Mobile Banking Activity and Why It matters

Mobile banking began catching on in 2007 when the iPhone first came out. Over the years, the mobile banking experience has come a long way thanks to advancements in data sharing and other behind-the-scenes technologies improving.
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 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 (cheque) deposits, Person to Person payments, and funds transfers between a customer's or another's accounts. Some apps also enable copies of statements to be downloaded and sometimes printed at the customer's premises. Using a mobile banking app increases ease of use, speed, flexibility and also improves security because it integrates with the user built-in mobile device security mechanisms.

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 could also refer 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. It refers to the use of a smartphone or other cellular device to perform online banking tasks while away from your home computer, such as monitoring account balances, transferring funds between accounts, bill payment and locating an ATM.

Typical Mobile Banking services may include:

1. Account information which includes

  • Mini-statements 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 statements
  • Insurance policy management

2. Transaction

  • Funds transfers between the customer's linked accounts
  • Paying third parties, including bill payments and third party fund transfers
  • Check Remote Deposit

3. Investments

  • Portfolio management services
  • Real-time stock

4. Support

  • Status of requests for credit, including mortgage approval, and insurance coverage
  • Check (cheque) book and card requests
  • Exchange of data messages and email, including complaint submission and tracking
  • ATM Location

5. Content services

  • General information such as finance related news
  • Loyalty-related offers

Different Types of Mobile Banking Technology and How it works

The different types of mobile banking technology can be classified by the means a financial institution uses to communicate with customers and allow them access to its services. Most of the technology applications that banks use integrate with smart phones, such as the iPhone and the Blackberry. Mobile banking typically operates across all major mobile providers through one of three ways: 

  • SMS messaging
  • Mobile web browsers 
  • Applications developed for iPhone, Android or Blackberry devices.

Mobile text and alert is the simplest, allowing the user to transfer funds or access account information via text message. Texting terminology varies from bank to bank, but the overall function is generally the same. Users need to first register and verify their phone numbers with their bank, but once that's completed, they can also set up alerts to let them know about negative balances or deposit confirmations.

For those customers who wish to take advantage of mobile banking but do not have a smart phone, text messaging may be their primary option. Banks send customer alerts via text messages. These alerts are available for account balances, sent payments, direct deposits, and a myriad of account activity. Some banks allow users to sign up for these alerts through their online banking service for free while others charge a fee, in addition to the text messaging fees customers are charged by their cell phone carriers.

A second type of mobile banking technology is the mobile web browser. Individuals who own cell phones with web access are able to go to a modified version of the bank's online site. Full account access is given from the site, allowing users can monitor activity, request account transfers and make payments. Accessing the bank's website from a mobile phone does not usually result in a charge from the bank, but the user will most likely incur data charges from his wireless carrier.

One of the most exciting forms of mobile banking technology is the development of smart phone banking applications. These give users one-touch access to many account features. Similar to the web browser technology, customers have full access to their accounts through a mobile phone application. Some banks or payment services allow users to take a picture of a check and make a virtual ATM deposit through their phones.

Mobile banking applications for Android, iPhone and Blackberry, connect the user directly to the bank server for complete banking functionality without having to navigate a mobile web browser. These applications can be downloaded either through the bank's website or through the iTunes store.

Some banks have however, taking the technology one step further with account rewards confirmation, person-to-person payments and, more importantly, Remote Deposit Capture (RDC) capability.

RDC is a service allowing users to scan checks and transmit the scanned images to a bank for posting and clearing. In the case of mobile banking, a customer takes pictures of both sides of a check and forwards the photos to the bank, which then deposits the funds in the same way as if the deposit was made through a teller. RDC capability means customers have faster access to their money, while automating yet another deposit feature.

Why it matters:

Advantages of mobile banking

The ability to access your financial records anytime, anywhere makes mobile banking appealing. You can deposit checks, send someone else money and monitor transaction history while standing in a grocery line. Those actions give you a safety advantage too. In monitoring your account more often, you will have a greater chance to discover fraud more quickly or spot times when you may need to slow down on spending.

For consumers, mobile banking is a terrific way to efficiently manage the occasional administrative task on the go. For small and mid-size business owners, mobile banking gives the precious gift of time.
For banks, mobile banking is a brilliant opportunity to simultaneously woo new customers while paring operational costs. By responding to the innovations in mobile technology, banks are effectively saying they are paying attention to the needs of their customers, while at the same time streamlining a number of processes to meet the fast-paced demands of the 21st century.

The merits could also be put more suscintly as follow:

1. Accessibility

Part of the appeal is the ability to access your account on a mobile device whenever you wish. Unlike a bank branch, you can use a mobile banking app to check in with your account 24 hours, seven days a week with some exceptions, such as planned maintenance updates.

2. Convenience

It also provides you a way to save time. Consider mobile check deposit, which is now mainstream within your mobile banking app. The feature lets you deposit a check without requiring you to go anywhere.

3. Paying IOUs

It is also easy to pay back a friend or family member when you are logged into your mobile banking app.

Banks across the country can send someone money in minutes through mobiles banking app rather than give them physical cash. You will only need to know your recipient’s email address or phone number to send them money. It also allows you to send a transfer to someone else’s bank account if you know their routing and account number.

4. Good security

Banks are in the business of guarding your assets — including your interactions on their mobile apps.
Of course, nothing is foolproof. But there are steps you can take to step up security precautions if you are worried about mobile banking security. These are provided in the banking app.

5. Control

Think of a mobile banking app as a remote control for your money. The controls are getting more advanced too as a growing number of banks let you use your mobile banking app to turn your debit or credit card off if it goes missing or is stolen. It’s a nice feature to help you feel instantly secure in a moment of panic.

Disadvantages of mobile banking

Not all mobile banking apps work well. You could become frustrated with a digital banking experience. Even the best ones will encounter outages every now and then. As banks layer in ever-more features, navigating the apps can feel daunting, too. If you are among them, check with your bank to see if it does in-person demos. Some banks appoint specialists in their branches to help customers learn how to use digital banking features.

Another downside with mobile banking apps is their lack support for taller orders, like getting a mortgage. A big disadvantage of mobile banking is you are not getting that kind of detail that you would get from an in-person interaction,

Consumers should also be aware that mobile banking poses certain identity theft concerns. While the transmission of data is encrypted across a secure network, hackers are always on the lookout for ways of accessing this information. Due diligence should be employed when relying on mobile banking, including close monitoring of your bank accounts, along with ensuring proper protection in the event that your mobile phone is lost or stolen.

Challenges for a Mobile Banking Solution

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 (Wireless Access Point) browser, or only SMS (Short Message Service).
Initial interoperability issues however have been localized to enable the limitations of low end java based phones.  South Africa have defaulted to the USSD as a basis of communication achievable with any phone while focusing on areas.

USSD (Unstructured Supplementary Service Data), sometimes referred to as "Quick Codes" or "Feature codes", is a communications protocol used by GSM cellular telephones to communicate with the mobile network operator's computers.

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.

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.

Security

Mobile banking is more secure than internet banking. Mobile banking can be conducted only from one specific device, smartphone or tablet which has a SIM card (subscriber identity module or subscriber identification module), the phone number of which is already registered with the bank account unlike internet banking which can be conducted using any number of devices connected to the internet such as smartphone, tablet, laptop, desktop computer.

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.

Scalability and reliability

Another challenge for the banks is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base. With mobile banking, the customer may be sitting in any part of the world anytime, anywhere banking and hence banks need to ensure that the systems are up and running in a true 24 × 7 fashion. As customers will find mobile banking more and more useful, their expectations from the solution will increase. Banks unable to meet the performance and reliability expectations may lose customer confidence.

Application distribution

Due to the nature of the connectivity between bank and its customers, it would be impractical to expect customers to regularly visit banks or connect to a web site for regular upgrade of their mobile banking application. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches otherwise called "Over The Air" updates.

Personalization


  • It would be expected from the mobile application to support personalization such as:
  • Preferred Language
  • Date / Time format
  • Amount format
  • Default transactions
  • Standard Beneficiary list
  • Alerts

In conclusion however, Mobile Banking apps help you take care of tasks quickly and should only get better in helping you demystify ever-more of your financial health concerns as banks continue to pour all kinds of money into their digital experiences. Thi is actually the bottom line.

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