An IDEA, whose time has come!!!! Mobile Banking


Dear Investor

Ten years ago, online banking leapt from nice-to-have status to must-have. In hindsight, it’s pretty obvious why it became so popular, but at the time there were still questions as to if and when it would break out into its own “channel,” on par with telephone and in-branch delivery.

Today, we are at a similar point in the development of mobile banking. The adoption curve of mobile banking in the next 10 years will look a lot like the 1995-to-2004 take-up of online banking.

However, there is a huge difference. With higher penetration than internet and broadband, Mobile banking offers a lot more potential, especially in the developing countries. With voice prompts and text-to-voice capabilities it seems only a little while when one-button mobile banking will be the industry standard.

What is Mobile banking?

Mobile banking facilitates you to avail all financial transactions through mobile.

In practical terms, you would no longer require debit and credit cards. Instead, you can swipe your mobile for payments.

Over the last few years, banks have developed various services that are available using mobile phones. These services have evolved from alerts to wireless application protocol (WAP)-based mobile banking:

· Alerts: Bank customers receive short message service (SMS) alerts on their mobile devices when there is a credit or debit over a certain amount in their account.

· SMS banking: Bank customers can check their account balances or last few transactions by sending an SMS to their bank.

· Mobile banking: Customers, using a GPRS-capable handset, can visit a WAP banking site to access their accounts and perform transactions from their devices.

The next generation of services poised to significantly change the banking business is mobile payments. This industry-altering technology is based on NFC(near field communication ), a communication technology similar to radio frequency identification (RFID), which is already being used in proximity cards, including PayPass from MasterCard.

These smart cards have memory on the secure chip and can be used for

making transactions by swiping the card over a merchant’s point-of-sale (POS) reader.

This same technology is now being integrated into mobile phones, allowing users to make payments by simply swiping their mobile phone over a POS machine reader.

Mobile users can also view their balances and transactions on multiple payment cards stored in the secure chip of their mobile phones. They can store multiple loyalty cards, load coupons and make payments using those loyalty cards and coupons.

The advantages of this are the ease of use and security. The handset can be locked and the mobile wallet on the handset can be configured with an optional personal identification number (PIN) or biometrics access. Users can also set up a PIN for

transactions above a certain amount. Moreover, these handsets can be configured over the air (OTA) by the bank and can also be suspended OTA if the handset is lost or stolen.

Sample NFC Trials Showing High Consumer Acceptance

NFC Trial Members Results Reference
London, UK




Transport for

London, TranSys,

Barclaycard, Visa

Europe, Nokia and

AEG, Venyon with

500 users

Over two-thirds of users

said that they would be

interested in having the

Barclaycard Visa payWave

feature on their mobile in

the future.


San Francisco,


January 2008-

May 2008

Sprint, Bay Area

Rapid Transit and

Jack in the Box, using

Samsung A920

More than 80% of trial

participants indicated that

the m-wallet application was

easy to use.





Philips Arena,

Atlanta, US



Nokia, Cingular

(AT&T), Chase

and Santa Clara’s


Trial participants fully

embraced the technology

and indicated that they

would like to use their

mobile devices for payment

at a variety of merchant












FeliCa based


with over 30 million


Over 93% of m-wallet users

in Japan were in favour of

using mobile wallets.

FeliCa Division, Sony,

October 2008

Courtesy Infosys Technologies

There have been many trials across the world to test the viability and consumer acceptance of mobiles as a payment form factor. All the trials (see Figure 1) have shown high consumer acceptance of mobile payments. Many banks, payment processors, technology vendors and device manufacturers are already working in earnest to be first to offer payments through mobile devices..

Why Mobile Banking?

India’s mobile phones will reach more than the targeted half billion people by the end of 2010 or 60 per cent of the tele-density, going by the country’s telecom ministry estimates. On the contrary, despite six decades of banking nationalization, denationalization and technological upgradation, India has failed to reach at least half the number telecom has reached in terms of providing financial access to the unbanked millions.

AAM AADMI agenda is on political cards. Apart from that India’s 50% population is out from financial services reach.

Govt wants to ensure that all financial transactions are channelled through banking route. This will reflect true economic picture, will increase govt tax revenue, rural and semi urban population will get benefits of financial services and benefits of subsidy and welfare programs can reach directly to the recipient.

But this requires Bank account. For banks, to open a branch in villages and Tehsils is not a viable option.

Mobile phones have reached to far remote areas, too. If, this service can be leveraged. Goal of financial inclusion can be achieved at less cost.

This is not an imagination; mobile banking has been implemented successfully in some parts like

In Andhrapradesh:

Thousands of people from rural areas across 12 states are likely to get their social security pension and wages paid under the National Rural Employment Guarantee Act (NREGA) scheme with the help of mobiles over the coming few months.

In Andhra Pradesh alone, for instance, 250,000 people have registered for mobile banking services. The state government is rolling out a programme to enroll three million people by the end of 2008.

Mobile banking pilots and full-scale operations are being conducted across 12 states, and the entire ecosystem is being managed by the government with the help of the Reserve Bank of India, banks, leading telecom operators and technology implementation partners.

The ecosystem is important since banking regulations in India currently do not allow cash for exchange of another ‘unit’ such as ‘airtime’ in the case of mobiles. Only banks and the Indian Post (through money orders) are currently allowed such transfers.

Mobile banking, which is catching up fast in the cities and hinterland, is not only helping the government to take a step forward towards fulfilling its aim of having one bank account for every household, but also saving it crores of rupees by way of reduced transaction costs.

While the government incurs a transaction cost of Rs 12-13 for every Rs 100 it shells out, mobile banking helps it reduce the cost to a mere Rs 2. RBI estimates that around 40 per cent of Indians lack access to formal financial services and are largely ‘unbanked’

Reliance Communications on its part, allows ICICI Bank account holders with Reliance handsets (even the low-end Rs 1,000 ones – with or without Internet connectivity) to make intra-bank (to ICICI account holders) money transfers. It has already tied up with HDFC to offer Reliance mPay – a virtual credit card

Why Banks prefer mobile banking?

Mobile Banking is the key area of development in the banking sector and is expected to replace the credit/debit card system in future. In past two years, use of mobile banking has increased three times. Nearly 85-90% mobile users do not own credit cards and there is at least 36% of population who are literate but have mobile phones, though they have no access to credit. This is the potential market that would benefit from mobile banking solutions.

Mobile banking has cost-saving advantages for banks and also it has proved the key to financial inclusion, said ICICI Bank official at Mobiles and Money India conference hosted at the Trade Centre (Mumbai).

“Mobile and internet banking can bring down costs by 98%. ,” stated by the official . 200 million mobile phone users in India do not have a bank account. The significant rural penetration of mobile phones can further be leveraged to draw additional customers into the banking space,” he added.

Further he added that, “servicing a customer, at a branch, who has has low amount of savings or transactions , is not economical. Banks see a huge opportunity in mobile banking space area and we are exploring a viable way forward.”

Has mobile banking been implemented successfully elsewhere?

In 2002, a successful pilot project was run to use mobile as Debit card.

April 30, 2002 | E-mail article link |

Mobile phone withdraws cash from Danish ATM

AALBORG, Denmark — Now here’s a pilot project that should catch the attention of everybody in the travel and hospitality industries. If a mobile phone can be used to withdraw cash from a bank’s automated teller machine with all the security and encryption that that entails, how much of a leap can it be before wireless handheld devices are used for airline boarding passes, keyless hotel entry, and many other applications?

NCR Corporation, AU-System and beamtrust a/s have started a pilot project enabling consumers to obtain cash from a traditional automated teller machine (ATM) using a mobile phone. The live pilot project is taking place in Denmark and involves cash withdrawals from three ATMs owned by Spar Nord Bank and Laan & Spar Bank. The three companies involved in the project are calling it a “world first.”

The consumer can initiate the transaction process prior to approaching the ATM, choosing the transaction type, amount of cash and account details. At the ATM, the consumer enters the security personal identification number into the mobile phone and the transaction details are transmitted to the ATM. The ATM processes the transaction and dispenses the cash.

In Japan, it has been implemented successfully.

Mobile phone becomes ATM card in Japan

Japanese telco NTT DoCoMo is to release a mobile phone that doubles as an ATM cash card.

The service will allow people to withdraw and deposit money at machines in convenience stores and supermarkets using thier phones instead of cash cards.

The scheme has been developed in partnership with IY Bank, a unit of retailer Ito-Yokado..

The high-speed i-Mode 504i handsets contain a chip on which account information can be stored and transferred through an infrared port.

IY Bank said that it aims to launch the service, tentatively named Mobile Cash Card, by the middle of next year.

DoCoMo began a service last summer in co-operation with Coca-Cola Japan that allows people to buy drinks at vending machines using their phones.

In Hong Kong a system that allows users to buy products using a chip in their mobile phone has had some success

LG has implemented mobile banking successfully in Soutkorea couple years before.

What about Government and Regulatory support?

Prime Minister

Expand mobile banking to poor: PMO tells DoT

8 Sep 2009, 0014 hrs IST, G Ganapathy Subramaniam, ET Now

The Prime Minister’s Office (PMO) has asked the department of telecommunications (DoT) to find ways to expand mobile banking services to take

financial services to the remotest corners of the country.

The UPA government is keen to ensure that the poor with mobile phone connections can carry out a financial transaction through it, including receipt of wages and payments, even if they do not have a bank account.

The DoT has been asked to set up a committee that will study the authentication requirement necessary for expanding mobile banking services rapidly. The panel will also work on application of know-your-customer (KYC) norms to mobile banking customers in far-flung areas. The committee will also study mobile payment systems in other countries to adopt best practices to spruce up the Indian mobile banking system, the officials said

Prime minister Manmohan Singh places a lot of lot emphasis on financial inclusion and mobile banking has now become a key focus of this aspect of UPA’s thinking, the officials said. In view of the political consequences, this social sector initiative is likely get the backing of the political leadership too. The government may treat expansion of mobile banking as a national priority, the officials said

IT department

IT dept lends support to M-banking

30 Nov 2009, 0118 hrs IST, Harsimran Singh, ET Bureau

New Delhi: Even as the ministry of home affairs and RBI have expressed their concerns about opening up mobile banking, the department of IT came out

in its support on Friday. “Provided security concerns are addressed, I am of the view that restrictions on M-banking should be lifted. M-governance and small utility bill payments can be introduced through mobile phones. It will improve service delivery to citizens,” DIT secretary R Chandrashekhar

MUMBAI: The Reserve Bank of India (RBI) has hiked the daily ceiling for banking transactions through mobile phones to Rs 50,000 — a significant jump

from the present cap of Rs 15,000. Mobile banking as defined by RBI refers to the facility, which enables bank customers access their accounts using an application on their mobile phone.

Mobile banking applications enable payments made from customer’s account through debit/credit on the basis of funds transfer instruction received over the mobile phones. RBI had capped daily funds transfer to Rs 5,000 and transactions involving purchase of goods or services to Rs 10,000. This limit is now consolidated into a single daily limit of Rs 50,000.

Speaking in a FICCI seminar in December, RBI deputy governor KC Chakrabarty had said banks had complained that the limit of Rs 5,000 does not permit transactions like purchase of air tickets through mobile banking and, thus this limits needs to hiked.

Recent Implementation!!!

Atom Technologies, part of FTIL group (Financial Technologies India Ltd) has launched atom Cards, a mobile wallet/card product that enables one to swipe the mobile phone to make payments, much like a credit card (source)


  • The credit card data will be stored in 2-D bar code format.
  • After the credit card data is burned on the mobile phone (this is irrespective of the operator, but in collaboration with the card-issuing bank), the handset can be used instead of credit cards
  • For making a purchase, all that you need to do is swap your mobile phone and provide the PIN number, just the way you do with your credit card.

To read the 2D-barcode, merchants would need a webcam (which can be obtained for as low as @ Rs. 200/)

As of now, the software will work only on Java enabled phones and Atom will provide the software free of cost to banks, merchant establishments and customers, but will levy a percentage of the transactions as its fee.

Atom is currently doing a pilot study with Axis bank (and it’s customers) and is in advanced stages of tying with other banks. As far as mobile wallet service is concerned, RBI is yet to give it’s nod on the service.

Who will benefit from Mobile banking?

Mobile operators


Technology partners

Mobile manufacturers


For Details of How to use mobile banking, Economic times below link would be useful.


Even Pakistan is in process of implementing Mobile Banking? !!!!

Pakistan’s central bank, telecom authority join hands to enhance mobile banking


Investment Academy | Baroda | 09825528815
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13 responses »

  1. I have been posting here for long, I did find this post really worth of publishing to another forums and share with other friends, well I do it on your permission, coz I think this will help several other webmasters as well. If you will like this to shared on other forums as well, I will really like to help. I will post it with your name to make your work really help full for you as well! Keep up the good work, post more topics like this and I know the forum will really be proud of their best resources.

    • Dear Nasturi

      You can post my articles on other forums. Pl mention organisation name Investment Academy and mine as Author.


  2. I just registered and tested sending SMS and calling (from an austrian mobile phone) – didn’t costed anything too the web site displays rates for what I did. Will keep utilising it as I did for a lengthy time with different services by the same provider (voipbuster, voipstunt)

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