Mobile Banking in India

Transcription

1 31 Mobile Banking in India Sunindita Pan, Lecturer in Economics, Loyola Academy Degree & P.G. College, Alwal, Secunderabad, Telangana ABSTRACT After Internet Banking, Mobile banking has become the buzz word in the industry. Mobile banking has given the traditional banking a newer look Anywhere Banking. Considering the Asian economy countries like china, India and Korea have seen the mobile boom in past one decade. The rapid growth of mobile technologies and devices makes it possible for the customers of banking services to conduct banking at any place and at any time. Mobile banking can work as a potent tool for financial inclusion in India though it has to overcome several obstacles before it can achieve its objective of reaching the unbanked population. It is a radical approach to banking transactions. It is important for mobile banking to reach the remotest locations in the country for the purpose of inclusive growth. Mobile banking is perhaps the most promising front-end technology for facilitating financial inclusion in India, especially for individual customers. In the last decade, mobile phone technology has emerged as the most potential and well-suited channel for financial inclusion. Use of mobile phone for inclusive finance is popular in countries where most of the population is unbanked or underbanked. In the present paper an attempt has been made to explore the potential of mobile phone technology in accelerating financial inclusion in India Keywords Mobile banking, financial inclusion, inclusive growth, India INTRODUCTION Over the years, banking has transcended from a traditional brick and mortar model of customers queuing for services in the banks to modern day banking where banks can be reached at any point for their services. Banks are constantly adopting technology to expand its business and to reach different level of customers. Mobile banking is one of the services provided by banks to its customers. Mobile banking is the latest in the series of technological wonders of the recent past. As smart phones become more common, they can play an increasingly larger role in the interactions between customers and financial service providers. Mobile technology is transforming the global banking and payment industry by providing added convenience to bank customers in developed markets and by offering new services to the unbanked customers in emerging markets. This has the potential to unlock a large untapped market. Customer satisfaction and customer retention are increasingly developing into key success factor in mobile banking. In today s business, technology has been on the predominant indicators of growth and competitiveness. The banking industry today is in the industry of its revolutions. Today, banks have welcomed wireless and mobile technology into their boardroom to offer their customers the freedom to pay bills, planning payments while stuck in traffic jams, to receive updates on the various marketing efforts. Mobile banking is a radical approach to banking transactions. It has created a strong connectivity between customers and the banks as both will transact with minimum cost and in minimum time. Its cost effective services can deliver mobile money to non-banked poor people and will induce economic growth of the country. Mobile banking refers to provision and availment of banking and financial services with the help of mobile telecommunication devices. It executes financial services within an electronic procedure to the customer using mobile communication techniques in conjunction with mobile devices. The challenging business process in the financial services pressurized banks to introduce alternate delivery channel to attract customers and improve customer s perception. Mobile banking consist of three inter-related concepts Mobile accounting-it is characterized as transaction-based banking services that revolve around a bank account and are availed using mobile devices. It is availment of account specific banking services of non-informational nature. Mobile brokerage-it refers to intermediary services related to the bourse (selling and purchasing of stocks). It is transaction based mobile financial services of non-informational nature that revolve around a securities account. Mobile financial information-it refers to nontransaction based banking and financial services of informational nature. It includes banking and financial services and is meant to provide the customer with anytime, anywhere access to information. With the advancement in the operating systems of the mobile phones and mobile technology like 2G, 3G,4G has

2 32 brought a significant change in the way of working of mobile banking service providers. Since the introduction of 2G and 3G, the demand for mobile phone has increased many folds. OBJECTIVE 1. To present the trends in mobile banking in India. 2. To study the mobile banking problems of customers and bankers 3. To analyse the existing guidelines and suggest future course of action RESEARCH METHODOLOGY For the present research, the study is based on exploratory research. The secondary data has been collected from various books, journals, magazines, newspapers and internet sources. The researcher develops concepts more clearly, establish priorities and improve the final research design. The study is concerned with the new avenues for banking in the form of e-banking in Indian banking industry. MOBILE BANKING IN INDIA Technology and financial inclusion are the popular coinage in banking parleys in the country, while technological up gradation and mobile banking are catching up so fast, financial inclusion is relatively tardy in progress. Given the reach of the mobile phone connectivity and associated communication technologies in India, mobile banking has the potential to emerge as a positive strategy in terms of costs, convenience and speed of reach. Banks are constantly adopting technology to expand its business and to reach different level of customers. The development in Information and communication technology (ICT), comfort and access of services and competition with peer forced banks to introduce mobile banking services in India. First mobile banking transaction services in India were offered by ICICI bank in January Now, 32 banks had been granted permission to operate mobile banking in India. Evolution of different technology in communication system and mobile device is a major challenge to mobile banking. in mind the variations in literacy levels. The mobile banking facilitates to access banking service to the rural community. This requires customer friendly banking software that can be used in their local language. Once the customer becomes confident on technology it will automatically increase the adoption of mobile banking in mass. Indian mobile banking users are specially concern with security issues like financial frauds, account misuse and user friendliness issue-difficulty in remembering the different codes for different types of transaction, application software installation and updating due to lack of standardization. For mobile banking to be acceptable by society in general, it is important to understand the mindset of Indian consumers who are wary of investing their money on a technology which appears virtual. Other problem is that for mobile banking to be user friendly, one is dependent on good telecom service quality in urban and rural India. Urban India, its rapidly expanding cities suffer from a lingering problem of network congestion during rush hour. This would result in delays in delivery of SMSs that would translate into hindrances to customer s financial transactions. In rural India, there is lack of awareness amongst customers owing to language and literacy barriers. Mobile banking system is enjoying a rapid growth in India. It has successfully crossed the introduction stage. Mobile banking services are growing both in terms of volume and value of transaction. In India, mostly young and educated customers are very much interested to apply and avail mobile banking services. Convenience, 24 X 7 flexible services, speed and quick financial decision are the factors responsible for motivating customers to use mobile banking system. In India, mostly bank-focused mobile banking model has been used and offered services. India is a country where different languages are used in different parts. India has 18 official languages which are spoken across the country. The state governments also are dictated to correspond in their regional language for official purposes. Therefore, customer support must be provided in vernacular languages that should always keep

3 33 MOBILE BANKING SERVICES IN INDIA 1. Transaction based services Fund transfer Insurance premium payment Transaction alert messages Micro payments Mobile recharge Blocking of payments of stolen credit cards Bill payment Cash deposit/ Stop cheque withdrawal through payments retail banking agents Tax payment Peer-to-peer payments 2. Non-transaction based services Enquiry based services cheque book mini account Card and loan Pension plan Insurance policy Cheque status enquiry Contents based services Weather updates Support service News update Insurance coverage Traffic updates Foreign exchange information Stock market quotes Bank interest rates Commodity prices Investment service Credit Real time request stock quote delivery Portfolio management request service Mortgage Selling and approval purchase of securities Security alerts ATM cards Submission of complaints Loan request to customers Unusual price notification RESERVE BANK OF INDIA REGULATION The following are the RBI guidelines issued to provide mobile banking service in India: (8 October 2008) Only such banks which are licensed and supervised in India and have a physical presence in India will be permitted to offer mobile payment services to residents of India. The services should be restricted to only to bank accounts/credit card accounts in India. The guideline issued by RBI on Know Your Customer, Anti-Money Laundering and Combating financing of Terrorism would be applicable to mobile banking services also. Only Indian rupee based services should be provided. Cross-border transfer through mobile banking would be strictly prohibited. Banks may use the services of business correspondents for extending this facility to their customers. The guidelines with regard to use of business correspondent would be as per the RBI circular on business correspondents issued from time to time. The Risks and Controls in Computers and Telecommunication guidelines will equally apply to mobile payments. The Know Your Customer and Anti-Money Laundering as prescribed by RBI from time to time would be applicable to customers opting for mobile based banking service. Encryption of transactions irrespective of value limit To ensure interoperability between banks and between their mobile banking service providers, banks should adopt message formats like ISO 8583 with suitable modification to address specific needs. Customer complaints and grievance mechanism Daily cap of Rs 5,000 per customer for funds transfer and Rs 10,000 per customer for purchase transactions 24 December 2009: Cap for daily transaction and funds transfer raised to Rs 50,000. Allowed transactions up to Rs 1,000 without endto-end encryption of messages Permitted cash-out through ATMs and BCs (cap of Rs 5000 per transaction and Rs 25,000 per month per customer 4 May 2011: Raised the limit to rs 5,000 for transactions without end-to-end encryption

4 34 22 December 2011: Daily caps for purchase transactions removed and left to the discretion of banks. Cash-out limits through ATM/BCs raised to Rs 10,000 per transaction, subjected to the limit of Rs 25,000 per month per customer. 1 July 2013: Compiles all the guideline contained in the previous circulars. Malware-a contraction for malicious software that is inserted into s system. Phishing-tricking a victim into disclosing sensitive personal information or downloading malware through an . SMishing-a contraction of SMS phishing Spoffing-sending a network packet that appears to come from a legitimate source, rather than its actual source Vishing-a contraction of voice and phising, in which victims are tricked into disclosing sensitive personal information through a phone call. FINDINGS Mobile banking raises the prospect that financial services provided via mobile phones can overcome almost all the barriers to entry in the traditional banking system. Use of mobile phone for inclusive finance is very popular in countries where most of the population is unbanked. The Philippines is pioneer in enabling financial services through mobile phones. Countries like Sudan, Ghana and south Africa have also adopted mobile technology for inclusive finance. Latin American countries like Uruguay, Paraguay, Argentina, Brazil, Venezuala, Colombia and Mexico started wit a huge success. SECURITY ISSUES Few important areas of concern that are common to banks and mobile service providers are network security, customer privacy and informed consent, liability, fraud prevention/authentication, interoperability/standardization, data access and use, parental control and financial risk/rewards. Financial institutions should be aware of the types of potential threats that can affect their mobile banking service like Cloning-copying the identity of one mobile phone to another Hijacking-the attacker takes control of a communication between two entities, masquerading as one of them. It is well recognized that mobile phones have immense potential of conducting financial transactions thus leading the financial growth with lot of convenience and much reduced cost. Mobile banking is useful for all the people but it is not available in remote areas. Uneducated personas persons cannot use mobile baking because it is total English languages. It is not available in local languages. Mobile banking facility fail due to sometimes account block and pin number blocking. Effective and more user-friendly software may be introduced to simplify the uses. The existing customers are not satisfied with present security measures, so steps should be taken to introduce effective security measures to avoid mobiletransaction-based crimes which would help to bring financial inclusion in India. CONCLUSION For inclusive growth, the benefits of mobile banking should reach to the common man of the country. Inclusion of non-banking population in financial main stream will benefit all. There is need to generate awareness about the mobile naming so that more people use it for their benefit. The main factors limiting customer adoption of mobile banking and payments are a preference for using other methods for banking or making payments and security concerns. Necessary steps are to be taken to frame guidelines related to security and privacy of transaction. New legal frameworks are also needed that should define supervisory structure of related entities and that would help to bring transparency in all activities. The future of mobile banking depends on efforts of all concerned parties-the service providers, service facilitators, regulatory system and customers. Financial inclusion initiative of government through mobile phone will have to overcome a range of challenges from technical to administrative and regulator ones before it becomes reality.

5 35 REFERENCES [1] Dr Ramesh Kumar Miryala (2015) Trends, Challenges & Innovations in Management-volume III [2] Kashyap,Amit K (2014) Indian Banking: contemporary issues in law and challenges [3] V.Devadevan (2013) Mobile banking in Indiaissues and challenges, International Journal of Emerging technology and Advanced Engineering, [4] Dr K.C.Biswal(2015) Emerging trend in Indian Banking sector-challenges and opportunities, International Journal of Advances in arts, sciences,engineering, volume 3, issue june 2015 [5] Pradhan,rudra Prakash (2009)- Forecasting financial markets in India [6] Sharma,K.C(2007)- Modern banking in India [7] [8]