The last time that technology had a major impact in helping banks service their customers was with the introduction of the Internet banking. Internet Banking helped give the customer's anytime access to their banks. Customer's could check out their account details, get their bank statements, perform transactions like transferring money to other accounts and pay their bills sitting in the comfort of their homes and offices. However the biggest limitation of Internet banking is the requirement of a PC with an Internet connection, not a big obstacle if we look at the US and the European countries, but definitely a big barrier if we consider most of the developing countries of Asia like China and India. Mobile banking addresses this fundamental limitation of Internet Banking, as it reduces the customer requirement to just a mobile phone.

Mobile usage has seen an explosive growth in most of the Asian economies like India, China and Korea. In fact Korea boasts about a 70% mobile penetration rate and with its tech-savvy populace has seen one of the most aggressive rollouts of mobile banking services. Still, the main reason that Mobile Banking scores over Internet Banking is that it enables ‘Anywhere Banking'. Customers now don't need access to a computer terminal to access their banks, they can now do so on the go – when they are waiting for their bus to work, when they are traveling or when they are waiting for their orders to come through in a restaurant.

Banks offering mobile access are mostly supporting some or all of the following services:

• Account Balance Enquiry
• Account Statement Enquiries.
• Cheque Status Enquiry.
• Cheque Book Requests.
• Fund Transfer between Accounts.
• Credit/Debit Alerts.
• Minimum Balance Alerts.
• Bill Payment Alerts.
• Bill Payment.
• Recent Transaction History Requests.
• Information Requests like Interest Rates/Exchange Rates.

One way to classify these services depending on the originator of a service session is the ‘Push/Pull' nature. ‘Push' is when the bank sends out information based upon an agreed set of rules, for example your banks sends out an alert when your account balance goes below a threshold level. ‘Pull' is when the customer explicitly requests a service or information from the bank, so a request for your last five transactions statement is a Pull based offering.

The other way to categorize the mobile banking services, by the nature of the service, gives us two kind of services – Transaction based and Enquiry Based. So a request for your bank statement is an enquiry based service and a request for your fund's transfer to some other account is a transaction-based service. Transaction based services are also differentiated from enquiry based services in the sense that they require additional security across the channel from the mobile phone to the banks data servers.

Presently, Mobile Banking is being deployed using mobile applications developed on one of the following four channels.

• IVRS (Interactive Voice Response System)
• SMS (Short Messaging Service)
• WAP (Wireless Application Protocol)
• Standalone Mobile Application Clients
• IVR – Interactive Voice Response System

IVRS or Interactive Voice Response System service operates through pre-specified numbers that banks advertise to their customers. Customer's make a call at the IVR number and are usually greeted by a stored electronic message followed by a menu of different options. Customers can choose options by pressing the corresponding number in their keypads, and are then read out the corresponding information, mostly using a text to speech program. Mobile banking based on IVR has some major limitations that they can be used only for Enquiry based services. Also, IVR is more expensive as compared to other channels as it involves making a voice call which is generally more expensive than sending an SMS or making data transfer (as in WAP or Standalone clients).

One way to enable IVR is by deploying a PBX system that can host IVR dial plans. Banks looking to go the low cost way should consider evaluating Asterisk, which is an open source Linux PBX system Asterisk, due to its open source nature has caught on in a big way and is being sold as an PBX solutions by quite a few companies commercially. However there has been considerable noise on multiple Asterisk related forums over the stability of Asterisk based systems. Companies planning to use Asterisk for their IVR solutions should certainly do a rigorous evaluation of its capabilities before committing their long term future on it.

The main advantage of deploying mobile applications over SMS is that almost all mobile phones, including the low end, cheaper one's, which are most popular in countries like India and China are SMS enabled. An SMS based service is hosted on a SMS gateway that
further connects to the Mobile service providers SMS Centre. There are a couple of hosted IP based SMS gateways available in the market and also some open source ones like Kannel.

WAP - Wireless Application Protocol

WAP uses a concept similar to that used in Internet banking. Banks maintain WAP sites which customer's access using a WAP compatible browser on their mobile phones. WAP sites offer the familiar form based interface and can also implement security quite effectively.

A WAP based service requires hosting a WAP gateway. Mobile Application users access the bank's site through the WAP gateway to carry out transactions, much like Internet users access a web portal for accessing the banks services.

The following figure demonstrates the framework for enabling mobile applications over WAP. The actual forms that go into a mobile application are stored on a WAP server, and served on demand. The WAP Gateway forms an access point to the internet from the mobile network.

Standalone Mobile Application Clients

Standalone mobile applications are the ones that hold out the most promise as they are most suitable to implement complex banking transactions like trading in securities.

They can be easily customized according to the user interface complexity supported by the mobile. In addition, mobile applications enable the implementation of a very secure and reliable channel of communication.

One requirement of mobile applications clients is that they require to be downloaded on the client device before they can be used, which further requires the mobile device to support one of the many development environments like J2ME or Qualcomm's BREW. J2ME is fast becoming an industry standard to deploy mobile applications and requires the mobile phone to support Java.

The biggest advantage that mobile banking offers to banks is that it drastically cuts down the costs of providing service to the customers.

For example an average teller or phone transaction costs about $2.36 each, whereas an electronic transaction costs only about $0.10 each. Additionally, this new channel gives the bank ability to cross-sell up-sell their other complex banking products and services such as vehicle loans, credit cards etc.

For service providers, Mobile banking offers the next surest way to achieve growth. Countries like Korea where mobile penetration is nearing saturation, mobile banking is helping service providers increase revenues from the now static subscriber base.

Also service providers are increasingly using the complexity of their supported mobile banking services to attract new customers and retain old ones.

Swapna Singh