Mobile Banking In India: Its benefits and Concerning Issues Author Ms.

Charu Modi, Assistant Professor, JSSGIW Bhopal.MP Email address- jain04.charu@gmail.com Abstract In present day banking, total automation of banking operations is an imperative need for all banks to attract more customers, provide efficient services, and su rvive in the emerging new competition, apart from the profit motive which is the primary objective of the business. In order to achieve these goals of business, various channels have been developed through technology. Mobile banking is one of the best alternative channels available to customers for quick, correct and eff icient service at anytime and anywhere. India, which has 600 million active mobi le phone connections, according to the Telecom Regulatory Authority of India (TR AI), has one of the highest mobile penetration in the world. But mobile banking as a concept is yet to take off in a big way even among the educated masses. The comfort with which people use internet banking to perform various banking trans actions is yet to be seen in using a mobile as a tool for banking. The present p aper is outlined realistically the use of mobile phone in the banking industry, its economic implications, and in general a systematic look into the various for ms of mobile banking with emphasis on the security measures that makes the whole process safe for adoption. Keywords: Mobile banking, benefits, concerning issues, India 1. INTRODUCTION In India traditional branch-based banking remains the most widely adopted method of conducting banking transaction, at same time commercial banks are undergoing a rapid change majorly driven by the information & telecommunication (ITC) tech nology. ICICI bank pioneered in mobile banking services in India. Among public b anks, Union Bank of India was first to introduce mobile banking (Ali et al. 2010 ). Today many commercial banks have launched mobile banking using ITC technology and now they can reach out to customers and provide them with not only general information about its services but also the opportunity of performing interactiv e retail banking transactions anytime, anywhere. Mobile banking in India is as a concept is largely used for two purposes, fund transfer (transfer of funds from one bank account to another) and merchant transactions (purchase of travel and movie tickets, among others). The Reserve Bank of India (RBI) has allowed only a bank-led model for mobile banking and not a telecoms-operator-led model for mob ile banking to avoid situations like money laundering or terror financing. Hence , the pace in which mobile banking grows in India depends on the pace in which b anks prepare themselves to adapt to mobile banking technology. 1.1 Concept of mobile banking: Mobile Banking refers to provision and availing of banking- and financial servic es with the help of mobile telecommunication devices. The scope of offered servi ces may include facilities to conduct bank and stock market transactions, to adm inister accounts and to access customized information." 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 transact ion-based. The non-transaction-based services of an informational nature are how ever essential for conducting transactions - for instance, balance inquiries mig

ht be needed before committing a money remittance. The accounting and brokerage services are therefore offered invariably in combination with information servic es. Information services, on the other hand, may be offered as an independent mo dule. However the most important reasons for which institutions offer mobile ban king services to their customers are: Lower operating costs Greater geographic diversification Improved or sustained competitive position Increased customer demand for services, and New revenue opportunities In order to regulate mobile banking the RBI has issued a set o guidelines under sec18 of the payment and settlement Act 2007. As per the guidelines: Banks have been permitted to offer this facility subject to transactions with cap of Rs 500 0/- per day for fund transfer and Rs 10000/- per customer per day for transactio ns involving purchasing of goods/services. But banks can, of their own, fix limi t within this Overall limit. Various types of M-banking: Technically speaking most of these services can be deployed using more than one channel. Presently, mobile banking is being deployed using mobile applications d eveloped on one of the following five channels. IVR (Interactive Voice Response)

SMS- (Short messaging service) WAP (Wireless Access protocol) Standalone Mobile Application Fast net Mobile banking. 1.2 Growing Trends in Mobile Banking Banks have gradually moved from offering non-financial services to financial ser vices on mobile phones - the evolution curve has been: alerts (on ATM withdrawls , credit card purchases etc), cheque book request, payments (of utility bills), debit and credit statements, fund transfer, opening fixed deposits, cash managem ent at low end (up to Rs 50,000 per day) etc. In future more services will be ad ded. The Reserve Bank of India has allowed use of 'semi closed wallet' by mobile comp anies. Via semi closed wallet accounts, people can send and spend money through the mobile network, but can't withdraw cash. Airtel, Vodafone and Idea are offer ing such services. To expand mobile banking reach, HDFC Bank has started Hindi mobile banking servi ce and a 'net safe light' virtual card - both were started last month. The latte r helps a user to store a limited value on his mobile. Say a credit card limit i s Rs 2 lakh but a user want to buy books online worth Rs 2,000. He can create a new limit on his card using net safe light and use the code generated for online shopping. This creates a security layer for the user - he uses the card for onl ine payments without worrying about it being misused as the limit is only Rs 2,0 00. Figure: M-banking is taking off Source: Shelley Singh, ET Bureau, Mobile banking: A technology gradually permeati ng into the system , http://articles.economictimes.indiatimes.com/2012-12-11/news/ 35749517_1_account-holders-icici-bank-hdfc-bank The small base exaggerates the change, but it is significant in that it shows a technology gradually permeating into the system. "There's an opportunity to leap frog: take banking to the masses via mobile banking," says AP Hota, managing dir

ector & CEO, National Payments Corporation of India (NPCI), which, among other t hings, sews up back-end connections to enable m-banking. Of its total customer base of 200 million, State Bank of India (SBI), the countr y's largest bank, has 5.2 million registered users for its m-banking services. " Two lakh new users are registering every month," says Thandapani G, deputy gener al manager, SBI. The bank's account holders do 90,000 transactions per day on mo bile phones and did m-transfers of Rs 180 crore in November. 1.3 List of possible services (subject to bank s preference). Mobile banking services: Mobile banking can offer service such as the following; Account information: Mini- statement and checking of account history Alerts on account activity or passing of set thresholds Monitoring of term deposits Access to loan statements Access to card statements Mutual funds/equity statement Insurance policy management Pension plan management Status on cheque, stop payment on cheque. Payment and transfers: Domestic and international fund transfers Micro-payment handling Mobile recharging Commercial payment processing Bill payment processing Peer to peer payment Investment: Portfolio management service Real-time stock quotes Personalized alerts and notification on security prices Support: Status of request for credit including mortgage approval, and insurance Coverage Ii check (cheque) book and card requests Iii Exchange of data messages and email, including complaint submission and trac king Iv ATM location Content service: General information such as weather up dates, news Loyalty-related offers Location-based services 2. Review of the literature: Barnes and Corbitt (2003); Scornavacca and Barnes (2004) suggest that recent inn ovations in telecommunications have enabled the launch of new access methods for banking services, one of these is mobile banking; whereby a customer interacts with a bank via a mobile device such as a mobile phone or personal digital assis tant. Karjaluoto et al. (2002); Rugimbana (1995) found that there is vast market potential for mobile banking due to its always-on functionality and the option to do banking virtually any time and anywhere. Unnithan and Swatman (2001) studi ed the drivers for change in the evolution of the banking sector, and the move t owards electronic banking including mobile banking by focusing on two economies, Australia & India and suggested strong growth potential of new banking channel

in India. Clark (2008) suggests that as a Channel the mobile phone can augment t he number of channels available to consumers, thereby giving consumers more lowcost self-service options by which to access funds, banking information and make payments. Mas (2008); Lyman et al. (2008) found that there are a large number o f different mobile phone devices and it is a big challenge for banks to offer mo bile banking solution on any type of device. Some of these devices support J2ME and others support WAP browser or only SMS; presetting a serious challenge. Haya t (2009) suggests that for a banking regulator it is important to provide adequa te protection for consumers, ensure economic stability, provide interoperability of electronic systems and guarantee security of transactions and Anti-Money Lau ndering and Know-Your-Customer principles must also be applied to mobile payment s. Comninos et al. (2008) suggest that un banked will only transact electronical ly (online/mobile banking) if there is convenience and security. Sharma and Sing h (2009) found that Indian mobile banking users are specially concern with secur ity issues like financial frauds, account misuse and user friendliness issue - d ifficulty in remembering the different codes for different types of transaction, application software installation & inundation is due to lack of standardizatio n. Banzal (2010) found that another major issue is the revenue sharing agreement s between mobile service providers, banks, content providers, aggregates and oth er service providers like utilities, travel agencies, hotel industry, retailers etc. 3. 1. 2. 3. 4. . Objectives of the study: To study about the concept of mobile banking. To study the Growing Trends in Mobile Banking. To find out the benefits regarding the usage of phone / mobile banking. To find out the security issues regarding the usage of phone / mobile banking

4. Methodology : The descriptive research design is used in the paper, and the collection of data is done through secondary sources like journals, published data, websites, books, mag zines, newspapers, etc. 5. Findings and Discussions: 5.1 SWOT analysis for Mobile Banking as an alternate channel In Indian Market Strengths: Mobile as a technology provides all the support required to leverage Banking tra nsactions. Ease of availability- any time, any where. Rapid growth of Mobile and wireless market. Weakness: Lack of awareness about the new channel among the mobile users. Security concerns about the new channel Mobile Handset Operate-ability Application distribution Opportunities: Rapid increase in the Mobile user base and acceptance of the Mobile technology e ven in Rural areas makes a bigger market available for mobile banking to expand. With technology advancements in Mobile handsets rich features can be embedded in the application. Lowering of Mobile Tariff rates - GPRS plans, SMS Threats: Regulatory restrictions by TRAI and RBI to launch Mobile banking as a separate c hannel. Acceptance of new technology by users. Security Issues

5.2 Benefitss Of Using Mobile Banking Through Cell Phone Mobile banking through cell phone offers many advantages for customers as well a s banks. Some of them are as follows:Mobile banking has an edge over internet banking. In case of online banking, you must have an internet connection and a computer. This is a problem in developin g countries. However, with mobile banking, connectivity is not a problem. You ca n find mobile connectivity in the remotest of places also where having an intern et connection is a problem.You can make transactions or pay bills anytime. It sa ves a lot of time. Mobile banking thorough cell phone is user friendly. The interface is also very simple. You just need to follow the instructions to make the transaction. It als o saves the record of any transactions made. Cell phone banking is cost effective. Various banks provide this facility at a l ower cost as compared to banking by self. Banking through mobile reduces the risk of fraud. You will get an SMS whenever t here is an activity in your account. This includes deposits, cash withdrawals, f unds transfer etc. You will get a notice as soon as any amount is deducted or de posited in your account. Banking through cell phone benefits the banks too. It cuts down on the cost of t ele- banking and is more economical. Mobile banking through cell phone is very advantageous to the banks as it serves as a guide in order to help the banks improve their customer care services. Banks can be in touch with their clients with mobile banking. Banks can also promote and sell their products and services like credit cards, l oans etc. to a specific group of customers. Various banking services like Account Balance Enquiry , Credit/Debit Alerts, Bil l Payment Alerts, Transaction History, Fund Transfer Facilities, Minimum Balance Alerts etc. can be accessed from your mobile. You can transfer money instantly to another account in the same bank using mobil e banking. Mobile banking has become really popular owing to the convenience that it gives its customers. You can access your account, pay bills, and make cash transfers t hrough cell phone banking. It offers many benefits over internet banking and ban king in person. With the wide range of mobile connectivity, mobile banking throu gh cell phone can be accessed by anyone. 5.3 The Major areas of concern of using m-banking: 1. Rapid growth. Mobile banking and payments will continually change, and the ex pectation among security and mobile experts is that the mobile channel will soon become consumers' primary financial-services platform. Because the channel is c onvenient and can be customized, users will migrate from PC banking and payments to mobile. And the more mobile users, the greater the security risk. 2. Need for new security controls. Because the mobile threat landscape is growin g -Symantec in its just-released Internet Security Report says targeted attacks on mobile phones are increasing - financial institutions must be diligent in the ir efforts to keep up with emerging mobile threats. That means they have to make investments in security controls specific to mobile. 3. More players, more risks. The mobile system depends on a number of players, m any of which fall outside the scope of core financial services. Device manufactu rers, operating systems, network operators, application developers and others al l are involved. And they all need to address security. 4. Privacy issues. Emerging mobile privacy issues, such as those revolving aroun d Geo-location, will become more critical. As more mobile technologies emerge, i nstitutions will have to balance customer and member convenience with security a nd fraud prevention. 5. Role of consumers. Financial institutions must develop strategies to educate their customers and members about actively managing their own mobile-device secu

rity. 6. Anticipating Risk. As more mobile services hit the market, banks and credit u nions must balance innovation with fraud protection. More threats will emerge as adoption grows. Anticipating new risks will be paramount. 7. Insecure Information. There are some risks involved in mobile banking. Access ing financial services through mobile banking entails submitting personal inform ation through a text messaging platform. Hackers can try to access those message s through unsecure Wi-Fi hot spots. Other risks involve the bank not investing i n enough encryption security of its technology. This would leave the customer s pe rsonal information open for interception. 8. Regulatory Issues. Banking institutions employ telecom agents to manage their mobile banking services. The use of independent or franchised telecom agents ma kes it difficult for a country s central bank to regulate banking operations to ha ve a universal set of standards. This means that different banks can establish d ifferent mobile banking rules, use substandard banking security software and cha rge high fees for mobile banking. These issues can cause customer confusion. 9. Viruses. Banking institutions make sure that their channels are protected by a secure layer to ensure the safety of their customers information. However, some mobile phones are very vulnerable to viruses such as Trojans. These viruses pro vide hackers the opportunity to access your banking information through your mob ile phone. 10. Coverage. One of the biggest challenges of mobile banking is cellular covera ge. Across the country there are a number of different providers, but there is n ot necessarily nationwide coverage for these providers. Bank users may not reali ze this and can end up with a large cell phone bill full of charges. Other users may not be able to access their mobile banking at all in different parts of the country. This problem is beyond the bank's control as the bank works with the c ellular company to provide the service. 11. Security. Security can be an issue with mobile banking although there are a number of government regulations with which cell phone providers must comply. Fr aud protection must be developed within the cell phone company. Network security is out of the control of the bank as well as data access and use. 12. Customer Authentication. It is more difficult to verify a customer's identit y with mobile banking. Mobile banking allows for little to no customer contact. In this situation it is important to use the USA Patriot Act to verify a third p arty who wishes to use a mobile banking service. Money laundering is also a conc ern, as with traditional banking, and must be closely monitored. 6. Recommendations and Suggestions: 6.1 Ways To Protect against security issues in m-banking: 1. Set the phone to require a password to power on the handset or awake it from sleep mode. 2. Whether you re using the mobile Web or a mobile client, don t let it automaticall y log you in to your bank account. Otherwise, if your phone is lost or stolen, s omeone will have free access to your money. 3. Avoid sharing your password, account number, PIN, answers to secret questions or other such information. Don t save this information anywhere on your handset. 4. Immediately tell your bank or mobile operator if you lose your phone. 5. Review account statements. If you do notice any unusual transactions, call yo ur bank immediately and dispute the transactions. The banks providing mobile banking services to their customers, wishing to incre ase their customer share by removing all the above-discussed hurdles in the way of adoption of mobile banking services, may find relevant information from the f indings. 7. Conclusion: As far as mobile banking is concerned, it s a new type of service offered by the b anks to the customers. So it s very important for the banks to give due priority t o it for its successful implementation. As far as the future scope is considered , it can provide great opportunities for micro financing in the developing count

ries. Also many technological innovations and researches are required to make th e service more effective. Last, but not the least, in a hugely populated country like India, where concepts like Micro finance, SMEs, Self Help Groups etc. are picking up the pace, Mobile Banking can play a fantastic role in bringing about Financial Inclusion in various nations including India by reaching the masses an d allowing them to bank anywhere anytime. References: ARCHANA SHARMA, MOBILE BANKING AS TECHNOLOGY ADOPTION AND CHALLENGES , ZENITH In ternational Journal of Multidisciplinary Research Vol.1 Issue 6, October 2011, I SSN 2231 5780 Vishal Goyal, Dr.U.S.Pandey, Sanjay Batra, Mobile Banking in India: Practices,Ch allenges and Security Issues, International Journal of Advanced Trends in Comput er Science and Engineering, ISSN No. 2278 -3091, Volume 1, No.2, May June 2012. R. K. Uppal, Emerging issues and strategies to enhance M-banking services, Afric an Journal of Marketing Management Vol. 2(2) pp. 029-036, February, 2010. Rajnish Tiwari, Stephan Buse, Cornelius Herstatt, Mobile Banking As Business Str ategy: Impact Of Mobile Technologies On Customer Behaviour And Its Implications For Banks, Technology Management for the Global Future PICMET 2006 , Volume 4, ISBN : 1-890843-14-8, pp. 1935 1946. Jonathan Donner, Camilo Andres Tellez, Mobile banking and economic development: Linking adoption, impact, and use, http://www.informaworld.com/openurl?genre=art icle&issn=0129- 2986&volume=18&issue=4&spage=318 http://www.bankinfosecurity.com/6-top-mobile-banking-risks-a-4735/op http://www.ehow.com/list_6576939_challenges-mobile-banking.html http://www.mydigitalfc.com/banking/india-awaits-boom-mobile-banking-616 . https://www.google.co.in/#q=research+paper+on+Mobile+Banking+In+India:+Its+benef its+and+Concerning+Issues&psj=1&ei=5oyKUfveEoTzrQep1oH4Dg&start=10&sa=N&bav=on.2 ,or.r_qf.&bvm=bv.46226182,d.bmk&fp=98dbcd887b52c9bf&biw=1600&bih=775. http://aut.researchgateway.ac.nz/bitstream/handle/10292/666/YuS.pdf?sequence=4. http://www.tiddee.com/11-advantages-using-mobile-banking-through-cell-phone.