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It is my pious duty to make grateful acknowledgement of the assistance and guidance. I have obtained in the course of preparing this project work.I take this opportunity to express my heartiest gratitude to Prof. Mr. Rajesh Timane who has rendered me his invaluable guidance towards preparation of this work. I extended my regards towards our Director Dr. B. B. Taywade and Mr. Mukul Burghate and our faculty for their help and encouragement. Last but not the least I thank people of the world, who have help me for this project.

Nagpur Date:18-Jan-2011

Dhammadip Motghare Researcher

Analysis of SMS & Mobile Banking services used by Financial & Banking Services


INDEX Sr.N o 1. 2. Chapters Introduction Mobile Banking & SMS Banking I. II. III. IV. 3. Mobile Banking Background Mobile Banking Services SMS Banking Services Mobile & SMS Banking Technology Page No 9 12 13 15 17 21 25 27 28 29 30 M31 36 38 39 40 41 43 44 45 46 54 56 58 60

Mobile Banking in India I. II. III. IV. Indian Scenario Growth Trends Most Popular Services & Banks Low up-take of M-Banking in India

4. 5.

Advantages, Disadvantages & Challenges for Banking Solutions Research Methodology I. II. III. IV. Objectives Hypothesis & Research Design Sample Plan & sample Size Sampling Methods


Data Collection I. II. Data Analysis Tools Limitations of study

7. 8. 9. 10. 11.

Data analysis & Interpretation of Data Findings Conclusion Bibliography Annexure


Analysis of SMS & Mobile Banking services used by Financial & Banking Services


Over the years has banking transcended from a traditional brick-and mortar model of customers queuing for services in the banks to modern day banking where banks can reach at any point for their services. In today's business, technology has been on the predominant indicators of growth and competitiveness. The banking industry today is in the midst of an IT revolution banking is the executive financial services, which provide speed & convenience to the customer & reduce the cost of transaction. The ever increasing speed of internet enabled phones & personal assistant, made the transformation of banking application to mobile devices, this creative a new subset of electronic banking i.e. mobile banking. In 1999 & 2000 mobile banking as an established channels, still seems to be a distant prospect. As a personalized end-user communication instrument, today mobile phones are perhaps the easiest channel on which customers can reach on the spot, as they carry the mobile phone all the time no matter where they are. Besides, the operation of SMS banking functionality over phone key instructions makes its use very simple. This is quite different from internet banking which can offer broader functionality, but has the limitation of use only when the customer has access to a computer and the Internet. This personalized services through mobile phones increase to find new ways and increase customer loyalty to add the value to this product and services. Mobile banking solution enables banks to offer the convenience of comprehensive anywhere anytime banking, using GPRS, WAP or SMS. It is a new technology, which provides more convenience to the customer & employee of bank.

Analysis of SMS & Mobile Banking services used by Financial & Banking Services


Banks also enables customers lifestyle needs by changing and increasing preference for speed and convenience are eroding the traditional affinity between customer and branch offices as a new technology disinter mediates traditional channels, delivering the value proposition hinges on owing or earning the customer interface and bringing the customer a complete solution which satisfies their needs. M-Banking is a new trend which provides the opportunity to build an incremental revenue stream by providing an ideal platform for extended application and services. Banks are well position to play central role unit in future M-commerce market. Banks have strong relationships with corporate and business customers and a wide experience in providing them with corporate banking services. The study has done on various banks in Nagpur city that offers Mobile-banking services, by interviewing & surveying through the different banks & financial institutes.

Analysis of SMS & Mobile Banking services used by Financial & Banking Services


Analysis of SMS & Mobile Banking services used by Financial & Banking Services


INTRODUCTION:Traditional banks offer many services to their customers, including accepting customer money deposits, providing various banking services to customers, and making loans to individuals and companies .Compared with traditional channels of offering banking services through physical branches, E-banking uses the Mobile & Internet to deliver traditional banking services to their customers, such as opening accounts, transferring funds, and electronic bill payment. Mobile Banking can offer by an existing bank with physical offices can and offer E-banking services to its customers in addition to the regular channel. Customer can access their bank account through the mobile, and provide premium services in addition to corebanking services including brokerage services & insurance. Mobile banking is provided to customer with or without extracost. Customers are attracted by the convenience of Mbanking through the Internet & mobile, and in turn, banks can operate more efficiently when customers perform transactions by themselves rather than going to a branch and dealing with a branch representative Mobile banking has the potential to bring a whole host of people that have no/little access to land lines /internet connections onto the electronic platform an innovative way to generate financial inclusion. To do so successfully will require customer training, technology stabilization and managing carefully the know your customer issues. Mobile-banking services are delivering to customer through the mobile, database server & GSM network. The database can be the same as the Core banking database, having another table for mobile banking users. The customer uses his/her mobile phones to transact through the mobile network. The Mobile banking server in turn talks to the Core

Analysis of SMS & Mobile Banking services used by Financial & Banking Services


banking systems of the bank for user processing transactions, authorization, etc.


Mobile banking also provides text-messaging capabilities, and a growing number are Web-enabled. That makes the mobile phone an ideal medium through which banks can deliver a wide variety of services. One of the main concerns of mobile banking is security. An effective approach to security involves a delicate trade-off between security and customer convenience. Often customers can perceive security requirements as an inconvenience. The bank offer identification & authentication, firewalls to ensure high level of security The Reserve Bank of India (RBI) will shortly come out with regulatory framework for mobile banking, with increasing number of banks going the electronic way. The guidelines issued by the Reserve Bank on Risks and Controls in Computers and Telecommunications vide circular DBS.CO.ITC.BC. 10/ 31.09.001/ 97-98 dated 4th February 1998 will apply mutatis mutandis to mobile banking.

Analysis of SMS & Mobile Banking services used by Financial & Banking Services


Mobile-Banking Background:-

Analysis of SMS & Mobile Banking services used by Financial & Banking Services


Mobile banking background builds on a history of innovations such as the automated teller machine. Mobile banking, or M-banking, which enables mobile phone users to access basic financial services even when they are miles away from their nearest branch or home computer. The internet banking came in the mid1990s, which enabled consumers to access their financial accounts using a home computer with an Internet connection.

Today, Internet banking has reached a critical mass. Yet banking at the living room computer still has some serious limitations. Less people have broadband Internet access, which is essential to efficient, convenient service & the biggest issue, however, is mobility. Even with a laptop, its almost impossible to stay connected in virtually any location on the planet.

This is not so with mobile phones. They can be carried anywhere and are -- by an enormous number of people. According to the Euronet mobile Banking Guide, there are currently close to 400 Mobile Operators in over 133 countries who are signing up 4 to 6 new customers every second. This implies that more people are going mobile like never before.

The telecommunications industry worldwide has scrambled to bring what is available to networked computers to mobile devices. The advances in network and device capabilities have enabled new features of mobile applications that could further increase their usability. Examples of services in M-banking category are e- wallet, mobile banking, bill payment, fund transfer etc, which can be done via the mobile device.

The applications are called mobile applications and they can be deployed on mobile devices as standalone modules or as a client communicating with a server via mobile web services, or other services such as that of short messages.

Analysis of SMS & Mobile Banking services used by Financial & Banking Services


These applications work on mobile phone and are a simple, secure and a fast way to transact 24x7 from the comfort of home, office or even from car. With SMS banking, convenience can be achieved 24hrs a day. This is because a user has access to his mobile phone all day, at all times. So, to effectively achieve a truly convenient banking mode, a truly mobile mode of banking has to be explored.

Mobile Banking:A financial transaction conducted by logging on to a bank's website using a cell phone, such as viewing account balances, making transfers between accounts, or paying bills. This can be conducted through the internet browser on the phone, through a program downloaded from your bank, or by text-message (SMS).

SMS Banking:SMS banking services of Bank allows customer to keep a watch on their account with a round the clock service. Every debit or credit in their account over a limit desired by them is intimate by SMS as and when they happen. Therefore, customers are always in a position to detect unauthorized access to their account.

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Mobile Banking:Mobile Banking

Mobile banking (also known as M-Banking, m banking, SMS Banking etc.) is a term used for performing balance checks, account transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today is most often perform via SMS or the Mobile Internet but can also use special programs called clients downloaded to the mobile device.

SMS banking is a technology-enabled service offering from banks to its customers, permitting them to operate selected banking services over their mobile phones using SMS messaging. Mobile Banking refers to provision and availment of bankingand 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 customized information.

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Mobile banking today is most often perform via SMS or the Mobile Internet but can also use special programs called clients downloaded to the mobile device. According to this model, Mobile Banking can be said to consist of three inter-related concepts:

1. Mobile Accounting2. Mobile Brokerage 3. Mobile Financial Information Services

Most services in the categories designated Accounting and Brokerage are transaction-based. The non-transaction-based services of an informational nature are however, essential for conducting transactions. The accounting and brokerage services are therefore offer invariably in combination with information services. Information services, on the other hand, may be offer as an independent module.

Mobile-Banking Services:-

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Mobile banking can offer services such as the following:

Account Information1. 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 cheque 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 15. Blocking of (lost, stolen) cards

Payments, Deposits, Withdrawals, and Transfers1. 2. 3. 4. 5. 6. 7. 8. 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

SMS Banking

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Short Message Service (SMS) is a communication service standardized in the GSM mobile communication system, using standardized communications protocols allowing the interchange of short text messages between mobile telephone devices. SMS text messaging is the most widely used data application on the planet, with 2.4 billion active users, or 74% of all mobile phone subscribers sending and receiving text messages on their phones. The SMS technology has facilitated the development and growth of text messaging. The connection between the phenomenon of text messaging and the underlying technology is so great that in parts of the world the term "SMS" is used as a synonym for a text message or the act of sending a text message, even when a different protocol is being used. SMS Banking is a Mobile technology that allows you to request and receive banking information from your bank on your mobile phone via Short message service (SMS). Individuals or corporate bodies can manage their bank accounts, check their account balances, perform check requests, money transfers, pay some bills, and perform other banking transactions using their mobile phones. There are two methods of SMS widely used in applications; they are the PUSH & PULL. Especially for clients in remote locations, it will be important to help them deposit and withdraw funds at banking agents, i.e., retail and postal outlets that turn cash into electronic funds and vice versa. The feasibility of such banking agents depends on local regulation, which enables retail outlets to take deposits, or not. 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.

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SMS-Banking Services:PUSH & PULL Services:

Push Services: Push SMS are those that the bank chooses to send out to a customer's mobile phone, without the customer initiating a request for the information. Typically push messages could be either Mobile marketing messages or messages alerting an event which happens in the customer's bank account, such as a large withdrawal of funds from the ATM or a large payment using the customer's credit card, etc. Push service is sending a message from an application (i.e. SMS Server in this case) to the Mobile Phone. It is a one-way message.

Typical push services would include: 1. Periodic account balance reporting (say at the end of month); 2. Reporting of salary and other credits to the bank account; 3. Successful or un-successful execution of a standing order; 4. Successful payment of a cheque issued on the account; 5. Insufficient funds; 6. Large value withdrawals on an account; 7. Large value withdrawals on the ATM or on a debit card; 8. Large value payment on a credit card 9. One-time password and authentication Pull Services:

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Pull SMS are those that are initiated by the customer, using a mobile phone, for obtaining information or performing a transaction in the bank account. Examples of pull messages for information include an account balance enquiry, or requests for current information like currency exchange rates and deposit interest rates, as published and updated by the bank. Pull messages is sending a request and obtaining a reply. This is a full duplex scenario where a user sends a request to the SMS banking application and the application replies with the information requested. An Example is when a user requests his bank account balance.

Typical pull services would include: 1. Account balance enquiry; 2. Mini statement request; 3. Electronic bill payment; 4. Transfers between customers own accounts, like moving money from a savings account to a current account to fund a cheque; 5. Stop payment instruction on a cheque; 6. Requesting for an ATM card or credit card to be suspended; 7. De-activating a credit or debit card when it is lost or the PIN known to be compromise; 8. Foreign currency exchange rates enquiry; 9. Fixed deposit interest rates enquiry. is

Mobile & SMS Banking Technology:Mobile banking software gives businesses the convenience of confirming payments, credits and reviewing account

Analysis of SMS & Mobile Banking services used by Financial & Banking Services 16

balance and transaction history all from their mobile phones. Mobile banking software offers a flexible and secure way to keep track of important business financial information at any time and from any location. While most mobile banking software providers allow limited activity, such as access to recent transactions and account balances, some are allowing users to transfer funds between accounts and pay bills. Consider the following tips to determine if mobile banking software is right for your business. 1. Stay connected to your bank around the clock with banking software. mobile

2. Use mobile banking software to avoid frequent trips to the bank. 3. Find mobile banking software services to meet your business needs. Example: India`s largest private sector lender ICICI Bank (Q, N,C,F)* launched iMobile, a unique mobile banking platform on mobile phones. iMobile is a platform wherein all internet banking transactions can be done on mobiles phones. Customers can now transfer funds to ICICI and non-ICICI Bank accounts just with the click of their mobile. Technologies enabling Mobile Banking Technically speaking most of these services can be deployed using more than one channel. Presently, Mobile Banking is being deployed using mobile applications developed on one of the following four channels. 1) IVR (Interactive Voice Response) 2) WAP (Wireless Access Protocol) 3) Standalone Mobile Application Clients 4) SMS (Short Messaging Service)

1) IVR (Interactive Voice Response) IVR or Interactive Voice Response service operates through prespecified numbers that banks advertise to their customers. Customer's

Analysis of SMS & Mobile Banking services used by Financial & Banking Services 17

make a call at the IVR number and are usually greeted by a stored electronic message followed by a menu of different options. Customers can choose options by pressing the corresponding number in their keypads, and are then read out the corresponding information, mostly using a text to speech program.

2) WAP (Wireless Access Protocol) :

WAP uses a concept similar to that used in Internet banking. Banks maintain WAP sites which customer's access using a WAP compatible browser on their mobile phones. WAP sites offer the familiar form based interface and can also implement security quite effectively. A WAP based service requires hosting a WAP gateway. Mobile Application users access the bank's site through the WAP gateway to carry out transactions, much like internet users access a web portal for accessing the banks services.

3) Standalone Mobile Application Clients

Standalone mobile applications are the ones that hold out the most promise, as they are most suitable to implement complex banking transactions like trading in securities. They can be easily customized according to the user interface complexity supported by the mobile. In addition, mobile applications enable the implementation of a very secure and reliable channel of communication.

One requirement of mobile applications clients is that they require to be downloaded on the client device before they can be

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used, which further requires the mobile device to support one of the many development environments like J2ME or Qualcomm's BREW. J2ME is fast becoming an industry standard to deploy mobile applications and requires the mobile phone to support Java. 4) SMS (Short Messaging Service) SMS uses the popular text-messaging standard to enable mobile application based banking. The way this works is that the customer requests for information by sending an SMS containing a service command to a pre-specified number. The bank responds with a reply SMS containing the specific information. The Short Message Service (SMS) is a GSM service to exchange text messages up to 140 byte (or 160 characters of 7 bit). The transmission of mobile-originated short messages is carried out by the short message service Center (SMSC) of the particular network operator. The SMSC is receiving the message from the mobile device and routing it to the destination device. For generating mobile-terminated short messages, it is possible that a Company or a special service provider runs an own SMSC. Thus, a bank could generate SMS from bank data like account balance or account movements and send it to the mobile device of the customer. This technique is used at SMS-banking. The customer sends an SMS with a request to the bank, and gets the desired data as an answer. The customer has to include a PIN for authorization in every SMS he sends to his bank. Alike the WAP banking, one should pay special attention on the security of the location of the SMSC. The operation of SMSC is offered as a service by many service providers. The usage of such a service is out of question for banks, because of the high sensitive character of the transmitted data.

SMS stands for Short Message Service; its

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a mobile technology that allows for sending and receiving text or even binary messages to and from a mobile phone. SMS use the GSM special signalling channel instead of the voice channel and is therefore a very reliable media channel. The SMS processing computer applications usually runs on corporate servers that are connected to the SMS network through specialized connectors and gateways connected to the SMS Centres of mobile operators. These servers are assigned short numbers instead of the traditional 10-digits mobile numbers.These numbers, also known as short codes are usually 4 to 6 digits long. These numbers are operator specific. Also, a premium fee (a fee other than the fixed rates for SMS) can be charges on these short codes; in other words, users would pay more for sending SMS to short codes. Due to the large number of users and the large amount of financial transactions expected to be carried out using SMS Banking, there is a need for methodologies of Knowledge Discovery and Data Mining (KDD). The SMS banking application should be able to effectively analyze all banking transactions. If data is successfully analyzed (mined) over a period of time, the bank can develop models that predict whether a customer is a good credit risk, the analysis can also be used to identify illegal money transfers and frauds. The Banking Agent receives the text messages from the clients, processes them and sends the output back to the users when applicable. Operations for SMS- Banking: There are a number of transactions that can be carried out using the SMS banking agent. Examples are, creating an account, checking account balances, transferring of funds and changing of pin code.

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Mobile Banking in India:

Mobile phones as a delivery channel for extending banking services have off-late been attaining greater significance. The

Analysis of SMS & Mobile Banking services used by Financial & Banking Services 21

rapid growth in user and wider coverage of mobile phone networks have made this channel an important platform for extending banking services to customers. With the rapid growth in the number of mobile phone subscribers in India, banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services.

Some banks have started offering information based services like balance enquiry, stop payment instruction of cheques, transactions enquiry, and location of the nearest ATM/branch etc. In order to ensure a level playing field and considering that the technology is relatively new, reserve bank has brought out a set of operating for adoption by banks.

The Reserve Bank of India (RBI) has been trying to push mobile banking in a big way across the country as a medium for financial inclusion. However, due to lack of a regulatory framework, clear guidelines and security, bankers are treading with caution. They feel that in case of a fraudulent activity in any mobile banking transaction, they would be held accountable.

Mobile banking allows the user to log into his or her account from a cell phone, and then use the phone to make payments, check balances, transfer money between accounts, notify the bank of a lost or stolen credit card, stop payment on a check, receive a new PIN, or view a monthly statement, among other transactions.

Indian Scenario:

In India, out of the 32 banks that have been given approval to provide mobile banking facilities, only 21 have started providing these services. Most Indian banks offer mobile banking facilities. RBI has cautiously encouraged the trend with guidelines on mobile banking with putting in place Rs 5000/- limit on withdrawals which is now extended to Rs50,000/via a mobile banking transaction.

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The central bank has been very active in trying to take advantage of the reach and penetration of mobiles in the county.

India classifies mobile transactions as follows:

Transactio n Based

Fund Transfer Bill Payment Other financial Services

Enquiry Based

Credit/Debit Alerts Minimum Balance Alerts Bill Alerts Payment

Account Enquiry Account Enquiry

Balance Statement

Cheque Status Enquiry Cheque Book Requests Recent History Transaction

The mobile payments market is still at its infancy in India and it is estimated that the current daily transaction volumes today would be in the range of Rs 5-10 Million. Even if 5% of mobile bill payment and recharge shifts onto mobile payments platform, the industry can grow to Rs200 Million a day.

Growth Trends:Tower Group estimates that mobile banking usage will grow from 10 million active users in 2009 to over 53 million active users in 2013, representing a compound annual growth rate of 51.8%.

Analysis of SMS & Mobile Banking services used by Financial & Banking Services 23

Two factors that have helped the rapid growth of mobile banking are the lower cost of mobile calls and the rapidly growing mobile penetration.

The figure below is from a comprehensive article from Technology Review

Mobile banking in India is set to explode - approximately 43 million urban Indians used their mobile phones to access banking services during quarter ending August 2009, a reach of 15% among urban Indian mobile phone user.

Currently, there are three modes of transactionsShort Messaging Service (SMS), client applications and mobile web. Banks are offering mobile banking tie-ups with various mobile providers to offer the back-end solutions.

Most Popular M-Banking Services & Banks: Popular M-Banking Services:

Analysis of SMS & Mobile Banking services used by Financial & Banking Services 24

Checking account balances is the most popular banking service used by urban Indians with almost 40 million users followed by checking last three transactions, 28 million and status of cheques with 21 million users.

Mobile banking is popular among the Rs.1 to 5 lakhs per year income group with almost 60% of mobile banking users falling in the income bracket, an indicator of adoption of this service by younger generation.

Most Popular Banks:ICICI bank maintains its position as country biggest private lender on mobile screen as well with 17.75 million users. HDFC accounts for second most subscribers with 9.1 million subscribers followed by State Bank of India with 6.13 million subscribers.

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Low up-take of Mobile-Banking in India:The number of telephone subscribers in India increased to 543.2 million at the end of November from 525.65 million in October 2009, thereby registering a growth rate of 3.34%. With this, the overall tele-density in the country had reached 46.32, said Telecom Regulatory Authority of India (TRAI), in its latest report. When this figure is compare with the total number of bank customers across the country, there is a wide gap. India is the worlds second largest mobile market, with over 400 million subscribers, but it still only has 20 million to 25 million registered users for mobile banking. The active user base is only upto 10% of total user base.

According to the deputy governor, the reason for low uptake of mobile banking facilities is the requirement of end-to-end encryption that makes implementation expensive. There are two main reasons for the low acceptance among urban users. First, these subscribers have accessibility to various alternative modes of transaction and payment such as Internet banking, ATMs and credit cards. Second, security remains a concern.

SMS applications used for banking and financial services are also vulnerable to this breach of security and current security solutions available for mobile phones are not capable of detecting such security leaks. Hackers can easily intercept the wireless network of GSM operators in less than a second. According to a senior official from the National Payment Corporation of India (NCPI), banks would have to pay for any faulty transactions and money theft through cell phones.

The other issue banks face in providing mobile banking is that they are required to tie up with individual service providers for enabling such services. Banks face difficulties in entering into such partnerships. Again, mobile service providers do not open up channels for facilitating mobile banking services by banks.Rural India is a huge and challenging market insofar as banking is concerned. But still Indias rural markets are also difficult to tap due to high illiteracy, poor infrastructure that inhibits accessibility and lack of technology.

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Advantages & Disadvantages of Mobile-banking & SMS Banking:

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Advantages: Convenience SMS banking offers a whole lot of convenience to its users, it enables users to perform most banking transactions at their own time, in SMS Banking, there is no such thing as standing in a queue. Accessibility The user, can access his banking information, from anywhere, as long as he has network coverage on his mobile phone. In essence, SMS banking brings the information to the customer by bringing the customer to the information. Portability Unlike a lot of software applications such as J2ME Midlets which are platform dependent, SMS Banking can be done from any GSM phone as all GSM phones support SMS. Saves time SMS banking reduces the time required performing an average banking transaction; this is due to the automation of everything and the fact that there is no human intervention. Reduced Costs Relatively, SMS Banking reduces the costs of performing a banking transaction, Relatively Lower Cost of accessing information Less human resources required - Automatic processing of clients request.


The main disadvantage of Mobile banking is security problem due to hacking problems & identify theft.SMS banking channel is not intended to be used for very high-risk transactions.The physical security of handheld device is required.

User Authentication and Authorization, Java Phone & PIN based Security enabled for secured transaction is required. The technical difficulties are:

The SMS technology (like email) does not set transmission times or guaranteed delivery of the message, therefore some message may be delayed, blocked or lost.

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Not all networks have full coverage and some locations may be protected for electromagnetic radiation, therefore not all users may be capable of getting of getting a signal. Delay of transmission of SMS by the GSM operators and inter connection delays and traffics between GSM operators.

The servers of the bank were not able to cope with it unpredicted rise in customer.

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Challenges for Mobile-banking Solution:Challenges for a Mobile-Banking Solution: 1. Interoperability There is a lack of common technology standards for mobile banking. Many protocols are being use for mobile banking HTML, WAP, SOAP, XML to name a few. There are a large number of different mobile phone devices and it is a big challenge for banks to offer mobile banking solution on any type of device. Some of these devices support J2ME and others support WAP browser or only SMS. 2. Security Security of financial transaction, being execute from some remote location and transmission of financial information over the air, is the most complicated challenges that need to be addressed. The following aspects need to be addressed to offer a secure infrastructure for financial transaction over wireless network: * Physical security of the handheld device if the bank is offering smart card based security. * Security of the thick-client application running on the device. In case the device is stolen, the hacker should require 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 banks 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.

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3. Scalability & Reliability As customers will find mobile banking more and more useful, their expectations from the solution will increase. Banks unable to meet the performance and reliability expectations may lose customer confidence.

4. Application Distribution Due to the nature of the connectivity between bank and its customers, it would be impractical to expect customers to regularly visit banks or connect to a web site for regular upgrade of their mobile banking application. It will be expected that the mobile application itself check the upgrades and updates and download necessary patches. However, there could be many issues to implement this approach such as upgrade / synchronization of other dependent components.

5. Personalization It would be expected from the mobile application to support personalization such as: 1. Preferred Language 2. Date / Time format 3. Amount format 4. Default transactions 5. Standard Beneficiary list 6. Alerts

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Research Methodology:Research Methods are the ways or techniques employed by the researchers in conducting research operations. On the other hand,

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Research Methodology is a scientific and systematic way to solve research problems. Research methodology deals with the research methods and takes into consideration logic behind the methods.

Research Methodology includes the type of primary and secondary research used for this project. The methodology includes the plan for sampling, the relevant collection of data and the statistical analysis tools to be use to interpret the data so collected.

Research Methodology is a system of models, procedures and techniques used to find the result of the research. It is a discussion within the body of a research report of research design, data collection methods, sampling techniques & data analysis.

Hypotheses of the research problem formulated with the exploration of secondary data will be useful in drawing definite conclusions for implementation. Research Methodology is the systematic and objective process of gathering, recording and analyzing data helping the decision making process.

Rationale behind the study:Mobile-banking is the general framework covered under the general Electronic banking. Mobile phones as a medium for

Analysis of SMS & Mobile Banking services used by Financial & Banking Services 33

providing banking services have been attaining greater importance. The Reserve Bank of India (RBI) has been trying to push mobile banking in a big way across the country as a medium for financial inclusion. However, due to lack of a regulatory framework, clear guidelines and security, bankers are treading with caution.

With mobile banking facilities, one can bank from anywhere, at anytime and in any condition or anyhow. The banks under study in Nagpur are mostly nationalized bank & other financial institute which providing or plan to implementing M-banking.

There is wide gap between mobile user & mobile-banking customers. The customers are less aware about M-banking & other reason is security.

Research Objectives:The main objective being designed is to analyze the role of Banks & services provided by them in Mobile & SMS Banking. 1. To find the awareness of Banks & financial institutes about M banking. 2. To identify major factor influencing the banks in offering this services. 3. To find the services those are mostly provided by banks under MBanking. 4. To find the effectiveness & benefits of M-Banking services over internet banking.

Research Hypothesis:Analysis of SMS & Mobile Banking services used by Financial & Banking Services 34

This is the proposition as statements about the observable phenomena in this research study that may be judge as true or false. There are some cases & variables to be observe as the study progress. The variables here are the banks & financial institutes. It is expected that mobile phones will be the most preferred and convenient device for conducting banking transactions and emerge as one of the major payment channels in India.

The new idea of adopting SMS banking & M-banking is convenient, user friendly and provides more facilities to bankers & their customers. Mobile banking is more effective over internet banking.

Research Design:Research Design is a master-plan specifying the methods and procedures for collecting and analyzing the needed information. It provides the framework to be used as a guide in collecting and analyzing data. Descriptive Research Design has been chosen to carry out in this project with specific objectives base on exploratory study. Descriptive studies are those used to describe phenomena associated with a subject population or estimate proportions of the population that have certain characteristics. The cross-sectional study has been taken up for this research which is concerned with the sample units from the banks & financial institutes in Nagpur city. The most common method of generating primary data is through a survey or interviews that have been selected here. A survey is a research technique in which information is gathered from a sample of people using a questionnaire. The design of suitable questionnaire and capturing data from the respondents shall test the hypotheses set for this study and result in coming out with unambiguous closing after data analysis.

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Sample Plan:

A sample is a part of the target population, carefully selected to represent that population. Sampling studies are undertaken in order to establish one or more population values and/or testing one or more statistical hypotheses.

The sample here selected will be the nationalized & private Banks, which provide M-Banking services. The target group in this research will be the individuals who are relate to Banks i.e. their customers and the bank as service provider.

Banks in Nagpur Nationali zed Banks B Private Banks

Financial Institutes

The universe of study is all the banks in Nagpur City for all the three categories of samples i.e. the Nationalized banks, Private Banks & Financial Institutes.

Sample Size:The next sampling issue is concern the size of the sample. A sample must be truly representative of the universe or the population under the study.

1. Nationalized Banks 2. Private Banks 23 3. Financial Institutes 05 Total Sample Size is 40


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Sampling Methods:The final sampling decision requires the researcher to choose how the sampling units are to be selected.

Stratified Random Sampling:Most populations can be segregated into several mutually exclusive sub-proportions, or strata. The process by which the sample is constrained to include elements from each of the segments is called stratified random sampling. Here the strata are selected depending upon the banks which offer M-banking services.

Convenience Sampling:Non-probability samples that are unrestricted are called as convenience samples. They are least design but normally the easiest and cheapest to conduct. Researcher (or field workers) has the freedom to choose whomever they find thus the name convenience. The banks & financial institutes here selected are more using the availability of Mbanking & suitable timing of the respondent.

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DATA COLLECTION:Data Collection Tools

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Data is the basic input to any decision making process in a research study; processing which gives the statistics of importance of the study. The data can be classified in to primary and secondary data. The data, which is collected from the field under the control and supervision of the investigator, is known as primary data while the data collected from books, journals, magazines, government publications, annual reports, internet etc. is known as secondary data.

Types of Data

Primary Data

Secondary Data

Primary Data: Primary data has been collect through administering questionnaires to the Bank employee. The Primary Research Tools used were Survey and Expert Consultation (interviews).

Secondary Data: Most of the data is explore from the internet which is used in previous chapters. This exploration into secondary data has assembled the background information on the topic of this research to refine the research question itself. In general, the secondary data has been collect from various sources like evaluation reports, publications, bank reports, available literature through books, web / internet resources, relevant journals, magazines etc and official information from the banks.

Data Analysis Tools:

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The reason for analyzing data is to understand the variation and its causes in any phenomenon.

The data is analyzed using the statistical formulae and in most of the case using Microsoft Excel Spreadsheets. This has allowed the researcher to analyze the data sets and flexible preparation of graphs, charts and tables for inclusion in this report. Some of the MS-Excel Tools used in his research report are as given below.


Data Analysis Add-in is installed from the Ofiice-2007 CD which appeared in the Tools Menu as a readymade function and made the further calculations much easier. Chart function is use from the Standard Toolbar itself to draw all the charts from the tables created. Column, Bar, Pie and Doughnut Charts are mostly used.


Most of the tables use frequency distribution amongst various variables used in this study. The arrangement of data where the observed value is paired with its frequency is called a frequency distribution. It enabled the researcher to understand the data in a more meaningful manner. The major advantage of using frequency distribution being that it enabled the researcher to obtain further characteristics of the variables with the help of various descriptive statistical techniques as mentioned earlier.

Limitations of the Study:-

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Any study suffers with certain limitations; similarly, the present study also faces the limitations like: Manpower ,Geographical Area under Study and Time.

The response of customers using Mobile banking cannot obtain

due to confidentiality issue of customers. Customer satisfaction to this service could not evaluate.

Some Respondent would not give sufficient time to answers/ fill the questionnaire and some did not see the project important so they gave Extra information that had no use for the project.

The study is based on knowledge, ideas and preferences of

respondent, which are complex in nature and depend upon subjectivity of the individual.

The research is carried out in Nagpur city only therefore findings are limited to Nagpur city only.

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Data Analysis &Interpretation of Data:1) Banks

& financial institutes banking services in Nagpur.



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Nagpur city is a hub of various banks & financial institutes,by analysing the banks & institute for M-banking it is observe that most of the banks & financial institute provides SMS-Banking facilities but not Mobile-Banking. Most of the financial institue are at initial stage,hence they are just providing SMS-alerts facilities.

2)The future plans of Banks & financial institute regarding implementation of Mobile-banking:The banks which donot offer Mobile-banking presently but has future plans regarding Mobile-banking service are mostly those banks which are well known and are capable to provide more technacial benefits to their customers through M-banking. The Banks & financial institutes which donot comment on this are mostly at developing stage,hence they cant comment on implementation of this services.

3)Services provided by through Mobile-Banking:





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1.Statement of account 2.Insurance policy plan 3.Pension plan management 4.Cheque statement 5.Balance checking in accounts 6.Bill payment 7.other services

81.25 % 25% 25% 75% 93.75 % 75% 37.5 %

The various services provided by Banks through Mobile-banking are given in percentage. It is found that balance checking (93.75%) is most common service offer by all banks followed by account statement (81.25%).

5) PUSH Services:

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1.Account Balance Reporting 2.Reporting of salary 3.Payment of cheque 4.Withdrawl on ATM 5.Large value Payment 6. Large value withdrawal 7.other services

93.75 % 43.75 % 56.25 % 25% 31.25 % 31.25 % 37.5%

The major PUSH services provided by banks are shown in the chart. The most common services are account balance reporting & report of payment on cheque. There are various other services which alert customer on their account.

6) PULL Services:

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1.Account Balance & mini Statement 2.Transfers between customer's accounts 3.Fixed Deposit & Interest rate enquiry 4.Requesting for ATM 0r Credit card to be suspended 5.Deactivating of Credit or Debit card 6. Large value withdrawal 7.other services under pull services.

93.75 % 43.75 % 56.25 % 25%

The major services provided under PULL service are show in the chart. The most common Pull service is mini statement & account balance enquiry. The other services are fixed deposit & interest rate enquiry. Various other Pull services related to ATM & credit cards are providing

31.25 % 31.25 % 37.5%

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7) Reasons for offering Mobile-banking:

The major reason of offering M-banking is convenience of customer & bank. The other reasons are customer request & competition in market,which enable banks to provide this services.

8)Benefits to the employee & customers due to

Mobile-Banking :

The benefits that customer & banks get using MBanking service is time management & convenience.The other benefit is ,it keep the updates of all information & its availability at anywhere anytime.

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9)Various services:





The various other factors that are involved in M-banking and response from the banks to these are show in above chart. a) PIN provision: PIN provision for M-banking is provided by 43.75% banks, 31.25% dont provide this while remaining 25% banks dont have any comment on it. b) Charges offer by Banks: 31.25% banks offer charges for Mbanking, 31.25% do not offer any charges while 37.5% do not comment on it. c)Motivation to use M-banking: Most of the banks motivate their customers for using M-banking by informing them about M-banking while opening of account or by informing them during transaction.81.25% banks motivate their customers for using Mbanking, 12.5% banks say that they not give any motivation to customer while remaining 12.5% give no comment on this.

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d) Registration of business account for M-banking: 50% banks say no to this, 12.5% say yes while remaining 37.5% have no idea about this. e) Use of M-banking on all mobile phones: M-banking service can be use on all mobile phone with all services as 87.5% banks response yes to this. While remaining 12.5% have no idea about it. f) Use of more than one phone number for M-banking: Customer cannot use more than one phone number for mobile banking as 87.5% banks say No to this. While remaining 12.5% have no idea about this. g) M-banking beneficial over Internet banking: 43.75% banks find mobile banking more beneficial over internet banking, 31.25% banks say internet banking is more beneficial while 25% banks find that both are beneficial hence no comment on it. h) Activation of two or more signatories account: 43.75% allow customer to register account with two or more signatories, 25% do not allow for this & 31.25% do not give any comment, as they do not have idea about it. i) Separate M-banking department: Generally, all banks have separate m-banking department at their Head-office in Nagpur or some have banking-agent to provide these services. 87.5% response yes to this question. j) Multi-language support: 31.25% bank offer multi-language supporting M banking to provide more convenience to customer. 25% bank support single language i.e. English, while 43.75% do not support this query.

8) Effectiveness of Mobile-Banking over Internet banking:The bankers found that Mobile-banking is not much effective over internet banking. The major reason

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behind this is security & lack of regulatory framework for Mbanking.

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Following are the findings of Project:

It was found during the study that; 60% banks in Nagpur are not providing Mobile Banking, even though they are aware about it.

Almost 80% of the Banks are ready to implement this new technology for their customer for more convenience in near future.

The most common services, which generally all banks provide, are statement of account 81.25%, balance checking in account 93.75%, cheque statement 75%.

The most common reason for implementation of Mobile-banking is convenience & customer request. The most common benefit due to this is that it facilities time management.

43.73% bankers found Mobile-banking is more beneficial over internet banking but 50% state that M-banking is not effective as internet banking.

Customer can use all mobile phone for SMS & Mobile-Banking but cannot use more than one phone number for this service.

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Analysis of SMS & Mobile Banking services used by Financial & Banking Services 52


It is observed that mobile phone is most preferred & convenient device for conducting banking transaction & is the major channel of payment in India. M-Banking is new IT innovation which is beneficial to use & provides more facilities to bankers & their customers.

The Mobile-Banking is a new IT trend which growing faster. Most Banks & Financial institutes in Nagpur region are aware about MBanking services but most of them are as at developing stage, hence they are not providing these services. The major reason behind less use of M-banking is lack of a regulatory framework, clear guidelines and security. Bankers & customers have a fear of fraudulent activity in mobile banking.

The most common services provide by banks are checking balance in accounts, statements of accounts, cheque statement & bill payments. The M-Banking are beneficial to use as compare to Internet Banking.

The major factors influencing banks to offer M-Banking services are time facilities, convenience & customer request. Bank promotion and other activities of increasing awareness about Mobile-Banking have good effect on customers to shift towards Mbanking.

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Analysis of SMS & Mobile Banking services used by Financial & Banking Services 54

Internet Book Resource:

Mobile Banking & Beyond By Abhishek Kumar

Introduction to Mobile Communications: Technology, Services Markets ( Informa Telecoms & Media) by Tony Wakefield, Davy McNally, David Bowler, and Alan Mayne

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Analysis of SMS & Mobile Banking services used by Financial & Banking Services 56

QuestionnaireName of Bank/Financial Institute under study:____________________________________________ 1. Does the bank/Financial Institute offer Mobile Banking service? a) Yes b) No If not; does the bank/ Financial Institute have any future plans regarding the Mobile banking? a) Yes b No When the Bank/ Financial Institute plan to implement Mobile banking? 2. From how long does the bank Financial Institute / offering Mobile banking services? 3. Does the bank Financial Institute / have separate Mobile banking department? a) Yes b) No 4. Does the mobile banking support Multi-language for personalized use? a) Yes b)No 5. Which of the following services provided by the Bank /Financial Institute on phone? a) Statements of account b) Insurance policy plan c) Pension plan management d) Cheque statement f) Balance checking in the account g) Bill payments h) Any other (Please specify) ___________________________________________ 6. What are the following push services provided by bank/ Financial Institute? a) Account balance reporting b) Reporting of salary c) Payment of a cheque d)Withdrawals on the ATM or debit card e) Large value payment f)Large value withdrawals g)Any other; (Please specify)_____________________________________________________ 7. What are the pull services provided by Bank /Financial Institute? a) Account balance enquiry& mini statement b) Transfers between customer's accounts c) Fixed deposit interest rates enquiry d) Stop payment instruction on a cheque e) Requesting for an ATM card or credit card to be suspended f) De-activating a credit or debit card g)Any other; (Please specify) ___________________________________________ 8. What are the reasons for offering mobile banking? a) Convenience b) Competitions c) Customer request d) New Customer e) Any other; (Please ________________________________________________ 9. What are the benefits to the employee/customer due to mobile banking? a) Will reduce the cost of stationeries, Telephone bills b) Facilitates Time Management c) Reduced local & international Phone bills d) convenience e) Updates & availability f) other (Please specify)_____________________________________________ 10. How many customers are subscribing for mobile banking? _____________ specify)

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11. Do the bank / Financial Institute offer charges for SMS banking services? a) Yes b) No If Yes; what are the charges? Rs. ___ per _____ 12. Do you find Mobile banking more beneficial than Internet banking? a) Yes b) No 14. Is there any Age restriction to use SMS-banking? a) Yes b) No If Yes; what is the age limit? ____ yrs 15. Give the answers of the following questions in YES or NO? Query Do bank provide PIN provision, Change of PIN and reminder over the Mobile? Does the bank find mobile banking more effective over internet banking? How the bank motivate customer to use Mobile banking? Can customer register his business account for SMS banking? Can a customer able to activate his account for SMS banking if his account requires 2 or more signatories? Can SMS banking be used on all mobile phone & with all service providers? Can customer use SMS banking on more than one phone number? 16. For how many accounts can customer accesses through SMS banking? 17. Suggestions if any: To Banks/ Financial Institutes ______________________________________________________________ : Y N

To Customers: ___________________________________________________________ Personal details: Name: Gender: a) Male b) Female b) 21-35 c) 35-45 d) 45-55 e) 55&above b) Diploma c) Graduate d) Post-Graduate

Age group: a)