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Executive Summary

Mobile Banking is gaining increasing acceptance amongst various

sections of the society. This growth can be partly traced back to

technological and demographical developments that have been

influencing important aspects of the socio-cultural behavior in todays

world. The need/wish for mobility seems to be the driving force behind

Mobile Banking in general.

Mobile banking is a way for the customer to perform banking actions onhis or her cell phone or other mobile device. It is a uite popular method

of banking that fits in well with a busy! technologically oriented lifestyle. It

might also be referred to as M-banking or "M"banking.

Mobile phone banking is fast catching up in India! as a cost effective

alternative banking model. It is also a virtual banking model. #owever

there are security issues and regulatory concerns in its usage. Mobile

Banking could pave the way for a greener society! with the progressive

elimination of cash transactions

$owadays everyone uses multimedia phones i.e. Blackberry! I-%hone

etc. "uch handsets are enabled with &'%/(%)" which allows access to

the Internet. This helps Banking through your cell phone anytime and

anywhere.

*inacle mobile banking solution empowers retail and corporate banking

customers with access to banking services through "M" and

(%)"/&'%-enabled handsets! leveraging a single platform. It offers

both mobile commerce +m-commerce, and mobile payments within the

$' of mobile banking! with built-in support for merchant-initiated

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payments and reversals! in addition to customer-initiated payments and

reversals. everaging recent technological advances in the mobility

space! the mobile banking solution empowers banks with the means to

innovate by easily deploying new services! with improved time to market.

The end user eperience thus created is richer! secure and truly

convenient.

Mobile Banking uses eisting and rapidly epanding mobile phone

infrastructure! and therefore! has the potential to be deployed widely and

affordably to epand access to easy electronic payment services without

the need for visiting a bank branch.

This research pro0ect eamines the opportunities for banks to generate

revenues by offering value-added! innovative mobile banking services

while retaining and even etending their base of technology-savvy

customers.

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Introduction to Mobile Banking

'cross developing countries! millions of people rely on informal

economic activity and local level networks to earn their living. Most of

these populations are from bottom of pyramid and they dont have

access to basic financial services/banks as access to them is costly and

very limited. #owever! the outstanding growth of mobile sector worldwide

has created a uniue opportunity to provide social and financial services

over the mobile network.

#ow many times you visit your bank or wait endlessly for a phone call to

get through customer care 0ust to check your bank balance1 2ou need

not waste your precious time for these small 0obs anymore. $ow you can

access your bank account and conduct a host of banking transactions

and inuiries through Mobile Banking service.

Mobile Banking is a service that allows you to do banking transactions

through your mobile phone without making a call! using the "M" / &'%

facility. 2ou can check your balance! stop a cheue payment! or even

pay your utility bills. Mobile Banking service gives you account

information and real-time transaction capabilities from the mobile phones

anywhere! anytime.

Mobile Banking refers to the supply and availability of banking and

financial services through mobile telecommunications euipment. The

scope of services offered can also agree on banking and trading

operations! accounting and management of personal information for

reference.

The amount of banking you are able to do on your cell phone variesdepending on the banking institution you use. "ome banks offer only the

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option of tet alerts! which are messages sent to your cell phone that

alert you to activity on your account such as deposits! withdrawals! and

'TM or credit carduse. This is the most basic type of mobile banking.

' more involved type of mobile banking allows the user to log into his or

her account from a cell phone! and then use the phone to make

payments! check balances! transfer money between accounts! notify the

bank of a lost or stolen credit card! stop payment on a check! receive a

new %I$! or view a monthly statement! among other transactions. This

type of banking is meant to be more convenient for the consumer than

having to physically go into a bank! log on from their home computer! or

make a phone call.

"ome financial institutions take a different approach to mobile banking to

offer their customers. They make customers with special software

downloaded on their mobile phones! which functions as a client for the

mobile banking services.

Mobile Banking in India

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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 3information-based -- customers

engage in m-banking services like balance enuiry! last three

transactions! 4alerts4 for strange activities in bank accounts etc. "ome

banks like IBI Bank are also offering bill-payment services to

customers through m-banking.

#owever! 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.

*irstly! as m-banking is currently "M"-based! the transaction delivery

time is not guaranteed since it is dependent on factors like "M"5 +short

message service centre, congestion and network strength in the area

where the customer is located. "econdly! 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. &ith the advent of 6ava-enabled mobile devices! the shape of m-

banking services is in for a change. 7ne would also be ensured the

same amount of security and comfort as one would be when using

internet banking.

Mobile Banking Perceptions

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7ver 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. Mobile banking which is an integral part of m

5ommerce has become very popular among mobile users ever since its

eistence in 899:. It creates new! convenient communication and fast

financial transactional channel for mobile users which is accessible from

anywhere! anytime. 5hecking account information! balance available!

credit/debit card information! cheue status! setting alerts! payment

reminders! locating 'TMs and bank branches! accessing mini statement!

accessing loan and euity statements! insurance policy management!

placing orders for cheue books etc via mobile phones are some of the

services offered in mobile banking. &ith multiple access channels such

as "M"! downloadable client! mobile Internet +&'%, mobile banking is

encouraging mobile users more to eplore the service.

To know about the different perceptions of Mobile Banking the following

activities were carried out;

'n opinion was taken from the *inacle Team +Mobile Banking ivision,!

Infosys Technologies.

To have a wider idea about mobile banking among common man a

survey was conducted with the common people to know its use.

*inally to know how it is helping the banks an interview was conducted

with Mr. Tarun 6ain! Branch Manager! I5I5I Bank +


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"! #hat $as the motivation behin evelopment of Mobile Banking

pro%ct&

There are multiple opportunities and challenges faced by the bank in

todays environment:

Approximately 40% percent of the Indian population is unbanked

!etting up branches in all these areas "ill increase the cost of

operations significantly

All these service outlets need to be connected

#iven the lo" cost of most phones$ "ide penetration of mobile

technology and the ease of use$ obile banking acts as an effective

tool for offering a cheap$ cost efficient and convenient solution to the

"ide range of customers

'! #hat is Mobile Banking service&

&anks can provide the various services to the customer on their

mobile The most popular being &alance In'uiry$ (unds transfer$

obile payments and AT )ocator services

! In yo%r eperience $hat is b%siness potential of Mobile

technology& #hat are the ne$ services $hich $ill become

$iely accepte&

obile banking provides is a cheap channel for the banks to provide

their services due to the follo"ing reasons:

The cost of a mobile is far less than a computer hence services

hosted on the internet channel can be provided on the mobile

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*ustomer carry a mobile "herever they go and ho"ever remote

the place is$ thus for the customer the bank is available in the

pocket all the time Thus the customer is likely to do more

transactions than before

In addition to the banking transactions offered in the mobile$ there "ill

be other services like obile top up$ movie ticketing and other value

added services "hich "ill be popular services on the mobile

*! #hat are the +isks epose by Mobile Banking& o$ o

In%stry - .roviers - +eg%lators aress to minimi/e these

risks&

There are multiple channels in mobile banking in "hich it can be

offered to the customer The first one is the !! channel "here the

customer uses her mobile handsets to send and receive messages

on the mobile+ the second channel is the bro"ser based channel

"here the customer uses the mobile bro"ser to do transactions on

the mobile by accessing the banks "eb site and+ the third channel is

the rich do"nloadable client "here the customer do"nloads an

application and use the applications to do transactions

The !! channel being a store and for"ard channel is the most

convenient but the "eakest channel in terms of security As the

transactions go through t"o net"ork the Telco net"ork and the

internet it is susceptible to more risks

(e" measures taken by regulators$ banks and solution providers are

as follo"s:

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)imit on the number of transactions$ velocity of transactions and

transaction amounts are enforced

All transfer transactions to be implemented using t"o factorauthentication mechanisms

,ncryption of data over net"ork

0! #hat .ercentage of bank1s c%stomer %se Mobile Banking

effectively&

There are no clear numbers "hich "e have as of no"$ it depends on

the geographies$ culture of the land the services offered on the

mobile This being a nascent channel has around -./0% of the

customers on this channel This ought to improve "ith more

emphasis and kno"ledge of using this channel

2! #hat are the challenges face by In%stry $ith Mobile Banking

technology an offerings&

The main challenge is to get the customer to use the mobile device to

access banking services "hich is smooth and easy for the customer

It also aims at reducing the risk perception of the customer

3! #hat sho%l +eg%lators or 4overnment o to s%pport

avancement of Mobile Technology&

There is a lot of emphasis from the &I to"ards advancement of

mobile technology for offering mobile banking services In fact$ &I

has one of the very "ell defined guidelines for implementation of

mobile banking

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5! #ith 4 net$ork coming soon, $hat revol%tions o yo%

envisage in the offerings&

1ith the introduction of 2# and ne" and more po"erful devices$

banks "ill be able to offer a lot more services on the mobile The user

experience for the customer in using mobile for accessing data

services "ill improve In advanced countries like 3! "e even have

services like emote eposit capture on the mobile

+eport of 6%rvey taken $ith the common people

' survey was conducted with the common people to ascertain the level

of awareness about mobile banking! about the services offered! and

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about the banks that offered them= and two! to find out what services

were used! and with what freuency.

' sample of 8> people was taken and few uestions were asked related

to their use and awareness of Mobile Banking. The result was that they

use mobile banking services only to check account balance! with very

few actually conducting transactions. The obvious reasons for this?lack

of awareness of services offered by banks and eually important! a

perceived issue of security and confidentiality. 5learly! banks have not

done enough to push their bouuet of mobile banking services.

D%ring the s%rvey the follo$ing 7%estions $ere aske8

"! ave yo% hear abo%t Mobile Banking&

9o%rtesy : D;T;6T

'pproimately 8@A +@ people, of the sample had heard about Mobile

Banking. This is due to lack of awareness among them.

'! #hat Mobile Banking services from the follo$ing o yo% %se an

$hich of them are yo% a$are of&

Balance check

5heck Book )euests

Mini "tatement transactions

*ied eposit/7ther enuiries

%aying bills

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9o%rtesy : D;T;6T

7ut of those who were aware of Mobile Banking "ervices only

8A +@ %eople, were actual users where 4checking of account

balance4 scored high! followed by reuests for cheue books and

mini-statements! fied deposit enuiries and paying bills.

! #o%l yo% like to %se Mobile Banking 6ervices&

9o%rtesy : D;T;6T

&hile awareness remains at 8@A! people are keen to try out mobile

banking. @CA +D@ people, evinced interest in the services. (iven the

convenience factor?the fact that mobile banking can be used from

anywhere in the world as long as one can send and receive "M"?

most were interested.

*! #hich option $o%l yo% prefer?Mobile or Online Banking&

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9o%rtesy : D;T;6T

7ut of those who actually use mobile banking 9A +D9 people,

preferred online banking and @9A +D> people, preferred Mobile

Banking. 'lso! e-commerce as a medium of purchasing and

transacting has not really caught on! and the basket of mobile

banking offerings is! in itself! very limited though the technology

backbone is in place! and getting better.

0! ;re yo% %ncomfortable $ith M:Banking transactions& If @es,

$hy&

9o%rtesy : D;T;6T

7f the people who are both aware of and use m-banking services!

most say 4security4 is a key concern. &hile theres hardly any security

risk in sending "M"! a perception about it is there?banks! therefore!

need to educate consumers on this front.The net reason is that people generally feel more comfortable

making physical transactions. This may seem technology-unsavvy!

but this is borne out by the survey.

2! #hy o yo% %se M:Banking 6ervices&

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9o%rtesy : D;T;6T

"aving on time is the key factor pushing mobile banking. *orget about

going to the nearest 'TM or even logging on to the Internet via the

%5! or using the landline for phone banking and waiting... (et clicking

on the mobile keys! send an "M"! and voila?you have your answer.

"aving time and ease of usage will be the key enablers for mobile

banking services.

"o what is the scenario like in India1 Barring a few private banks?I5I5I

Bank! #*5 Bank! IBI Bank?and a few M$5 entities?5itibank! 'B$

'mro! "tanchart and #ongkong Bank?few others offer a wide portfolio

of mobile services. %ublic sector banks do not figure prominently in this

picture yet. But the number of users is growing.

Mobile devices and the cost of technology are also coming down fast!

and this has been making will ownership and access both viable and

affordable. Many banks now have a built-in delivery mechanism that

offers services and 8: access to them. Enlike Internet banking that is

%5-restricted! mobile banking provides banks with an unparalleled

opportunity to reach customers in an unrestricted environment. Better-

integrated customer relationship channel for better service is what these

banks believe in.

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Intervie$ $ith Mr! Tar%n Aain, Branch Manager, I9I9I Bank,

(har #est)

5As the intervie" "as conducted via email a copy of the email has been

attached in bibliography for reference6

"! #hat is Mobile Banking accoring to yo%&

obile &anking according to me is using our mobile phones for

in'uires pertaining to account 7 doing banking transactions 1ith

obile &anking$ you can conduct any financial and non financial

transactions effortlessly and securely (rom making payments to

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checking your account information$ obile &anking allo"s you to

bank from any"here at any time

'! #hat are the specific services offere by I9I9I %ner mobilebanking&

The specific services offered by I*I*I &ank under obile &anking are

obile &anking 8thru !!9 7 iobile I*I*I &anks mobile banking

service has revolutioni;ed the "ay in "hich you can bank It is not

only a convenient mode of banking but also offers you various

benefits like:

Anytime any"here direct access to your bank accounts


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shopping "hich allo"s you to recharge your prepaid mobile number

and book your movie tickets

! #hat are the charges applicable for the %se of this service&

The customers can avail obile &anking service from the bank for

free There are no specific charges as such If there are any revised

charges I*I*I &ank "ill inform all the customers

Incase of iobile$ I*I*I &ank offers iobile at no cost to its

customers >ou can do"nload and use this application as and "hen

needed "ithout any charges by the bank >our mobile operator "ill

levy charges for #


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obile Alerts are not restricted to any service provider These alerts

are sent via !! directly to your phone If your service provider

supports the !! facility$ you can avail of this service

2! ;re there any limitations on f%n transfer facility (like a

maim%m transfer limit, or a limite scope of receivers)&

>es$ due to various security reasons there has to be a capping on the

upper limit for transfer of funds (inancial transactions are only

possible on iobile There is a limit of s-0000 per day for financial

transactions using obile &anking

3! o$ has mobile banking helpe yo% in increasing c%stomer

base an generate more reven%e&

This service is outstanding and it offers a value added service to the

customers 7 increases the stickiness of the customer for the bank

5! #hat is the feeback yo% have receive from c%stomers abo%t

this service&

The service is ama;ing It has received an excellent feedback from

the customers

C! Is the n%mber of c%stomers %sing mobile banking service

consierable or still a minority co%nt&

?o$ due to absence of data to support$ there are not many people

"ho use it

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"! Does the %se of Finacle as yo%r banking sol%tion help yo% a

great eal $ith Mobile banking&

>es The solution provides a faster$ richer$ secure and convenientuser experience$ ensuring inclusion of customers "ith various mobile

devices

""! #here o yo% see mobile banking in the f%t%re&

The customer base is increasing at a very fast rate obile banking is

gro"ing very rapidly and "ill soon become the main channel forbanks to be in touch "ith their customers

Implementation of Mobile Banking

The following steps need to be followed to implement Mobile Banking;

esignate a particular account linked to your 5ustomer-id as the7perative 'ccount.

Balance inuiry will give you information on all accounts linked to your

5ustomer Identification $umber.

'll other transactions will give you information on your 7perative

'ccount.

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Mobile Banking thro%gh 6M6

Mobile Banking with "M" is conducted through "M" codes sent to a

particular number as directed by your bank. 2ou will receive the

response in the form of a tet message on your mobile phone screen

within a few seconds. *or eample to get details of your #*5 bank

account you will use codes like #*5B'! #*5TF$! #*5"TM!

#*5"T%G@ digit cheue no.H! etc. for balance enuiry! last transaction

details! account statement! stop cheue payment etc. respectively.

o$ it $orks&

The message sent by you travels from your mobile phone to the "M"

5entre of the 5ellular "ervice %rovider! and from there it travels to the

Banks systems. The information is retrieved and sent back to your

mobile phone via the "M" 5entre! all in a matter of a few seconds.

Operative Guidelines by BI

Mobile phones as a delivery channel for etending banking services

have off-late been attaining greater significance. The rapid growth inusers and wider coverage of mobile phone networks have made this

channel an important platform for etending banking services to

customers. &ith the rapid growth in the number of mobile phone

subscribers in India! banks have been eploring the feasibility of using

mobile phones as an alternative channel of delivery of banking services.

In order to ensure a level playing field and considering that the

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technology is relatively new! )eserve Bank has brought out a set of

operating guidelines for adoption by banks.

+eg%latory E 6%pervisory Iss%es

7nly banks which are licensed and supervised in India and have a

physical presence in India will be permitted to offer mobile banking

services.

The services shall be restricted only to customers of banks and

holders of debit/credit cards issued as per the etant )eserve Bank ofIndia guidelines.

7nly Indian )upee based domestic services shall be provided. Ese of

mobile banking services for cross border transfers is strictly

prohibited.

The guidelines issued by )eserve Bank on J


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

mandatory physical presence of their customers! before commencing

mobile banking service.

7n registration of the customer! the full details of the Terms and

5onditions of the service offered shall be communicated to the

customer.

Inter:operability

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. )estriction! if any! to the customers of particular mobile

operator+s, is permissible only during the initial stages of offering the

service! up to a maimum period of si months sub0ect to review.

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 reuire

inter-operability between mobile banking service providers and banks

and development of a host of message formats

9learing an 6ettlement for inter:bank f%ns transfer transactions

To meet the ob0ective of a nation-wide mobile banking framework!

facilitating inter-bank settlement! a robust clearing and settlement

infrastructure operating on a 8: basis would be necessary.

%ending creation of such a national infrastructure! banks may enter

into bilateral or multilateral arrangement for inter-bank settlements!

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with epress permission from )eserve Bank of India! wherever

necessary.

Transaction limit

' per transaction limit of )s. 8>99/- shall be imposed on all Mobile

Banking transaction sub0ect to an overall cap of )s. >999/- per day!

per customer.

Banks may also put in place monthly transaction limit depending on

the banks own risk perception of the customer.

Boar approval

'pproval of the Board of irectors +ocal Board in case of foreign

banks, for the product as also the related security policies must be

obtained before launching the scheme.

;pproval of +eserve Bank of Inia

Banks wishing to provide mobile banking services shall seek prior

one time approval of the )eserve Bank of India! by furnishing full

details of the proposal.

Mobile Banking Services

&ho can avail Mobile Banking services1

To avail Mobile Banking services you must have;

'n account in a Bankthat offers Mobile Bankingservice e.g. #*5

Bank! I5I5I Bank

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2ou must be a subscriber of any of the 9ell%lar 6ervice .roviers

which have tie %p $ith yo%r Bank

2ou have to ;pply for Mobile Banking through an appropriate'pplication *orm with your bank

Most of the Banks offer Mobile Banking service absolutely *).

'lthough "M" 5harges for outgoing messages would be charged as

usual by your mobile phone "ervice %rovider.

Mobile Banking ;lerts

"ome banks also provide the facility of Mobile Banking 'lerts where you

can get regular updates of transactions in your account as they happen.

These include;

5redits to your account +you choose a threshold credit amount! above

which youd like to be alerted,

ebits to your account +you choose a threshold debit amount! above

which youd like to be alerted ,

5heue returned +(et to know every time a cheue deposited in your

account is returned,

6ome of the 6ervices that are available thro%gh Mobile Banking

are8

2ou can get your Balance details

(et Transaction details

)euest for a 5heue Book

"top a 5heue payment24


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Inuire about a cheue status

)euest an account statement

(et *ied eposit details

(et Bill payment details for lectricity! Mobile phone and Telephone

services

%ay your bills

M-Banking: The Services Bouquet

ICICI Bank HDFC Bank IDBI Bank HSBC Bank of America Citibank AB Amro

Balance enquiry

Last few transactions

Cheque payment status

Stop payment of cheques

Statement request

Cheque book request

Business Models for M!Banking

!ource:


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Business Models for Mobile Banking can be broadly classified into three

categories;

'lternative Banking Model

Nirtual Banking Model

Bank-on-Mobile Model

;lternative Banking Moel

Ender this model! banks use mobile phones as an alternative banking

channel! similar to Internet banking! to provide certain banking facilitiesto their eisting customers. ' customer needs to register his mobile

number with the bank! which! in turn! uses the number to provide

banking facilities over mobile such as balance enuiry! alerts! funds

transfer! etc.

The mobile operators role in this model remains limited to the etent of

transmitting messages between the bank and the customer for which

they charge normal rates. "uch model is in use by a number of banks in

India! yet its scope remains restricted since! only the eisting bank

customers get such facilities and! hence! it does not meet the

reuirements of the hitherto unbanked masses.

*urther! the scope of funds transfer is limited to a registered payee

maintaining a bank account and! hence! it cant be used at the %oint-of-

"ale +%7", or effecting various small payments and remittances. In

India! this type of M-Banking model has been approved by the )BI.

irt%al Banking Moel

Ender the virtual banking model! banks have no role to play and the

entire services are provided by the Mobile "ervice %roviders +M"%, by

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acting as virtual banks. The operator enables customers to purchase

goods and services through their mobile phones and payments are

debited to their prepaid cards or post paid bills. 7perators allow usage of

talk-time as a virtual currency! whereby users can purchase and transfer

talk-time to another person! who! in turn! can get the same redeemed for

cash from the nearest operators outlet. 'lthough this model is simpler

and has better scope in spreading financial inclusion! yet! the lack of

involvement of the banking system in the process makes it vulnerable to

inherent risks +such as money laundering and systemic risk, involved in

a payment system. "uch risks are better managed by the banking

system under the supervision of the 5entral Bank. Besides! the model

also suffers from an inherent legal weakness that in India it can not carry

out full-fledged banking activities in terms of prohibition contained

under "ection : of the Banking )egulation 'ct! DOO. The simplicity and

wide coverage of this model needs to be supplemented by the strong

foundation of the banking system so as to make M-Banking a realsuccess.

Bank:on:Mobile Moel

Bank-on-Mobile presents another model of M-Banking by using a hybrid

system in which the mobile service provider enters into a tie up with a

bank to offer M-Banking "ervices. *inancial messages are sent across

the mobile network in an encrypted form to the bank where the message

is decrypted and authenticated using the mobile operators public key

infrastructure +a set of public key-private key and hashing algorithm,

integrated into banks application software. The desired payment and

settlement is carried out through the banks eisting infrastructure and a

confirmation is sent to the concerned parties related. ' sound

communication system ensures instantaneous completion of

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transactions. This kind of arrangement provides a sufficient leverage in

creation! distribution and management of M-Banking services due to

synergic benefits of the combined entity of mobile network operators and

banks. "uch an arrangement is regarded as more credible! secure and

better positioned to cater to the reuirements of a large cross-section of

the population including unbanked ones.

"dvantages 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. *or

eample an average teller or phone transaction costs about P8.C@ each!

whereas an electronic transaction costs only about P9.D9 each.

'dditionally! this new channel gives the bank ability to cross-sell up-sell

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away from cash with introductions of low cost solutions such as micro-

payments to further efficiency gains.

6M;+T Money

The service was launched in ecember 8999 in co-operation with *irst

-Bank! which has since been acuired by Banco de 7ro! and

Master5ard! one of the worlds leading payment services providers.

'ccording to "M')T! "M')T Money was the worlds first re-loadable

electronic cash wallet! linked together by their cellular network. 7nce

cash has been transferred to the "M')T 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 "M')T

Money card to another.

4:9ash

The service was launched in 7ctober 899! with an initial set of three

anchor services= international and domestic remittance! %8% +phone-to-phone or person-to-person, transfers and payments for retail purchases.

&ith (-5ash! all of (7Bs subscribers are m-5ommerce-enabled. 's

users do not need to have a card or bank account to be part of the

service! (-5ash is able to provide M-5ommerce capability to a

previously underserved segment of the market! including those who

currently do not do banking. Enlike "M')Ts approach whereby it

operates the service 0ointly with B7! (7B on its own maintains

records of all transactions and arranges settlement between the retailers

and the (-5ash customers. (-5ash provides services through close to

!O99 retail outlets nationwide and more than >99 (-5ash partners.

Mobile +emittance

Migrant remittances! which are personal flows from migrants to their

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friends and families! have become a ma0or source of eternal

development finance! and in the process! play an effective role in

reducing poverty. 5apitaliQing 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 thro%gh Mobile Technology

5urrently! a ma0or 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 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 freuent power

failures. #ence! providing microcredit through a mobile platform +"M"-

based, could be the best way to reach out to the poor.

#inacle ! " Banking Solution

*inacle is the heart of the entire technology infrastructure in a bank. It

looks after all back-office operations! where every transaction in the

bank actually happens. It is the lifeblood of the bank. 'll other

applications interface with *inacle.

*inacle +from Infosys, is an integrated! centraliQed! multi-currency and

multi-language-enabled and functionally rich banking solution to addressretail and corporate banking reuirements. *inacle helps banks by

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providing an integrated transformation approach! complete with banking

solutions and services.

*inacle helps banks &I$ I$ T# *'T &7) by providing solutionsand services that enable a shift in their strategic and operational

priorities. The offerings address the comprehensive technology-led

business transformation reuirements of retail! corporate and universal

banks worldwide by maimiQing their opportunities for growth! while

minimiQing the risks that come with such large scale transformation.

*inacle from Infosys partners with banks to power-up their innovation

agenda! enabling them to differentiate their products and service!

enhance customer eperience and achieve greater operational

efficiency. *inacle solutions address the core banking! wealth

management! 5)M! Islamic banking and treasury reuirements of retail!

corporate and universal banks worldwide. *inacle solutions also

empower banks with multiple sales! service and marketing channels

including e-banking! mobile banking and call centers. These offerings

make *inacleR a strong innovation-facilitator enabling banks to

accelerate growth! while maimiQing value from their large scale

business transformation.

's a leader in banking transformation! *inacle has a global footprint

across @9 countries and has been acknowledged by top analysts

including (artner! *orrester and 5elent among the leaders in the core

banking solution space. *inacle is also the winner of a series of awards

for its innovation and implementation capabilities! the most notable ones

being The Banker Technology 'ward and The 'sian Banker IT

Implementation 'ward.

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"everal differentiating features make *inacle one of the most

comprehensive! fleible and scalable universal banking solution.

*inacle is used in over DDD banks across @C countries as on 899S.

#inacle Mobile Banking Solutions

*inacle Mobile Banking solution provides retail and corporate banking

customers with access to banking services through "M" and

(%)"/&'%-enabled handsets! leveraging a single platform. It offers

both mobile commerce and mobile payments within the $' of

mobile banking! with support for merchant-initiated payments and

reversals! in addition to customer-initiated payments and reversals

through manual "M" banking. The solution provides a faster! richer!

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secure and convenient user eperience! ensuring inclusion of customers

with various mobile devices.

Mobile banking solution *inacle functions in combination with differenthost systems! the core banking solutions! payment networks and third

party applications. The solution is orchestrated with Infosys M-5onnect

locally advanced middleware! transactions between mobile users!

devices! and the '7 universal banking solution *inacle interface.

Infosys M-5onnect manages multiple form factors and mechanisms for

access to multiple devices! make a contet for 'daptive "erver

transaction. This provides the banks with a strong channel to customer

segments! serving from mass tourism tributary of the under steer or

without a bank account! made to tackle the challenge posed by the

variety of mobile devices.

The solution supports downloaded the synchroniQation clients! '7s own

data on their mobile phones without re-downloading the application on

the client mobility. It allows the banks to their transactions over the

Internet use and support eisting capabilities to epand the mobile world!

in almost real time. This opens the way for the benefits of integration

through the use of the common interface for mail! maintenance and

deployment costs are reduced.

ey Mo%les

The bank offers mobility of *inacle is a logical etension of the proven

solution for Internet banking. 'll *inacle! the online capabilities '7" can

be translated into the mobile channel! minimiQing delays! providing a fast

time of placing on the market for banks.

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9%stomer on:boaring

*inacle enables the bank '7" eisting customers should be directed to

the mobile channel for banking and payment transactions by using the

following methods;

%hone banking leveraging the banks tele-banking call center

Mobile banking facility reuested by sending "M" reuest in

prescribed format

)egistering for mobile banking through the banks Internet banking site

Mobile banking capabilities by sending "M" application desired format

prescribed 'pplication for Mobile Banking by the Bank! '7" Internet

banking site.

The different variants of mobile banking are;

Browser-based mobile banking

ownloadable client-based mobile banking

Manual "M" Banking

*inacle offers several features for the consumer and corporate

customers to use (%)" or &'%-based transmission. ' preliminary list

of features is as follows;

'ccount Management and 'pplications

ocal payments! bill payments and transfers

'pprovals for the transaction of business customers

Merchant %ayments and recoveries for the %7"! telephone or Internet

purchase transactions

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"upport for administrative tasks such as secure e-mail to relationship

manager! permits! change password! data synchroniQation and self-

audit

B%siness Benefits

; 6trong Frame$ork Incl%sivity

*inacle mobile banking solution leverages Infosys M 5onnect to

smoothly hurdle the challenges posed by the multiplicity of form

factors and access mechanisms on multiple devices to provide a

contet-adaptable view to the transaction server. This enables banks

to include! through the mobile channel! its various customer

segments! ranging from the #$&I to specific unbanked communities!

surmounting the compleities of diverse location and dissimilar mobile

devices.

Maimi/e Innovation

Banks can leverage *inacle mobile banking solutions indigenously

developed middleware Infosys M 5onnect! to configure an unlimited

palette of services from any channel! to the mobile space! with ease.

The need for development of new back end services is precluded due

to the availability of a banking solution behind the mobile interface.

*inacle also provides the fleibility to deploy services over the

eisting online banking platform or through a standalone delivery

channel interfaced directly with the relevant host systems. This

ensures the rapid delivery of a comprehensive range of financial

services! embellished with new innovative features! on mobile

devices.

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9ost 6avings

The solution presents banks with the advantages of reduced

integration by leveraging common interface messages! maintenanceand deployment costs. This translates into significant cost savings

without banks having to compromise on features or the range of

devices supported. The mobile banking solution is inherently

independent of the network service provider! obviating the need to

build a business model that involves costs and profits sharing with

them.

+ob%st 6ec%rity

The solution offers etensive features such as encryption of &eb

'pplication "ecurity! check references on the &eb and session

management to create a solid security framework. The solution also

supports 7T% +7ne Time %assword,! which provides a mechanism forthe two-factor authentication for users to communicate with the

mobility of customers to download to make. This allows the bank to

products that are now very safe and adapted to withstand the

onslaught of threats associated with mobile transactions.

9%stomer Delight

*inacle mobile banking solution enables banks to offer the

convenience of comprehensive anywhere anytime banking! using

(%)"! &'% or "M". It supports a wide range of mobile devices and

mobile browsers. Banking customers can uery on account balances

and make fund transfers. Banks can also proactively send timely

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information to customers in a completely secure environment!

whenever a customer-defined event occurs. The mobile banking

solutions self-service capabilities empower customers to manage

their banking activities better. The solution also addresses data

transmission and storage related security concerns adeuately!

delivering a truly streamlined customer eperience.

Mobile $ommerce

Mobile 5ommerce can be defined as Jany transaction! involving the

transfer of ownership or rights to use goods and services! which is

initiated and/or completed by using mobile access to computer mediatednetworks with the help of an electronic deviceK

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inclusion! but it has been dogged by security issues all along. "ervice

providers have to safeguard transactions at three levels L authenticate

user identity! protect devices against replication and secure data

transmission. &hile various technologies such as user and mobile %I$!

data encryption! limited on-device data storage and multi-factor

authentication improved the safety of mobile transactions! they could not

be universally applied and hence! ecluded a huge number of older or

less powerful devices.

*our risk factors! viQ.! 'nonymity! lusiveness! )apidity and %oor

7versight are very crucial in M-Banking. 'nonymity is the risk of not

knowing a customers actual identity. lusiveness is the ability to

disguise mobile transaction totals! origins and destinations. )apidity is

the speed with which illicit transactions can occur. %oor oversight identity

refers to the level of regulation of service providers. 'ny model of mobile

financial service needs to address these issues. Mobile Banking reduces

costs to the provider and makes the banking eperience more

convenient and more cost-effective to the customer. 2et! the facility of

banking from remote locations without face to face interaction between

the bank and customer increases the risk of money laundering. 's such

the M-Banking service providers need to establish the best ways to open

accounts and to monitor transactions subseuently in terms of


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concerns of regulatory authorities! banks and other service providers is

to safeguard stolen instruments so that they cannot be used to

perpetrate identity or financial fraud. They are addressing this threat

through the use of firmware such as security-enhanced "IM or memory

cards. 7ther measures include better


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password epires! naturally! after it is used once or after a time limit has

passed. Esing two passwords increases the security of the account! an

important concern with mobile banking.

Mobile Banking Scope and Opportunities

7ver the past few years! mobile telephony has been one of the fastest

growing markets in the world! especially in 'sian countries such as

5hina! Indonesia! India and the %hilippines. The Indian Mobile sector

has crossed >9 crore subscriber base as on C9 th$ovember! 899O with

easily affordable handsets! lower tariffs and better network coverage. M-

Banking is fast emerging as a ma0or driver for the adoption of wireless

technology in rural areas in developing countries.

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The fact that mobile phones is the easiest to operate among the

alternative banking channels and its proliferation is much faster than that

of computers! has made it an effective channel for conducting mass

banking. 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.

7n the contrary in the developing economies! a very large population

segment remains unbanked and relies heavily on cash L based

transactions for all their day to day epenses.

ven those who hold an account with the bank prefer carrying cash! as

the alternative mechanisms are still not widely available and reliable.

These factors are ma0or incentives in the developing countries to move

the people away from cash with introduction of low cost solutions like

mobile payments.

#uture and Gro%t& of Mobile Banking

Mobile banking is growing very rapidly and will soon become the main

channel for banks to be in touch with their customers. &hile the largest

banks in the financial and technical resources to move into the mobile

channel! most mid-tier and small banks are not obliged to innovation and

ways to discover this. Many of the largest banks have mobile banking

services! which capture the customer and generate positive operating

results. )ecent months have led to a stream of messages from the

mobile banking mobile banking provider! the answer to growing demand

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$onclusion

&hile it may be argued that M-Banking may not be the most necessary

factor for improved banking services! yet its utility in supplementing the

traditional banking services through easy and cost effective alternative

channel to bring in significant improvement in the state of financialinclusion in the country need no overemphasis.

Mobile Banking! as has been demonstrated! has gained non-negligible

relevance for banks today. Mobile banking technology vendors have a

ma0or role in helping mid-tier and small institutions take advantage of

playing this nascent channel.

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evelopments in the banking sector! e.g. increased competition on

account of technological developments coupled with the process of

globaliQation have produced new challenges for banks.

Its main contribution! however! can be epected to take place in the

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

Many banks recogniQe 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 5ommerce!

particularly in the backdrop of its high acceptance across commercially

important sections of the society. &e may epect to see Mobile Banking

go into the footsteps of 7nline Banking! i.e. to become a standardservice offered by every bank worth its name.

Taking advantage of recent technological advances in the field of

mobility! enabling the mobile banking solution for banks to innovate in

providing new services easily! with improved time to market! the

eperience of the created user is successful! safe and very practical.

Mobile usage! today! transcends all classes of the society and is

epanding at an eponential rate. (iven its mass appeal! mobile

payments shall definitely be accepted with grater ease in comparison to

any other form of e-money. In the time to come we will see more and

more banks offering such services in India which will definitely make our

life easier.

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Suggestions

Mobile banking is certainly going to be the net wave of banking=

however there are certain hurdles which need to be overcome at least

from the Indian perspective.

*irstly! cheaper ()%" plan and availability of (%)" service from the

network providers across all geographies whether urban or rural.

"econdly! (uidelines need to be put by the )BI! where the threshold

of transaction can be limited.

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The use of the mobile phone for bringing about much-needed +and

talked about, financial inclusion is a critical social need with good

economics for all stakeholders. $early half of the rural and farmer

households have no formal access to credit or financial services. It is

these missing markets that banks want to bring under their fold. It is

clear that banks by themselves cant roll out such services across the

country.

The use of mobile for banking i.e.! towards payments and settlements

+remittances, would help in financial inclusion. The use of non banks

to accept cash for topping up the accounts can only make financial

inclusion successful till such time all the payments and settlements

happen electronically. #owever! the use of non banks is not fleible

and has to satisfy various guidelines issued by the regulator from time

to time.

The registration process needs to be made simpler and on par withother channels. &hile one can initiate registration by 'TM! mobile or

telephone! its fulfillment can be done by the very means that other

secure channels employ currently! rather than reuiring physical

presence. The absence of a simple registration process will grossly

handicap the adoption of m-banking without adding to safety and

security.

Multiple %I$ numbers to be remembered for each delivery channel

+product, are an obstacle to adoption. 's it is! everyone has to

remember a plethora of numbers! be their phone! %I$! %'$ short

codes! passwords! user ids for mobile! credit and debit cards! internet

and telephone banking! internet mail! commerce and social

networking! 'TM! etc. "ome banks do have the same %I$ for internet

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and telephone banking. This is a good start. It is! therefore! imperative

to have a minimum number of %I$ numbers +if not 0ust one, for an

account holder without pre0udicing security.

astly! the net important factor which might the take the mobile

banking to the net level would be making micro payments through

mobile! where small amounts can be transferred through mobile

phones from ones bank account to any other bank account! otherwise

it does not make any sense in the future!

7ther services like "M" based mobile alerts will remain unecited in the

coming days for customers.

Bibliograp&y

Interview taken via email with Mr. Tarun 6ain! Brach Manager! I5I5I

Bank +


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