Post on 06-Apr-2018
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EXECUTIVE SUMMARY:-The rapid pace of technological development has created opportunities for different
kinds of online services. In the financial services sector the exploitation of online
service technology is one of the most advanced and adoption rates are high. Some of
the most promising but so far little adopted services is mobile banking services. The
aim is to see that how marginal group of mobile banking users differ from other
users of online banking services.
Changes in the banking environment & new entrants on the conventional banking
markets, globalization of the line of business and service innovations haveintensified the competition on the markets and forced banks to offer customers more
choices. The technological development has provided opportunities for service
providers to develop their services and offer customers more flexibility. As a
consequence, banks have launched multiple service access methods via new delivery
channels like Internet and mobile phone. While electronic banking in general hasbeen subjected to scholarly research, mobile banking has been neglected in this
respect.To study Mobile Banking, challenges faced by it a research is conducted with the
help of market survey & made it available.
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INTRODUCTION:-Recent innovations in telecommunications have enabled the launch of new access
methods for banking services. One of these is mobile banking. It is defined as a
channel whereby the customer interacts with a bank via a mobile device, such as amobile phone. Mobile banking is a term used for performing balance checks,
account transactions, payments, credit applications and other banking transactions
through a Mobile Phone. The earliest mobile banking services were offered over
SMS. With the introduction of the first primitive smart phones with WAP support
enabling the use of the mobile web in 1999, the first European banks started to offer
mobile banking on this platform to their customers. There is vast market potential
for mobile banking due to its always-on functionality and the option to bank
virtually any time and anywhere. Mobile Banking is also known as M-Banking,
SMS Banking.
Mobile marketing can refer to one of two categories of interest. First, and relatively
new, is meant to describe marketing on or with a mobile device, such as a cell
phone. Second, and a more traditional definition, is meant to describe marketing in a
moving fashion.
Mobile banking has until recently (2010) most often been performed via SMS or the
Mobile Web. Apple's initial success with iPhone and the rapid growth of phones
based on Google's Android (operating system) have led to increasing use of special
client programs called apps, downloaded to the mobile device.
In one academic 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
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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.
BANKING IN INDIA:-Banking in india is in still tradional mode go to bank fill up the challan and get
recipt its quit manual and simple but changes coming very Fast Banking in India
originated in the last decades of the 18th century. The first banks were The General
Bank of India which started in 1786, and the Bank of Hindustan, both of which are
now defunct. The oldest bank in existence in India is the State Bank of India, whichoriginated in the Bank of Calcutta in June 1806, which almost immediately became
the Bank of Bengal. This was one of the three presidency banks, the other two being
the Bank of Bombay and the Bank of Madras, all three of which were established
under charters from the British East India Company. For many years the Presidency
banks acted as quasi-central banks, as did their successors. The three banks merged
in 1921 to form the Imperial Bank of India, which, upon India's independence,
became the State Bank of India.
Indian merchants in Calcutta established the Union Bank in 1839, but it failed in1848 as a consequence of the economic crisis of 1848-49. The Allahabad Bank,
established in 1865 and still functioning today, is the oldest Joint Stock bank in
India. It was not the first though. That honor belongs to the Bank of Upper India,
which was established in 1863, and which survived until 1913, when it failed, with
some of its assets and liabilities being transferred to the Alliance Bank of Simla.
When the American Civil War stopped the supply of cotton to Lancashi refrom the
Confederate States, promoters opened banks to finance trading in Indian cotton.
With large exposure to speculative ventures, most of the banks opened in Indiaduring that period failed. The depositors lost money and lost interest in keeping
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deposits with banks. Subsequently, banking in India remained the exclusive domain
of Europeans for next several decades until the beginning of the 20th century.
Foreign banks too started to arrive, particularly in Calcutta, in the 1860s. The
Comptoire opened a branch in Calcutta in 1860, and another in Bombay in 1862;
branches in Madras and Pondichery, then a French colony, followed. HSBC
established itself in Bengal in 1869. Calcutta was the most active trading port in
India, mainly due to the trade of the British Empire, and so became a banking center.
The partition of India in 1947 adversely impacted the economies of Punjab and West
Bengal, paralyzing banking activities for months. India's independence marked the
end of a regime of the Laissez-faire for the Indian banking. The Government of
India initiated measures to play an active role in the economic life of the nation, and
the Industrial Policy Resolution adopted by the government in 1948 envisaged a
mixed 13 economy. This resulted into greater involvement of the state in different
segments of the economy including banking and finance. The major steps to regulate
banking included:
In 1948, the Reserve Bank of India, India's central banking authority, wasnationalized, and it became an institution owned by the Government of India.
In 1949, the Banking Regulation Act was enacted which empowered theReserve Bank of India (RBI) to regulate, control, and inspect the banks in
India.The Banking Regulation Act also provided that no new bank or branch of anexisting bank could be opened without a license from the RBI, and no two
banks could have common directors.
However, despite these provisions, control and regulations, banks in India except the
State Bank of India, continued to be owned and operated by private persons. This
changed with the nationalization of major banks in India on 19 July 1969.
MOBILE SERVICES IN INDIA:-The Indian telecommunication industry, with about 688 million mobile phone
connections as of August 2010 is the third largest telecommunication network in the
world and the second largest in terms of number of wireless connections. The Indian
telecom industry is one of the fastest growing in the world and is projected that India
will have 'billion plus' mobile users by 2015. Projection by several leading global
consultancies is that Indias telecom network will overtake Chinas in the next 10
years. For the past decade or so, telecommunication activities have gained
momentum in India. Efforts have been made from both governmental and non-
governmental platforms to enhance the infrastructure. The idea is to help modern
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telecommunication technologies to serve all segments of Indias culturally diverse
society, and to transform it into a country of technologically aware people. India has
become one of the fastest-growing mobile markets in the world. The mobile services
were commercially launched in August 1995 in India. In the initial was 16 million,
followed by 22 million in 2004, 32 million in 2005 and 65 million in 2006. As ofJanuary 2009, total mobile phone subscribers numbered 362 million, having added
15 million that month alone. India ranks second in mobile phone usage to China,
with 506 million users as of November 2009.
TRENDS IN MOBILE BANKING:-The advent of the Internet has enabled new ways to conduct banking business,
resulting in the creation of new institutions, such as online banks, online brokers and
wealth managers. Such institutions still account for a tiny percentage of the industry.
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 in November 2009 it exceeded 2.5 billion of which more
than 2 billion are GSM.
According to a study by financial consultancy Celent, 35% of online banking
households will be using mobile banking in future 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 has made up 10% of the
contactless market. Another study by Berg Insight, forecasts that the number of
mobile banking users in the US will grow from 12 million in to 86 million in 2015.
The same study also predicts that the European market will grow from 7 million
mobile banking users to 115 million users in 2015.
Many believe that mobile users have just started to fully utilize the data capabilities
in their mobile phones. In Asian countries like India, China, Bangladesh, Indonesia
and Philippines, where mobile infrastructure is comparatively better than the fixed-
line infrastructure, and in European countries, where mobile phone penetration is
very high (at least 80% of consumers use a mobile phone), mobile banking is likely
to appeal even more.
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 ofmobile commerce is also popular incountries where most of their population is unbanked. In most of these places, banks
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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, 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.
Dutch-Bangla Bank launches the very first mobile banking service in Bangladesh on
31 March, 2011. This service is launched with Agent and Network support from
mobile operators, Banglalink and City cell. Sybase 365, a subsidiary of Sybase, Inc.
has provided software solution. There are around 160 million people in Bangladesh,
of which, only 13 per cent have bank accounts. With this solution, Dutch-Bangla
Bank can now reach out to the rural and unbanked population, of which, 45 per cent
are mobile phone users. Under the service, any mobile handset with subscription to
any of the six existing mobile operators of Bangladesh would be able to utilize the
service. Under the mobile banking services, bank-nominated Agents perform
banking activities on behalf of the banks, like opening mobile banking account,
providing cash services (receipts and payments) and dealing with small credits. Cash
withdrawal from a mobile account can also be done from an ATM validating each
transaction by mobile phone & PIN instead of card & PIN. Other services that
are being delivered through mobile banking system are person-to-person (e.g. fund
transfer), person-to-business (e.g. merchant payment, utility bill payment), business-
to-person (e.g. salary/commission disbursement), government-to-person
(disbursement of government allowance) transactions.
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SYSTEM INTEGRATION OF MOBILE CLIENTS WITHCORE BANKING PROCESSES:-
A banks core banking system, the system that houses the consumers account and
related transaction management and history, would require a means to translatebanking instructions, received from consumers, through one of the bank channels
such as ATMs or the internet, into a format that the core banking system can
process.
This translation is normally performed by an EFT channel switch. The EFT channel
switch would switch transactions from the channel to the appropriate area within the
core banking system. An Electronic Funds Transfer, EFT, or Financial Switch
accepts, translates and forwards transactions from multiple channels to the banks
core systems. This can sit within the bank or the banks third party processor.
THE RESERVE BANK OF INDIA (RBI):-RBI has taken progressive steps to accelerate the rollout and adoption of mobile
banking services. The mobile phone represents a ubiquitous, low cost and secure
platform - and in a country where less than 20% of the population has an active bank
account, the RBI was one of the first to recognize an opportunity to leverage the
mobile platform. The m-banking guidelines - covering m-banking, money transfer,
m-payments and m-commerce were introduced in October 2008.
Based on initial results in the first 12 months, the RBI has been quick to amend the
guidelines to further the uptake. The new guidelines have three major points:
(1)TRANSACTION LIMIT:Banks are now permitted to offer this service to their customers subject to a daily
cap of Rs 50,000 per customer for both funds transfer and transactions involving
purchase of goods and services.
(2)TECHNOLOGY & SECURITY STANDARD:Transactions up to Rs 1,000 can be facilitated by banks without end-to-end
encryption. The risk aspects involved in such transactions may be addressed bythe banks through adequate security measures.
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(3)PROVIDE FUND TRANSFER SERVICES:Provide fund transfer services that facilitate transfer of funds from the accounts
of their customers for delivery in cash to the recipients. The disbursal of funds to
recipients of such services can be facilitated at ATMs or through an agent
appointed by the bank as business correspondent.
MOBILE BANKING FAST REPLACING CASH & CHEQUETRANSACTIONS:-
While cash and cheque transaction are already at half the level of 2003, driven by
plastic money and online transactions, mobile banking is going to be the mainstay of
this trend going forward.
Financial transactions involving cash and cheque are gradually diminishing with
currently only 49 per cent of all deals being carried through this medium. This is
happening due to the increasing adoption of alternative channels like credit and debit
card, ATM, online transactions and now the mobile.
According to a report by Boston Consultancy Group, the share of traditional cash
and cheque-based transactions is to fall to a low 15 per cent by 2020.
Payments through cash and cheques had accounted for a whopping 94 per cent of
the total transactions in 2003 and the share has been on the down-slide ever sincewith currently only 49 per cent transactions are being done through the medium.
While other channels like ATMs, points of sale (Credit card/Debit card) and Internet
banking have been steadily increasing their shares over the years, the fastest growth
is going to come from the mobile phones, driven by increased adoption of smart
phones.
"Mobile phones, propelled by 3G and the smartphone technology, will emerge as an
undisputed winner by 2020, potentially accounting for 20-30 per cent of the total
transactions," the report says.
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Almost all the banks in India and abroad have launched their phone banking
application, which not only allows people to transact in money but also offers
services like bill payment, ticket booking, cheque book request etc.
The reason for the interest of banks is two fold - it reduces the cost of transaction,
for instance the cost of facilitating ATM transaction is just 27 per cent of the total
cost of establishing a branch. Mobile transaction further reduces the cost of banks.
The second reason is that mobile banking offers additional conveniences to the users
which helps in retention initially and later on is considered as a basic service by
those who have already used such services.
For the end user also, mobile transactions are much cheaper as it helps reduce travel
cost and time (which is in short supply these days), and therefore presents a win-win
situation for both the bank and its customers.
RBI INCREASES MOBILE BANKING LIMIT TO Rs. 50,000:-Reserve Bank of India has increased the amount that you can store in your m-wallet
(mobile wallet) to Rs 50,000 from current Rs 5000. It has also relaxed the daily
transaction limit for this growing segment.
The Reserve Bank of India has increased the maximum amount that you can store in
your m-wallet (mobile wallet) to Rs 50,000 from current Rs 5,000. It has also
relaxed the daily transaction limit for this growing segment.
Through a notification, RBI has announced the move attributing it to "the potential
of such mobile-based prepaid instruments for promoting non-cash based transactions
and the interest evinced by non-bank (like Mobile operators) entities in promoting
these products".
The success of the m-wallet system in the country can be judged by the fact that of
the 39 banks, that were granted approval for mobile banking, 34 banks have
launched the mobile banking services.
On an average, 6.8 lakhs transactions amounting to 61 crores in a month are settled
through this channel.
RBI has also relaxed the daily limit of transaction without the need for end to end
encryption from current Rs 1,000 to Rs 5,000. What this basically means is that it
will become easier to transfer up to Rs 5,000 daily through your m-wallet account.
The move has come after intense lobbying from banks and other stakeholders like
mobile operators, who argued that Rs 5,000 transaction limit is too little to let the m-wallet system grow.
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Leading mobile operators Bharti airtel and Vodafone had tied up with SBI and ICICI
Bank respectively to offer such facilities to their subscribers. However, only Airtel
has so far launched an m-wallet that too in Delhi NCR only. After this relation it is
expected that the launches will happen sooner. Idea cellular has also launched an m-
wallet service in partnership with Axis bank.
MOBILE MONEY SERVICES TO BE DOUBLED IN 2YEARS:-
Mobile money services are expected to double in the next two years and will have
more than 200 million users worldwide by 2013. Mobile money services, which
enable banks to reach rural customers through mobile technology, are set to reach 20
crores users worldwide in the next two years.
According to the latest analysis from Juniper Research active mobile money users
will increase, in the short term due to the need for many people in developing
nations to access basic financial services.
Currently, there are 100 million users of these services in the world, though there are
none in India.
However, with Airtel and SBI, and ICICI and Vodafone, having joined hands tooffer mobile banking services, this sector is set to grow much faster.
India did not see much action on this front as regulations were earlier unfavourable,
but now RBI permits mobile banking and the industry is prepared to cash in the
opportunity.
India has a huge un-banked population with almost 41 per cent people lacking a
bank account, and the government is keen to get this population into the organized
banking fold - a sector that is expected to grow at a pace rivaling the growth of themobile phone industry.
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With India's population of more than a billion, and the country's GDP growing at
more than 8.5 per cent per annum, there will be huge demand for financial services
and considering the vast geographies, mobile will be the platform to meet this
demand.
It would not be surprising if actual growth of mobile money services exceeds
projections by a huge margin. A lot will depend on how various stake holders
perform their roles.
While the industry has welcomed the regulation by RBI, it has said that restrictions
such as the limit on transaction amount need to be relaxed in a phased manner.
Some players have also criticized RBI for not allowing mobile service providers to
function as banks. Under current regulations service providers can only act as agents
to banks. Industry experts feel that this makes the service expensive as banks andservice providers have to share revenue. However, most players feel that there is a
big enough market that can sustain multiple players.
The stage seems set for these services to be launched, and it will be interesting to see
how the masses take to them.
PRIVACY CONCERNS MOBILE MARKETING:-Mobile advertising has become more and more popular. However, some mobile
advertising is sent without a required permission from the consumer causing privacy
violations. It should be understood that irrespective of how well advertising
messages are designed and how many additional possibilities they provide, if
consumers do not have confidence that their privacy will be protected, this will
hinder their widespread deployment.
The privacy issue became even more salient as it was before with the arrival of
mobile data networks. A number of important new concerns emerged mainly
stemming from the fact that mobile devices are intimately personal and are always
with the user, and four major concerns can be identified: mobile spam, personal
identification, location information and wireless security.
MOBILE BANKING BUSINESS MODELS:-A wide spectrum of Mobile/branchless banking models is evolving. However, no
matter what business model, if mobile banking is being used to attract low-income
populations in often rural locations, the business model will depend on banking
agents, i.e., retail or postal outlets that process financial transactions on behalf telcos
or banks. The banking agent is an important part of the mobile banking businessmodel since customer care, service quality, and cash management will depend on
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them. Many telecoms will work through their local airtime resellers. However,
banks in Colombia, Brazil, Peru, and other markets use pharmacies, bakeries, etc.
These models differ primarily on the question that who will establish the
relationship (account opening, deposit taking, lending etc.) to the end customer, the
Bank or the Non-Bank/Telecommunication Company (Telco). Another difference
lies in the nature of agency agreement between bank and the Non-Bank. Models of
branchless banking can be classified into three broad categories - Bank Focused,
Bank-Led and Nonbank-Led.
(1)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.
(2)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 bankemployees. 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 (telecoms / chain store) having experience and
target market distinct from traditional banks, and may be significantly cheaper than
the bank-based alternatives. The bank-led model may be implemented by either
using correspondent arrangements or by creating a JV between Bank and
Telco/non-bank. In this model customer account relationship rests with the bank.
(3)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:
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(1)ACCOUNT INFORMATION:-(1) Mini-statements and checking of account history(2) Alerts on account activity or passing of set thresholds(3) Monitoring of term deposits(4) Access to loan statements(5) Access to card statements(6) Mutual funds/ equity statements(7) Insurance policy management(8) Pension plan management(9) Status on cheque, stop payment on cheque(10) Ordering cheque books(11) Balance checking in the account(12) Recent transactions(13) Due date of payment (functionality for stop, change and deleting of payments)(14) PIN provision, Change of PIN and reminder over the Internet(15) Blocking of (lost, stolen) cards
(2)PAYMENTS, DEPOSITS,WITHDRAWALS &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 agentA specific sequence ofSMS messages will enable the system to verify if the client
has sufficient funds in his or her wallet & authorize a deposit or withdrawal
transaction at the agent. When depositing money, the merchant receives cash & the
system credits the client's bank account or mobile wallet. In the same way theclient can also withdraw money at the merchant: through exchanging SMS to
provide authorization, the merchant hands the client cash & debits the merchant's
account.
(3)INVESTMENTS:-(1)Portfolio management services(2)Real-time stock quotes(3)Personalized alerts and notifications on security prices
(4)SUPPORT:-
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(1)Status of requests for credit, including mortgage approval, and insurancecoverage
(2)Check (cheque) book and card requests(3)Exchange of data messages and email, including complaint submission and
tracking(4)ATM Location
(5)CONTENT SERVICES:-(1)General information such as weather updates, news(2)Loyalty-related offers(3)Location-based servicesBased 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.
PROPOSED CHANGES TO THE EXISTINGLEGISLATION:-
Because the current telecom regulations are outdated in the EU and in the United
States particularly concerning unsolicited commercial communications and the spam
issue new legislation should be imposed. New laws should be more clear (simple),
flexible and comprehensive but still address only those issues, which are strictly
necessary. This is important because laws should promote competition, encourage
investment, cut unnecessary costs, and remove obstacles to doing business. They
should be drafted in a technologically neutral way to avoid the need to adapt the
legal framework constantly to new developments and independent from the parties
involved. Consumers privacy must be protected and marketers have to be able
easily to understand and comply with the rules. Kaspersen Henrik W.K. hasproposed that directives with regard to unsolicited commercial communications
should regulate not only electronic communications but also paper distribution.
Moreover legislator should cooperate with technological and business experts to
create a reasonable legal framework.
Application of these rules must be done in a sensible manner thus courts should
avoid applying new rules with too much severity because there is a risk of slowing
or limiting the development of a very promising industry. But with too loose
interpretation of the rules, consumers may not feel protected which may also limitthe development. In other words if consumers concerns about privacy are not
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addressed, the growth of mobile advertising may be endangered by the same lack of
consumer trust that has discouraged the growth of email marketing. The protection
of privacy shall be achieved in combination with a number of efforts including
legislation, social norms, business practices and technical means.
DIRECT MOBILE BILLING:-The consumer uses the mobile billing option during checkout at an e-commerce site
such as an online gaming siteto make a payment. After two-factor authentication
involving a PIN and One-Time-Password, the consumer's mobile account is charged
for the purchase. It is a true alternative payment method that does not require the use
of credit/debit cards or pre-registration at an online payment solution such as PayPal,
thus bypassing banks and credit card companies altogether. This type of mobile
payment method, which is extremely prevalent and popular in Asia, provides thefollowing benefits:
(1)Security - Two-factor authentication and a risk management engine preventsfraud.
(2)Convenience - No pre-registration and no new mobile software is required.(3)Easy - It's just another option during the checkout process.(4)Fast - Most transactions are completed in less than 10 seconds.(5)Proven - 70% of all digital content purchased online in some parts of Asia use
Direct Mobile Billing method.
SMS BANKING:-SMS banking is a technology-enabled service offering from banks to its customers,
permitting them to operate selected banking services over their mobile phones using
SMS messaging
Screenshot of a typical SMS Banking
message on a mobile screen
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PUSH & PULL MESSAGES:-(1)PUSH SMS:-
SMS banking services are operated using both push and pull messages. Push
messages are those that the bank chooses to send out to a customer's mobile phone,
without the customer initiating a request for the information. Typically push
messages could be either Mobile marketing messages or messages alerting an event
which happens in the customer's bank account, such as a large withdrawal of funds
from the ATM or a large payment using the customer's credit card, etc.
Another type of push message is One-time password (OTPs). OTPs are the latest
tool used by financial and banking service providers in the fight against cyber fraud.
Instead of relying on traditional memorized passwords, OTPs are requested by
consumers each time they want to perform transactions using the online or mobile
banking interface. When the request is received the password is sent to the
consumers phone via SMS. The password is expired once it has been used or once
its scheduled life-cycle has expired.
Bulk SMS can be used to send message to a large number of people at a time, either
from a list of contacts or to all the users within a particular area. This service is
called broadcasting and is used extensively to contact employees or distribute news
and other information to subscribers. Your internet enabled PC is more enough to
hand you over this lethal communication tool!
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(2)PULL MESSAGES:-
Pull messages are those that are initiated by the customer, using a mobile phone, for
obtaining information or performing a transaction in the bank account. Examples of
pull messages for information include an account balance enquiry, or requests forcurrent information like currency exchange rates and deposit interest rates, as
published and updated by the bank.
The banks customer is empowered with the capability to select the list of activities(or alerts) that he/she needs to be informed. This functionality to choose activities
can be done either by integrating to the internet banking channel or through the
banks customer service call centre.
The communication platform creates possibilities whereby authorized users can get
response from backend database systems on their mobile phones by sending a query
in the form of a SMS.
FEATURES:-(i)Mobile Customers:-
Those who use mobile telephony use mobile banking service. Mobile telephony
is used through mobile phones.
(ii)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 MCommerce.
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(iii)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 provides the required software support.
(iv)Services:-Mobile banking offers the entire internet-based banking services such as on-line
account opening, account verification, funds transfer etc.
(v)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.
(vi)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.
The other features include:
(vii)Send multiple text messages from Computer to mobile phones at just one click.(viii)Recipient phone number can be entered manually or bulk uploaded using excel.(ix)SMS Live Bulk messaging software is secure with user friendly interface.(x) Easy to use and operate.(xi)Internet based connectivity.(xii)Instant delivery of messages.(xiii)Ready integration with SAP, Oracle, Navision or other legacy systems.
FUTURE FUNCTIONALITIES IN MOBILE BANKING:-Based on the 'International Review of Business Research Papers' from World
business Institute, Australia, following are the key functional trends possible in
world of Mobile Banking.
With the advent of technology and increasing use of smart phone and tablet based
devices, the use of Mobile Banking functionality would enable customer connect
across entire customer life cycle much comprehensively than before. With this
scenario, current mobile banking objectives building relationships, reducing cost,
achieving new revenue stream will transform to enable new objectives targeting
higher level goals such as building brand of the banking organization. Emerging
technology and functionalities would enable to create new ways of lead generation,
prospecting as well as developing deep customer relationship and mobile banking
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world would achieve superior customer experience with bi-directional
communications.
Illustration of objective based functionality enrichment In Mobile Banking
(i)Communication Enrichment:- Video Interaction with agents, advisors.(ii) Pervasive Transactions capabilities:- Comprehensive Mobile wallet(iii)Customer Education:- Test drive for demos of banking services(iv)Connect with new customer segment:- Connect with Gen YGen Z using games and social network ambushed to surrogate banks offerings
(v)Content monetization:- Micro level revenue themes such as music, e-bookdownload
(vi)Vertical positioning:- Positioning offerings over mobile banking specificindustries
(vii)Horizontal positioning:- Positioning offerings over mobile banking across allthe industries.
(viii) Personalization of corporate banking services:- Personalization experience formultiple roles and hierarchies in corporate banking as against the vanilla based
segment based enhancements in the current context.
(ix)Build Brand:- Built the banks brand while enhancing the Mobile real estate.CHALLENGES FOR A MOBILE BANKING SOLUTION:-
Challenges
HandsetOperability
Security
Scalability&
Operability
Application
Distribution
Personalization
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(1)HANDSET OPERABILITY:-There are a large number of different mobile phone devices and it is a big
challenge for banks to offer mobile banking solution on any type of device. Some
of these devices support Java ME and others support SIM Application Toolkit, aWAP 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.
On January 2009, Mobile Marketing Association (MMA) Banking Sub-
Committee, chaired by Cell Trust and VeriSign Inc., published the Mobile
Banking Overview for financial institutions in which it discussed the advantages
and disadvantages of Mobile Channel Platforms such as Short Message Services
(SMS), Mobile Web, Mobile Client Applications, SMS with Mobile Web and
Secure SMS.
(2)SECURITY:-Security of financial transactions, being executed from some remote location and
transmission of financial information over the air, are the most complicated
challenges that need to be addressed jointly by mobile application developers,
wireless network service providers and the banks' IT departments.
The following aspects need to be addressed to offer a secure infrastructure for
financial transaction over wireless network:
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(i) Physical part of the hand-held device. If the bank is offering smart-card basedsecurity, the physical security of the device is more important.
(ii)Security of any thick-client application running on the device. In case the deviceis stolen, the hacker should require at least an ID/Password to access
application.(iii)Authentication of the device with service provider before initiating a transaction.
This would ensure that unauthorized devices are not connected to perform
financial transactions.
(iv)User ID / Password authentication of banks customer.(v) Encryption of the data being transmitted over the air.(vi)Encryption of the data that will be stored in device for later analysis by the
customer.
One-time passwords (OTPs) are the latest tool used by financial and bankingservice providers in the fight against cyber fraud. Instead of relying on traditional
memorized passwords, OTPs are requested by consumers each time they want to
perform transactions using the online or mobile banking interface. When the
request is received the password is sent to the consumers phone via SMS. The
password is expired once it has been used or once its scheduled life-cycle has
expired.
Because of the concerns made explicit above, it is extremely important that SMS
gateway providers can provide a decent quality of service for banks and financialinstitutions in regards to SMS services. Therefore, the provision of service level
agreements (SLAs) is a requirement for this industry; it is necessary to give the
bank customer delivery guarantees of all messages, as well as measurements on
the speed of delivery, throughput, etc. SLAs give the service parameters in which a
messaging solution is guaranteed to perform.
(3)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
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banks adopting Mobile Transaction Platform and the Central Bank publishing
guidelines for mobile banking operations.
(4)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.
(5)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
MOBILE BANKING SERVICES:-Mobile banking can offer services such as the following:
(1)ACCOUNT INFORMATION:-(i) Mini-statements and checking of account history(ii) Alerts on account activity or passing of set thresholds(iii) Monitoring of term deposits(iv) Access to loan statements(v) Access to card statements(vi) Mutual funds / equity statements(vii)Insurance policy management(viii)Pension plan management(ix) Status on cheque, stop payment on cheque(x) Ordering cheque books(xi) Balance checking in the account(xii)Recent transactions(xiii)Due date of payment (functionality for stop, change & deleting of payments)(xiv)PIN provision, Change of PIN and reminder over the Internet
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(xv) Blocking of (lost, stolen) cards(2)PAYMENTS, DEPOSITS, WITHDRAWLS & TRANSFERS:-
(i) Domestic and international fund transfers(ii) Micro-payment handling(iii) Mobile recharging(iv) Commercial payment processing(v) Bill payment processing(vi) Peer to Peer payments(vii)Withdrawal at banking agent(viii)Deposit at banking agent
A specific sequence of SMS messages will enable the system to verify if the client
has sufficient funds in his or her wallet and authorize a deposit or withdrawaltransaction 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 toprovide authorization, the merchant hands the client cash and debits the merchant's
account.
(3)INVESTMENTS:-(i) Portfolio management services(ii) Real-time stock quotes(iii)Personalized alerts and notifications on security prices
(4)SUPPORT:-(i) Status of requests for credit, including mortgage approval, & insurance coverage(ii)Cheque book and card requests(iii)Exchange of data messages & email including complaint submission & tracking(iv)ATM Location
(5)CONTENT SERVICES:-(i) General information such as weather updates, news(ii) Loyalty-related offers(iii)Location Based Services
Based on a particular survey, mobile banking will be attractive mainly to the
younger, more "tech-savvy" customer segment. A one- third of mobile phone userssay 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.
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MOBILE SECURITY IN MOBILE BANKING:-For providers and regulators alike, the idea of mobile banking is inseparable from
the question of mobile security. When stories like this pop up about dozens of
mobile banking clients defrauding - it raises warning flags for some.
A new study digs deep into these issues. Some issues are very familiar: the use of
outsourced IT providers, customers protecting their PIN numbers. Several are
newish, but really permutations of issues with any electronic banking channel: thereliability and end-to-end security of communication networks carrying sensitive
data.
These factors do not make most mobile banking channels more or less risky than
other forms of e-banking. In fact, the range of m-banking technologies already
available includes some with the highest degree of security possible. Butautomatically requiring the most technically secure platform carries substantial
tradeoffs, not least of all that high-end technologies are substantially less likely to be
suitable for low-income clients.
Low-literacy clients may be very comfortable with some of the more ubiquitous but
somewhat less secure mobile technologies available. They may not try internet
browsing, & indeed the cheaper handsets they tend to own are unlikely to support it.
Providers targeting the unbanked may also prefer basic technologies. Smaller banks
and entrepreneurs which see the unbanked niche as attractive aredue to their sizelikely to lack bargaining power with mobile operators. They face a tough timenegotiating the right to put a mobile banking application directly onto the sim card
in mobile phones which enables a higher standard of end-to-end encryption. And
even large banks may prefer technologies that work on any handset and any operator
network. They want to ensure all bank clients can access the service, and it
eliminates the need to negotiate any revenue sharing with operators: the bank keeps
the whole pie. This explains why USSD is still attractive to some banks.
It is possible to offset the lower security qualities of less secure mobile technologies
by introducing operational controls. Balance and transaction limits can put a cap onrisk, for clients and providers. The Bankable Frontiers report ends with advice for
regulators: be careful not to entrench technology-specific standards in regulations
which stifle m-banking development. Instead, they should create a flexible,proportionate framework which requires an active supervision of mobile financial
services.
MOBILE SECURITY CONCERNS:-Several issues have been identified that must be taken into account when evaluating
the security of mobile communication. Some of the most important and universalones are discussed below:
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(1)AUTHORIZATION TECHNIQUES:-Especially because the devices are mobile, there is a large risk that they might fall
into the wrong hands. Here, a usability issue arises where people expect to be able
to conveniently and frequently use their devices, which often rules out the idea of a
login procedure. Also, there are a variety of data types flowing to and from the
devices, both public and private, that need different types of authentication, such
as encryption, Message Authentication Codes (MAC), or digital signatures. It may
even be the case that different network levels require different authentication.
(2)STORAGE OF SENSITIVE INFORMATION:-There is an increasing amount of sensitive information that can be stored on
mobile devices, from passwords, to credit card information, to certificates that
must be secure. The performance and physical capabilities of the device can make
it hard or impossible to sufficiently encrypt data.
(3)APPLICATION ENVIRONMENT:-Like any computer, mobile devices must be able to defend against software attacks
such as viruses, but unlike a machine in an unchanging network, they do have
constant access to software patches or updates. Sometimes even established
security mechanisms are not possible on handhelds due to their limitedperformance capabilities.
(4)NETWORK AVAILABILITY:-A network or service should only allow certain authorized devices to connect to it,
which requires strictly observed and verified user privileges and defense against
denial-of-service attacks and other misuse of the network services.
(5)INTER-OPERABILITY:-Mobile devices are used in many different environments and thus must be able to
accommodate a vast array of security protocol standards, for example, those
required for both 3G and LAN networks. There may also be the need tocommunicate with servers that use different cipher suite and key exchange
algorithm arrangements, so it is desirable for the appliance to be as flexible as
possible for the allowable combinations.
(6)COMPUTATIONAL REQUIREMENTS & BATTERY LIFE:-Not only do mobile devices have significantly less processing capability than a
laptop or desktop computer, but the energy consumption of running complex
cryptographic algorithms must be taken into account to avoid severely affectingbattery life.
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Fig. : Mobile Security Concerns
(7)USABILITY:-Mobile communication differs from wired network use in that it is expected to be
always accessible, but used spontaneously, for shorter amounts of time, in and
across different environmental conditions. Therefore, a mobile user expects
seamless transitions between network media and the ultimate amount of
convenience. Because of this, common design practice calls for transparent
security services, which often leads to insufficient security. Also, mobile devices
have smaller screens and keyboards that make it hard to have convenient security
measures.
RISKS IN MOBILE BANKING:-The experts are very optimistic about the future perspectives of mobile banking.
They think that it will grow much faster than online banking. Carrying a cell phone
is much easier than carrying a laptop!
Mobile banking is generally considered safer than online banking. The main threats
to online security, such as viruses, Trojans or other data stealing software don't exist
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for cell phones. So the risk of being infected on a mobile phone is minimal in
comparison with a PC.
The main type of scam that mobile banking users should avoid is called "Smishing."
It is a variation of the e-mail phishing scam. Smishing occurs when a person posing
as a financial institution sends a text message requesting personal information or a
social security number. You will be asked either to click a website URL or to call a
phone number that connects to automated voice response system.
The smishing message usually contains information that will definitely capture your
attention. For example, you will receive a notice that you have been subscribed to a
paid site, and you need to click a link to cancel this subscription. Or the thieves can
write that your account has been suspended and you need to reactivate it by making
a call.
The link will redirect you to a legitimate looking website where you will be asked toenter your SSN, credit card number, PIN, email address, etc. If you need to make a
call, you will be connected with a legitimate sounding automated voice response
system which will ask for the same pieces of information.
(1)BUSINESS RISKS:-Most of the business risks that rate as High are found where the transactions pass
through a common component, like the SMSC or USSD server, or where there is
vulnerability common for all end users.
(2)INDIVIDUAL RISKS:-Individual risks are the union of the business risks and the individual risks. A
business risk generally effecting the business and therefore all individuals as well
as the risks that the individuals are exposed to due to their specific use of the
channel. The risks introduced by the individual are how the individual uses the
service. As such the countermeasures usually involve user education.
So far the risks associated with the choice of mobile specific technology ARE
considered. However, these technology choices do not exist in a vacuum: they aredynamic not only in that they change over time, as technology changes and as
knowledge of vulnerabilities and how to exploit them spreads but also because final
risk evaluation is shaped by context.
(3)ENVIRONMENTAL RISKS:-The environmental risks linked to the use of the mobile channel may be heightened
when a significant proportion of the users are first time users of electronic banking
of any form, and hence have had less exposure and practice with issues like PIN
protection or with the need to check statements for unauthorized transactions.
Transformational models are likely to have more first time users, since targetedcustomers may be previously unbanked at the time when they sign up for. With the
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rapid development of mobile banking, users have faced a very serious problem
there are no specific laws concerning this industry.
Banks need to take into consideration regulatory and security issues involved withimplementing mobile solutions. First of all, it concerns third-party vendors (such as
software developers, telecommunications companies, etc.). Some of them may nothave any experience handling personal financial information. There are just a few
states that require vendors providing services to a bank and its customers to license
as money services businesses. Thats why it is necessary forfinancial institutions to
evaluate the risks associated with outsourcing mobile solutions to a vendor. Banks
can implement a system that will help them evaluate vendors capability to providesuch services. So even though mobile banking data is encrypted, it is necessary to
impose privacy requirements on vendors, because some of them might not fall
within statutory requirements to keep all customer information confidential.
Mobile phone banking is in a high-growth phase with at least 90 companiesemerging in recent years offering banking and payment applications for mobile
phones. It is estimated that as much as half of the worlds population may now own
a mobile phone, with about 80% of the US population thought to own one The
World Bank estimates that about two-thirds of the world's population live within
range of a mobile phone network. Mobile phones tend to be replaced every 18
months, compared to PCs being replaced on average every 42 months.
Fraudsters will target any channel which distributes value, customer data or
electronic money. The rate of loss of mobile phones averages one every minute in
the world. If the whole industry could adopt a holistic approach and plug any gaps inthe security lifecycle by applying these best practices and confirming to standards a
trusted environment for mobile banking will prevail.
The new best practice manual covers the following steps in the security lifecycle:
SIM card security, mobile software security, enrolment, registration, and customer
access to banking on mobile devices, security and privacy of customer details/data,
customer education on the mobile phone as an instrument of value, dealing with lost
or stolen mobile phones/devices, security of software and transmission to financial
services device (e.g. ATM), defining strengths and vulnerabilities of each mobile
phone channel & outlining the regulatory framework for mobile banking. Themobile phone has been used very successfully as authentication tool for onlinebanking, through a confirming SMS sent by the bank to the customer during online
transactions. It has already proved its worth in the field of banking security.
Credit unions and banks across the country employ multiple forms of identification,
authentication, log-in procedures and encrypted communications to make sure cyber
criminals cant access confidential banking information while consumers are using a
mobile banking application. However, the biggest threat to mobile security isnt the
technology; its the fact that many consumers are ignorant of the many fraudulent
applications that exist online and on mobile platforms.
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MANAGING THE RISK OF MOBILE BANKINGTECHNOLOGIES:-
M-payments and m-banking are now spreading fast across the world, in developed
and developing countries. The use of mobile phones for mobile Financial Services(m-FS) is relatively new and, as a consequence, the knowledge of the risks and the
risk experience of providers is still limited. However, the rapid take-up and potential
scale of new offerings has led to increased interest from mobile Financial ServicesProviders (mFSP), both banks and non-banks, and from government regulators in
understanding and managing any unique, additional risks. Two elements of the
mobile channel are distinctive relative to other banking channels like Internet
banking or point of sale devices:
The mobile handset, which comes with a wide range of functionality frombasic on standard handsets to advanced on feature phones and smart phones;
The mobile network, which includes all the links carrying a data message froma handset to the mobile financial service providers or vice versa and the methods
used to communicate between the handset and the mobile financial service
providers. Both these elements contribute to a different risk environment for m-
banking. Boards and management of mobile financial service providers as well
as regulators need to have a clear basic understanding of how these elements
work, including a comparison to other established e-banking channels.
Increasingly, as handset functionality increases, mobile financial services are
converging with Internet banking. Regulators and others commonly list additional
risk considerations arising from the use of the mobile channel. These include the
higher possibility of loss of device, the restricted screen and keypad of the device,
the information security of the end-to-end network, the availability and reliability ofthe communications network, and the use of outsourced service providers. However,
a priori, these factors do not in themselves make most use cases of m- FS more or
less risky than other forms of e-banking.
MOBILE BANKING SECURITY:-An effective approach to security involves a delicate trade-off between security and
customer convenience. Often customers can perceive security requirements as an
inconvenience. Therefore, many of the components of the mobile security approach
are made optional. This allows banks and credit unions to determine the best blend
of security and convenience for their customers.
The majority of security approaches today work along two lines: first, make it more
difficult for an attacker to obtain customer credentials; second, make it moredifficult for an attacker to use those credentials to execute a fraudulent transaction.
Customer education is an important step in the first approach. A knowledgeablecustomer is less likely to be ensnared by phishing attempts.
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Similarly, a bank or credit union may eschew the use of a channel that may be used
in phishing. For example, customers have been trained not to click on links in e-
mails that purport to come from financial institutions. An attacker may use this
method to direct the consumer to a malware or phishing site.
Approach to key security considerations:
(1)End-User Education(2)Preventing Code Insertion(3)Limiting Spoofing
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KES SHROFF COLLEGE OF ARTS & COMMERCEBhulabhai Desai Road, Kandivli (West), Mumbai- 67.
Tel:- 022-28072477. Email:- prinkesc@mtnl.net.in
NAME OF THE RESPONDENT:-___________________________________PROFESSION:- __________________SIGN:- _______________
Q.1) In which bank do you hold account with?______________________________________________
Q.2) Does your bank provide Mobile Banking Service?Yes No
Q.3) Do use Mobile Banking Facility provided by your Bank?
Yes NoQ.4) If you are aware of Mobile Banking, then how do you perform yourbanking transaction?
By personally visiting the bank
Through Mobile
Q.5) How were you introduced to the concept of Mobile Banking?By your own bank
By any other bank
Q.6) Do you find that Mobile Banking transaction is more comfortable?Yes No
Q.7) Do you think that the customers are satisfied with the service provided?Yes No
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Q.8) Do you think that mobile banking is safe?Yes No
Q.9) Are you aware of the risks involved in mobile banking services?Yes No
Q.10)Do you frequently change the password ofyour login IDs?Yes No
Q.11)Do you think that Traditional Banking System must be replaced by MobileBanking system?
Yes No
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Q.2) Does your bank provide mobile banking service?Provision Of Mobile Banking Service
Options No. Of Respondents Percentage
Yes 12 80
No 3 20
Table 1
Diagram 1
Conclusion:-
From the above pie diagram, we conclude that mobile banking is growing in India.
The common man is becoming aware of mobile banking. Out of the 15 respondents,
12 of them were aware of the mobile banking services offered by their banks.
Yes80%
No20%
Mobile Banking Service
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Q.3) Do use Mobile Banking Facility provided by your Bank?
Usage Of Mobile Banking Service
Options No. Of Respondents
Yes 9
No 3
Conclusion:-
From the above diagram, it is observed that the users whose banks provide mobilebanking services, maximum of them i.e. 9 respondents use mobile banking services
provided by their banks.
0
1
2
3
4
5
6
7
8
9
10
Yes No
No.ofRespondents
Usage Of Mobile Banking
Usage Of Mobile Banking
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Q.4)If you are aware of Mobile Banking, then frequently how do you perform yourbanking transaction?
BANKING TRANSACTION
Options No. Of Respondents
Personal Visit 9
Through
Mobile
3
Conclusion:-
From the above diagram, it is observed that due to time restriction maximum
respondents perform mobile banking transactions through mobile rather than
personally visiting the bank.
0
1
2
3
4
5
6
7
Personal Visit Through Mobile
Banking Transaction
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Q.5) How were you introduced to the concept of Mobile Banking?