MOBILE BANKING PROJECT FILE

ACKNOWLEDGEMENT
I gratefully acknowledge that this project is completed under the guidance and supervision of my teacher Mrs. Paramjeet. She has made vital contribution to my Project, without her timely help, the practical could not have been a success

INDEX
1.Introduction 2.Trends in mobile banking 3.Mobile banking services 4.Challenges for a mobile solution
5.Mobile banking in the world 6.Mobile banking benefits

Mobile banking
Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments, credit applications etc. via a mobile device such as a mobile phone or Personal Digital Assistant (PDA). The earliest mobile banking services were offered via SMS. With the introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers . Mobile banking has until recently (2010) most often been performed via SMS or the Mobile Web. Apple's initial success with iPhone and the rapid growth of phones based on Google's Android (operating system) has led to increasing use of special client programs, called apps, downloaded to the mobile device. A mobile banking conceptual model 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 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

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. Smart phones and 3G connectivity provide some capabilities that older text message-only phones do not. According to a study by financial consultancy Celent, 35% of 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 contactless payments will make up 10% of the contactless market by 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 telcos 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 telcos 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 nontraditional 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 branchbased banking in that customer conducts financial transactions at a whole range of retail agents (or through mobile phone) instead of at bank branches or through 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/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 has a limited role in the day-to-day account management. Typically its role in this model is limited to safekeeping of funds. Account management functions are conducted by a nonbank (e.g. telco) who has direct contact with individual customers. 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 / 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. 2. 3. 4. 5. 6. 7. 8. Domestic and international fund transfers Micro-payment handling Mobile recharging Commercial payment processing Bill payment processing Peer to Peer payments Withdrawal at banking agent 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. Investments 1. 2. 3. 4. Portfolio management services Real-time stock quotes Personalized alerts and notifications on security prices mobile banking

Support 1. Status of requests for credit, including mortgage approval, and insurance coverage 2. Check (cheque) book and card requests 3. Exchange of data messages and email, including complaint submission and tracking 4. ATM Location Content Services 1. General information such as weather updates, news 2. Loyalty-related offers 3. Location-based services

Based on a survey conducted by Forrester, mobile banking will be attractive mainly to the younger, more "tech-savvy" customer segment. A third of mobile phone users say that they may consider performing some kind of financial transaction through their mobile phone. But most of the users are interested in performing basic transactions such as querying for account balance and making bill payment. Challenges for a Mobile Banking Solution Key challenges in developing a sophisticated mobile banking application are : Handset operability There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solution on any type of device. Some of these devices support Java ME and others support SIM Application Toolkit, 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. There is a myth that there is a challenge of interoperability between mobile banking applications due to perceived lack of common technology standards for mobile banking. In practice it is too early in the service lifecycle for interoperability to be addressed within an individual country, as very few countries have more than one mobile banking service provider. In practice, banking interfaces are well defined and money movements between banks follow the IS0-8583 standard. As mobile banking matures, money movements between service providers will naturally adopt the same standards as in the banking world.

On January of 2009, Mobile Marketing Association (MMA) Banking SubCommittee, 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. Security Security of financial transactions, being executed from some remote location and transmission of financial information over the air, are the most complicated challenges that need to be addressed jointly by mobile application developers, wireless network service providers and the banks' IT departments. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network : 1. Physical part of the hand-held device. If the bank is offering smartcard based security, the physical security of the device is more important. 2. 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. 3. Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions. 4. User ID / Password authentication of banks customer. 5. Encryption of the data being transmitted over the air. 6. Encryption of the data that will be stored in device for later / off-line analysis by the customer. One-time password (OTPs) are the latest tool used by financial and banking service providers in the fight against cyber fraud. Instead of relying on traditional memorized passwords, OTPs are requested by consumers each time they want to perform transactions using the online or mobile banking interface. When the request is received the password is sent to the consumers phone via SMS. The password is expired once it has been used or once its scheduled life-cycle has expired.

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. Scalability & Reliability Another challenge for the CIOs and CTOs of the banks is to scale-up the mobile banking infrastructure to handle exponential growth of the customer base. With mobile banking, the customer may be sitting in any part of the world (true anytime, anywhere banking) and hence banks need to ensure that the systems are up and running in a true 24 x 7 fashion. As customers will find mobile banking more and more useful, their expectations from the solution will increase. Banks unable to meet the performance and reliability expectations may lose customer confidence. There are systems such as Mobile Transaction Platform which allow quick and secure mobile enabling of various banking services. Recently in India there has been a phenomenal growth in the use of Mobile Banking applications, with leading banks adopting Mobile Transaction Platform and the Central Bank publishing guidelines for mobile banking operations. Application distribution Due to the nature of the connectivity between bank and its customers, it would be impractical to expect customers to regularly visit banks or connect to a web site for regular upgrade of their mobile banking application. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches (so called "Over The Air" updates). However, there could be many issues to implement this approach such as upgrade / synchronization of other dependent components.

Personalization It would be expected from the mobile application to support personalization such as : 1. 2. 3. 4. 5. 6. Preferred Language Date / Time format Amount format Default transactions Standard Beneficiary list Alerts

Mobile banking in the world 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 Parsian, 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.

Mobile Banking Benefits

Reduce your operating costs Eliminate the need for costly call centres and customer service help desks by going mobile. Using a mobile platform such as SMS text messaging for simple and repetitive tasks such as reminders about payments due or balance requests can reduce the burden on IT and personnel resources. Using secure and integrated messaging platforms means that you can reduce the costs and errors associated with paper-based payments. One of Clickatell's clients on the African continent, SatCom Networks Africa Ltd operates out of Tanzania and uses SMS notifications to alert banks to problems before they become customer complaints. This includes alerting banks to ATM events such as low stock of funds or paper, power failures, attempts at frauds etc. This innovative service allows banks to proactively resolve problems before they become issues. Reduce risk for your institution SMS mobile banking is cost-effective which lowers the financial risk involved in rolling out new banking initiatives. It is immediate and effective and with two-way messaging enabled, campaigns can be monitored in real-time affording the opportunity to change strategy if need be. Clickatell's SMS mobile banking solutions can be integrated into existing infrastructure or externally managed so no additional personnel are needed. SMS mobile banking reduces the potential for fraud immediately as fraud and account transaction notifications are sent in real-time empowering customers to take action immediately. Give customers peace of mind around the accuracy and security of their financial transactions through SMS authentication PIN codes and transaction text notifications. Generate additional revenue Use premium-rated SMS to charge for banking transactions and create an additional revenue stream for your financial institution. Commissions and

service fees on mobile payments and transfers are another potential income stream. Customers can also purchase goods and services via a mobile banking platform and the mobile number database can be used for crossselling purposes - particularly time and event related options. This could include insurance packages, discounted holiday packages and premium banking services. Prepaid airtime, electricity vouchers, coupons etc can all be purchased via mobile phone. Customer Retention and Acquisition Campaigns Offering existing customers an additional, secure, easy to use banking channel is sure to improve the loyalty or 'stickiness' of customers to your brand. It can also act as an attraction point to new customers looking for ease of access and innovative services. There are many practical ways of using SMS text messaging to increase the level of service you offer customers:

Use SMS transaction and fraud alerts to guarantee their level of banking security. Allow customers to receive critical information and services via SMS messages. Allow your customers to communicate with you via SMS text message and set-up an 'intelligent customer callback service' that negates the need for customers to wait in frustrating phone queues. Run SMS marketing campaigns to attract new customers to your institution; because these campaign results are available immediately, the return on investment is measurable. Allow customers the flexibility and peace of mind to access their bank accounts on the go, receive their balance notifications and perform banking functions. A simple SMS service offering 'point of sale' SMS receipts contributes to customers feeling assured that their money transactions are accurate and secure. Mobile to mobile fund transfers are a very convenient way for customers to make payments.

Just by implementing SMS mobile banking you will effectively enhance the value and reach of your brand and build consumer confidence by offering them customer-centric service. SMS mobile banking becomes a unique tool for not only radically improving customer service but also to generate additional revenue and aid in the prevention of fraud.

Business Benefits

Greater Customer Convenience Finacle mobile banking solution empowers banking customers to make informed decisions by providing them with an invaluable set of financial management tools on the mobile handset. These tools help in quantitative and qualitative analysis, as well as in the selection and comparison of financial products. Reduced Turnaround Time Finacle mobile banking solution has a robust integration framework which allows it to function in tandem with disparate host systems, core banking solutions, payment networks and third-party applications. This translates into reduced go-to-market time for the bank as well as support for legacy systems. Robust Inclusivity Framework Finacle mobile banking solution leverages Infosys mConnect to smoothly hurdle the challenges posed by the multiplicity of form factors and access mechanisms on multiple devices to provide a contextagnostic view to the transaction server. This enables banks to include, through the mobile channel, its various customer segments, ranging from the HNWI to specific unbanked communities, surmounting the complexities of diverse location and dissimilar mobile devices. Maximize Innovation Banks can leverage Finacle solutions indigenously developed middleware Infosys mConnect, to configure an unlimited palette of services from any channel, to the mobile space, with ease. The need for development of new back end services is precluded due to the availability of a banking solution behind the mobile interface. Finacle also provides the flexibility to deploy services over the existing online banking platform or through a standalone delivery channel interfaced directly with the relevant host systems. This

ensures the rapid delivery of a comprehensive range of financial services, embellished with new innovative features, on mobile devices. Robust Security The solution offers extensive application security features like URL encryption, referral URL check and session management to provide a robust security framework. The solution also supports OTP (one time password), which provides a two factor authentication mechanism for users transacting with downloadable mobility client. This enables the bank to offer products that are highly secure and geared to withstand the onslaught of security threats associated with mobile transactions. Cost Savings The solution presents banks with the advantages of reduced integration by leveraging common interface messages, maintenance and deployment costs. This translates into significant cost savings without banks having to compromise on features or the range of devices supported. The mobile banking solution is inherently independent of the network service provider, obviating the need to build a business model that involves costs and profits sharing with them. Customer Delight Finacle mobile banking solution enables banks to offer the convenience of comprehensive anywhere anytime banking, using GPRS, mobile browser or SMS. It supports a wide range of mobile devices and mobile browsers. Banking customers can query on account balances and make fund transfers. Banks can also proactively send timely information to customers in a completely secure environment, whenever a customer-defined event occurs. The solutions self-service capabilities empower customers to manage their banking activities better. The solution also addresses data transmission and storage related security concerns adequately, delivering a truly streamlined customer experience.