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CHAPTER-1

OVERVIEW OF BANKING

Bank deals in money and credit. A bank is a factory manufacturer of credit. Bank get

money from the people on low rate of interest and gives loans to industrialists and

businessmen on high rate of interest. The difference between accepting deposits and

issuing loans is profit of the bank. The commercial banks work on commercial basis. The

aim of the bank is to earn profit. On the other hand the aim of central bank is not to earn

profit, but to regard the supreme interest of the country.

Finance is the blood of business. In modern time, it is not possible to start business

activities without the availability of adequate finance. Business enterprise requires funds

for the creation of fixed capital i.e. land, building, machinery and for the purchase of man

power, raw material, energy etc.

Business finance means anticipation acquisition and allocation of funds. Business finance

is defined as that business activity which is concerned with the acquisition and

conservation of capital funds in meeting the financial needs and overall objectives and

business enterprise.

The success and failure of business in private sector is linked with finance. Business

without finance is a just like a fish out of water. For proper working of assets, repair

renewal and maintenance is necessary. This work cannot be done without finance

Banking provides a safe place to save excess cash, known as deposits. It also supplies

liquidity to the economy by loaning this money out to help businesses grow and to allow

consumers to purchase homes, cars and consumer products.

Definition of Banking

A bank is a financial institution licensed by a government. Its primary activity is to

lend money. Many other financial activities were allowed over time. For example

banks are important players in financial market and offer financial services such as

investment funds.

Banking can also be defined as engaging in business of keeping money for saving

and checking accounts or for exchange or for issuing loans and credit.

Transaction business with banks; depositing or withdrawing funds or requesting

loans.

Banks — a supply or stock held in reserve for future use (especially in

emergencies)

Meaning of Banking

An organization, usually a corporation, chartered by a state or federal government which

does most or all of the following:

Receive demand deposits and time deposits

Honor instruments drown on them and pay interest on them, discounts notes

Makes loans and invest in securities, collect checks, drafts and notes Certifies depositor’s

checks and issue drafts and cashier checks

Mobile Banking

Mobile Banking refers to provision and availment of banking- and financial services with

the help of mobile telecommunication devices. The scope of offered services may include

facilities to conduct bank and stock market transactions, to administer accounts and to

access customized information.”

According to this model Mobile Banking can be said to consist of three inter-related

concepts:

• Mobile Accounting

• Mobile Brokerage

• Mobile Financial Information Services

Most services in the categories designated Accounting and Brokerage are transaction-

based. The non-transaction-based services of an informational nature are however

essential for conducting transactions - for instance, balance inquiries might be needed

before committing a money remittance. The accounting and brokerage services are

therefore offered invariably in combination with information services. Information

services, on the other hand, may be offered as an independent module. Mobile phone

banking may also be used to help in business situations

MOBILE BANKING TRANSACTIONS

For 30 years, financial institutions have been on a quest to satisfy their customers’ need

for more convenience. First came the automated teller machine (ATM), which New

York’s Chemical Bank introduced to the American public in 1969. It did little more than

dispense c at first, but the ATM evolved over time to become a true bank-away-from-

bank, providing a full suite of financial transactions.

Then came Internet banking in the mid-1990s, which enabled consumers to access their

financial accounts using a home computer with an Internet connection. Despite its

promise of ultimate convenience, online banking saw slow and tentative growth as banks

worked out technology issues and built consumer trust. Today, Internet banking has

reached a critical mass, with about 35 percent of U.S. households conducting bank

transactions online.

Yet banking at the living room computer still has some serious limitations. First, only 62

percent of American households have a computer, according to a 2003 .study conducted

by the U.S. Census Bureau. And only 28 percent of Americans have broadband Internet

access, which is essential to efficient, convenient service. The biggest issue, however, is

mobility. Even with a laptop it’s almost impossible to stay connected in virtually any

location on the planet.

Not so with mobile phones. They can be carried anywhere and are -- by an enormous

number of people. Worldwide there are more than 3.25 billion mobile phone subscribers,

with penetration topping 100 percent in Europe.

If mobile phones only delivered voice data, then their use as a vehicle to deliver banking

services would be limited. Most phones, however, also provide text-messaging

capabilities, and a growing number are Web-enabled. That makes the mobile phone an

ideal medium through which banks can deliver a wide variety of services.

Banks classify these services based on how information flows. A pull transaction is one

in which a mobile phone user actively requests a service or information from the bank.

For example, inquiring about an account balance is a pull transaction. So is transferring

funds, paying a bill or requesting a transaction history. Because banks must respond or

take some action based on the user request, pull transactions are considered two-way

exchanges.

A push transaction, on the other hand, is one in which the bank sends information based

on a set of rules. A minimum balance alert is a good example of a push transaction. The

customer defines the rule -- “Tell me when my balance gets below Rs 100” -- and the

bank generates an automatic message any time that rule applies. As these examples

illustrate, push transactions are generally one way, from the bank to the customer.

You can also classify mobile banking based on the nature of the service.. The chart below

summarizes these various types of mobile banking services.

Push Pull

Transaction

Funds transfer

Bill payment

Share trade

Check order

Inquiry

Minimum balance sheet

Credit/ debit alert

Bill payment alert

Account balance inquiry

Account statement inquiry

Check status inquiry

Transaction history

Clearly, push transactions are not as complex as their pull counterparts. Mobile banking

solutions also vary in their degree of complexity, and some only offer a fraction of the

services you would find in a bricks-and-mortar branch. In this respect, mobile banking

isn’t always full service banking.

MOBILE BANKING SCENARIO

The growth of mobile banking technology is increasingly hard to ignore. Nearly 50

percent of all mobile users in the United States will be using mobile banking within four

years and that nearly 50 percent of iPhone and other Smartphone users already use

mobile financial services today.

With 2010 being the year in which mobile banking broke into the mainstream, 2011 will

be the year in which financial institutions will look to capitalize on the full potential of

the mobile channel -- moving from basic user functionality to full mobile finance; or,

“Your bank in your pocket.”

Where We Are Now

The majority of banks currently are in transition between their introductory mobile

solutions and a second generation of offerings with greater capabilities. The introductory

mobile offerings. most banks deploy closely mirror users’ online experiences. While this

is a fraction of the full potential of the mobile channel, it is an essential stepping-stone to

move users from the branch and online banking to their own handsets for financial

interaction.

While the mobile channel still is far from being definitively proven, consumers demand

it. Banks are moving from one-way alerts and simple notifications to proactive content in

the form of real time, “actionable alerts.” These are personalized, two-way alerts that

enable customers to quickly and easily take action directly on their mobile devices in

response to previously set alert thresholds or financial events as defined by the consumer.

For instance, if a customer’s account balance falls below a predefined threshold, an

actionable alert is sent to the customer, who can then instantly transfer funds by

responding to the alert.

Where We’re Going

As mobile banking gives firms the ability to fully engage in conversations with customers

through their mobile devices, coordination of a “business workflow” across different

banking systems is required. In order to accomplish this, mobile banking providers must

establish open ways to access these different sources of information. This “connectivity”

is crucial to delivering fully mobile banking.

By opening up the mobile channel to multiple back-end and third-party systems or

networks such as Visa Net, mobile payments hubs such as Cash Edge or PayPal, remote

check-deposit capture technologies such as those offered by Mitek, or contextual

marketing systems capable of determining when to present offers, banks can capitalize on

the full capabilities of the mobile phone as a consolidation point of all other existing bank

channels -- e-mail, online, customer service, and mobile-specific SMS or push

notification alerts.

In order to provide authoritative value to customers and produce strong adoption (and

with it, definitive ROT), third-generation mobile banking solutions must empower

institutions to use the mobile channel as an extension of and integrative point for existing

technologies. This will instantly resolve consumer issues and complete tasks faster and

more economically -- making alerts fully actionable.

Many financial institutions and mobile vendors today, however, still are tied to basic core

functionality, either because they developed a non-scalable, non-adaptable elementary

mobile solution, or because they signed binding contracts with core financial technology

providers in order to rush a baseline mobile solution to market. The smart mobile banking

solutions of tomorrow must anticipate the future expectations of consumers and

recognize the potential that the mobile channel represents -- a technology set to increase

customer loyalty and satisfaction via conversation creation.

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 now exceeds 2.5 billion (of which more than 2 billion are GSM).

With mobile technology, banks can offer services to their customers such as doing funds

transfer while travelling, receiving online updates of stock price or even performing stock

trading while being stuck in traffic. Smartphone’s and 3G connectivity provide some

capabilities that older text message-only phones do not.

All be using mobile banking till 2010. Upwards of 70% of bank center call volume is

projected to come from mobile phones. Mobile banking will eventually allow users to

make payments at the physical point of sale. “Mobile contactless payments” will make up

10% of the contactless market till 2010. Another study from 2010 by Berg Insight

forecasts that the number of mobile. banking users in the US will grow from 12 million in

2009 to 86 million in 2015. The same study also predicts that the European market will

grow from 7 million mobile banking users in 2009 to 115 million users in 2015.

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

their mobile phones. In Asian countries like India, China, Bangladesh, Indonesia and

Philippines, where mobile infrastructure is comparatively better than the fixed-line

infrastructure, and in European countries, where mobile phone penetration is very high

(at least 80% of consumers use a mobile phone), mobile banking is likely to appeal even

more.

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 Telco’s or banks. The banking

agent is an important part of the mobile banking business model since customer care,

service quality, and cash management will depend on them. Many Telco’s will work

through their local airtime resellers. However, banks in Colombia, Brazil, Peru, and other

markets use pharmacies, bakeries, etc.

A wide spectrum of mobile/branches banking models is evolving. These models differ

primarily on the question that who will establish the relationship (account opening,

deposit taking, lending etc)with the end customer, the bank or the non- bank

telecommunication company (Telco). Models of branches banking can be classified into

three broad categories — bank focused, bank -led non bank —led.

Bank focused model

The bank focused model emerges when a traditional bank uses non-traditional low cost

delivery channels to provide banking services to its existing customers.

Example Range from use of automatic teller machine (AIMs) to internet banking or

mobile banking to provide certain limited banking services to banks customers. This

model is addictive in nature and may be seen as modest extension of conventional branch

based banking

Bank-led model

The bank-led model offers a distinct alternative to conventional branch-based banking in

that customer conducts financial transactions at the whole range of retail agents (or

through mobile phone) instead of at bank branches or through bank employees. This

model promises the potential to substantially increase the financial services outreach by

using different delivery channels (retailer/mobile phone),a different trade partner (Telco

chain store) having experience and target market distinct from traditional banks, and may

be implemented by either using Correspondent arrangements or by creating a JV between

bank and Telco/non-bank, in this model customer account relationship rests with the bank

Non bank-led model

The non-bank-led model is where a bank does not come into the picture. (Except possibly

as a safe —keeper of surplus funds) and the non bank (e.g. Telco) performs all functions.

Mobile banking in India

Over the last few years, the mobile and wireless market has been one of the fastest

growing markets in the world and it is still growing at a rapid pace. Mobile phones have

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

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

telecommunication industry. Mobile banking which is an integral part of commerce has

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

convenient communication and fast financial transactional channel for mobile users

which is accessible from anywhere, anytime.

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

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

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

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

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

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

service.

Mobile banking services

In April 2009 for Feb/March mobile banking urban Indian customer’s checking account

balance is the most frequently cited reason for using mobile banking. 40 million Urban

Indians used their mobile phones to check their bank account balances followed by

viewing last three transactions. ICICI bank continues to maintain its leadership extending

in mobile space, 42% of all mobile banking users bank with ICICI, followed by HDFC

(25.3%).

Mobile banking: “Most popular services and income profile”

Figure -1 Statistics on most popular mobile banking services

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

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

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

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

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

Figure -2 Mobile banking users — Income profile

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

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

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

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

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

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

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

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

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

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

MOBILE BANKING GLOBAL PROSPECTIVE

Mobile banking has come in handy in many parts of the world with little or no

Infrastructure development, especially in remote and rural areas. This part of the mobile

commerce is also very popular in countries where most of their population is unbanked.

In most of these places banks can only be found in big cities and customers have to travel

hundreds of miles to the nearest bank.

Countries like Sudan, Ghana and South Africa received this new commerce very well. In

Latin America countries like Uruguay, Paraguay, Argentina, Brazil, Venezuela,

Colombia, Guatemala and recently Mexico started with a huge success.

In Colombia was released with Redesign. In Iran banks like Persian, Tejarat, Mellat,

Saderat, Sepah, edbi and bankmelli offer this service. Guatemala have the support of

Banco industrial. Mexico released the mobile commerce with Omnilife, Bancomer and a

private company (MPower Ventures). Kenya’s Safaricom (Part of the Vodafone Group)

has had the very popular M-Pesa Service - mainly used to transfer limited amounts of

money, but has been increasingly used to pay utility bills. Zain in 2009 launched their

own mobile money transfer business known as ZAP in Kenya and other African

countries.

Telenor Pakistan has also launched Mobile banking solution, in coordination with

Taameer Bank, under the label “Easy Paisa”. Telenor rolled out its Mobile banking

solution in Q4, 2009. It was a huge success and customers embraced the wide set of

services offered. Eko India Financial Services the is business correspondent of State

Bank of India (SBI) and ICICI Bank, India’s top two largest banks, and provides no-frills

bank accounts and deposit, withdrawal and remittance services to customers (nearly 80%

of whom are migrants or the unbanked section of the population) through mobile

banking., and also offer micro-insurance and micro-finance facilities to its customers.

Technologies Behind Mobile Banking

Technically speaking most of these services can be developed using more than one

channel. Presently, mobile banking is being deployed using more than one channel.

Presently, Mobile

Banking applications developed on one of the following four channels.

1. IVR(interactive voice response)

2. SMS(short messaging services)

3. WAP(wireless access protocol)

4. Standalone Mobile Application Clients

IVR (interactive voice response)

TVR or interactive voice response services operate through pre- specified numbers that

banks advertise to their customers. Customer’s make call at the IVR number and are

usually greeted by stored electronic message followed by a menu of different options.

Customers can choose option by pressing the corresponding number in their keypads, and

then read out the corresponding information, mostly using text to speech program.

Mobile banking based on IVR has some major limitation that can be used only for

enquiry based services. Also, IVR is more expensive as compared to other channels as its

involves making a voice calls which generally more expensive than sending an SMS or

making data transfer(as in WAP or Standalone clients).

One way IVR is by deploying a PBX system that can host IVR dial plans.

Banks looking to go the low costs way should be considering evaluating asterisk, which

is an open source Linux PBX system

SMS- Short messaging service

SMS uses the popular text messaging standard to enable mobile application based

banking. The way this works is that the customer request for information by sending an

SMS containing a service command to pre-specified number. The bank responds with a

reply SMS containing the specific information.

For e.g. customers of the HDFC bank in India can get their account balance details by

sending the keyword “HDFCBAL” and receive their balance information again by SMS

However there have been few instances even transaction based services have been made

available to customer using SMS. For instances, customer of the centurion bank of

Punjab can make fund transfer by sending SMS “TRN” (A/C NO) (PIN NO)

(AMOUNT)”. One of other reason the transaction based services have not taken of on

SMS is that almost all mobile phones are SMS enabled.

An SMS based services is hosted on SMS gate way that further connects to the mobile

services providers SMS centre. There are a couple of the hosted IP based SMS gateways

available in the market and also some open source ones like kennel

WAP- Wireless Access Protocol

WAP uses concepts similar to that used in the internet banking. Banks maintain WAP

sites which customer’s access using a WAP compatible browser on their mobile phones.

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

effectively. Bank of America offers a WAP based services channel to its customers in

Hong Kong. The banks customers now have anytime, anywhere access to a secure

reliable services that allows them to access all enquiries and transaction based services

and also more complex transactions like trade in securities through their phone.

A WAP based services requires hosting a WAP gateways. Mobile Application users

access the bank’s site through the WAP gateways to carry out transaction, much like

internet users access a web portal for accessing the bank services.

The following figure demonstrates the framework for enabling mobile application over

WAP. The actually forms that go into a mobile application are stored on a WAP server,

and served on demand. The WAP gateway forms an access point to the internet from the

mobile network.

Standalone Mobile Application Clients

Standalone Mobile Application is the ones that hold out the most promises as they are

most suitable to implement complex banking transactions like trading in securities. They

can be easily customized according to the user interface complexity supported by the

mobile. In addition, mobile applications enable the implementation of a very secure and

reliable channel of communication.

One requirement of mobile application clients is that they require to be downloaded on

the client device before they can be used, which further require the mobile device to

support one of the many development environments like J2ME or Qualcomm’s

BREW,J2ME is fast becoming an industry standard to deploy mobile application and

requires the mobile phone to support java.

The major disadvantages of mobile application clients are that the applications to be

customized to each mobile phones on which it might finally run. J2ME ties together the

API for mobile phones which have the similar functionality in what it calls “profiles”

Out of J2ME and BREW, J2ME seems to have edge right now as Nokia has made the

development tools open to developers which has further fostered a huge online

community focused in developing application based on J2ME. Nokia gone an additional

mile by providing an open online market place for developers where they can sell their

application to major cellular operators around the world.

Quite a few mobile software product companies have rolled out solutions, which enable

J2ME mobile application based banking. Once such product is wireless 1-banco. The

mobile user downloads and installs the wireless 1-banco server through the services

providers GSM networks to enable users to access information about their accounts and

perform transactions. One of the other big advantages of using a mobile application client

is that it can implement a very secure channel with end-to-end encryption.

However country like India faces a serious obstacle in the proliferation of such clients as

few users have mobiles, which support J2ME or BREW However, one of the biggest

CDMA players in Indian telecom industry, Reliance infocomm has about 7.01 million

users all which have handsets, which support J2ME. Reliance has unveiled one of the

most ambitious data services deployment program in the country. On the other hand a

country like South Korea with its tech savvy population has widespread adoption of the

higher-end mobiles, which support application development.

Lists of banks provide this facility

• Allahabad bank

• Andhra bank

• Axisbank

• Bank of India

• Bank of maharastra

• Bank of rajasthan

• Canara bank

• Central bank of India

• Corporation bank

• Dena bank

• Deutsche bank

• Dhanlakshmi bank

• Hdfc bank

• Federal bank

• ICICI bank

• IDBI Bank

• Indian bank

• Indian overseas bank

• Ing vysya bank

• Jammu & Kashmir bank

• Karnataka bank

• Karur vysya bank

• Kotak mohindra bank

• Lakshmivilas bank

• Oriental bank of commerce

• Punjab national bank

• Standard charted bank

• State bank of Hyderabad

• State bank of India

• State bank of my sore

• State bank of Patiala

• State bank of Travancore

• South Indian bank

• Syndicate bank

• Uco bank

• Union bank of India

• United bank of India

• Vijaya bank

• Yes bank

Mobile Banking Services

Mobile banking can offer services such as the following:

Account Information

1. Mini-statements and checking of account history

2. Alerts on account activity or passing of set thresholds

3. Monitoring of term deposits

4. Access to loan statements

5. Access to card statements

6. Mutual funds I equity statements

7. Insurance policy management

8. Pension plan management

9. Status on cheque, stop payment on cheque

10. Ordering cheque books

11. Balance checking in the account

12. Recent transactions

13. Due date of payment (functionality for stop, change and deleting of payments)

14. PIN provision, Change of PIN and reminder over the Internet

15. Blocking of (lost, stolen) cards

Payments, Deposits, Withdrawals, and Transfers

1. Domestic and international fund transfers

2. Micro-payment handling

3. Mobile recharging

4. Commercial payment processing

5. Bill payment processing

6. Peer to Peer payments.

7. Withdrawal at banking agent

8. Deposit at banking agent

A specific sequence of SMS messages will enable the system to verify if the client has

sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at

the agent. When depositing money, the merchant receives cash and the system credits the

client’s bank account or mobile wallet. In the same way the client can also withdraw

money at the merchant: through exchanging sms to provide authorization, the merchant

hands the client cash and debits the merchant’s account.

Strategy

Dual Strategy for Rural and Urban Segments

Indian mobile banking has two major segments: the urban segment and the rural segment.

Celent estimates that urban mobile banking subscribers will reach 65 million by 2012.

The rural mobile segment represents a huge opportunity to bank the unbanked

population, thereby adding a revenue stream.

In a new report, Mobile Banking in India; Dual Strategy for Rural and Urban

Segments, Celent explains the mobile banking ecosystem in India and looks at the trends

driving the growth in its urban and rural sub segments. The report looks at the prospects

of mobile banking from both a regulatory perspective and an industry perspective.

In India’s urban segment, mobile banking is an enabling fifth channel, and in the rural

segment, mobile banking is a primary mode of financial inclusion. In both segments, the

two fundamental factors affecting the growth of mobile banking are regulations and

technology. No transactional users will remain the majority in India because they will

continue to use online banking and other payment mechanisms. Government-to-person

(G2P) payments will be the major growth driver for rural mobile banking. Regulatory

changes are also a big driver. Celent believes that, by 2012, over 60 million rural users

will be beneficiaries of mobile banking through business correspondence.

“While the urban banking market is dominated by information services, the payment

transactions segment has not picked up mainly due to regulatory limitations,” says Rajesh

M R, an analyst with Ceient and coauthor of the report. “However, recent relaxation of

payment norms by RBI has presented a huge opportunity for this segment.”

Advantages

Huge subscriber base across India of approximately 400 Million: A Bank’s

mobile banking Sales & Marketing plan will certainly cover almost all of a bank’s

customers and it is certainly a large prospect base. Even a city or region-based Sales

& Marketing plan will cover a huge number of prospects. Today banks and other

retail industries are heavily using SMS for promos. Even your local insurance agent

may be using some form of bulk SMS service for new schemes or promos

Utility: Users are familiar with a cell phone and will probably adapt quickly to mobile

apps and mobile banking apps. Note that there are so many people in India using a

mobile and not the Internet (Mobile: 400 Million, Internet: 50 Million).

Rural Reach: Coming to last mile connectivity which is more difficult in rural areas

(maybe due to technological limitations like wire length of not more than 2.5 kms

from the Telephone exchange to a consumer) the Mobile channel may offer better

reach

Bringing costs down for other channels: If one can access bank services on the

mobile banking application, he or she would not call the Call Center or log on to

Internet Banking

Business Channel: This is a completely untapped business channel for banks that

have already launched Mobile Banking, probably due to a combination of reasons

including lack of real estate (or screen space) on the Mobile Banking screen, the

primary outlook of the bank of this being a Service Delivery Channel or user non-

familiarity with mobile applications. There is also huge cross-sell leverage that may

be obtained by integrating Mobile Banking with Mobile Commerce

Customer Adoption Plan: There are vast challenges involved. Most banks don’t

even have the Mobile numbers of all their customers. Do they get the customers to

adopt when they walk into a branch otherwise is there an alternate route? There is also

an RBI requirement here

CHALLENGES OF THE “M-BANKING REVOLUTION”

Operational Risk:

Operational risk, also referred to as transaction risk the most common form of risk

associated with mobile banking

Its takes them from inaccurate processing of transaction, non-enforceability of

contracts, compromise in data integrity, data privacy and confidentiality,

unauthorized access/ intrusion to bank system and transaction, etc.

Such risks can arise out of the weakness in the design, implementation and

monitoring of banks information system

Besides inadequacies in technology, human factor like negligence by customer and

employee, fraudulent activity of employee and crackers! hacker, etc can become a

potential source of operational risks

Reputation Risk:

Reputation risk is the risk of getting significant negative public opinion, which

may result in a critical loss of funding or customer. Such risks arise from action

which causes a major loss of public confidence in the banks ability to perform

critical function or impair bank-customer relationship. It may due to banks own

action or due to third party action.

The main reason for this risks may be the system or product may not be working

to the expectation of the customers, significant security breach (both internal or

external attack), inadequate information to the customer about the product use and

problem resolution procedures, significant problems with communication

networks that impair customer access to their funds or account information

especially if there are no alternative means of account access]

Legal Risks:

Legal risks arise from violation of, or non confidence with laws, rules, regulations,

or prescribed practices, or when the legal rights and obligation of parties to

transaction are not well established.

A customer inadequately informed about his rights and obligations, may not take

proper precaution in using mobile banking products or services, leading to

disputed transaction, unwanted suits against the bank or other regulatory sanctions.

Strategic Risk:

For reducing such risks, banks need to conduct proper survey, consult experts

from various fields, establish achievable goals and monitor performance.

Also they need to analyze the availability and cost of additional resources,

provision of adequate supporting staff, proper training of staff and adequate

coverage.

Risk of unfair competition:

Mobile banking is going to it the competition among various banks. The open

nature of mobile may induce few banks to use unfair practices to take advantages

over rivals.

Thus, one can find that along with the benefits mobile banking carries various

risks for bank itself as well as banking system as whole.

Security Risk:

Physical part of the hand-held device. If the bank is offering smart-card based

security, the physical security of the device is more important.

Security of any thick-client application running on the device. In case the device is

stolen, the hacker should require at least an ID/Password to access the application.

Authentication of the device with service provider before initiating a transaction.

This would ensure that unauthorized devices are not connected to perform

financial transactions.

User ID / Password authentication of bank’s customer.

Encryption of the data being transmitted over the air.

Encryption of the data that will be stored in device for later / off-line analysis by

the customer.

Other risk:

Focus: Insufficient attention is being given by a bank’s business and IT on the

potential of this channel

High GPRS based Internet cost for the User: The application should use

minimal bandwidth to provision for maximum savings to the end-user

Targeting the right customer for the right product: Should the bank target their

own customers or should it target other banks’ customers. This needs extensive

customer profiling of back end bank applications for targeted campaigns

Lack of mass adoption: There are large as well as niche product companies in

this space offering Mobile Banking Applications. However, the apps can be

completely developed and tested only under mass usage conditions and over time

Lack of support for all handsets: There are many handset models across 5-10

mobile manufacturers, there are also Mobile Operating System variants

Regulatory restrictions on limits on transactions: This is of course necessary

till security evolves

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.

One-time password (OTPs) is 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 consumer’s 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 financial institutions 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.

Top 9 Security Threats of 2011

Mobile banking and social networks are expected to pose new security threats in the

payments space in 2011. But security experts say those threats won’t displace the Zeus

botnet, malware attacks and phishing threats, which for years have plagued banking

institutions. Fraud attempts will escalate, not diminish, as new threats and channels

blossom in 2011.

The top 9 threats of 2011 include:

1. Mobile Banking Risks

Mobile phones used for banking are on the rise, but mobile security is proving

increasingly challenging for banks and credit unions, as controls put in place to protect

traditional online banking do not translate well when applied to mobile.

Mobile banking applications from Bank of America, Chase, Wells Fargo and TD

Ameritrade have all suffered from security flaws, and CitiGroup in 2009 noted

vulnerabilities when it learned some banking apps stored sensitive user details in hidden

files on smart phones.

Until recently, functionality for mobile banking was fairly limited. But as mobile

application robustness has increased, so, too, have security risks. McNelley, an analyst at

Aite Group, says, “Many banks seem to be reliving all the hard lessons of the early days

of online banking.” Mobile malware is an emerging threat, and Zeus attacks, such as

Mitmo aimed at mobile, have already been identified.

But RSA security researcher Rivner slightly disagrees. “Mobile banking apps will not be

a primary target for fraudsters,” he says. Instead, he believes mobile browsing will be

more targeted in the coming year, since most mobile users continue to use their online

banking sites to conduct banking functions.

2. Social Networks and Web 2.0

The connection between mobile phones and social media is growing, with Twitter and

Facebook apps offered for mobile users. Institutions embracing mobile also are

embracing social networking, says Rasmussen, Internet Identity’s chief technology

officer. “With more banks on social networks, expect to see more fake sites using social

networks, like Twitter and Facebook, to try and trick people into giving up vital personal

information,” including banking login credentials and Social Security numbers, he says.

But external threats aren’t the only risks. Social networking sites are also a venue for an

institution’s own employees to intentionally or inadvertently expose sensitive

information. To mitigate internal risks of data leakage, it’s important for organizations to

spell out social networking policies to employees. They must know when and how to use

social networks in the course of their jobs, as well as what information is/is not ap

3. Malware, Botnets and DDoS Attacks

Distributed denial-of-service or DDoS, attacks, as seen in the wake of the recent

WikiLeaks incidents are likely to increase. In fact, the WikiLeaks-inspired attacks against

leading e commerce sites have fueled interest among fraudsters, says RSA’s Rivner.

Botnet operators now see opportunity for additional income.

Even with the takedown of the Mariposa Botnet earlier this year, banking institutions are

expected to face growing challenges in the fight against DDos attacks.

Attacks are also getting more sophisticated. The No. 1 banking-credential-stealing

Trojan, Zeus, is used by hundreds of criminal organizations around the world, so “add-

ons” are prevalent. This year alone, Zeus has been linked to some $100 million in

financial losses worldwide, according to the Federal Bureau of Investigation. Rasmussen

says Zeus’ anonymous programmer, who launched the Trojan in 2007, is likely to come

out with a new and improved Zeus variety in 2011. “There is a good chance that he will

soon emerge with even more powerful ways to steal,” he says.

Concerted attacks launched against online banking sites will likely make stronger

authentication a necessity, says Eisen, founder of 41st Parameter. “The amount and

velocity of fraud could force new and stronger authentication methods and more stringent

procedures, such as dual- signatures and dual authentications,” he says.

4. Phishing

Sophistication in phishing, smishing and vishing attacks also is increasing, “Fraudsters

now create very polished messaging that targets everything from bank accounts to

Amazon accounts,” In fact, respondents to the recent Faces of Fraud survey say

phishing/vishing attacks rank No. 3 among fraud threats.

To fight these incidents, inroads in consumer educatipn have been made, but the social

engineering techniques that have made phishing a success are now trickling down to

land-line and mobile phones. “Phishing will be used as a general purpose tool that

leverages a recognized brand, but doesn’t try to attack them directly,” Rivner says.

Nonetheless, the damage to the brand’s reputation (in the eyes of the victimized

consumers) could be costly.

5. ACH Fraud: Corporate Account Takeover

In 2010, ACH fraud resulting in corporate account takeovers saw a dramatic increase and

made for some of the year’s most compelling reading. We witnessed banks suing

customers and customers suing banks over the responsibility for fraud incidents and

losses.

In 2011, commercial banking attacks are expected to rise, experts say, especially as man-

in- middle or man-in-the-browser, also known as MitB, schemes increase.

MitB attacks targeting two-factor authentication intensified in 2010, requiring

commercial banks to deploy additional lines of defense, such as out-of-band

authentication, desktop hardening and anti-Trojan services. .“With some gangs stealing

millions from just a few victims, expect more and more criminals to pile on the ‘easy

money’ bandwagon,” Rasmussen says. As the MitB attacks get easier, less sophisticated

criminals are expected to target consumer accounts, too, despite smaller returns.

6. Cloud Computing

Cloud computin2 is touted for its ability to curb fraud, but fraudsters are working

overtime to create new threats in what Rivner calls “the Dark Cloud.” He predicts

fraudsters will hone their ability to exploit new and yet-unknown cloud vulnerabilities.

Rivner says institutions can expect in 2011 to see cloud-targeted Trojans, like Oakbot that

focus on a geographic region and/or specific banking sectors.

But movement to the cloud is definitely on the horizon, as more financial institutions

gradually warm to non-localized content management. Jeff Reich director of the Institute

of Cyber Security at the University of Texas in San Antonio, says the biggest barrier to

cloud computing has been the fear of data security. Now that fear is diminishing, the use

of cloud computing by banks and credit unions is expected to take off. But, like any new

or emerging technology, the cloud will face challenges, Reich says.

“Cloud computing, in particular, is thought to be failsafe,” he says. “People sometimes

think there is no hardware involved ... and, as a result, it will never fail. So it’s one thing

to keep in mind: Cloud computing is not limitless. Every cloud has its own boundaries.”

7. Inside Attacks

Malicious attacks or hacks are often launched inside an organization by a disgruntled

employee. But the inside threat also may be posed by an outside person who uses false

credentials to pose as an insider to illegally gain access to internal servers and systems.

Kirk Nahra a privacy expert and attorney, says most compromises of internal data can be

traced back to an employee. That’s especially true when the information that’s been

compromised involves the theft of an identity. But Nahra is quick to point out that not all

compromises are intentional and malicious. The problem: companies and financial

institutions have not properly limited access to databases and files that contain sensitive

information.

“Go into your company and does a real thorough audit or a review,” he says. “Doing that

kind of a survey or audit, I think, can really do a very significant job of reducing -- not

eliminating, but reducing -- these problems, because it cuts down so many of the places

where information just simply doesn’t need to be.”

WikiLeaks serves as a prime example of how insider threats can pose significant security

risks. The controversy brewed when an Army private allegedly accessed and downloaded

classified information that he later sent to WikiLeaks. Though the private had some

security clearance, he did not necessarily have authorization to access and download the

classified files he leaked.

Aite’s McNelley says it’s often all too easy for employees to illegally grab sensitive

information. “It’s the little things that lead to most internal compromises, like walking

away from your desk and not locking your. screen,” she says. “A lot of that kind of thing

slips through the cracks.” Internal fraud is still one of the biggest issues in financial

services, she says, especially since the embezzlement of funds and the compromise of

consumer financial information is so tempting.

As RSA’s Rivner points out, the challenges posed by outsiders are just as alarming, since

many take aim at government and bank employees. Noting Operation Aurora as an

example, Rivner says insiders can unknowingly pose threats, especially when they are

targeted by sophisticated hackers. “Some of those affected were from the financial sector,

which shows bank employees are a valid target for cybercriminals,” he says. “At times, I

see these hijacked resources communicating with the Trojan mother ship, while within

the corporate firewall.”

8. First-Party Fraud

First-party fraud continues to pose security challenges. Also known as “advances fraud,”

“out fraud, “application fraud,” “friendly fraud” and “sleeper fraud,” first-party crime

typically involves a customer applying for and accepting credit with no intention of

repayment. First-party fraud applicants can use synthetic identification or misrepresent

their real identities.

Jasbir, Anand, a senior solutions consultant and security expert at ‘AC’ Worldwide, says

the British Bankers Association estimates between 10 percent and 15 percent of bad debt

losses may result from first-party fraud. “Specialized criminal gangs now target financial

institutions with counterfeit identification and advanced knowledge of lending practices,”

he says. Once an identity is established, the fraudster builds credit and applies for

multiple financial products.

9. Skimming

in 2010, card skimming of all types took off, including traditional ATM skimming and

new incidents at merchant point-of-sale systems and self-service gasoline pumps. Even

though skimming incidents are localized, they represent a growing problem. The advent

of ATM “ or “flash” attacks reveals growing sophistication and coordination among

counterfeit-card operations. Blitz or flash attacks involve the simultaneous withdrawal of

funds from multiple ATMs in different locations, sometimes scattered throughout the

world.

Avivah Litan, vice president and distinguished analyst at Gartner, says flash attacks will

pose increasing challenges, since they “fly under the radar” of most fraud-detection

systems. “Banks can stop it if they can figure out the point of compromise, but many

have a hard time doing that with current fraud-detection solutions,” she says.

The technology behind skimming is reaching new levels of sophistication, says Jeremy

King European regional director for the Payment Card Industry Security Standards

Council. Fraudsters throughout the world rely more on wireless communications to

transmit skimmed card data. “Improving awareness is important,” King says, “and the

PCI PED standard is addressing some of the global card skimming trends we are seeing.”

Stronger cardholder authentication through contactless radio-frequency identification

payments or contact chip technology such as EMV could address some of these emerging

fraud concerns, says Chuck Somers, vice president of ATM security and systems for

Diebold Inc. “Anything beyond better authentication would involve changing the whole

infrastructure,” Somers say

SUGGESTION TO OVERCOME CHALLENGES

Stock up on passwords...

When considering using a mobile payment system, look for as many security features as

possible, says Ondrej Krehel, an information security officer for Identity Theft 911, an

identity- theft resolution service in Scottsdale, Ariz. For instance, a mobile-payment app

that offers protection through a PIN number and password can be more secure than an

app that requires only one of the two. Users should make sure their phone and its

subscriber identity module, or SIM, card -- a chip that houses a phone’s subscriber

information and vital numbers -- are protected, as well. “What can happen is even if

can’t use your phone, they can use your account via your phone’s SIM card,” Krehel

says. “All they need to do is put it into another phone and access your information.”

Make sure they’re strong

Consumers often use the same password for multiple applications, including email,

Facebook, retail web sites and banking applications. That’s a mistake, Krehel says.

Instead, users should keep their mobile device separate from their personal life by using

separate credentials for each platform, he says. Also, users should select passwords that

are comprised of at least eight random characters including capital letters, lower-case

letters, numbers and special characters. He also recommends changing them often. Users

who think they might forget multiple passwords might try encrypted password

management programs, such as Bruce Schneier’s Password Safe or KeePass Portable, the

mobile version of KeePass’s open source password manager.

Don’t store sensitive information

Avoid storing sensitive information on your phones. In addition to passwords, some

people store their Social Security numbers on their phones, says Krehel. Revealing too

much personal information can also put users at risk. For instance, programming the

word “home” into a phone can have negative consequences if a purse is lost with house

keys inside, he says. Thieves can use that information and enter a home easily.

Remove data remotely

Consider using technology that allows you to wipe out your phone’s data remotely.

Account holders will need to check with their carriers for options applicable to their

phones. Two options include MobileMe, which is a service for the iPhone, and

Motorblur, a service for Motorola phones. These programs can also help locate a missing

phone.

Vet the service provider

Make sure you can trust your mobile payment provider, says Lillie Coney, the associate

director of the Electronic Privacy Information Center, a research center in Washington,

D.C. When it comes to sharing bank account or credit-card information, find out if the

company providing that app is a known entity, she says. “If you’re dealing with another

entity, will you be able to go back to them if there is a problem?” Users should find out

who to contact if security vulnerabilities or other issues arise, says Coney.

Know the protocol for fraud

Find out if you’ll be on the hook for fraudulent purchases, says Coney. Right now credit-

card holders are legally obligated to pay up to $50 of fraudulent purchases. However,

since these programs are so new, the law may not protect mobile payment transactions.

“Laws are written out to cover current credit-card transactions,” she says, adding: “This

is a new one; until these issues are addressed through state law or federal legislation,

consumers are exposed.” To find out how fraudulent charges will be treated, consumers

should call the app provider and their credit- card issuer, Coney says. They could also

look to the terms and conditions for the application. “See what it says about obligations

and anything they say about disputes on financial transactions,” she says. “See what they

put in there to protect the consumer,”

Any time you log into SMCU Mobile Banking, be sure to be aware of the people

around you. Don’t disclose personal information, including account numbers or

social security numbers, if someone else can read your screen or hear your voice.

Always secure your phone with a password to prevent unauthorized access. It may

be a bit of a hassle, but if your phone is ever lost or stolen, you’ll be glad you took

this extra precaution.

Be sure to log out completely every time you finish a Mobile Web Banking

session. This will prevent someone from having easy access to your information if

they get hold of your phone. Also, don’t save any financial or personal

information on your phone, including Pins and Online Banking login information.

If you lose your phone, not only have you lost that information, but it could fall

into the hands of someone with bad intentions.

Some web browsers have an “auto-fill” function that remember your username and

password, and pre-fill these fields for you the next time you log in. If you are

prompted, tell your phone NOT to remember or auto-fill this information.

Beware of third-party applications (“apps”) for your phone. There are some

programs that you can download that claim to organize your various online

banking accounts or other passwords. Many of these are basically phishing scams

designed to steal your information and send it to fraudsters. Only access your

accounts through our official website www.smcu.com or the mobile site

m.smcu.com. Seattle Metropolitan Credit Union does not currently have or

endorse any downloadable application.

If you do lose your phone and you are worried about your Online Banking

information being compromised, log into your account from another computer and

reset your password right away. If you can’t get to a computer, call our Contact

Center at 206-3 98- 5500 or 800-334-2489.

If you use SMCU Mobile Text Banking, know that we will never send you an

unsolicited message or ask you for a password or personal information via text. If

you get a message requesting such information, do not respond.

While SMCU will never send personal or account identifying information via text, being

in the habit of periodically deleting your archived texts will help ensure there is never

information on your phone that might jeopardize your account’s security.

Top 10 telecom service providers

1. Bharti Airtel

Bharti Airtel retained its leading position among telecom service providers and posted a

growth of five per cent to end 2009-10 fiscal with revenues of Rs 38,800 crore (Rs 388

billion).

2. BSNL

Bharat Sanchar Nigam Limited saw a drop in its revenue for the second consecutive year

to post Rs 30,240 crore (Rs 302.4 billion), a drop of 14 per cent, even though it retained

the number two position among telecom players.

3. Vodafone Essar

The Indian subsidiary of Vodafone Group, Vodafone Essar recorded 13.7 per cent growth

to emerge as the third largest player with revenue of Rs 23,200 crore (Rs 232 billion).

4. Reliance Communications

Reliance ADA Group’s flagship company, Reliance Communications reported a negative

growth of 3.5 per cent with revenue of Rs 22,130 crore (Rs 221.3 billion).

5. Idea Cellular

Idea Cellular is part of the Aditya Birla Group and has bagged fifth position with a

revenue of Rs 11,390 crore (Rs 113.9 billion).

6. Tata Communications

Tata Communications reported revenue of Rs 11,000 crore (Rs 110 billion).The Tata

Global Network includes one of the most advanced and largest submarine cable

networks, a Tier-i IP network, with connectivity to more than 200 countries across 400

PoPs, and nearly I million square feet of data center and collocation space worldwide.

7. Tata Teleservices

Tata Teleservices spearheads the Tata Group’s presence in the telecom sector. It has

posted revenue of Rs 6,900 crore (Rs 69 billion). Established in 1996, Tata Teleservices,

one of the 96 companies of Tata Group, has its network in 20 circles. It is the first

company to launch CDMA mobile services in India.

8. Aircel

Aircel recorded the highest growth of 37.2 per cent among operators in 2009-10. The

company posted revenue of Rs 4,700 crore (Rs47 billion) to move to the number eight

slot.

9. MTNL

Mahanagar Telephone Nigam Limited (MTNL)’s revenue dropped nearly by a fifth

highest among the top 10 players -- to Rs 3,650 crore (Rs 36.5 billion). The company has

achieved a customer base of 8.06 million in the two metro cities of Delhi and Mumbai.

The government currently holds 56.25 per cent stake in the company.

10. TTML

The third Tata group company this arena, Tata Teleservices Maharashtra Limited

(TTML) is ranked number 10, among the top ten telecom players in India, with revenues

of Rs 2,300 crore (23 billion. This helped the group’s earning go past the Rs 20,000 crore

(Rs 200 billion) mark.

I think the heartening factor here is that there is over 30% rise in users who log on to

internet to view multimedia content (From 32% in 2008 to 45% in 2009), which

indirectly also means that Internet speeds are getting better in India:)

MOBILE PENETRATION

India adds 19.90 million mobile users

• Total Telephone subscriber base reaches 581.81 Million

• Wireless subscription reaches 545.05 Million

• Wire line subscription declines to 36.76

• Wire line subscription declines by 0.31 Million

• Overall Tele-density reaches 49.50

• Broadband subscription is 8.03 million

The number of telephone subscribers in India increased to 581.81 Million at the end of

January- 2010 from 562.21 Million in December-09, thereby registering a growth rate of

3.49%. With this, the overall Tele-density in India reaches 49.50.

Wireless Segment (GSM, CDMA & FWP)

Wireless subscriber base increased from 525.15 Million in December-09 to 545.05

Million at the end of January-2010 at a monthly growth rate of 3.79%. Wireless Tele-

density stands at 46.31.

Wireless Service: Service Provider wise net additions during the month

Stel2%

Uninor7%

Vodafone14%

Loop0%

Idea11%

Bharti14%

Reliance14%

Sis-tema1%

Tata15%

Aircel10%

MTNL0%

BSNL11%

CHAPTER-2

OBJECTIVE OF THE STUDY

To understand the concept of mobile banking

To know the various trends in mobile banking in India

To know the customer satisfaction level from Mobile Banking Services.

CHAPTER-3

RESEARCH METHODOLOGY

Research methodology is the way to systematically solve the research problem. When we

talk about research methodology we not only talk about research methods but also talk

about the logic behind the method we use in the context of our research that why our

research results are capable of being evaluated either by the researcher himself or by

others.

The purpose of this section is to describe the methodology carried out complete the work.

The methodology plays a dominant role in any research work. The effectiveness of any

research work depends upon the correctness and effectiveness of the research

methodology.

Research Design:

A research design is an arrangement of conditions for collections and analysis of data in a

manner that aims to combine relevance to the research purpose with economy in

procedure, it constitutes the blueprint for collection, measurement and analysis of data.

The research design for the research is exploratory and descriptive.

Data collection:

For our research study the data has been collected by both the primary and secondary

means.

(a) Primary data — I have adopted the structured questionnaires, which were filled

by the 100 respondents.

(b) Secondary data — the data has been collected through various magazines,

journals and websites.

Sampling Design:

A sample design is a definite plan for obtaining a sample from a given population. It

refers to the technique or procedure the researcher would adopt in selecting items for the

sample. The sample design used in this project is:

(a) Non-Probability sampling

• Convenient sampling

• Judgmental sampling

Sampling Size:

Sample size for the research report is 100 respondents of Ludhiana city.

Obtaining information regarding the company

Sampling design

Preparation of schedule

Field work (survey)

Editing and analysis

Preparation of report

CHAPTER-4

DATA ANALYSIS AND INTERPRETATION

Q.1 In which bank do you have your account?

Particulars No. of Respondents %age

Axis Bank 10 10%

ICICI Bank 32 32%

HSBC Bank 5 5%

HDFC Bank 16 16%

State Bank of India 37 37%

Any other bank 0 0%

10%

32%

5%16%

37%

Account in Respective Bank

Axis BankICICI BankHSBC BankHDFC BankState Bank of IndiaAny other bank

INTERPRETATION:

It was witness that today public sector bank state bank in India ha largest customer base but the

private bank are also catching up and after state bank in India, ICICI has highest customer base.

And on the other side multinational banks are also making their presence noticeable in the Indian

scenario.

Q.2 How frequently you visits your bank branch monthly?


Never 9 9%

1 to 4 times 45 45%

5 to 8 times 16 16%

9 to 12 times 20 20%

Over 12 times 10 10%

9%

45%

16%

20%

10%

No. of Times

Never1 to 4 times5 to 8 times9 to 12 timesOver 12 times

Interpretation:

As per survey most of the customer that is 45 customers visits their branch 1-4 times in a month

and we can see there is a segment of customers that is 9 customers who are busy enough that

they do not get time to visit their bank even once in a month.

Q.3 How frequently do you avail the services of mobile banking?


Daily 10 10%

Weekly 10 10%

Monthly 20 20%

Depends 60 60%

10% 10%

20%60%

Frequency of Availing Mobile Banking Services

DailyWeeklyMonthlyDepends

Interpretation:

Maximum people that 60% people use the services depends on the factors and there are 10% of

the people who use mobile banking on daily and more of the category consists of businessman

who use mobile banking for their daily business transaction.

Q.4 Are you satisfied with your banking mobile banking services?


Yes 80 80%

No 20 20%

80%

20%

Satisfaction with banking services

YesNo

Interpretation:

It is very interesting to see that most of the respondents are happy with the services their

respective bank is providing, the rest of the respondents felt there is scope of improvement.

Q.5 Rank the following advantages of mobile banking according to your choice?

Particulars Ranking No. of Respondents %age

Convenience 1 40 40%

Safety 4 10 10%

Transparency 2 35 35%

Quick transaction 3 15 15%

40%

10%30%

20%

Ranking

Convenience SafetyTransparencyQuick transaction

Interpretation:

Most of the people prefer mobile banking because of convenience 2nd preference is given to

transparency provided by mobile banking 3rd preference to time saving and safety was given least

preference because anywhere still customer feels that mobile banking is unsafe as compare to

traditional banking.

Q.6 Do you feel safe in disclosing your credit card and purchase information over

the mobile when this information is encrypted?

No. of Respondents %age

Strongly agree 35 35%

Agree 15 15%

Neutral 15 15%

Disagree 25 25%

Strongly disagree 10 10%

35%

15%15%

25%

10%

Safety in Using Mobile Banking Services

Strongly agreeAgreeNeutralDisagreeStrongly disagree

Interpretation:

Out of the respondents who were using mobile banking services 35% of the respondents were

strongly agreed that they feel safe in disclosing their credit card and purchase information over

the mobile when this information is encrypted where as 15% respondents were neutral and 10%

strongly disagree on it.

Q.7 What are the main transactions you would prefer to do through mobile

banking?

No. of Respondents %age

Money transfer 15 15%

Checking your current balance 25 25%

Mobile Cheque 15 15%

Pay bill 25 25%

Stop payment 20 20%

15%

25%

15%25%

20%

Preferences of transactions

Money transfer Checking your current balanceMobile Cheque Pay billStop payment

Interpretation:

It is interesting to see that a respondent would like to do all the transaction which one does on

personal visit to a bank. Thus, mobile banking has promising future ahead.

Q.8 Are you aware about possibility of fraud?


Yes 30 30%

No 70 70%

30%

70%

YesNo

Interpretation:

It’s party tragic but most of the respondents are unaware of the techniques which can be taken up

for any type of fraud and they are not aware of the measures that can be taken to avoid those

frauds.

Awareness About Fraud

Q.9 Does Bank educates you about the measure which you can take to secure your

mobile banking transaction?


Yes 45 45%

No 55 55%

45%

55%

Awareness about security measures

YesNo

Interpretation:

Some of the respondents that are 45 respondents were not given any sort of education regarding

what are the various measures available to secure their mobile banking transaction but 55 of the

respondent were taught about measures by their respective banks.

Q 10 With Which factor you are uncomfortable with the mobile banking transaction you

do?

Particulars No. of Respondents % age

Security issue 42 42%

Availability 19 19%

About the ability bank to maintain confidentiality 11 11%

Its techniques 28 28%

42%

19%11%

28%

Security issueAvailabilityAbout the ability bank to main-tain confidentiality Its techniques

Interpretation:

Above table revealed the fact that 42 % of the respondents are uncomfortable with the mobile

banking services because of Security issues after which they are uncomfortable with its

techniques used for it besides some other factor also with which respondent are unhappy.

Uncomfortable with the mobile banking

Q.11 Why do you use mobile banking services?


Time-saving 20 20%

Confidentiality 25 25%

Clarity of transaction 55 55%

20%

25%

55%

Reasons for Using Mobile Banking

Time-savingConfidentialityClarity of transaction

Interpretation:

As 55% of the respondents are in favor of Clarity of transaction it can be concluded Clarity of

transaction is very important aspect of mobile banking besides this confidentiality is also the

reason why respondent want to use mobile banking.

CHAPTER-5

FINDINGS

AN old Chinese saying goes: If you don’t know where you are going - you will never get

there.

Public sector bank state bank of India has the largest customer base but the private

banks are also catching up and after state bank of India ICICI bank has highest

customer base.

Most of the customers visits their banks 1-4 times in a month.

ATM transaction costs at 45 paise, mobile banking at 35 paise, debit card at 20

paise and internet banking at paise per transaction so in this• internet banking has

edge over mobile banking

Banks are very much working on to remove the hacking problems and other flaws

in the way of mobile banking

Compared to foreign countries Indian banks offering mobile banking services still

have long way to go of customer who don’t prefer mobile but prefer traditional

banking only.

10% customer use mobile banking services weekly, 20% uses it monthly and there

is a segment of 10% people who uses mobile banking services daily basis and this

segment consists of more of businessmen who uses it for their business transaction

80% of the customers are satisfied with the mobile banking services but 20% still

think that there is a scope for improvement.

Most of the people prefer mobile banking because of clarity of transaction 2nd

preference given to confidentiality provided by banks in mobile banking and

3rd preference to time saving.

35% respondent were strongly agreed that they feel safe in disclosing their credit

card and purchase information over the mobile when this information is encrypted

whereas 15% respondent were neutrals and 25% disagree on it.

Respondent would like to do all the transaction which one does personally on a

visit to the banks but most of the people use it to enquiry there balance in their

account.

70% of the respondents are unaware of the techniques which can be taken up for

any type of fraud and they are not aware of the measures that can be taken to avoid

those frauds whereas 30% respondents were aware.

55% respondents were not given any sort of education regarding what are the

various measures available to secure their banking transactions but 45% of the

respondents were taught about these measures by their respective banks.

SUGGESTIONS

The banks should take up the responsibility of educating the customers and all the

benefits of mobile banking.

There is need felt for the banks to promote mobile banking services and proper

promotional activities are not taking place.

Banks need to appeal the customers who may not be technologically sophisticated,

and should not require an engineering degree to get started or use this service.

Banks need do tie ups with mobile service provider do to make this service more

popular.

Banks should try put their security standard up to mark so that they cannot be

easily hacked.

Mobile service provider companies also should take mobile banking as more

serious aspect than now in future.

CHAPTER-7

LIMITATINS OF THE STUDY

Sincere efforts have been made to collect authentic and reliable information from

respondents however the report is subject to following limitations:

1. The study was limited to Ludhiana city only. Wider coverage has made the study

more reliable and representative.

2. Sample was drawn by convenience sampling, so possibility of sampling error

cannot be ruled out.

3. Response of respondents was biased based on their personal preferences.

4. Due to time and costs constraints, study could not be carried out on large scale.

CHAPTER-8

CONCLUSION

The cutthroat competition and the fear of losing customer are compelling the banks to

formulate mobile banking strategies. Expansion of the market is the need of the hour. To

expand market awareness has to be created amongst the user that mobile banking is safe

and secure to use. The scope is large — first today more than 200 million Indians use

mobile phones as compared to 20 millions who have access to computer and the

population of mobile phone user is expected to grow at 25-30 percent. Second, Indian

demographic profile-mare than half the population is under 35 years old which are more

receptive to new age technologies and application. Mobile banking also helps banks

reach out to unbanked areas. It is fairly certain that given the market and potential mobile

banking will go a long way in the Indian banking sector.

Increasing satisfaction with, and usage of, mobile banking presents both an opportunity

and a challenge for banks. The opportunity lies in driving more customers to the mobile

banking channel to take advantage of the convenience and efficiency of the mobile

channel while continuing to meet their need and exceed their expectation. If banks

continue to satisfy customer with the mobile banking while increasing usage, the end

result should be larger number of satisfied and loyal customers. This will help banks

attract a higher share of wallet from existing customers and increase penetration thanks to

stronger recommendation from existing mobile banking customers to prospects.

In addition, increasing adoption of the mobile banking channel will reduce the cost

required to service customers. Banks will be able to provide a more satisfying experience

by delivering services through a lower cost channel. This improves operational efficiency

and reduces costs to banks. The challenge lies in changing customer behavior to embrace

the mobile channel. There will always be holdouts for whom mobile banking is not viable

channel due to perceived security risks, lack of comfort with latest technology and a host

of other reason. Once prospective mobile banking customers try mobile banking, they

may experience a lessening of security concerns and increase satisfaction resulting from

convenience and accessibility of banking services. Banks that figure out how to

maximize the mobile channel will be rewarded with greater loyalty and financial success.

BIBLIOGRHAPHY

BOOKS

R.K. Uppal (2009), “future scenario of Indian Banking”, MAHA MAYA

Publication, pp.1-11.

R.K. Uppal & Rimpi Jatana( 2007) E-banking in India - Challenges and

Opportunities

Jayshree Bose (Author)

E- Banking in India: The Paradigm Shift

JOURNALS/MAGAZINES/NEWSPAPER

HINDUSTAN TIMES

THE TIMES OF INDIA

WEBSITES

WWW.GOOGLE.COM

WWW.WEKIPEDIA.COM

WWW.INFOGILE.COM

WWW.MMAGLOBAL.COM

QUESTIONNAIRE

Name :______________________________

Age :______________________________

Occupation :______________________________

Income :______________________________

Q.1 Which bank do you have your account?

(a) Axis Bank

(b) ICICI Bank

(c) HSBC Bank

(d) HDFC Bank

(e) State Bank of India

(f) Any other Bank

Q.2 How frequently you visit your bank branch monthly?

(a) Never

(b) 1 to 4 times

(c) 5 to 8 times

(d) 9 to 12 times

(e) Over 12 times

Q.3 How frequently do you avail the services of mobile banking?

(a) Daily

(b) Weekly

(c) Monthly

(d) Depends

Q.4 Are you satisfied with your banking mobile banking services?

(a) Yes

(b) No

Q.5 Rank the following advantages of mobile banking according to your choice?

(a) Convenience

(b) Safety

(c) Transparency

(d) Quick transaction

Q.6 Do you feel safe in disclosing your credit card and purchase information over the

mobile when this information is encrypted?

(a) Strongly agree

(b) Agree

(c) Neutral

(d) Disagree

(e) Strongly disagree

Q.7 What are the main transactions you would prefer to do through mobile banking?

(a) Money transfer

(b) Checking your current balance

(c) Mobile Cheque

(d) Pay Bill

(e) Stop payment

Q.8 Are you aware of method which can be undertaken to make any kind of fraud?

(a) Yes

(b) No

Q.9 Does your bank educate you about the measure which you can take to secure your

mobile banking transaction?

(a) Yes

(b) No

Q.10 With which factor you are uncomfortable with the mobile banking transaction you

do?

(a) Security issue

(b) Availability

(c) About the ability bank to maintain confidentiality

(d) Its techniques

Q.11 Why do you use mobile banking services?

(a) Time-saving

(b) Confidentiality

(c) Clarity of transaction

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