Mobile phones are basically communication devices that can be used for several other purposes, such as for executing financial or banking transactions. After internet banking, mobile banking has added another dimension to banking by enabling us to carry out any kind of transactions like payments, balance inquiry, and the transfer of funds, using our mobile phones.
Banking transactions over the mobile phone are usually performed either by sending an SMS message to the bank or by using mobile internet. When you send an SMS message requesting a financial transaction, it goes to the SMS center of your cellular service provider, and from there it travels to the bank's system. You then receive the response that is sent by the bank via the service provider, all within a few seconds.
Doing Bank Transactions with Your Mobile Phones
Nowadays, banks have come up with a range services for reducing their cost of operation, while providing more easily accessible and faster services to the customers. You can use your mobile banking facilities to inquire the balance of your account, and request a statement or details of the last few transactions and the management of pension and insurance policies. In addition to these, you can request the bank to activate alerts, such as the minimum balance alert.
You can order or request a checkbook or card, and pay bills with the help of mobile banking. It has also made fund transfer (both national and international) quite simple and fast. It can give you the facility of carrying out cash deposition and withdrawals. Some other services include portfolio management services, personalized alerts, notifications on security prices, mobile recharging, etc. You can also receive online updates of stock prices, and perform stock trading as well.
There are generally two ways to classify mobile banking services. The first method classifies the banking services as 'Push' or 'Pull', depending on the originator of a service session. If the bank sends information as per the already agreed rules, then it is categorized as 'Push'. An example of 'Push' is a minimum balance alert, which the bank sends whenever your balance goes below a particular amount.
On the other hand, when the bank sends information as a response to the request sent by a customer, it is termed as 'Pull'. So, if you request the bank to send a statement for the last few, say 3 or 5 transactions, then it is a Pull-based service.
The second classification depends on the nature of the transactions. So, if you request the bank to send a bank statement, it is an inquiry-based service, while a request for fund transfer is classified as a transaction-based service.
These services are not only beneficial for the customers but for the banking institutions as well. These services can significantly lower the operating cost of banking institutions by reducing the dependence on costly call centers. They can also lower the frequency of errors that are usually committed in paper-based payments.
Mobile banking can considerably reduce the financial risks associated with starting a new business initiative. It can also enable banking institutions to closely monitor their new campaigns. Moreover, it can provide a new avenue for selling their products like insurance packages and other banking services.
It also helps the customers by ensuring fast processing of their banking transactions. As any kind of financial transactions are immediately reported to the customers, they can monitor and detect any error like an unauthorized transaction quite easily.
Today, the mobile and wireless market is one of the fastest growing markets in the world. However, a lack of trust and general awareness have been observed when it comes to mobile banking. Therefore, it is essential to address issues, like the security of the banking transactions that are executed from a distant place. It is equally important to ensure the security of the financial transactions if the device is stolen by hackers. The popularity of mobile banking can be increased by instilling a sense of trust among the customers by addressing the aforementioned security concerns.