mobile telephony front from the consumers point of view; he never had it so good.

The recent price cuts are also likely to help, say banking experts, adding that this will lead to increasing willingness to move on to mobile, and therefore, to the value-added services that most operators offer today The Internet is revolutionizing the way the financial industry conducts business, empowering organization with new business model and new ways to interact with customers. The ability to perform banking transactions online banks and brokers who offer personalized services through their web portals. This increased competition is driving traditional financial institutions to find new ways to add value to their product and services, gain competitive advantage and increase customer loyalty while also attracting new, high-value client.

OBJECTIVE OF THE STUDY

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Mobile and wireless technology, combined with the wide variety of portable devices available today, enable new revenue opportunities for financial services organizations. This provides a new channel that can be used to refresh and expand the customer base, attract prime customers and enhance loyalty. With mobile and wireless technology, banks can offer a wide possibility of services to their customers, from the freedom of paying bills while stuck in traffic, to receiving notification of a change in stock price while having lunch, the challenge, then is how to turn these possibilities into a reality for the customers.

METHODS OF THE STUDY

Mobile Banking

Following methods have been used to accomplish this proposed solution: Basic principles of existing banking system (Bangladesh) Study the major drawbacks of existing system by interviewing the current employees of different banks. Interviews are mostly taken through emails and in some cases through telephone and Internet chat. Study the existing IT infrastructure of Bangladesh in context of Bank by interviewing the developer of different banking software vendors Study the Online Banking system from different resources that are available in different websites, books and online journals Some of the what-if analysis has been used to measure performance of the proposed solution. Design proposed solution.

LIMITATIONS

Mobile Banking is a very much new concept in our country. Only two banks and three mobile phone operators are trying to implement this. The process is still in a tender age. Thats why a real impact of mobile banking Bangladesh cant be picked up by this study. As there are only two banks implementing it, most of the time I had to rely on web based data for the study.

INTRODUCTION TO MOBILE BANKING

Mobile Banking

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 Bangladesh, 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, Bangladesh, China and Korea. The main reason that Mobile Banking scores over Internet Banking is that it enables 'Anywhere Anytime Banking'. The last time that technology had a major impact in helping banks service their customers was with the introduction of the Internet banking. Internet Banking helped to give the customer's anytime access to their banks. Customer's could check out their account details, get their bank statements, perform transactions like transferring money to other accounts and pay their bills sitting in the comfort of their homes and offices. In fact Korea boasts about a 70% mobile penetration rate and with its tech-savvy populace has seen one of the most aggressive rollouts of mobile banking services. Still, the main reason that Mobile Banking scores over Internet Banking is that it enables Anywhere Banking'. Customers now don't need access to a computer terminal to access their banks, they can now do so on the go when they are waiting for their bus to work, when they are traveling or when they are waiting for their orders to come through in a restaurant. The scale at which Mobile banking has the potential to grow can be gauged by looking at the pace users are getting mobile in these big Asian economies. According to the Cellular Operators'
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Association of India (COAI) the mobile subscriber base in India hit 40.6 million in the August 2004. In September 2004 it added about 1.85 million more. The explosion as most analysts say, is yet to come as India has about one of the biggest untapped markets. China, which already witnessed the mobile boom, is expected to have about 300 million mobile users by the end of 2004. South Korea is targeted to reach about 42 million mobile users by the end of 2005. All three of these countries have seen gradual roll-out of mobile banking services, the most aggressive being Korea which is now witnessing the roll-out of some of the most advanced services like using mobile phones to pay bills in shops and restaurants. 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 mbanking experience. The m-PIN, which is issued by the bank, should be memorized and the PINmailer destroyed immediately. Change your m-PIN regularly and do not share it with anyone. The PIN is valid only for the corresponding phone number, 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
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Group had focused on three major areas of M-banking, i.e.,

(i) Technology and security issues, (ii) Business issues, and (iii) Regulatory and supervisory issues.

Each stake-holder group has the following expectations: a) To meet the following expectations of Consumer: Personalized service Minimal learning curve Trust, privacy and security Ubiquitous - anywhere, anytime and any currency Low or zero cost of usage Interoperability between different network operators, banks and devices Anonymity of payments like cash Person to person transfers

b) To meet the following expectations of Merchant: Faster transaction time Low or zero cost in using the system Integration with existing payment systems High security
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Being able to customize the service Real time status of the mobile payment service Minimum settlement and payment time

c) To meet the following expectations of Telecom Network Providers: Generating new income by increase in traffic Increased Average Revenue Per User (ARPU) and reduced churn (increased loyalty) Become an attractive partner to content providers

d) To meet the following expectations of Mobile Device Manufacturers: Large market adoption with embedded mobile payment application Low time to market Increase in Average Revenue Per User (ARPU)

e) To meet the following expectations of Banks: Network operator independent solutions Payment applications designed by the bank Exceptional branding opportunities for banks Better volumes in banking - more card payments and less cash transactions Customer loyalty

f) To meet the following expectations of Software & Technology Providers: Large markets

g) To meet the following expectations of Government: 13

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Revenue through taxation of m-payments Standards

Enthusiasm for mobile banking services 66% of respondents in the survey considered that mobile banking provides an excellent opportunity to enhance existing customer service. International factors European and Asia-Pacific regions are considerably ahead of the US in terms of mobile banking provision only 10% of US banking organizations taking part in the study currently offer mobile banking against 57% in Europe. Expected growth With 34% of banks (globally) currently offering mobile services to customers, an additional 32% of respondents plan to offer mobile services in the next 12-24 months. 53% of US banks expect to be offering mobile services in the next 12-24 months, giving potential parity to mobile service provision across the globe by 2010 (see Figure 1) The suggestion of considerable momentum for mobile banking over the next two years should be received warmly by mobile providers and bankers alike. The ratio of mobile banking users, i.e. customers adopting mobile services remains modest, but is predicted to grow over the next two years with 58% of banks currently offering mobile banking expecting that at least 1 in 10 customers will be using mobile banking by 2010. However this growth will not come without modification of existing processes. Our challenges are all based on standardization measures with regard to browsers, security demands and operator tariff systems.

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A MOBILE BANKING CONCEPTUAL MODEL

Mobile banking is defined as: "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." 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.

CONSIDERATION WHEN IMPLEMENTING MOBILE BANKING

The creation of mobile services is more efficient and effective when financial institution enters in alliance with mobile operators. The appropriate choice for each player depends on their combined customer base and the share of market each one brings to the alliance.

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The choices are then if one bank should establish alliance with one or many mobile operator. The theories on the evolution of these types of alliances show that the most usual beginning is from one to one. However, the dominant strategy will converge in the long term to a many to many alliance model. For large bank the most convenient strategy is to begin with a closed system; an alliance with one telecommunication company and initially closed to user outside the combined customer base. This will allow the alliance to lock in big customers before other players begin to enter the market. At least one or two condition is needed to maintain the closed system working: a critical mass of customers, or strategic adventure in the operating area. Banks with not so large customer base or that do not want to risk being the first movers in a closed system, would prefer to implement open system alliance and try to capture a larger market share. The decision about the most appropriate alliance to chose will depend on the particular of the bank implementing the mobile services and the availability of appropriate partners for telecommunication operation.

In the same way when choosing wireless platform the critical consideration are the connectivity with the back end system and the market several solutions in a short period of time. There are currently in the market several solution based upon different technology and budget requirements.

FEARURES OF MOBILE BANKING

Mobile Customers: - those who use mobile telephony use mobile banking service. Mobile telephony is used through mobile phones.

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M Commerce: - mobile banking is a part of m Commerce whereby business and trade takes place through mobile on-line. Those mobile users who became on line internet users do M Commerce. Technology based: - Mobile banking are based on technology of development. Mobile banking makes use of internet for transmission, transaction & delivery of banking services. The network provider the required software support. Services: - Mobile banking offers the entire internet-based banking services such as online account opening, account verification, funds transfer etc. Eligibility: - At present, mobile banking is extended only to individual customer having account with any branch of a particular bank that offers internet banking facility. Further, it is also required that the customer is registered as on internet banking customer. Application: - In order to avail the facility of mobile banking, an application duly filled is to be submitted to the bank. The application is invariably made available in the official website of the bank.

TRENDS IN MOBILE BANKING

The advent of the Internet has revolutionized the way the financial services industry conducts business, empowering organizations with new business models and new ways to offer 24x7 accessibility to their customers. The ability to offer financial transactions online has also created new players in the financial services industry, such as online banks, online brokers and wealth managers who offer personalized services, although such players still account for a tiny percentage of the industry. Over the last few years, the mobile and wireless market has been one of the fastest growing markets in the world and it is still growing at a rapid pace. According to the GSM Association and Ovum, the number of mobile subscribers exceeded 2 billion in September 2005, and now exceeds 2.5 billion (of which more than 2 billion are GSM).
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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. 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. This opens up huge markets for financial institutions interested in offering value added services. With mobile technology, banks can offer a wide range of services to their customers such as doing funds transfer while travelling, receiving online updates of stock price or even performing stock trading while being stuck in traffic. According to the German mobile operator Mobilcom, mobile banking will be the "killer application" for the next generation of mobile technology. Mobile devices, especially smartphones, are the most promising way to reach the masses and to create stickiness among current customers, due to their ability to provide services anytime, anywhere, high rate of penetration and potential to grow. According to Gartner, shipment of smartphones is growing fast, and should top 20 million units (of over 800 million sold) in 2006 alone. In the last 4 years, banks across the globe have invested billions of dollars to build sophisticated internet banking capabilities. As the trend is shifting to mobile banking, there is a challenge for CIOs and CTOs of these banks to decide on how to leverage their investment in internet banking and offer mobile banking, in the shortest possible time. The proliferation of the 3G (third generation of wireless) and widespread implementation expected for 20032007 will generate the development of more sophisticated services such as multimedia and links to m-commerce services.

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MOBILE BANKING BUSINESS MODEL

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 NonBank/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
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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

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 check books 11. Balance checking in the account 12. Recent transactions 13. Due date of payment (functionality for stop, change and deleting of payments)
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14. PIN provision, Change of PIN and reminder over the Internet 15. Blocking of (lost, stolen) cards Payments, Deposits, Withdrawals, and Transfers 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

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

A specific sequence of SMS messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. When depositing money, the merchant receives cash and the system credits the client's bank account or mobile wallet. In the same way the client can also withdraw money at the merchant: through exchanging SMS to provide authorization, the merchant hands the client cash and debits the client's account. Investments 1. Portfolio management services 2. Real-time stock quotes 3. Personalized alerts and notifications on security prices
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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

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 this service 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 send out an alert when your account balance goes below a thousand level. pull when the customer explicitly request a service or information from the bank so a request for your last five transaction 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 on enquiry based so a request for your bank statement is an enquiry based service and a request for your funds transfer to some other account is a transaction based services transaction based services are also differentiated from enquiry based

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services in the sence that they require additional security across the channel from the mobile phone to the banks date servers. Based upon the above classifications are arrive at the following services listed below:Push Based Pull based Transaction Based Fund Transfer Bill Payment Other Financial Services like share Enquiry Based Credit / Debit Alerts Minimum Balance Alerts Bill payment alerts trading Account enquiry Account enquiry Cheque Status enquiry Cheque book request Recent history transaction statement Balance

Table:- Classification of Services

DEVICES Mobile phone and palm pilot are the most important wireless devices. Even though, there is solution for both type of devices and some banks use both mechanisms to deliver their service, mobile phone has more potentially due to its rate of penetration especially countries.

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The following table presents the technology and advantages and disadvantages of both: Device Technology Advantages/Disadvantages Mobile phone is a more effective way to reach the unbanked masses, specially in emerging markets. Screen and keyboard will limit functionality.

SMS is a low-cost mechanism for nonvoice communication. Especially important in countries

SMS

Where communication is still expensive. Mobile phone

Pricing is per message send it. Texts are not much user-friendly. It is a more friendly due to its web enabled capacity. It will be expensive for the

WAP

customer(pricing per minute).

Table:- Technology

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UTILITY OF MOBILE BANKING FROM BANKS PERSPECTIVE

At this stage it would be relevant to understand the usefulness of Mobile Banking from the banks perspective. It is therefore imperative to understand the business environment in which banks operate and to identify customer groups that the banks may seek to target via Mobile Banking. 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 Globalization has further intensified the competition. Technical developments coupled with the process of Globalization, 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 Globalization 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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Adapting to Requirements of Core Target Groups: Banks, today, are increasingly confronted with technology-savvy customers who are often on the move. As Wolfgang Klein, Private Customers Director at Postbank, a leading German bank, puts it: Todays customers want to organise banking transactions while on the move, irrespective of opening hours.Banks are responding to this development by introducing mobile services. Core target groups of Mobile Banking are often divided in three categories: a) The Youngsters: The segment of 14-18 years old youth has acquired an important role in the growth of mobile telecommunications and related services. This group is technology-savvy and willing to experiment with innovative products and services. The youngsters, often on the move, demand ubiquitous, anytime service. Though the youngsters as a group are hardly relevant for banks from a financial perspective, they represent the prospective clientele of tomorrow and need to be cultivated in the middle to long-term marketing strategy of the banks. b) The Young Adults: Also this segment is thought to be technology- and innovation friendly. Though this group too is financially not very strong, many members of this group are known to be involved in stock market activities. Further, this group can be expected to enter in short to medium-run a professional carrier so that it needs to be cultivated in order to retain customers of this age-group even after they enter professional lives. c) The Business People: This group of customers, generally in the age-group of 26-50 years, is thought to be the most important one for Mobile Banking. Members of this group are generally well educated and economically well-off. They need to be professionally often on the move and carry mobile devices to ensure accessibility. For this reason they are ideal candidates to use services offered via mobile devices. From the banks perspective this group is particularly attractive on account of its relative economic prosperity and the need for financial services, e.g. home loans for young families.

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In order to fulfill the requirements of these customer groups banks tend to look at Mobile Banking as a promising option. However, these services also have their own utility for the banks.

MOBILE BANKING AS DISTRIBUTION CHANNEL

Mobile Banking enhances the number of existing channels of distribution that a bank employs to offer its services. The efficiency of a distribution channel can be measured by its fulfillment of three major objectives, which are closely related to each other. Increasing Sales Volume One of the primary tasks of a distribution channel is to increase the volume of demand for products at profitable prices .This objective is arrived by increasing operational efficiency so that those losses are minimized that are caused by delays in catering to customer orders. Further, a favorable reputation of the firms logistical capacities may help generate additional orders.

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UK-based Barclays is one of the largest corporate money managers in the 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 a 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.
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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 banking and payments will be on the basis of the ability of financial institutions and mobile operators to balance ease of use with security.

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. For example, customers of the HDFC Bank in India can get their account balance details by sending the keyword HDFCBAL' and receive their balance information again by SMS. Most of the services rolled out by major banks using SMS have been limited to the Enquiry based ones. However there have been few instances where even transaction-based services have been made available to customer using SMS. For instance, customers of the Bank of Punjab can make fund transfer by sending the SMS TRN(A/c No)(PIN No)(Amount)'. 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.
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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 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

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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 actually 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.

4. STANDALONE MOBILE APPLICATION CLIENTS

Standalone mobile applications are the ones that hold out the most promise as they are most suitable to implement complex banking transactions like trading in securities. They can be easily customized according to the user interface complexity supported by the mobile. In addition, mobile applications enable the implementation of a very secure and reliable channel of communication. One requirement of mobile applications clients is that they require to be downloaded on the client device before they can be used, which further requires the mobile device to support one of the many development environments like J2ME or Qualcomm's BREW. J2ME is fast becoming

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an industry standard to deploy mobile applications and requires the mobile phone to support Java. The major disadvantage of mobile application clients is that the applications needs to be customized to each mobile phone on which it might finally run. J2ME ties together the API for mobile phones which have the similar functionality in what it calls 'profiles'. However, the rapid proliferation of mobile phones which support different functionality has resulted in a huge number of profiles, which are further significantly driving up development costs. This scale of this problem can be gauged by the fact that companies implementing mobile application clients might need to spend as much as 50% of their development time and resources on just customizing their applications to meet the needs of different mobile profiles. Out of J2ME and BREW, J2ME seems to have an edge right now as Nokia has made the development tools open to developers which has further fostered a huge online community focused in developing applications based on J2ME. Nokia has gone an additional mile by providing an open online market place for developers where they can sell their applications to major cellular operators around the world. BREW on the other hand has seen limited popularity among the developer community, mostly because of the proprietary nature of its business and because of the steep prices it charges for its development tools. Quite a few mobile software product companies have rolled out solutions, which enable J2ME mobile applications based banking. One such product is Wireless I-banco . The mobile user downloads and installs the wireless I-banco application on their J2ME pone. The J2ME client connects to the wireless I-banco server through the service providers GSM network to enable users to access information about their accounts and perform transactions. One of the other big advantages of using a mobile application client is that it can implement a very secure channel with end-to-end encryption. However countries like Bangladesh face a serious obstacle in the proliferation of such clients as few users have mobiles, which support J2ME or BREW. However, one of the biggest CDMA players in the telecom industry, Reliance Infocomm has about 7.01 million users all of which have handsets, which support J2ME. Reliance has unveiled one of the most ambitious data services deployment program in the country. On the other hand a country like South Korea with
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its tech-savvy population has a widespread adoption of the higher-end mobiles, which support application development.

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. user experience of browsing the internet from a mobile device is familiar and offers a rich UI experience. allows end user to access corporate association. secure connection can be established on most of the mobile browsers.

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 sensitive demographics.
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No offline (out of the coverage) capability.

MARKETING FOR MOBILE BANKING

Mobile banking is poised to become the big killer mobile application arena. However, Banks going mobile the first time need to tread the path cautiously. The biggest decision that Banks need to make is the channel that they will support their services on. Mobile banking through an SMS based service would require the lowest amount of effort, in terms of cost and time, but will not be able to support the full breath of transaction-based services. However, in markets like India where a bulk of the mobile population users' phones can only support SMS based services, this might be the only option left. On the other hand a market heavily segmented by the type and complexity of mobile phone usage might be good place to roll of WAP based mobile applications. A WAP based service can let go of the need to customize usability to the profile of each mobile phone, the trade-off being that it cannot take advantage of the full breadth of features that a mobile phone might offer. Mobile application standalone clients bring along the burden of supporting multiple mobile device profiles. According to the Gartner Group, a leading wireless computing consulting organization, mobile banking services will have to support a minimum of 50 different device profiles in the near future. However, currently the best user experience, depending on the capabilities of a mobile phone, is possible only by using a Standalone client. Mobile banking has the potential to do to the mobile phone what E-mail did to the Internet. Mobile Application based banking is poised to be a big m-commerce feature, and if South Korea's foray into mass mobile banking is any indication, mobile banking could well be the driving factor to increase sales of high-end mobile phones. Nevertheless, Bank's need to take a hard and deep look into the mobile usage patterns among their target customers and enable their mobile services on a technology with reaches out to the majority of their customers.

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CHALLENGES FOR MOBILE BANKING

Key challenges in developing a sophisticated mobile banking application are : 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
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jointly by mobile application developers, wireless network service providers and the banks' IT departments. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network: 1. Physical part of the hand-held device. If the bank is offering smart-card based security, the physical security of the device is more important. 2. Security of any thick-client application running on the device. In case the device is stolen, the hacker should require at least an ID/Password to access the application.
3. Authentication of the device with service provider before initiating a transaction. This

would ensure that unauthorized devices are not connected to perform financial transactions.
4. User ID / Password authentication of banks 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.

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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 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

FEATURES OF MOBILE COMMERCE

Mobile Commerce is characterized by some unique features that equip it with certain advantages against conventional forms of commercial transactions, including Electronic Commerce: i) Ubiquity: Ubiquity means that the user can avail of services and carry out transactions largely independent of his current geographic location (the anywhere feature). ii) Immediacy: Closely related to the feature of ubiquity is the possibility of real-time
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availment of services (the anytime feature). This feature is particularly attractive for services that are time-critical and demand a fast reaction, e.g. stock market information. iii) Localisation: Positioning technologies, such as the Global Positioning System (GPS), allow companies to offer goods and services to the user specific to his current location. LBS can thus cater to consumers needs and wishes for localised content and services. iv) Instant connectivity: Ever since the introduction of the General Packet Radio Service (GPRS) mobile devices are constantly online, i.e. in touch with the network (the always-on feature). This feature brings convenience to the user, as time-consuming dialup or boot processes are not necessary. v) Pro-active functionality: Mobile Commerce opens, by the virtue of its ability to be immediate, local and personal, new avenues for business. The user may choose the products, and services, which he wants to be kept informed about. The Short Message Service (SMS) can be used to send brief text messages to customers ensuring that the right (relevant) information is provided to the user at the right place, at the right time. vi) Simple authentication procedure: Mobile devices function with an electronic chip called Subscriber Identity Module (SIM). The SIM is registered with the network operator and the owner is thus unambiguously identifiable. The clear identification of the user in combination with an individual Personal Identification Number (PIN) makes any furthertimeconsuming, complicated and potentially inefficient authentication process redundant.

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EMPLOYMENT OF MOBILE TECHNOLOGIES IN THE BANKING SECTOR

A cornerstone of Mobile Commerce is built by Mobile Banking, the availment of bank-related financial services via mobile devices. It comprises of services in the field of accounting, brokerage and financial information. Mobile Banking is increasingly being employed by many banks around the world to generate additional revenues, reduce costs or to increase customer satisfaction, often with very promising results. For instance, the utilization of transaction-based MFS of Finland-based Nordea bank grew by 30% in 2004.The number of Frances Socit Gnrale customers using mobile services crossed the mark of one million in year 2004, registering an impressive growth of nearly 200% vis--vis 2003. These facts point toward a positive shift in the customer perception of Mobile Banking. On the other hand, technological developments like Universal Mobile Telecommunications System (UMTS) have provided a new platform for realistic mobile applications. Unlike in the past, when banks offering mobile services suffered a severe setback due to lack of customer interest and unripe technologies, the time seems to be now ripe for (re-)launching mobile services. Mobile Banking is usually defined as carrying out banking business with the help of mobile devices such as mobile phones or PDAs [8; 11]. The offered services may include transaction facilities as well as other related services that cater primarily to informational needs revolving around financial activities. Considering these factors we can define Mobile Banking as following: Mobile Banking refers to provision and availment of bank-related 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, as defined above, includes a wide range of services. These services may be categorized as following:

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Mobile Accounting Mobile Accounting is sometimes characterized as transaction-based banking services that revolve around a bank account and are availed using mobile devices .Not all Mobile Accounting services are however necessarily transaction-based. A more precise definition of Mobile Accounting would therefore characterize it as availment of account-specific banking services of non-informational nature. Mobile Accounting services may be divided in two categories to differentiate between services that are essential to operate an account and services that are essential to administer an account.

Mobile Brokerage Brokerage, in the context of banking- and financial services, refers to intermediary services related to the bourse, e.g. selling and purchasing of stocks. Mobile Brokerage can be thus defined as transactionbased, mobile financial services of non-informational nature that revolve around a securities account. Mobile Brokerage, too, may be divided in two categories to differentiate between services that are essential to operate a securities account and services that are essential to administer that account.

Mobile Financial Information Mobile Financial Information refers to non-transaction based banking- and financial services of informational nature . Mobile Financial Information services include subsets from both banking and financial services and are meant to provide the customer with anytime, anywhere access to information .The information may either concern the bank and securities accounts of the customer or it may be regarding market developments with relevance for that individual customer. The information may be customized on the basis of preferences given by the customer and sent with a frequency decided by him. The information should be provided, ideally, on both, pull and push basis. Information services are an integral part of Mobile Accounting and Mobile Brokerage but they may also be offered as a stand-alone, independent module, i.e. Mobile Financial Information can be offered without offering Mobile Accounting or Mobile Brokerage but vice versa is not feasible.
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MOBILE BANKING IN BANGLADESH

Bangladesh has just entered in the era of mobile banking. The idea is very much new here. Only two banks started mobile banking here. Dutch Bangla Bank Ltd tied up with mobile phone operator Banglalink and Citycell and BRAC Bank tied up with mobile phone operator Robi to give this services to customers. Only Dhaka city is under coverage of mobile banking facility now. Soon the network will expand to the whole country. With Dutch Bangla Bank a customer can make five transactions a day with a maximum of taka five thousand per transaction. One percent commission will be charged for each deposit amount and two percent commission will be charged for each withdraw amount.

MOBILE BANKING IN THE WORLD

Mobile banking is used in many parts of the world with little or no infrastructure, especially remote and rural areas. This aspect of mobile commerce is also 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. In Iran, banks such as Parsian, Tejarat, Mellat, Saderat, Sepah, Edbi, and Bankmelli offer the service. Banco Industrial provides the service in Guatemala. Citizens of Mexico can access mobile banking with Omnilife, Bancomer and MPower Venture. Kenya's Safaricom (part of the Vodafone Group) has the M-Pesa Service, which is mainly used to transfer limited amounts of money, but increasingly used to pay utility bills as well. In 2009, Zain launched their own mobile money transfer business, known as ZAP, in Kenya and other African countries. In Somalia, the many telecom companies provide mobile banking, the most prominent being Hormuud Telecom and its ZAAD service. Telenor Pakistan has also launched a mobile banking solution, in coordination with Taameer Bank, under the label Easy Paisa, which was begun in Q4 2009. Eko India Financial Services,
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the business correspondent of State Bank of India (SBI) and ICICI Bank, provides bank accounts, deposit, withdrawal and remittance services, micro-insurance, and micro-finance facilities to its customers (nearly 80% of whom are migrants or the unbanked section of the population) through mobile banking.

In a year of 2010, mobile banking users soared over 100 percent in Kenya, China, Brazil and USA with 200 percent, 150 percent, 110 percent and 100 percent respectively According to the "2011 China Mobile Banking Industry User Survey" recently issued in Beijing by Chinese mobile internet portal 3G.cn, as of February 2011, mobile banking reached a penetration rate of 52.2% among Chinese mobile internet users, compared to 36.8% in July 2010. The report also shows that the industry is making inroads amongst the middle-age demographic, and users' personal monthly income level continues to rise.

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The Industrial and Commercial Bank of China's mobile banking services led the industry with a penetration rate of 35.1%, followed by China Construction Bank with 35% in second place, while other banks trailed far behind. According to the survey, security was named a key concern by more than 60% of mobile banking users. Micropayments remained the strongest application of mobile banking services, with over 70% of users' largest payments remaining under RMB 1,000, while nearly half made payments no larger than RMB 500. More than 10% of users reported making payments in excess of RMB 10,000.

THE FUTURE OF MOBILE BANKING

The growth of mobile banking technology is increasingly hard to ignore. Analyst firm Javelin Strategy & Research reports that nearly 50 percent of all mobile users in the United States will be using mobile banking within four years and that nearly 50 percent of iPhone and other smartphone users already use mobile financial services today. With 2010 being the year in which mobile banking broke into the mainstream, 2011 will be the year in which financial institutions will look to capitalize on the full potential of the mobile channel -- moving from basic user functionality to full mobile finance; or, "Your bank in your pocket." Where We Are Now The majority of banks currently are in transition between their introductory mobile solutions and a second generation of offerings with greater capabilities. The introductory mobile offerings most banks deploy closely mirror users' online experiences. While this is a fraction of the full

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potential of the mobile channel, it is an essential stepping-stone to move users from the branch and online banking to their own handsets for financial interaction. While the mobile channel still is far from being definitively proven, consumers demand it. Banks are moving from one-way alerts and simple notifications to proactive content in the form of realtime, "actionable alerts." These are personalized, two-way alerts that enable customers to quickly and easily take action directly on their mobile devices in response to previously set alert thresholds or financial events as defined by the consumer. For instance, if a customer's account balance falls below a predefined threshold, an actionable alert is sent to the customer, who can then instantly transfer funds by responding to the alert. Many financial industry analysts, including Javelin, believe that the delivery of real-time, twoway, transaction-driven alerts is one of the keys for financial institutions to provide value to their customers and to drive adoption and usage of mobile banking. Where We're Going As mobile banking gives firms the ability to fully engage in conversations with customers through their mobile devices, coordination of a "business workflow" across different banking systems is required. In order to accomplish this, mobile banking providers must establish open ways to access these different sources of information. This "connectivity" is crucial to delivering fully mobile banking. By opening up the mobile channel to multiple back-end and third-party systems or networks such as VisaNet, mobile payments hubs such as CashEdge or PayPal, remote check-deposit capture technologies such as those offered by Mitek, or contextual marketing systems capable of determining when to present offers, banks can capitalize on the full capabilities of the mobile phone as a consolidation point of all other existing bank channels -- e-mail, online, customer service, and mobile-specific SMS or push notification alerts. In order to provide authoritative value to customers and produce strong adoption (and with it, definitive ROI), third-generation mobile banking solutions must empower institutions to use the mobile channel as an extension of and integrative point for existing technologies. This will
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instantly resolve consumer issues and complete tasks faster and more economically -- making alerts fully actionable. Many financial institutions and mobile vendors today, however, still are tied to basic core functionality, either because they developed a non-scalable, non-adaptable elementary mobile solution, or because they signed binding contracts with core financial technology providers in order to rush a baseline mobile solution to market. The smart mobile banking solutions of tomorrow must anticipate the future expectations of consumers and recognize the potential that the mobile channel represents -- a technology set to increase customer loyalty and satisfaction via conversation creation.

RECOMMENDATION

Some guidelines and consideration banks need to follow implementing wireless banking are: Application servers should be easy to install, configure and add new services. Client application must be easy to install, customized, and add new handheld devices. Integration with other servers and back end services must be easy to implement. The advantages of using standard protocol are attainable mainly through open system.

For smaller financial institution, like credit unions, the outsourcing of the wireless services can solve most of the impediments they would face. Besides the lack of resources and expertise, other reasons for outsourcing are: Financial institution will not divert from it core business. Improve the time to implement the services. Cost and budget can be predicated with more accuracy.
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Wireless services will use the latest in technology.

CONCLUSION

Mobile Banking, as has been demonstrated, has gained non-negligible relevance for banks today. Developments in the banking sector, e.g. increased competition on account of technological developments coupled with the process of globalization 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 nature. Instead of providing a positive differentiation, Mobile Banking would be employed to thwart negative differentiation vis--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.

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REFERENCE

1. www.banking2020.com/2011/.../social-media-statistics-by-the-numbers-june- 2011 2. www.barclays.co.uk Personal Banking Mobile Banking Services 3. www.bankofamerica.com/onlinebanking/index.cfm?...mobile_banking 4. https://www.cibc.com/ca/legal/mobile-banking-security.html 5. www.creditnet.com/.../mobile-banking-growing-in-popularity-19930032.php 6. www.icicibank.com Insta Banking 7. www.infogile.com/pdf/Mobile_Banking.pdf 8. www.mobilecommercedaily.com

9. mobithinking.com/mobile-marketing-tools/latest-mobile-stats
10. http://www.marbridgeconsulting.com/marbridgedaily/2011-03-

30/article/44783/chinas_mobile_banking_penetration_reaches_52
11. www.slideshare.net/.../mobile-payment-value-chain-and-business-models. 12. www.statebankofindia.com/

13. technology.cgap.org/.../new-business-models-in-mobile-banking
14. Tiwari, Rajnish; Buse, Stephan and Herstatt, Cornelius (2006): Mobile Banking as

Business Strategy: Impact of Mobile Technologies on Customer Behaviour and its Implications for Banks, in: Technology Management for the Global Future - Proceedings of PICMET '06.
15. Vaidya (2011): Emerging Trends on Functional Utilization of Mobile Banking in

Developed Markets in Next 3-4 Years

16. en.wikipedia.org/wiki/Mobile_banking.

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