Mobile banking in the banking sector

Mobile banking is a newly added service in the banking sector that facilitates banking via mobile devices. With the tremendous growth in mobile phone usage, banks in the developed world have moved to utilize mobile banking, which makes banking easier, faster, and very cost-effective. Mobile phones have quickly emerged as a successful and popular means of communication in recent years and the researchers believe that growth of mobile banking is inevitable, especially when banks do not have sufficient number of branches in the rural areas. The purpose of this project work is to assess the Opportunities and Challenges of mobile banking in this country. To accomplish this empirical study, multiple banks have been surveyed which either currently have an operational mobile banking in place or planning to introduce one in the near future. The project shows tremendous potential for mobile banking and reveals some of the key barriers of progress as well.

Mobile banking is a system that allows customers of a financial institution to conduct a number of financial transactions through a mobile device such as a mobile phone or personal digital assistant.

Mobile banking differs from mobile payments, which involve the use of a mobile device to pay for goods or services either at the point of sale or remotely.

The earliest mobile banking services were offered over SMS, a service known as SMS banking. With the introduction ofsmart 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.

Regulation of Mobile Financial Services

The rapid growth of mobile phone users and countrywide coverage of mobile operator's network has made their delivery channel an important tool-of-the-trade for extending banking services to the unbanked/banked population, especially to expedite faster delivery of remittances across the country. From legal and regulatory perspective, only the bank-led model is allowed to operate.

Approved Mobile Financial Services (in broad categories) are listed below -

1. Disbursement of inward foreign remittances.
2. Cash in /out using mobile account through agents/Bank branches/ ATMs/Mobile Operator's outlets.
3. Person to Business Payments - e.g. a. utility bill payments, b. merchant payments.
4. Business to Person Payments e.g. salary disbursement, dividend and refund warrant payments, vendor payments, etc.
5. Government to Person Payments e.g. elderly allowances. Freedom-fighter allowances, subsidies, etc.
6. Person to Government Payments e.g. tax, levy payments.
7. Person to Person Payments (One registered mobile Account to another registered mobile account).
8. Other payments like microfinance, overdrawn facility, insurance premium, DPS, etc.

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