Mobile Banking

1. Some analysts feel that online and mobile banking have changed the face of banking in India. Giving examples of some recent online or mobile banking initiatives in India or abroad, explain the advantages and risks associated with such initiatives. What steps can banks take to mitigate the risks of online/mobile banking?

Mobile Banking refers to provision and availment of banking- and financial services with the help of mobile telecommunication devices.The scope of offered services may include facilities to conduct bank and stock market transactions, to administer accounts and to access customised information. "Mobile banking is a market mandate for financial institutions.

Internet banking opened the banks 24/7, mobile banking extends that to

'right now, right here banking,'

Indian Banking sector consists of 75 % private operators and 25 % gov operators. Currently, India has 96 scheduled commercial banks (SCBs) - 27 public sector banks (that is with the Government of India holding a stake), 31 private banks (these do not have government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign banks.

There are 3 models or pillars on which mobile banking is based

Bank-focused model

The bank-focused model emerges when a traditional bank uses non-traditional low-cost delivery channels to provide banking services to its existing customers. Examples range from use ofautomatic teller machines (ATMs) to internet banking or mobile phone banking to provide certain limited banking services to banks' customers. This model is additive in nature and may be seen as a modest extension of conventional branch-based banking.

Bank-led model

The bank-led model offers a distinct alternative to conventional branch-based banking in that customer conducts financial transactions at a whole range of retail agents (or through mobile phone) instead of at bank branches or through bank employees.

In this model customer account relationship rests with the bank

Non-bank-led model

The non-bank-led model is where a bank does not come into the picture (except possibly as a safe-keeper of surplus funds) and the non-bank (e.g. telco) performs all the functions

The Indian Banking Sector passed through a difficult period during the past year. Deposit and Credit growth of banking system at 19.8 percent and 17.3 percent .

The credit deposit ratio at about 72 percent as on March 2009 was also lower as compared to 73.9 percent as of March,2008.

Hence banking sector penetration is of utmost importance for the economy. The Ideal way of expanding the banking services is through mobile . The number of mobile subscribers in India is expected to grow from just over 10 crore to more than 35 crore by 2010.

Mobile Banking Services

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

8. Pension plan management

9. Status on cheque, stop payment on cheque

10. Ordering check books

11. Balance checking in the account

12. Recent transactions

13. Due date of payment (functionality for stop, change and deleting of payments)

14. PIN provision, Change of PIN and reminder over the Internet

15. Blocking of (lost, stolen) cards

Hence the face of banking in India has changed.

Many banks like SBI launched its m-banking services in India. Today