Mobile Banking Technology - Research Paper Example

? Running Head: MOBILE BANKING TECHNOLOGY Mobile Banking Technology In this new era of fierce global competition it is vital for any industry to adopt new technologies with changing times. There often remains a huge gap in the technical promise while introducing a new technology and effectively putting it to work and this is a grave concern for the management. A set of challenges is faced by the management to introduce new technology into the organization. (Barton and Kraus, 1985) Need for mobile banking technology New products and technologies are introduced in the market every year. Many of them do not succeed in reaching the desired business objectives which raise the question of whether new products or technologies should have been introduced. However, in the topical times when all over the world there is rapid change of technologies, it is vital to adapt to newer technologies. New technology must meet the need of customers and it must be easy to implement (Souder and Sherman, 1994, p.45). One such technology is mobile banking facility. In earlier days banks used to keep customers’ money in vaults and would only meet financial needs of the customers. Then financial data networks were create to facilitate electronic method of transfer of funds through interconnected banking system. Even then the customers had to be personally present in the bank to deposit or retrieve funds. Next ATMs provided the customers to do their banking in various locations. Now, more recently online banking through the internet has become a common occurrence. The latest technology in the line of banking facilities is mobile banking. This technology helps the customers to do activities like transferring funds, checking balances, paying bills from their cell phones. Now customers rarely need to go to the bank to do their banking (Stair and Reynolds, 2009, p.17). Widespread coverage of mobile phone network makes the mobile phones more accessible to the consumers in relation to the fixed infrastructure needed for ATMs. Mobile banking can prove to be a cost efficient channel for the banks for providing banking services and as such the banks can charge less for transactions. Mobile banking technology can provide the consumers immediate access to any information in relation to their bank accounts. (Krugel, 2007, p.3) Insecure edge of mobile banking technology Today customers do most of their banking either through personal computers or mobile phones. Mobile phones are in these days internet-enabled and private data either stay on a single device or float in the cyberspace and thus can be vulnerable to misuse (Mukherjee, 2008, p. 61). Mobile phones were primarily built for voice communications and as such have certain limitations that increase the risk factor in mobile banking. One major risk factor includes concern of confidentiality and integrity of data during transfer of information from and to bank’s wired core processing system and to wireless environment. There are many other limitations in mobile phone like small screen space, short battery life and lower processing speeds. There is also the problem of various data entry formats and also data storage capacity is limited. Attempts are being taken to reduce the risk factors through wireless markup language and wireless application protocol. The mobile manufacturers are also trying to improve the devices. But other risks which include security threat and authentication are still major issues of concern and unless measures are taken to resolve the security issues, mobile banking can never become the dominant channel for banking. Mobile technology of today can provide wide range options for mobile banking services. While some options can ensure high level of security there are other options which cannot promise the same security level. There is possibility to minimize the risk factors by introducing operational controls. In developing countries mobile handset technology is not of the highest level. In these countries risks of mobile banking facilities can be minimized by careful management of operational controls which includes user education. In these countries mobile technologies which are widely available carry higher technical risks (Bezuidenhoudt and Porteous, 2008, p.4) Mobile Banking in Developed and Developing Countries In countries where a high percentage of the population holds banking accounts and have access to banking services, mobile banking technology can be very exciting. Mobile banking service can act as an add-on to already existing channels for banking and payment methods. This will provide to the already sophisticated customer base an easier way of accessing banking services. Consumers in developed countries have no urgency about mobile banking, but in developing countries there is strong interest value in mobile. In developing countries millions of people do not hold bank accounts and hence they do not have access to banking services like debit/credit cards. In these countries mobile banking facility will give the people to pay for goods and services in easy and efficient manner and thus they can enter the ‘convenience economy’ (Swift, 2011). In developed countries customers have thousands of channels like ATM, Internet for accessing financial services and so mobile banking is not very popular in these countries. In developing countries mobile banking service can replace other banking infrastructure which are more expensive and can reach out to the population of low-income who do not have bank accounts. In the United States mobile banking services are launched by banks that own accounts. Banks do the marketing of the services instead of the phone companies. In developing countries mobile banking services are initiated by telecom companies and not by the banking industries. Some examples are Vodafone’s M-Pesa service in Kenya and Globe Telecom’s G-Cash in Philippines. Both of these services were developed by telecom companies. Another such example is MTN banking in South Africa. It is not clear which technology or business model would dominate if mobile banking services become popular in developing countries (Rhyne, 2009, p.117). Benefits of mobile operators A question arises whether mobiles will generate new streams for revenue for banking industry by providing mobile banking services. This technology can be disruptive by making way for more revenue for industries which share a closer relationship with the end customers. An example can be given by mentioning the success story of a mobile banking service in Kenya – M-Pesa. The leading mobile operator in Kenya, Safaricom launched a sms service in March, 2007. By this sms service consumers of the mobile operator can access to banking facilities such as deposit, withdraw and transfer funds. Use of M-Pesa became hugely successful and more than 35% of the adult population of Kenya adopted this service. In this case undoubtedly the mobile operator gained the most. (Swift, 2011) Role of Banks To ensure complete safety of mobile banking services to the consumers there must be right regulations in place. Banking industry has the capability to follow rigid regulations. Banking industry has the best technology to provide secure and reliable platforms to meet demands of banking services that will be created by growing mobile banking services in the developing world. To ensure smooth running of mobile banking services there must be collaboration not only between banks but also between banks and mobile operating services. (Swift, 2011) Conclusion Mobile banking is rapidly on the rise and this can be evident from the vast number of implementation all over the world and also from the interest garnered by the technology. There is also rise of providers of technology for mobile banking services. The implementation option that will be selected should depend upon how the technology is adopted by the consumers, technical capability of the mobile handsets, how well the service channel is affordable and the comfort level of the consumers in accessing the services. (Krugel, 2007, p.35) References 1. Barton, D. L. and W. A. Kraus, (1985) “Implementing New Technology”, Harvard Business Review, retrieved on 11th July, 2011 from: http://hbr.org/1985/11/implementing-new-technology/ar/1 2. Bezuidenhoudt, J. and D. Porteous (24th March, 2008), “Managing the Risk of Mobile Banking Technologies”, Banking Frontier Associate, retrieved on 4, 11th July, 2011 from http://www.ifc.org/ifcext/gfm.nsf/AttachmentsByTitle/Tool10.9.ManagingMobileMoneyRisk/$FILE/Tool+10.9.+Managing+Mobile+Money+Risk.pdf 3. Krugel, G. T. (2007), “Mobile Banking Technology Options”, Finmark Trust, 3 (35) 4. Mukherjee, A. (1st Dec, 2008), “The Electronic Bilk”, Outlook, 48(48) 5. Rhyne, E. (2009), Microfinance for Bankers and Investors, India: Tata McGraw-Hill Education 6. Swift, K. P. (5th May 2011), “Mobile Banking for the Unbanked”, Banking Technology, 11th July, 2011 from http://www.bankingtech.com/bankingtech/mobile-banking-for-the-unbanked/20000205123.htm 7. Souder, W. E. and J. D. Sherman (1994), Managing New Technology Development, USA: McGraw-Hill, Inc. 8. Stair, R. M. and G. Reynolds (2009), Principles of Information Systems, Cengage Learning Read More