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Name: Ugwu Nkiruka L.

Reg. Number FPOHA17074

Topic: Cell Banking

Abstract

Cell Banking has been in existence since more than a decade. Cell banking also called Mobile
banking (also known as Mbanking, sms-banking) is a term used for performing balance
checks, account transaction, payments etc. via a mobile device such as a mobile phone.
Mobile banking is an obvious extension of online banking as cell phones get more powerful
and begin to mimic computers. Mobile Banking would be increasingly used from “Building
better customer relations, reducing cost, achieving new revenue stream” etc to that of
“connecting with the new customer segments, enhancing customer relationships to improve
loyalty and reduce attrition, create new ways to generate lead in the process of prospecting,
real time experience of bi-directional customer experience etc.” And needless to say the
technological revolution would play a major role in days to come.

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Introduction

In country only banking sector is that sector which works as a channel in attracting savings

and mobilizing them in required areas. It works as a weapon of capital formation.

As, change is the rule of nature. To alter the policies according to environment fluctuation is

known as change and to explore or use new technology for making change is known as

innovation. Today all sectors are working as innovation acceptor. Banking sector’s

profitability depends on better customer relationship. And nowadays today’s consumer

banking needs are getting more complex and demands are for more innovative products. So

give them better services banks have introduced a new profitable technology called Cell

banking or Mobile Banking. And many more like internet banking, ATM, debit card, credit

card etc. With mobile banking technology, banks can offer a wide range of services to their

customer such as funds transfer while travelling, receiving online updates of stock price or

even performing trading while being stuck in traffic. M-banking gives ability to customer to

control their cash outflows anytime, anywhere, without having to connect to internet

The use of a mobile phone to make payment and carryout other banking transaction called m-

banking has started taking roots in a number of developing countries, including India. M-

banking is a service of banks to make available, the facility of banking wherever the customer

is and whenever he needs. In today’s world every person has personal mobile rather than

having computer at home. Even rural person also have mobile. With mobile banking

customer can bank from anytime and anywhere. 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 race. And also spread of mobile phones across the developing world is one

of the most remarkable technology stories of the past decade. Mobile banking is enjoying a

rapid growth in India. It has successfully crossed the introduction stage. Mobile banking is

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different from internet banking and ATMs anyways. The internet is not as commonly used as

the mobile phones. Further, the internet requires particular devices such as a desktop or a

laptop. Mobile banking can be said to consist of three interrelated concept viz; Mobile

accounting, Mobile brokerage, Mobile financial information.

ICICI bank pioneered in mobile banking service in India. Among public bank, Union bank of

India was first to introduce mobile banking (Akturan, 2016) . “Mobile banking refers to

provision and a ailment of banking and financial services with the help of mobile

telecommunication devices. “The term m-banking m- finance refer collectively to a set of

application that enables consumer to use their mobile telephones to request their bank

account balance and last transaction, store value in an account linked to their handsets,

transfer funds between accounts and to make buy and sell orders, for the stock exchange and

to receive portfolio and stock exchange, price information. , or even access credit or

insurance products. M-banking may prove to be an important innovation in developing

world. The public sector bank realized that if they have to survive, they will have to adopt

modern technology, SBI was first to focus on technology and is constantly at work to

innovate in an attempt to lower costs. Technology will not just help them reach out to

customer better but also help them cut costs and improve efficiency. Hence by adopting right

mobile banking regulation and mobile security standards the banks can reach whole

population which result in economic growth of the country. Banks have changed from paper

based banking solution provider to the latest of the technology like online banking, Mobile

banking.

Mobile banking should reach to the common man at the remotest location in the country.

Mobile banking reaches from high-end to low-end users and from metros to middle towns

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and rural areas. M-banking system is one which provides all daily banking operations to

customer with one click of the mobile handset with support application. Growth in the M-

banking is driven by various facilities like convenience of banking operation, greater reach to

consumer .in M-banking there is no place restriction. It is highly penetration coefficient as

growth of mobile phones is more than computer. It is fully personalized and private

increasing transaction authenticity and is 100% available all the time with the users. Mobile

Banking is a service that allows you to do banking transactions through your mobile phone

without making a call, using the SMS / WAP facility. You can check your balance, stop a

cheque payment, or even pay your utility bills. Mobile Banking service gives you account

information and real-time transaction capabilities from the mobile phones anywhere, anytime.

Problem Statement

Stated as a question this concern can be expressed as: what is the extent of access to financial

services? What are the attitudes towards mobile banking by small businesses? And what are

the effects and challenges of implementing mobile banking.?

Motivation

The purpose of this study is to establish the importance of mobile banking in the day to- day

running of small businesses in Kenya. To understand the challenges involved in using m-

banking as a business tool and appreciate the advantages and disadvantages therein.

Literature review

Mobile banking is a service provided by a bank or other financial institution that allows its

customers to conduct financial transactions remotely using a mobile device such as a

smartphone or tablet. Unlike the related internet banking it uses software, usually called an

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app, provided by the financial institution for the purpose. Mobile banking is usually available

on a 24-hour basis. Some financial institutions have restrictions on which accounts may be

accessed through mobile banking, as well as a limit on the amount that can be transacted.

Mobile banking is dependent on the availability of an internet or data connection to the

mobile device.

Transactions through mobile banking depend on the features of the mobile banking app

provided and typically includes obtaining account balances and lists of latest transactions,

electronic bill payments, remote check deposits, P2P payments, and funds transfers between a

customer's or another's accounts (Vaidya, 2015). Some apps also enable copies of statements

to be downloaded and sometimes printed at the customer's premises. From the bank's point of

view, mobile banking reduces the cost of handling transactions by reducing the need for

customers to visit a bank branch for non-cash withdrawal and deposit transactions. Mobile

banking does not handle transactions involving cash, and a customer needs to visit an ATM

or bank branch for cash withdrawals or deposits. Many apps now have a remote deposit

option; using the device's camera to digitally transmit cheques to their financial institution.

Mobile banking differs from mobile payments, which involves the use of a mobile device to

pay for goods or services either at the point of sale or remotely, analogously to the use of a

debit or credit card to effect an EFTPOS payment (Tiwari, 2014). The earliest mobile

banking services used SMS, a service known as SMS banking. With the introduction of smart

phones with WAP support enabling the use of the mobile web in 1999, the first European

banks started to offer mobile banking on this platform to their customers (Owens, 2016).

Mobile banking before 2010 was most often performed via SMS or the mobile web. Apple's

initial success with iPhone and the rapid growth of phones based on Google's Android

(operating system) have led to increasing use of special mobile apps, downloaded to the

mobile device. With that said, advancements in web technologies such as HTML5, CSS3 and

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JavaScript have seen more banks launching mobile web based services to complement native

applications. These applications are consisted of a web application module in JSP such as

J2EE and functions of another module J2ME.

In one academic model, mobile banking is defined as: Mobile Banking refers to provision

and availment of banking- and financial services with the help of mobile telecommunication

devices.The scope of offered services may include facilities to conduct bank and stock market

transactions, to administer accounts and to access customised information."

According to this model mobile banking can be said to consist of three inter-related concepts:

 Mobile accounting

 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 (Tiwari, 2014). Mobile banking may also be used to help

in business situations as well as for financial situation

Electronic Banking

The telecommunications industry worldwide has scrambled to bring what is available to

networked computers to mobile devices (Salzaman, 2013). Presently, the use of electronic

banking is considerably high and as more and more users sign up for electronic-banking, the

maturity as regards remote banking ( i.e. banking outside the banking hall) is on the increase.

With electronic banking, users can now conveniently carry out banking transactions, but this

convenience cannot be achieved if the user does not have access to the internet, hence, in

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other words, the user cannot carry out a banking transaction while waiting for a bus, or

perhaps while having lunch in a restaurant. With m-banking, convenience can be achieved

24hrs a day. This is because a user has access to his mobile phone all day, at all times. So, to

effectively achieve a truly convenient banking mode, a truly mobile mode of banking has to

be explored, hence the need for m-banking.

Trends in Mobile Banking

The advent of the Internet has revolutionized the way the financial services industry conducts

business, empowering organizations with new business models and new ways to offer 24

hour accessibility to their customers. The ability to offer financial transactions online has also

created new players in the financial services industry, such as online banks, online brokers

and wealth managers who offer personalized services, although such players 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).

According to Friedman, (2010) online banking households will be using mobile banking by

2010, up from less than 1% today. Upwards of 70% of bank center call volume is projected to

come from mobile phones. Mobile banking will eventually allow users to make payments at

the physical point of sale. "Mobile contact less payments” will make up 10% of the contact

less market by 2010. 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,

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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.

This opens up huge markets for financial institutions interested in offering value added

services. With mobile technology, banks can offer a wide range of services to their customers

such as doing funds transfer while traveling, receiving online updates of stock price or even

performing stock trading while being stuck in traffic. According to the German mobile

operator Mobilcom, mobile banking will be the "killer application" for the next generation of

mobile technology. Mobile devices, especially smart phones, are the most promising way to

reach the masses and to create “stickiness” among current customers, due to their ability to

provide services anytime, anywhere, high rate of penetration and potential to grow.

According to Gartner, shipment of smart phones is growing fast, and should top 20 million

units (of over 800 million sold) in 2006 alone.

In the last 4 years, banks across the globe have invested billions of dollars to build

sophisticated internet banking capabilities. As the trend is shifting to mobile banking, there is

a challenge for CIOs and CTOs of these banks to decide on how to leverage their investment

in internet banking and offer mobile banking, in the shortest possible time. The proliferation

of the 3G (third generation of wireless) and widespread implementation expected for 2007–

2011 will generate the development of more sophisticated services such as multimedia and

links to m-commerce services.

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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 telecoms 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 telecoms will work through their local airtime

resellers. However, banks in Colombia, Brazil, Peru, and other markets use pharmacies,

bakeries, etc. These models differ primarily on the question that who will establish the

relationship (account opening, deposit taking, lending etc.) to the end customer, the Bank or

the Non-Bank/Telecommunication Company (Telco). Another difference lies in the nature of

agency agreement between bank and the Non-Bank. Models of branchless banking can be

classified into three broad categories - Bank Focused, Bank-Led and Nonbank-Led.

Bank-focused Model

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

delivery channels to provide banking services to its existing customers.

Examples range from use of automatic teller machines (ATMs) to internet banking or mobile

phone banking to provide certain limited banking services to banks‟ customers. This model is

additive in nature and may be seen as a modest extension of conventional branch-based

banking.

Bank-led Model

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

customer conducts financial transactions at a whole range of retail agents (or through mobile

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phone) instead of at bank branches or through bank employees. This model promises the

potential to substantially increase the financial services outreach by using a different delivery

channel (retailers/ mobile phones), a different trade partner (telco / chain store) having

experience and target market distinct from traditional banks, and may be significantly

cheaper than the bank-based alternatives. The bank-led model may be implemented by either

using correspondent arrangements or by creating a JV between Bank and Telco/nonbank. 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 the functions.

Handset accessibility

There are a large number of different mobile phone devices and it is a big challenge for banks

to offer a mobile banking solution on any type of device. Some of these devices support Java

ME and others support SIM Application Toolkit, a WAP browser, or only SMS.

Initial interoperability issues however have been localized, with countries like India using

portals like "R-World" to enable the limitations of low end java based phones, while focus on

areas such as South Africa have defaulted to the USSD as a basis of communication

achievable with any phone.

The desire for interoperability is largely dependent on the banks themselves, where installed

applications(Java based or native) provide better security, are easier to use and allow

development of more complex capabilities similar to those of internet banking while SMS

can provide the basics but becomes difficult to operate with more complex transactions.

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There is a myth that there is a challenge of interoperability between mobile banking

applications due to perceived lack of common technology standards for mobile banking. In

practice it is too early in the service lifecycle for interoperability to be addressed within an

individual country, as very few countries have more than one mobile banking service

provider. In practice, banking interfaces are well defined and money movements between

banks follow the IS0-8583 standard. As mobile banking matures, money movements between

service providers will naturally adopt the same standards as in the banking world.

In January 2009, Mobile Marketing Association (MMA) Banking Sub-Committee, chaired by

CellTrust and VeriSign Inc., published the Mobile Banking Overview for financial

institutions in which it discussed the advantages and disadvantages of Mobile Channel

Platforms such as Short Message Services (SMS), Mobile Web, Mobile Client Applications,

SMS with Mobile Web and Secure SMS (Papajorgji, 2015).

Security

As with most internet-connected devices, as well as mobile-telephony devices, cybercrime

rates are escalating year-on-year. The types of cybercrimes which may affect mobile-banking

might range from unauthorized use while the owner is using the mobile banking, to remote-

hacking, or even jamming or interference via the internet or telephone network data streams.

This is demonstrated by the malware called SMSZombie. A, which infected Chinese Android

devices. It was embedded in wallpaper apps and installed itself so it can exploit the

weaknesses of China Mobile SMS Payment system, stealing banks credit card numbers and

information linked to financial transactions (Papajorgji, 2015). One of the most advanced

malwares discovered recently was the Trojan called Bankbot. It went past Google's

protections in its Android app marketplace and targeted Wells Fargo, Chase, and Citibank

customers on Android devices worldwide before its removal by Google in September 2017.

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This malicious app was activated when users opened a banking app, overlaying it so it can

steal banking credentials (Brook, 2017).

Differences b/w traditional banking and mobile banking

traditional banking mobile banking

Doing traditional banking from bank customer With help of M-banking customers do not need to

going physically to bank whenever they have go bank. Mobile banking enables anytime

bank need. anywhere banking .customer can access their

banking a/c while travelling ,waiting for bus or in

traffic, in queue etc.

Traditional banking needs papers. M-banking save paper &that save tree. It is a part

of green banking.

traditional banking facility is not possible to do M –banking services provide anytime banking.

anytime banking

Branches are (ATMs and computers) are location Mobile banking is not location specific. Customer

specific. need not be worried if the branch is not at a

convenient location.

In traditional banking customer spent their M-banking save time. They need not stand in the

precious and valuable time in standing in queue. queue.

In traditional banking whenever customer wants In mobile banking customer need not face the

information about their a/c they face employee employee whom do not.

attitude.

Branches are not fully personalized and private Mobile phones are fully personalized and private

Traditional banking not available all the time. Its Mobile banking or mobile phones are 100%

time is fixed as office hours. available all the time with users. It is available

24*7.

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Benefits of Mobile banking;

To the customer:

 Customer need not stand in the bank counters/offices for various enquiries about his

account.

 Customer can save his valuable time in banking transaction and save in travel cost

reaching the bank branch.

 It is the mobile banking to have information of all the 365 days at anytime, anywhere

about his account.

 Customer can pay his utility bills in time and save paying penalties, since alerts are

received from bank.

 Cheque book request can be send sitting in his work place.

 Give information at anytime and anywhere.

 Plane funding his accounts for the cheque issued to various customer

 For customers mobile banking reduces cost and save their precious time.

To the bankers

 M –banking helps banks in saving crores of rupees by way of reduced transaction

cost.

 Banks can utilize the time saved for expansion of business, marketing and sales

activity by channel migration of customers to mobile banking.

 Banks can take advantage of profit by way of commission for cellular companies by

selling prepaid talk time through ATMs.

 Banks providing mobile banking services can have competitive advantage on those

banks, which are not providing these services.

 Mobile banking enables banks to reduce costs of courier, communication and paper

works etc.

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 M-banking can increase banks outreach to rural areas while reducing costs.

Challenges and issues of Mobile banking-

 Security-security here refers to the security of the confidential information about

customer bank account. There should be any chance for information leakage.

Transaction is done by mistake there should be option to undo. The physical security

of device is more important. User id /password authentication of banks customer.

Encryption of the data that will be stored in device for later.

 Handset operability-there is large number of different mobile phones and it is a big

challenge for banks to offer mobile banking solution

 Scalability and reliability-The customer may be sitting in any part of the world and

these banks need to ensure that the system are up and running in a true. Customer will

find mbanking more and more useful. Banks unable to meet the performance and

reliability expectation may lose customer confidence.

Conclusion

Mobile banking plays vital role an increasing profitability of banks. And also maintain better

customer relationship, increasing customer satisfaction level, improve loyalty. Mobile

banking is popular among in all customers. Through this service customer save their valuable

time, cost and other expenses. To see the growth of mobile banking we can say that in future

mobile banking is spread both rural and urban area and also it becomes a basic need of

customer. With the help of this new technology banks can cover all unbanked area. Mobile

banking has a lot of advantages for both providers and those who avail the services. Mobile

phones provide a way to reach out to people in remotest area. Customer enjoy anytime

anywhere banking with the help of their mobile phones. It is cost effective for bankers and

customers.

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References
Akturan, N. (2016). Mobile Banking Adoption of the Youth Market Perception and Intention.
Marketing intelligence and planning , 30 (4).

Brook, C. (2017). "Mobile Banking Trojan BankBot Identified, Removed From Google Play".
Digital Guardian. Retrieved 3 October 2018.

Friedman, T. (2010). "Do Believe the Hype". New York Times.

Owens, J. (2016) Catching the Technology Wave: Mobile Phone Banking and Text-A-
Payment in the Philippines

Papajorgji, P. (2015) Automated Enterprise Systems for Maximizing Business Performance.


Hershey, PA: IGI Global

Salzaman, R. (2013) Mobile Communication: Understanding Users, Adoption and Design.


(Lecture) Paper presented in CHI workshop

Tiwari, S. (2014) The Mobile Commerce Prospects: A Strategic Analysis of Opportunities in


the Banking Sector, Hamburg University Press.

Vaidya, A. (2015) "Emerging Trends on Functional Utilization of Mobile Banking in


Developed Markets in Next 3-4 Years"

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