Xavier Institute of Management,

Bhubaneswar

Group 4: Commercial
banking-Section Z

M-Banking: Does it have

potential?
Presented by:
Amrit Kumar (UM14245)
Ankit Tripathi (UM14246)
Adit Khiroria (UM14303)
Marut Kumar Mishra
(UM14325)
Neetesh Singh (UM14326)

What is M-Banking?
M-Banking is a term used to describe the processes which allow
people execute a number of financial transactions through a mobile
device like a cell phone or a tablet.

Through M-Banking balance

enquiries can be made, money
can be sent and/or bills can be
paid anytime 24x7 depending on
the banks.

This form of banking is

typically possible by using
special applications in Java
/Android /iOS /Windows
Phone /Blackberry mobile
devices with or without
internet connection.

SMS Banking is a part of mobile

banking: Special keywords can be
sent to bank defined numbers to
do basic transactions like balance
enquiry and mini statements
enquiry.

Some Statistics
According to RBI by 10 July, 2015 there are a
total of 119 banks (domestic and foreign)
permitted to provide Mobile Banking Services in
India

According to a TOI September 2014 report, State

Bank of India was the market leader with about
50% market share in number of transactions in
M-Banking with more than 1.15 crore users.

According to a TOI July 2015 report, HDFC Bank

was the leader in terms of value of transactions
worth Rs 5686 crore in April 2015.

Mobile Phone Growth - Worldwide

Fixed Line
Subscriptio
n
1.27 Bn
Fixed Line
Subscriptio
n
1 Bn
2002

Mobile
Phone
Subscriptio
n
1 Bn

Mobile Phone
Subscription
4.1 BN

2008

Mobile Phone
Subscription
6 Bn
Fixed Line
Subscriptio
n
1.16 Bn
2015

Source : UN Report on Global Telecommunication Industry

Internet Users in India All vs

Mobile

July 2014
Source : India Stat., InternetLive Stats, IAMAI ; dazeinfo.com

Mobile Activity Report - India

July 2014
Source : India Stat., InternetLive Stats, IAMAI ; dazeinfo.com

RBI Regulations for Mobile Payment

Systems (MPS)
Regulatory and Supervisory
Issues
Only such banks which are licensed
and supervised in India and have a
physical presence in India will be
permitted to offer MPS to residents
of India
The services should be restricted
to only to bank accounts/credit
card accounts in India which are
KYC/AML compliant.
Only Indian Rupee based services
should be provided.
Banks may use the services of
Business Correspondents for
extending this facility, to their
customers.

Transaction Limits in Mobile

Banking
Transactions are allowed within
India only.
Per day transaction cap of
Rs.50000 has been removed by
RBI, and every bank can change
this cap depending upon their risk.
Transactions without end-to-end
encryption is Rs.5000/- (SMS
Based).
In case of cash out, the maximum
value of such transfers shall be Rs
10,000/- per transaction. Banks
may place suitable cap on the
velocity of such transactions,
to a maximum value of Rs
Source :subject
https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?

RBI Regulations for Mobile Payment

Systems
(MPS)
Registration of customers for
mobile service

Banks should strive to provideoptions

for easy registrationfor mobile
banking services, minimizing the
need for the customer to visit the
branch for such services.
Following Channels can be explored
for MPIN registration :
Through the ATM channels
Through an option provided in the
USSD menu for mobile banking
Banks own internet banking
website, with necessary safeguards
Use of MPIN mailers (like PIN
mailers for cards)
Common website can also be
designed as an industry initiative

Security and Authentication

The mPIN or higher standard of

mechanism should be used to
authenticate the Mobile Banking
customer.
End-to-end secure encryption
mechanism should be followed in
transactions
Bank should conduct regular
information security audits on the
mobile banking systems to ensure
complete security

Source : https://www.rbi.org.in/scripts/BS_ViewMasCirculardetails.aspx?

Mobile Banking in India

In India, traditional branch-based banking remains the most widely adopted method of
conducting banking transaction, at the same time commercial banks are undergoing a
rapid change majorly driven by the information & telecommunication (ITC) technology.

Mobile Banking initiatives by Indian Banks

ICICI bank pioneered in mobile banking services in India
Among public banks, Union Bank of India was the first to introduce mobile banking (2010)
Today many commercial banks have launched mobile banking using ITC technology
They can now reach out to customers and provide them with not only general information about its services but also the
opportunity of performing interactive retail banking transactions anytime, anywhere.

Mobile Banking in India

(Contd.)
Some banks in India have started providing the mobile banking service to
their customers that include State Bank of India (SBI), Union Bank of India
(UBI), Punjab National Bank (PNB), HDFC, ICICI, Axis Bank, etc.

Mobile banking services offered by some of the banks in India

State Bank of India
Union Bank of India
Punjab National Bank
ICICI Bank
HDFC Bank
Axis bank

SMS Banking, FreedoM, USSD

SMS Banking, U-Mobile
SMS Banking
SMS Banking, i-Mobile ,M-PESA, m-Rupee
SMS Banking, App Based, Browser Based
SMS Banking, Phone Banking, Internet Banking on Mobile

Major Services in Mobile Banking

Account
Information
Alerts on account activity
or passing of set
thresholds
Monitoring of term
deposits

Deposits and
Withdrawals

Payments and
Transfers
Domestic and
international fund
transfers

Cash-in, cash-out
transactions on an ATM

Micro-payment handling

Access to loan statements

Mobile & Direct to Home

package recharging

Access to card statements

Purchasing tickets for

travel and entertainment

Mutual funds / equity

statements
Insurance policy
management

Deposits and
Withdrawals at Banking
Agent

Purchasing tickets for

travel and entertainment
Bill payment processing

Enabling conditions for Mbanking

Infrastructure
Need for ubiquity
Need for availability of high capacity SIM cards

Regulation
Protection from frauds/ secure service
Protection from money laundering/ Know Your Customer requirements

Partnerships
With banks and retail store
Microfinance institutions (to offer other value added services)

Scalability
Volume is the key

Establishing trust/ overcoming ignorance

Trends in Mobile Banking

Advent of Internet

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.

Emergence of new
players

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

Fast growing mobile &

Wireless market
Over the last few years, It has
been one of the fastest growing
markets over the last few years
and it is still growing at a rapid
pace. According to the GSM
Association and Ovum, the
number of mobile subscribers
exceeded 1.7 Billion in
September 2005, and now
exceeds 6 billion (of which more
than 4.5 billion are GSM).

Trends in Mobile Banking

(Contd.)
Mobile devices: An
attractive proposition

Mobile Banking: A new

challenge

Generation of
sophisticated services

Smart phones, are the most

promising way to reach the
masses and to create
stickiness among the current
customers, due to their ability to
provide services anytime,
anywhere, high rate of
penetration and potential to
grow.

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 3G and its

widespread implementation from
2007 2013 has generated the
development of more
sophisticated services such as
multimedia and links to mcommerce services.

Mobile Banking: Key

decisions
Why are you doing it?

To stay competitive

Customers are asking for it

What services
provide?

SMS

WAP

are

Smart App

you

going

to

Demographic study

% of customers that would use

this channel

Current
usage

statistics

on

mobile

Cost for implementing mobile banking

Evaluate current vendors

Existing core banking vendor

Potential Impact on
Economy
Increases circulation of money
(e-money)

By 2017, 600
million without
traditional
bank accounts
is expected to
use mobile
money

US $7.5 billion
annual direct
revenues from
fees for
financial
services

Growth in formal financial

system
US $4.2 billion
annual indirect
revenues from
voice and SMS

An increase of 10 mobile phones

per 100 people boosts GDP
growth by 0.6 percentage points
Increases effective
communications infrastructure

Increases employment

Benefits of Mobile Banking

Customers

Easy access from mobile phones at low/

no additional cost
Mobile wallets, capable of being loaded
up with and storing money (aka
electronic purse)
Money transfer or simply transferring
funds between accounts
Electronic bill payments, Becoming a
virtual debit card
Rapid person-to-person payment over
distances
Notification on account changes and
time critical information
Encourages savings
Banking on the go/ salaries can be
received directly on the phone

Banks: Opportunity to serve

unbanked
New
banking
channel

Security
from cash
theft

Capture
new market
segment

Mobile
Bankin
g
Improve
information
flow: bank/
client

Lower cost
to serve

Expand
reach of
offerings

Overall Impact

Decrease
Increase
use of
formal
Decrease
Increase
cash
Increase merchants
the cost to
peoples
which
traceabilit
when
serve the
control of
saves
y in the
every
un- and
their
currency
economy phone is a
undermoney
costs in
Point-ofbanked
an
Sale
economy

Increase
money in
circulation
(e-money)

Transformative M-Banking Models across

the Globe
Service

MPESA

Bolsa
Familia

Location

Provider

Scope

Impact

Kenya

Being used to
12 Million users
buy goods and
out of Kenyas
services, pay
Safaricom, a
38 Million
bills to insurance
private company
18000 MPESA
brokers, taxi
jointly owned by
agents, six times
fares, school
Vodafone and
the no. of bank
fees,
Kenyan Govt.
branches and
microfinance
ATMs
lenders and
utility companies

Brazil

Mechanism for
Govt. social
welfare
payments
affecting 45
Million people

National Govt.

Reduce program
cost and delays
in delivery

Transformative M-Banking Models across

the Globe
Service

Smart Money
G-CASH

Wizzit

Locatio
n

Philippines

South Africa

Provider

Scope

Smart and Globe

3 Million users
currently use the
service. There is
potential for a
further 4-5 Million
growth in customers
if penetration rates
could match best
practice operators
elsewhere

Division of the
South Africa Bank
of Athens

450,000 people use

wizzit

Impact
Cash Deposit
Cash
Withdrawals
Transfer of
credit to the
prepaid
account
Inward
International
remittances
Target of 16
Million people in
South Africa who
are unbanked or
who have
difficulty

What the surveys say?

Survey conducted by Federal Reserve (U.S.) on
2000 individuals using mobile phones
Global Mobile Payment Transaction Value (in $Bn)
721.4
563.4
431.1

Using your mobile phone, have you done any of the following in the past 12 months
1%
2%
3%

325.2
235.4
52.9

101.1

163.1

11%
21%
26%

The year 2014 saw Global Mobile

Payment Transaction volume hit
$325.2 Billion. It is estimated that it
will touch a whopping $721.4 Billion
by 2017 growing at a CAGR of
45.1% YoY
Source : http://www.statista.com/statistics/226530/mobile-paymenttransaction-volume-forecast/

33%
42%
48%
90%
Source : http://www.federalreserve.gov/econresdata/mobile-devices/2012-current-usemobile-banking-payments.htm#Figure3.WhatAreTheMainReasonsYouHav-FDB4E107r

What the surveys say?

Use of mobile banking
in the past 12 months
by age
Age

Reasons for not using Mobile banking

2%
2%

Yes
categories
18-29
43.5
30-44
35.7
45-59
14.7
60+
6.1
Number of
respondents
372

4%
9%
9%
12%
15%
20%
31%

No

Total

16.8
24.7
30.2
28.4

22.4
27
26.9
23.7

1,626

1,998

36%
37%
42%

Nearly 42% of the respondents were afraid of using Mobile

Banking due to security concerns, followed by No additional
benefit and Ease of use of Cash. This shows that with
proper information dissemination and increase investment in
security measures may increase mobile payments
substantially.

Mobile Banking was seen used

most by the age group
between 18-29 years. This is
expected as mobile banking
usage is directly dependent
on smartphone usage.

Issues And Challenges In Mobile

Banking
Issues

The customers who

use ATM and
internet banking
services mostly feel
comfortable
without mobile
banking.
There are chances
of misuse in MBanking in cases of
mobile thefts.

Challeng
es

The advent of 3G
and 4G technology
in India is leading
the banks to adopt
the current
technology and
causing losses.
Daily transaction
limits fixed by
banks and limited
features also acts
as a barrier for
customers to adopt
mobile banking.

Recommended Security Measures

For Consumers

For Banks

Implement application level encryption

network and transport layer encryption

Establish proper firewalls, intruder detection

systems (IDS), data file and system integrity
checking,
surveillance
and
incident
response
procedures

Conduct periodic risk management

security vulnerability assessment

over

Set strong passwords, install anti-virus

software on smart phones

Know the developer before downloading

applications

analysis,

Maintain proper and full documentation of

security practices, guidelines, methods and
procedures used in mobile banking and payment
systems

Implement appropriate physical security measures

to protect the system gateways, network
equipment's, servers, host computers, and other
hardware/software used from unauthorized access and
tampering

How well have they tested the app?

Is it certified?

Is the application launched by the Bank

or fraudulent sources ?

Do not store sensitive data on mobile

phone

Receive mobile alerts on potentially

fraudulent transactions

Summary of the discussion

Though M- banking seems to cut across all groups, usage is more pronounced among
youngsters.

With the help of mobile banking users can send money using their phone to any other
customer in the country, deposits and withdrawals in less time.

According to the analysis Mobile banking provides financial services, including

solutions facilitating savings and insurance.

Mobile Banking facilitates payments, giving users a way to pay their bills and to pay
for goods at shops that accept Orange Money electronically without cash.

Conclusion
Mobile Banking, as has been demonstrated, has gained non-negligible relevance for banks
today. Developments in the banking sector, e.g. increased competition on account of
technological developments coupled with the process of globalization have produced new
challenges for banks. Its main contribution, however, can be expected to take place in the
strategic field as it is all set to become an instrument of differentiation

Mobile Banking seems to possess the potential to become one of the widely spread and accepted
application in the field of Mobile Commerce, particularly in the backdrop of its high acceptance
across commercially important sections of the society. We may expect to see Mobile Banking go
into the footsteps of Online Banking, i.e. to become a standard service offered by every bank
worth its name. Hence, the future for banking sector is going to make rapid straights in near
future.

One of the major hindrance in the widespread use of Mobile Banking is that most of the
customers feel comfortable without mobile banking. They also feel, there are chances of misuse
in mobile banking due to mobile handset theft.

Thank You !