Mobile Banking - The future of Banking is here.

The advent of the Internet revolutionized the way the financial service industry conducted their businesses. They empowered organizations with new business models and new ways to offer non-stop accessibility to their customers. 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, although such players still account for a tiny percentage of the industry. Mobile devices, especially smart phones, are the most promising way to reach the masses and to create “stickiness” among current customers, due to their ability to provide services anytime, anywhere, their high rate of penetration and potential to grow has made them a dominating force in the world of e-banking. The mobile banking business model depends on banking agents, i.e, the retail or postal outlets that process financial transactions on behalf of 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. 

Mobile Banking models are classified into 3 main categories. 1) Bank Focused Models, 2) Bank-Led model, 3) Non-Bank led model. The bank-focused model emerges when a traditional bank uses non-traditional 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 bank customers. The bank-led model offers a distinct alternative to conventional branch-based banking, through which a 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 non-bank-led model is where a bank does not come into the picture (except possibly as a safe-keeper of surplus funds) and the non-bank (e.g: telco) performs all the functions.

Mobile Banking is the hottest area of development in the banking sector and is expected to replace the credit/debit card system in future. Currently (September, 2008), there are 47 million mobile users, with approximately 2 million being added every month While the government incurs a transaction cost of Rs 12-13 for every Rs 100 it shells out, mobile banking helps it reduce the cost to a mere Rs 2. RBI estimates that around 40 per cent of Indians lack access to formal financial services and are largely 'unbanked'. The number of mobile users is estimated to have far surpassed the number of Internet users. Hence it is important to safeguard the secure usage of this medium for financial transactions. Some techniques that can be implemented for the same include using the phone-lock function on your mobile device when it is not in use, choosing passwords which are difficult to crack and keeping them safe and ensuring that the phone is configured securely, especially when it comes to configuring the Web browser and email software. Keeping your mobile phone updated with the latest patches and updates including antivirus updates help a lot.