What is Mobile banking ?

Mobile banking (also known as M-Banking, mbanking, SMS Banking) is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or Personal Digital Assistant (PDA). The earliest mobile banking services were offered over SMS.

Many believe that mobile users have just started to fully utilize the data capabilities in their mobile phones. In Asian countries like India, China, Bangladesh, Indonesia and Philippines, where mobile infrastructure is comparatively better than the fixed-line infrastructure, and in European countries, where mobile phone penetration is very high (at least 80% of consumers use a mobile phone), mobile banking is likely to appeal even more.





Mobile banking services
Mobile banking can offer services such as the following:
Account information

•     Mini-statements and checking of account history
•     Alerts on account activity or passing of set thresholds
•     Monitoring of term deposits
•     Access to loan statements
•     Access to card statements
•     Mutual funds / equity statements
•     Insurance policy management
•     Pension plan management
•     Status on cheque, stop payment on cheque
•     Ordering cheque books
•     Balance checking in the account
•     Recent transactions
•     Due date of payment (functionality for stop, change and deleting of payments)
•     PIN provision, Change of PIN and reminder over the Internet
•     Blocking of (lost, stolen) cards

Payments, deposits, withdrawals, and transfers

•     Domestic and international fund transfers
•     Micro-payment handling
•     Mobile recharging
•     Commercial payment processing
•     Bill payment processing
•     Peer to Peer payments
•     Withdrawal at banking agent
•     Deposit at banking agent

A specific sequence of SMS messages will enable the system to verify if the client has sufficient funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. When depositing money, the merchant receives cash and the system credits the client's bank account or mobile wallet. In the same way the client can also withdraw money at the merchant: through exchanging sms to provide authorization, the merchant hands the client cash and debits the merchant's account.

Investments

•     Portfolio management services
•     Real-time stock quotes
•     Personalized alerts and notifications on security prices

Support

•     Status of requests for credit, including mortgage approval, and insurance coverage
•     Check (cheque) book and card requests
•     Exchange of data messages and email, including complaint submission and tracking
•     ATM Location

Content services

•     General information such as weather updates, news
•     Loyalty-related offers
•     Location-based services

Security

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 :

•     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.
•     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.
•     Authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions.
•     User ID / Password authentication of bank’s customer.
•     Encryption of the data being transmitted over the air.
•     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[7]. 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.

The Benefits of Mobile Banking

• Banking on the Go

    When you are traveling, you may not have access to a bank or ATM machine. However, if you have a cell phone, you may be able to set up mobile access for your bank account so that you can check your balance and transfer funds while on the road.

• Account Notification

    You may also be able to set up your mobile account to notify you on your cell phone when funds have been added to your account, and when money has been deducted.

• Account Security

    You can also check your bank account on your cell phone for unauthorized transactions, to avoid coming home from a long trip to discover that you have been a victim of fraud.

• Paying Bills

    You can also access your bank account from a cell phone to pay your bills, such as utilities, credit card payments, and car insurance.

• Security

    Cell phone-based banking encrypts your information, and for added security, this service must be set up from a computer. The phone also stores only limited personal banking information, in case the phone is lost or stolen.

source: wikipedia