MOBILE BANKING IN THE PHILIPPINES
Dianne Añes, Raisa Aquino, Bea Carpio, Solomon Lim, and Nica Tanjutco
EM-TECH S14
De La Salle University-Manila
ABSTRACT
Mobile banking is using a handheld device to make
banking transactions. Despite being the texting capital of
the world with over thirty-five (35) million mobile phone
users, the Philippines is still trying to cope up with other
countries in terms of this emerging trend in banking. One
reason may be because of the low number of mobile
banking users in the country, as the current trends in
mobility are leaning toward simplicity over complexity and
that consumers are still not ready for feature-rich mobile
banking services. As such, one objective is to introduce
mobile banking applications on a step-by-step proves,
wherein consumers are first only exposed to the most basic
applications which slowly transitions to the more complex
ones through the passing of time as to not arouse much
hesitation and rejection on the new trends in banking.
1. INTRODUCTION
With the emergence of smaller and more portable devices
such as cellphones, ultramobiles, and netbooks, new trends
of computing have emerged. People nowadays prefer doing
things mobile and on-the-go than doing things the old way
– going somewhere just to do and accomplish something.
Many industries today are now implementing mobile
solutions for their products and their services, and the
banking industry is no exception. Banks today are shifting
from its old, manual process to a new trend which just
requires the use of a handheld device, a new trend known
as mobile banking.
Surprisingly, the Philippines isn’t moving as fast as other
countries in this trend of banking besides it having the most
number of mobile phone users in the world. What are the
causes of such instances? This paper would delve into such
topics and would propose means and ways on how to
address such issues.
2. WHAT IS MOBILE BANKING
Mobile banking, simply put, is using a handheld device to
make banking transactions. The target of mobile banking is
to enable people in rural areas to transact in banks who
using their mobile devices.
Many countries, where most of their population are
unbanked, have been able to successfully implement mobile
banking. Examples of which include the Latin Americas
(Argentina, Brazil, Colombia, Guatemala, Mexico,
Paraguay, Uruguay, Venezuela). Other countries like
Sudan, Ghana and South Africa have also been successful
in implementing this new type of banking. The Philippines
today also has its set of mobile banking applications which
are supported and even accredited by the Philippine Central
Bank.
Mobile banking through a mobile phone is possible for the
following technologies. First, the interactive voice response
(IVR) this uses software which enters data on a mobile
keypad and put information this is usually the recorded
voice to be followed with a concern. Second, sending text
messages is the most used technology since it does not
depend on the model of the phone. The user can request
services through a set of codes for every transaction to be
made.
3. HOW MOBILE BANKING WORKS
Today, mobile banking offers services that are similar to
those currently there in banks. These services can be
divided into two (2) categories – push services and pull
services. Push services are services wherein the bank sends
out information based upon a set of rules. An example of
which is banks sending out alerts if an account is low on
balance. The second type of service, pull services, are
services wherein the user, in this case the customer, is the
one who asks the bank for information. Examples include
inquiries on account balances, transferring funds, and
paying due bills.
Mobile banking services can also be classified based on
transactions and inquiries. From the name itself, one can
see the types of services under these classifications. Specific
examples of these services include account balance
inquiries, account statement inquiries, status inquiries,
credit and debit alerts, bill payment alerts, and many more.
The table below classifies transactions from pull to push
and transaction to inquiry types:
Push Pull
Transaction  Funds transfer
 Bill payment
 Share trade
 Check order
Inquiry  Minimum balance  Account balance
alert inquiry
 Credit/debit  Account statement
payment inquiry
 Bill payment alert  Check status inquiry
 Transaction history
Figure 1. Push-Pull and Transaction-Inquiry Classifications
Mobile banking services enable the customer to keep track
of his or her banking transactions with just the use of a
mobile phone. Performing these transactions can be made
through short message service (SMS) and/or through
mobile Internet. Besides these two, there are also mobile
banking providers that let users download mobile
applications which enable them to connect to banks through
their phones. An example of this is the American
Telephone & Telegraph Company (AT&T) which asks
customers to download to their mobile phones their mobile
banking application to access the services that they offer.
In an article by the Economist, mobile phones also open
doors to economic benefits. The services which banks offer
allow customers to deposit and withdraw cash through a
mobile operator's agents, and send money to other people
via text messages that can be are equivalent and can be
converted to cash.
Banks also keep in mind the changing times in technology.
It is an advantage if the banking company is resilient and
will use new and emerging technologies and integrate them
into their existing mobile banking processes.
4. MOBILE BANKING IN THE PHILIPPINES
In the Philippines, there are a number of banks that support
mobile banking. Usually, these banks use SMS in
conducting the transactions for mobile banking. For
example, ChinaBank requires users to send their mobile
banking transactions through SMS to the numbers provided
to them by the telecommunications companies. Through
SMS, users of this system can request for their bills
payment, account status, and many more. For security
purposes, ChinaBank also requires users to input their 4-
digit passwords before they can access their accounts.
Telecommunications companies like Globe also offer
mobile banking applications like G-CASH and other
applications to allow its users to make transactions on the
go. Banks under G-CASH are allowed to convert electronic
money to actual money and actual money to electric money.
Indeed, more and more people are now using their mobile
phones to buy goods, make donations, pay loans, and do a
lot more things which were before not possible with their
mobile devices.
5. ISSUES IN MOBILE BANKING
According to a survey conducted by the National
Telecommunications Commission (NTC) in 2006, there are
approximately thirty-five (35) million mobile phone users
in the Philippines, giving the country the privilege of being
known as the text capital of the world. It has remained the
texting capital through the passing of time mainly due to
the magnitude of the short message service (SMS)
messages are sent out and transmitted to other mobile
phone users every day. Telecom executives estimated that
around 200,000 text messages are sent daily; however,
despite all these factors, there are still issues with regards to
the establishment of mobile banking in the country. These
issues include (1) mobile banking users consist of only a
very small minority, (2) interest and trends are leaning
toward basic services, and (3) consumers are not yet ready
for function-rich mobile banking. Each issue would be
discussed in detail below.
5.1. Mobile banking users consist of only a very small
minority
As of 2009, the most notable mobile banking application
used in the Philippines today is Globe Telecom’s G-CASH.
G-CASH had become a common transaction, especially for
online buyers and consumers when paying for the products
that they had bought online. According to a survey
conducted in 2004, around 500,000 users are making
transactions using G-CASH. Though the population
seemed high, when compared to the total number of cell
phone users in the country – about 35 million – the number
of people using mobile banking services only comprise of
about 1.5 percent of the total mobile phone users. In short,
mobile banking users consist of a very small minority.
5.2. Interest and trends are leaning toward basic
services
The country, as of today, is already providing users with
different platforms and technologies used in handling
banking transactions through the use of the consumers’
mobile phones. These banking transactions range from the
simple checking of account balances to more complicated
ones like paying bills; however, most consumers right now
prefer simple applications rather than more complex ones.
Consumers are more inclined to the basic services of mobile
banking rather than its intricate processes. This issue
further highlighted in the next issue below.
5.3. Consumers are not yet ready for function-rich
mobile banking
As stated in the previous issue, the Philippines already has
the technologies needed for mobile banking. Needless to
say, more technologies are bound to emerge; however, it
seemed that it is only the applications that are basic which
are more dominantly used by the users. One reason behind
this phenomenon is that consumers are not yet ready for
function-rich mobile banking. This unreadiness can be
caused by other factors including (1) distrust on the
processes on how a transaction works in mobile banking
and (2) consumers are already used to and prefer the old,
manual process of banking. But in implementing something
big of a change, users are naturally bound to get scared and
hesitant at first in acceptance and usage, as such, it could
not be averted if users would prefer the old process of
banking.
According to a survey conducted to nine thousand (9,000)
mobile phone users which ask them on what mobile
activities they are interested in, majority of the respondents
answered “None”. Below is the bar graph showing the
results of the conducted survey.
Figure 2. Mobile Phone Application Survey Results
5. POSSIBLE SOLUTIONS
To address the issues stated above, the group has come up
with possible solutions to solve the mentioned problems,
three (3) of which are discussed below.
According to telecick.ca, “Strong take-up of USB modem
services could result in traffic per cellular customer
increasing to as much as 23 times its 2008 level by 2015.
Mobile operators may need networks that are able to
support a huge increase in traffic, and should review their
strategies towards USB modem services.” This means that
the users of mobile phones will increase in the future, as
such, despite the current situation, it is advisable for the
banking industry to continue investing in mobile banking.
With countries like the Philippines and Kenya showing that
mobile banking is successful. Others could follow suit since
users now a days are finding the best services banks could
offer. The bank industry should also survey sample clients
to verify if the services they offer in mobile banking is
sufficient to their needs. It is not enough that the banks
offer basic services but offer more and make use of the
platform presented to them.
6. CONCLUSION AND RECOMMENDATIONS
Mobile banking is indeed helpful especially during a
situation where banks are not present and a transaction is
needed to be done at that point of time. It provides a more
secure way of making transactions instead of carrying cash;
it facilitates transactions such as deposits and withdrawals;
and it makes operations much simpler for micro-
entrepreneurs.
In a country like the Philippines, where mobile phone users
are everywhere, mobile banking would be advantageous for
those in the provinces where fewer banks can be found.
Mobile phones can bring banking within everyone’s reach.
Mr. John Owens, chief of party at RBAP-MABS, mentions
that their transactions are growing and have increased
substantially over the previous year, with over 2,000 clients
being registered weekly by rural banks as m-banking
clients.” This proves that the Philippines really has a
potential for widespread mobile banking, considering that
SMS usage in the country is one of the highest in the world
in ratio to population.
To eliminate and prevent hesitations to this new trend in
banking, mobile banking applications must be introduced
on a step-by-step proves wherein consumers are first only
exposed to the most basic applications which slowly
transitions to the more complex ones through the passing of
time.
7. REFERENCES
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