Mobile Banking Services – This is the second part of a 5-part story on mobile financial services and their security. This part focuses on mobile banking and the opportunities that come out of this service, as well as those opportunities that got added under the Mobile Financial Services umbrella as an independent service. Mobile money and mobile banking are viewed under the same umbrella and are currently encapsulated in a financial world that is either too complicated or is viewed as complicated.
Introduction – Mobile Banking Services
A huge percentage of people do not acknowledge the fact that mobile money and mobile banking are two different service offerings and completely separate businesses, as mobile money normally focuses on unbanked and low-end customers where margins are very low and transaction values are low, but the high volumes can suffice to bring profitability to the operators.
Mobile banking, on the other hand, is when a financial institution allows its customers to conduct financial transactions on their bank account via a mobile device.
Africa is heaven for mobile money because banking penetration is less than 5%, while in Asia, through countries like Indonesia, Singapore, India, and many more, mobile money services can never fly, or, if I can say, never be a success; chances are almost zero due to the high level of financial inclusion, the availability of ATMs, and the rife use of agency banking. When Africa delivers on its potential in terms of mobile money, the winners will be those operators who have been ready to live with the risks involved in the business.
As far as mobile money and mobile banking are concerned, in terms of technology, there is no rocket science in both services, but major issues are found in business rules, business requirements, distribution channels, and regulatory requirements. In the US market, mobile banking typically operates across all major mobile providers in one of three ways: SMS messaging, mobile web, or applications developed for iPhone, Android, or Blackberry devices.
Mobile Banking Services
Mobile banking refers to the utilization of mobile devices for conducting various financial transactions pertaining to an individual’s bank account, including the provision of airtime service top-ups. The financial institutions extend this service to their clientele. The notion of mobile banking (M-banking) allows individuals to leverage their mobile devices to conveniently access and manage their respective bank accounts.
The ability for clients to engage in core banking activities, such as airtime replenishment, monetary resource transfers, balance monitoring, bill payment, and the submission of unique requests to their financial institution, is facilitated through the utilization of their registered mobile phone, which is linked to their customary bank account.
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, analogously to the use of a debit or credit card to effect an electronic funds transfer at the point of sale (payment method), which is an electronic payment system involving electronic funds transfers based on the use of payment cards, such as debit or credit cards, at payment terminals located at points of sale.
Unless we talk about value-added services on top of banking, mobile banking and mobile money basics remain the same as in mainstream banking (debit or credit), with nothing beyond. Banks are losing out to mobile money services due to their failure to compete with MNOs and MVNOs and their skepticism about opening up their mobile banking services to run side by side with mobile money.
SMS Mobile Banking and Alert is the simplest, allowing the user to transfer funds, check balances, or access account information via text message. Texting terminology varies from bank to bank, but the overall function is generally the same. For example, texting “Bal” will obtain the account balance, while “Tra” will allow inter-account transfers. The first user registers and creates a trust relationship between their phone number and the bank server in order to verify their phone numbers with their bank, but once that’s completed, they can also set up alerts to let them know about balances or other confirmations.
Mobile Web (restricted to handset properties and the operator’s IP pool) is the second mobile banking option. Similar to online account access from a home-based computer, this option allows for checking balances, bill payments, and account transfers simply by logging into the user’s account via a mobile web browser. Mobile banking applications for Android, iPhone, and Blackberry connect the user directly to the bank server for complete banking functionality without having to navigate a mobile web browser. These applications can be downloaded either through the bank’s website or through the iTunes store.
Where World is Moving for Digital Payments
As the world transitions towards using mobile phones for payments, the previous two to three decades’ worth of work in the plastic payment industry is becoming obsolete. This shift marks a return to fundamental principles and a change in mentality from one extreme to the other.
We can expedite our success by embracing Harvey Mackay’s philosophy, which suggests titles hold no significance. Every individual is engaged in selling. It’s the sole means of our survival as a company. In my opinion, this statement holds significance as it distinguishes between being influenced by data and being strictly guided by data.
Mobile money solutions have been utilized in developing countries to provide financial services to individuals who are either “unbanked” or “underbanked.” This is especially important considering that up to half of the world’s adult population belongs to this category.
Conclusion: Africa is heaven for mobile money because banking penetration is less than 5%, while in Asia, through countries like Indonesia, Singapore, India, and many more, mobile money services can never fly, or if I can say never be a success, the chances are almost zero due to the high level of financial inclusion, the availability of ATMs, and the rife use of agency banking.
When Africa delivers on its potential in terms of mobile money, the winners will be those operators who have been ready to live with the risks involved in the business. For consumers, mobile banking is a terrific way to efficiently manage the occasional administrative task on the go. For small and mid-size business owners, mobile banking gives them the precious gift of time.
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