How will e-banking develop?

Mobile banking (also known as m-banking) is a term used for performing balance checks, account transactions, payments etc. via a mobile device. Mobile banking today is most often performed via SMS or the Mobile Internet but can also use special programs downloaded to the mobile device, such as the Citi Mobile, introduced in April 2007. Mobile banking has been slow to catch on, in part because of lack of interest.

According to an academic model [1], 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:
1)Mobile Accounting
2)Mobile Brokerage
3)Mobile Financial Information Services

===Mobile Banking Services===
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

Payments & 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

Investments

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

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

===Challenges===
Interoperability

There is a lack of common technology standards for mobile banking. Many protocols are being used for mobile banking – HTML, WAP, SOAP, XML to name a few. It would be a wise idea for the vendor to develop a mobile banking application that can connect multiple banks. It would require either the application to support multiple protocols or use of a common and widely acceptable set of protocols for data exchange.

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.

Overcoming 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 java enabled applications are of better security, easier to use and offer development of more complex transactions similar to that of internet banking while SMS can provide the basics but becomes a hassle to operate with more difficult transactions.

Security

Security of financial transaction, 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 bank’s IT department.

The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network :

1) Physical security 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 the thick-client application running on the device. In case the device is stolen, the hacker should require ID/Password to access the application.
3) Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions.
4) User ID / Password authentication of bank’s customer.
5) Encryption of the data being transmitted over the air.
6) Encryption of the data that will be stored in device for later / off-line analysis by the customer.

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 (a 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.

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. However, there could be many issues to implement this approach such as upgrade / synchronization of other dependent components.

Personalization

===Sources===
1) http://en.wikipedia.org/wiki/Mobile_banking
2) http://www.time.com/time/business/article/0,8599,1605781,00.html
3) Tiwari, Rajnish; Buse, Stephan and Herstatt, Cornelius (2007): Mobile Services in Banking Sector: The Role of Innovative Business Solutions in Generating Competitive Advantage, in: Proceedings of the International Research Conference on Quality, Innovation and Knowledge Management, New Delhi, pp. 886-894.

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