Table of Contents
- Introduction:
- Pros and Cons of Mobile Banking
- Challenges in Mobile Banking
- Customer Awareness
- Privacy Concerns
- Virus Attacks and System Malware
- Wireless Link
- Risk through SMS
- Verification Concerns
- Conclusion
- References:
Introduction:
The banking industry is the spine of a strong monetary system and growing economic stability. There is a direct impact of banking on every economy in the world. A simple example could be the crash of the US stock market of 2008 that had repercussions around the world. As the world has evolved, the mode of banking has also evolved. There was a transition from paper currency to stored currency in credit/debit cards. There was another transition to online banking for the financial inclusion of everyone. It leads to the development of mobile banking facilities. When financial transactions are done via mobile devices, it is called Mobile Banking. It can vary from simple bill payment to the transfer of funds abroad. It is the most readily available banking service to the customers and can be done easily in this digital era.
Mobile communications have been an important leap by mankind towards development. The wireless network has simplified the basic wants of the people worldwide, including the revolutionary changes it has produced within the banking industry. The benefits of mobile banking have been immense and undeniable. It has given the rise to the possibility of anytime-anywhere banking facilities to the customers. There are various ancillary developments associated with mobile banking, collectively known as the mobile technology revolution in banking. Mobile banking has also evolved the concept of mobile applications for banking services to make them hassle-free and easy to use. The broad classification of mobile banking can be the following:
- Banking through web
- Banking through mobile apps
- Banking through USSD codes
Mobile banking has shown steady growth in recent years. According to the TRAI census of March ’11, there were around 800 million customers actively using mobile banking. This figure has been increasing through the years, especially after the Digital India campaign launched by the Govt. of India. In addition to its advantages, mobile banking has its disadvantages and challenges rationalized hereinafter.
Pros and Cons of Mobile Banking
Instead of walking into a physical branch of their bank, customers have access to their account balance, payments received, funds transferred, and can easily organize their finances on the go. This can be done regardless of where the customers are, at a time and place that suits their needs, rather than waiting in long queues. Authenticated mobile banking apps have a security assurance or SMS verification code that needs to be input to authorize a payment. Hence, mobile banking is said to be much more secure than its predecessor banking methods. With the introduction of mobile banking, customers have access to their financial information even after their bank’s working hours.
It assists them to utilize banking services at their convenience. Mobile banking operations are efficient and competent. It helps in de-congesting the bank lobbies and reducing the amount of tedious administration for bankers and the customer. Customers are being assisted in real-time to manage their investments as well. The customer can track their account balance, review all transaction activities, locate ATMs, deposit cheques, and also manage investments. It is accessible round the clock throughout the year and is an ideal option for gaining financial services for those mobile phone users who reside in rural areas.
However, mobile banking users are at a higher risk of phishing through scam messages and e-mails. Hackers have to do the least amount of effort to cause severe damage to the mobile banking users Criminals can easily gain access to the customers’ mobile banking PIN and other sensitive data if the device is lost. Latest mobile devices such as smartphones are more suitable for mobile banking than older mobile devices, demanding the customer to upgrade out of compulsion and necessity. Significant charges from banks are accumulated with the regular use of mobile banking services. There is also a lack of a substantial operating system supporting mobile banking for many regional rural banks in India.
Today, mobile banking apps require an internet connection to function, leaving rural areas at a great disadvantage if the internet connection is poor. They also consume mobile battery and is not compatible with those customers who cannot purchase better mobile devices with good battery life. An additional disadvantage is that many domestically manufactured mobile devices, which are economic for tight budgets, are not still attuned with an anti-virus system. Certain mobile devices are not even compatible with their existing anti-virus software available, making it impossible to register them. Not all banks offer the same level of security for mobile banking that they do for online or on-counter bank transactions. Because the risks are yet to be known, certain banks have been slow to make clear about their facilities covered through mobile banking[1].
Challenges in Mobile Banking
Customer Awareness
The lack of awareness about mobile banking is among the several reasons for the lack of trust, and it is also the reason for the higher threat to security in mobile banking. Because it is a new technology in the banking industry, not all banking customers are aware of it and find it difficult to adopt it. This has been a great challenge faced by mobile banking services in India.
Privacy Concerns
The security of mobile banking is a big issue. In mobile banking PIN or Password is used which may be sneaked by any unauthorized user if that mobile device has been lost without the knowledge of the owner. Customers often store sensitive information of their bank accounts on their mobile devices, which is at risk if the banking application services are provided by a third party. It may be hacked and infiltrated using a virus, therefore it is essential to download only legitimate and authorized applications for transaction through mobile banking, with the assistance of banks if necessary.
Virus Attacks and System Malware
There is always a threat of virus outbreaks and system malware that can expose the customer’s bank account details such as their username and password. In almost every mobile device there is the threat of viruses and systems through the circulation of malicious codes to defect mobile banking, such as ‘Zeus’ that is used to target SMS banking and steal mobile transaction verification passwords and PIN.
Wireless Link
All operations of mobile banking are carried out through wireless medium resulting in a security breach of the mobile device location and committed circuit for the transmission of services. If there is any fault in the network, the threat to security increases.
Risk through SMS
End-to-end encryption is unavailable in simple SMS text formats. The only encryption existing is during communication at the root level of the receiver and the SMS server. There is a risk in mobile banking through SMS. There have been various instances of SMS deceptions where an attacker could send messages on the system by manipulation of end-users numbers.
Verification Concerns
There exists verification risks at the time of logging in to access the bank account on a mobile device. For purpose of verification, PIN numbers are still used which an old method is involving numerous concerns of identity theft by stealing the user ID and password. It often results in an unauthorized entry to the customer’s bank account by an outsider. The same risk is associated when the mobile device is lost or stolen[2].
Conclusion
As technology is developing in the banking, finance, and commercial industry, it saves time and provides easier access to bank account information from anywhere and anytime. It also alerts the customers of their bank account transactions and unusual activities. However, there exist certain security and privacy-related threats and challenges. To combat the existing challenges associated with mobile banking, the banks need to develop their service values in terms of responsiveness towards the dynamic technology. There is a need for better interaction with the customers to receive valid feedback on their mobile banking services for better financial security and privacy. Banks should also ensure absolute safety and confidentiality of transactions of their customer, reducing the involvement of a third party as far as possible. Standards should be set to provide the best possible benefits to their existing customers while mobile banking and addressing grievances of online phishing. The challenges may be overcome by improving the existing authentication setup for secured services and building trust in their current and future customer. It would also encourage more people to use mobile banking and also remove obstacles in the acceptance of mobile banking.
References:
[1] Renu Chandran, Pros and Cons of Mobile Banking, International Journal of Scientific and Research Publications, Volume 4, Issue 10, October 2014
[2] Aditya Kumar Tiwari, Imperative and Challenges of Mobile Banking in India, International Journal of Computer Science & Engineering Technology (IJCSET) Vol. 5 No. 03 Mar 2014
