When a mobile device such as a smart phone or a tablet computer is used to check bank balances or carry out account transactions, this is known as ‘mobile banking.’ This type of banking offers services such as account activity alerts, access to statements and a log of recent transactions. Some banks also offer fund transfers (both domestic and international), bill payments and deposits.
Many people wonder if mobile banking is safe. Since hacking mobile phones is not easy or widespread, mobile banking can be even safer than accessing your bank’s website from your laptop or PC. It’s definitely safer than writing cheques, which are often forged, or credit cards, prone to theft and other types of fraud. The best thing is, if your security is compromised and your account is used fraudulently, many banks will make it up to you.
Mobile banking became popular in the early 2000s after Citibank set up a mobile phone based service that allowed customers access to account balances, bill payment and funds transfer, regardless of their wireless carrier. This came a week after some other US banks launched competing mobile banking services in partnership with AT&T, America’s largest provider of wireless services.
Mobile banking services are now possible even without a bank account, with the advent of companies like Oxigen, Airtel Money and Obopay. The new development has benefited millions of individuals who find it difficult to manage a bank account, but who need to pay bills and transfer funds. Subscribers to these services must pay a small registration fee and give in identity documents to complete Know Your Customer procedures.
The mobile banking industry is now a hit in developing nations, particularly in India and the African continent. For example, MFS Africa, which was pioneered in Johannesburg, South Africa by a Beninese businessman, Dare Okoudjou, has recently launched a number of innovative products that can only be used on mobile phones using mobile payment platforms. Using MFS, it is now possible for customers to purchase micro insurance, receive international money transfers and get employer-backed salary advances.
It’s now become unnecessary to build up a national system of branches and cash machines. Access to credit is now easier than ever with mobile banking schemes being united with microfinance lending, and customers can use the platform to set up a credit history. On the other hand, banks and governments will need to control this new industry, making the restrictions stringent enough to safeguard customers and prevent money laundering, while being open enough for new services to emerge.
Mobile banking is growing at an incredibly rapid pace and will soon become the chief means for banks to relate to their clientele. However, while the top banks have the technical and financial wherewithal to make moves in the mobile channel, most small banks lack the innovation and finances required to explore this front. Technology vendors for the mobile banking sector have a large responsibility to assist mid-tier and small institutions in taking advantage of this promising channel.