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FUTURE OF MOBILE BANKING IN INDIA

Hidayatullah National Law University, Naya Raipur,

Chhattisgarh

Economics Project

Submitted to; Submitted by

Mrs. Eritriya Roy Sourav kumar verma

Faculty of Economics Sem- 1, Sec- A.

Roll no. - 148

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Declaration

I hereby declare that this research work titled ‘Future of mobile banking in india’ is my own
work and represents my own ideas and where others’ ideas or words have been included, I
have adequately cited and referenced the original sources.

I also declare that I have adhered to all the principles of academic honesty and integrity and
have not misrepresented or fabricated or falsified any idea/data/fact/source in my submission.

.……………………………

Sourav kumar verma

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ACKNOWLEDGEMENTS

It gives me immense pleasure to write this project “future of mobile banking in india
Firstly, thanks to the Almighty who gave me the strength and determination to put all my
endeavours into this work.

Secondly, I’d like to thank our Economics faculty, Eritriya Ma’am for allotting such an
enlightening topic and for all the help and co-operation extended by her in helping scrutinize
the same.

Thirdly, I’d like to thank my parents and friends for all their constant support without which
this venture would not have been possible.

Last but not the least, I would like to thank the Library staff and my respected seniors for
extending their help in finding the relevant books and articles required for the work.

Sourav kumar verma

Sem-1, Sec-C
Roll no. – 148
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TABLE OF CONTENTS

S. Particulars Page
no.
no.

1 Declaration I

2 Acknowledgements Ii

3 Introduction 1

4 Objectives 2

5 Research Methodology 2

6 Chapter 1 3

7 Chapter 2 4

8 Chapter 3 5

9 Chapter 4 7

10 Chapter-5 9

11 Chapter-6 10

12 Chapter-7 13

13 Conclusion 16

14 Refrence 18
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INTRODUCTION

M-commerce is the fast emerging concept of e-commerce which provides various e-

services on mobile devices. Now a days, increase in number of wireless internet subscribers
and smart-phone users, m-commerce is rapidly adopted technology in the world. Through m-
commerce people are enjoying various m-services such are M-agriculture, M-education, M-
finance and M-shopping. In the recent past, banks have launched mobile websites and
banking apps for providing their services through mobile. Mobile banking (also known as M-
banking, SMS-banking) is a term used for performing banking transactions, payments, etc.
with mobile devices. The Global Mobile Banking Report found that m-banking is rapidly
adopted by new users and it is largest banking channel by volume of transaction. The most
interesting finding was that adoption rates are highest in developing countries reaching about
60-70% in India and China. The main reason of increasing in trend of m-banking is that it
helps to perform banking activities at anytime and anywhere. M-banking ensures customers
in clearing and settlement of transactions through nationwide and enabling real fund transfer
in any bank account and operated by users using mobile banking services of any operators.
The convenience of use of mobile, people can take advantage of banking services 24 hrs a
day and wherever he needs. It not only saves time for costumers but also reduce cost for
banks.

OBJECTIVES

This project seeks to answer the following questions.

1. What is mobile banking?

2.Steps taken by Indian government to increase mobile banking.

3. functionalities of mobile banking

4.challenges for mobile banking

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RESEARCH METHODOLOGY

This project work has been carried out following the descriptive and analytical approach. It
provides a deep approach into the topic of future of mobile banking in india and further
scrutinizes all the aspects of the same. Books and other references (including various
websites) were primarily helpful for the completion of this project. Footnotes have been
provided wherever necessary
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CHAPTER-1

WHAT IS MOBILE BANKING

Mobile banking is a service provided by a bank or other financial Instution that
allows its customers to conduct financial transaction
remotely using a mobile device such as a smartphone or tablet Unlike the
related internet banking it uses software, usually called an app, provided by the
financial institution for the purpose. Mobile banking is usually available on a
24-hour basis. Some financial institutions have restrictions on which accounts
may be accessed through mobile banking, as well as a limit on the amount that
can be transacted.
Transactions through mobile banking may include obtaining account balances
and lists of latest transactions, electronic bill payments, and funds
transfers between a customer's or another's account1s. 1 Some apps also enable
copies of statements to be downloaded and sometimes printed at the customer's
premises; and some banks charge a fee for mailing hardcopies of bank
statements.
From the bank's point of view, mobile banking reduces the cost of handling
transactions by reducing the need for customers to visit a bank branch for non-
cash withdrawal and deposit transactions. Mobile banking does not handle
transactions involving cash, and a customer needs to visit an ATM or bank
branch for cash withdrawals or deposits. Many apps now have a remote option;
using the device's camera to digitally transmit cheques to their financial
institution.
Mobile banking differs from mobile payments which involves the use of a
mobile device to pay for goods or services either at the point of sale or remotely
(mobile banking overview, 2009)2, analogusly to the use of a debit or credit card
to effect an EFTPOS Payment.

1
The statistics portal,usage of mobile banking worldwide,www.statista.com
2
https://home.kpmg.com/ge/en/home.html
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HISTORY OF MOBILE BANKING

CHAPTER -2

The earliest mobile banking services used SMS a service known as SMS banking
With the introduction of smart 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.3
Mobile banking before 2010 was most often performed via SMS or the mobile
web. Apple'sinitial success with iPhone and the rapid growth of phones based
on Google's Android (operating system) have led to increasing use of
special mobile apps, downloaded to the mobile device. With that said,
advancements in web technologies such as HTML5, CSS3and JavaScript have
seen more banks launching mobile web based services to complement native
applications. These applications are consisted of a web application module
in JSPsuch as J2EE and functions of another module J2ME4.
A recent study (May 2012) by Mapa Research suggests that over a third of
banks have mobile device detection upon visiting the banks' main website. A
number of things can happen on mobile detection such as redirecting to an
app store, redirection to a mobile banking specific website or providing a menu
of mobile banking for the user to choose from.In india it was started in 2002
when transcations carried through SMS.ICICI bank was the first bank to launch
full fledged mobile banking in 2008 known as I mobile platform.

3
https://web.archive.org
4
Proceedings of Fourth International Conference on Soft Computing for Problem Solving: SocProS 2014,
Volume 2. Heidelberg: Springer.
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CHAPTER-3

STEPS TAKEN BY INDIAN GOVERNMENT

1.BY LAUCHING APPS-Almost all the banks and private tech companies
launched their apps for mobile banking and also providing incentives on
transcations .For ex-Sbi has lauched SBI anywhere personal application for
mobile banking.Others such as Paytm ,phone pe ,Bhim,
2.UPI-Unified Payments Interface (UPI) is a system that powers multiple bank
several banking features, seamless fund routing & merchant payments into one
hood. It also caters to the “Peer to Peer” collect request which can be scheduled
and paid as per requirement and convenience. Each Bank provides its own UPI
App for Android, Windows and iOS mobile Platforms.
3.PAYMENT BANKS-Payments banks is a new model of banks
conceptualised by the Reserve Bank of India (RBI). These banks can accept a
restricted deposit, which is currently limited to ₹1 lakh per customer and may be
increased further. These banks cannot issue loans and credit cards. Both current
account and savings accounts can be operated by such banks. Payments banks
can issue services like ATM cards, debit cards, net-banking and mobile-
banking. Bharti Airtel set up India's first live payments bank.Paytm was the
second company to launch payment bank.Currently there are six payment bank
in india
4.INCENTIVES-Government provides incentives on mobile payment which
encourage customers to opt for mobile banking like giving incentives on
petrol,railway ticket, movie ticket,accidental insurance on all railway ticket upto
10 lakh.
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CHAPTER-4
MOBILE BANKING SERVICES

Typical mobile banking services may include:

Account information

1. Mini-statements and checking of account history

2. Alerts on account activity or passing of set thresholds
3. Monitoring of term deposits
4. Access to loan statements
5. Access to card statements
6. Mutual funds / equity statements
7. Insurance policy management

Transaction

1. Funds transfers between the customer's linked accounts

2. Paying third parties, including bill payments and third party fund
transfers(see, e.g., FAST)
3. Check Remote Deposit
Investments

1. Portfolio management services

2. Real-time stock
Support

1.Status of requests for credit, including mortgage approval, and insurance

coverage

2.Check (cheque) book and card requests

3.Exchange of data messages and email, including complaint submission

and tracking
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4.ATM Location

Content services

1. General information such as weather updates, news

2. Loyalty-related offers
3. Location-based services
A report by the US Federal Reserve (March 2012) found that 21 percent of
mobile phone owners had used mobile banking in the past 12 months.5 Based
on a survey conducted by Forrester, mobile banking will be attractive mainly to
the younger, more "tech-savvy" customer segment. A third of mobile phone
users say that they may consider performing some kind of financial transaction
through their mobile phone. But most of the users are interested in performing
basic transactions such as querying for account balance and making bill.

5
https://www.federalreserve.gov/econresdata/mobile-device-report-201203
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CHAPTER-5
FUTURE FUNCTIONALITIES IN MOBILE BANKING

Based on the 'International Review of Business Research Papers' from World

business Institute, Australia, following are the key functional trends possible in
world of Mobile Banking. With the advent of technology and increasing use of
smartphone and tablet based devices, the use of Mobile Banking functionality
would enable customer connect across entire customer life cycle much
comprehensively than before.
Illustration of objective based functionality enrichment In Mobile Banking:

 Communication enrichment: - Video Interaction with agents, advisors.

 Pervasive Transactions capabilities: - Comprehensive “Mobile wallet”
 Customer Education: - “Test drive” for demos of banking services
 Connect with new customer segment: - Connect with Gen Y – Gen Z using
games and social network ambushed to surrogate bank’s offerings
 Content monetization: - Micro level revenue themes such as music, e-book
download
 Vertical positioning: - Positioning offerings over mobile banking specific
industries
 Horizontal positioning: - Positioning offerings over mobile banking across all
the industries
 Personalization of corporate banking services: - Personalization experience
for multiple roles and hierarchies in corporate banking as against the vanilla
based segment based enhancements in the current context.
 Build Brand: - Built the bank’s brand while enhancing the “Mobile real
estate”
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CHAPTER-6

Challenges for a mobile banking solution

Key challenges in developing a sophisticated mobile banking application
are :
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Handset accessibility
There are a large number of different mobile phone devices and it is a
Toolkit, a WAP browser, or only SMS.
Initial interoperability issues however have been localized, with countries like
India using portals like "R-World" to enable the limitations of low end java
based phones, while focus on areas such as South Africa have defaulted to
the USSD as a basis of communication achievable with any phone.
The desire for interoperability is largely dependent on the banks themselves,
where installed applications(Java based or native) provide better security, are
easier to use and allow development of more complex capabilities similar to
those of internet banking while SMS can provide the basics but becomes
difficult to operate with more complex transactions.
There is a myth that there is a challenge of interoperability between mobile
banking applications due to perceived lack of common technology standards
for mobile banking. In practice it is too early in the service lifecycle for
interoperability to be addressed within an individual country, as very few
countries have more than one mobile banking service provider. In practice,
banking interfaces are well defined and money movements between banks
follow the IS0-8583 standard. As mobile banking matures, money movements
between service providers will naturally adopt the same standards as in the
banking world.
In January 2009, Mobile Marketing Association (MMA) Banking Sub-
Committee, chaired by CellTrust and VeriSign Inc., published the Mobile
Banking Overview for financial institutions in which it discussed the advantages
and disadvantages of Mobile Channel Platforms such as Short Message
Services (SMS)
Mobile Web, Mobile Client Applications, SMS with Mobile Web and Secure
SMS.
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SECURITY
As with most internet-connected devices, as well as mobile-telephony
devices, cybercrime rates are escalating year-on-year. The types of cybercrimes
which may affect mobile-banking might range from unauthorized use while the
owner is using the mobile banking, to remote-hacking, or even jamming or
interference via the internet or telephone network data streams. This is
demonstrated by the malware called smszombie, which infected Chinese
Android devices. It was embedded in wallpaper apps and installed itself so it
can exploit the weaknesses of China Mobile SMS Payment system, stealing
banks credit card numbers and information linked to financial
transactions6. One of the most advanced malwares discovered recently was
the Trojan called Bankbot. It went past Google's protections in its Android app
marketplace and targeted Wells Fargo, Chase and Citibank customers on
Android devices worldwide before its removal by Google in September
2017.7 This malicious app was activated when users opened a banking app,
overlaying it so it can steal banking credentials.8
In the banking world, currency rates may change by the millisecond.
Security of financial transactions, being executed from some remote location
and transmission of financial information over the air, are the most
complicated challenges that need to be addressed jointly by mobile application
developers, wireless network service providers and the banks' IT departments.
The following aspects need to be addressed to offer a secure infrastructure for
financial transaction over wireless network :

1. Physical part of the hand-held device. If the bank is offering smart-card

based security, the physical security of the device is more important.
2. Security of any thick-client application running on the device. In case the
device is stolen, the hacker should require at least an ID/Password to
access the application.
3. Authentication of the device with service provider before initiating a
transaction. This would ensure that unauthorized devices are not
connected to perform financial transactions.
4. User ID / Password authentication of bank’s customer.

6
. Automated Enterprise Systems for Maximizing Business Performance. Hershey, PA: IGI Global.
7
. Danny palmer, www.zdnet.com/article/bankbot-android-malware-sneaks-into-the-google-play-store-for-the-
third-time
8
Chris brook, https://digitalguardian.com/blog/mobile-banking-trojan-bankbot-identified-removed-google-play
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5. Encryption of the data being transmitted over the air.

6. Encryption of the data that will be stored in device for later / off-line
analysis by the customer.
One-time password (OTPs) are the latest tool used by financial and banking
service providers in the fight against cyber fraud 9 Instead of relying on
traditional memorized passwords, OTPs are requested by consumers each time
they want to perform transactions using the online or mobile banking
interface. When the request is received the password is sent to the consumer’s
phone via SMS. The password is expired once it has been used or once its
scheduled life-cycle has expired.
Because of the concerns made explicit above, it is extremely important
that SMS gateway providers can provide a decent quality of service for banks
and financial institutions in regards to SMS services. Therefore, the provision
of service level agreements (SLAs) is a requirement for this industry; it is
necessary to give the bank customer delivery guarantees of all messages, as
well as measurements on the speed of delivery, throughput, etc. SLAs give the
service parameters in which a messaging solution is guaranteed to perform.

CHAPTER-7

FUTURE SCOPE OF MOBILE BANKING

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https://web.archive.org/web/20110714104955/http://www.mobilepaymentsworld.com/mobile-payments/issue-
pdfs/
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india is headed for an exponential increase in digital payments over the

next four years, according to a new study by Google (Alphabet Inc.) and
Boston Consulting Group released on Monday.

The digital payments industry in india will grow by 10 times to touch $500
billion by 2020 and contribute 15% of gross domestic product (GDP), the report
predicted.

Ever-increasing penetration of smartphones, the entry of several non-banking

institutions offering payment services, consumer readiness to adopt digital
payments, progressive changes in the regulatory framework will power the
trend, it said.

“Spurred by smartphone penetration, and supported by progressive regulatory

policy, the digital payments industry is at an inflection point and is set to grow
10x by 2020,

“It is telling that half of India’s Internet users will use digital payments and that
the top 100 million users will drive 70% of the GMV (gross merchandise
value)—a clear indicator of the growing importance of the digital consumer.

The contribution of non-cash modes of payments, i.e. cheques, demand drafts,

net-banking, credit/debit cards, mobile wallets and unified payment interface
(UPI), is seen doubling to 40% of the consumer payments segment by 2020.

Non-cash transactions will exceed cash transactions in the economy by 2023,

the report forecast.

The trends should benefit a plethora of start-ups in the digital payment space
as well as traditional banks, promote online commerce and boost financial
inclusion in India.
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Online shopping, utility bill payments and movie ticket purchases were
identified as the top three services for which Indian users make digital
payments.

Online payments through digital wallets and debit/credit cards have been

emerging as a preferred transaction mode over the past few years, mainly due
to the ease of transaction, availability of smartphones and affordable Internet,
and enhanced security and encryption methods, which led to greater
confidence among customers.

Online ticketing firms, such as IRCTC (railways), Makemytrip, Yatra, Cleartrip

(airlines), redBus and Abhibus (buses) and Bookmyshow (movie and event
ticketing) also played a crucial role in giving a leg-up to digital payments by
getting customers to transact online.

Digital transactions began booming after the advent of e-commerce firms, such
as Flipkart, Snapdeal, Amazon, Myntra, Jabong and others, that began offering
attractive discounts to woo customers. As smartphone penetration increased
in the country, mobile wallet companies, such as Paytm (One97
Communications Ltd), Mobikwik (One Mobikwik Systems Pvt Ltd), Oxigen
Services (India) Pvt. Ltd, Citrus Payment Solutions Pvt. Ltd, Freecharge and
others, sought to make life easier for consumers by encouraging them to store
money in their online wallets to transact more easily.

Convenience has emerged as the most important factor that is driving this
growth, followed by availability of offers, while opting for digital payment
methods, the report noted, adding that Indian consumers are 90% as likely to
use digital payments for both online and offline transactions.

Some digital wallet firms such as PayTm, Mobikwik and Freecharge are now
encouraging their customers to transact using their mobile devices at select
local grocery stores, restaurants and petrol filling stations in the offline world.
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These offline points of sale will contribute to 60% of digital payments

eventually, the report said.

But ensuring universal acceptance of digital payment methods and reliable

speed of transactions during peak hours are two key concerns highlighted by
merchants which could inhibit their growth and usage.

The Indian digital payments story will be dominated by micro-transactions,

which will form a substantial portion of the industry. Over 50% of person-to-
merchant transactions are expected to be under Rs.100.
The report predicts that the value of remittances and money transfers that will
pass through alternate digital payment instruments will double to 30% by 2022

“With mobile becoming ubiquitous, these transactions will happen mobile-to-

mobile. As a result, most small payments, which either have a problem of time
or a problem of change, will actually move to mobile.10

CONCLUSION

Future of mobile banking is very bright and huge scope in our country.from the
above details we can conclude that at present ,a individual performes all his

10
Vishwanath nair,yogendra kalavalapallihttps://www.livemint.com/Industry//Digital-payments-in-India-seen-
touching-500-billion-by-2020
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transcation and got all service on phone,in future it roles is going to more
increase.

At the same time ,banks and digital wallet companies have to remove security
apprehension in the minds of people and also they try improve quality of
service.

Hence ,we can say it has a very promising future because nowdays people
prefer to use mobile banking.
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REFRENCE
1. www.statista.com
2. home.kpmg.com
3. web.archive.org
4. . ISBN 9788132222194
5. www.federalreserve.gov
6. www.zdnet.com
7. www.mobilepaymentsworld