www.infosys.com/finacle How comfortable are we with Mobile Banking? Not very much, it seems. Even today, most of us who use mobile banking do so merely to check account information, transfer funds or pay bills. How many of us are aware of mobile technologies like Near Field Communication (NFC) and Remote Deposit Capture (RDC), which have evolved in response to customers’ need for a mechanism to make quick in-store/ transit purchases and check deposits without visiting a branch or an Internet banking site?

1. Mobile Banking – A Transformation
of Traditional Banking
Universal Banking Solution System Integration Consulting Business Process Outsourcing

2. How comfortable are we with Mobile Banking? NFC is already well established in Japan and
Not very much, it seems. Even today, most of South Korea and is on its way to becoming
us who use mobile banking do so merely to mainstream in the U.S. and Western Europe.
check account information, transfer funds or pay Although developing markets have favorable
bills. How many of us are aware of mobile conditions for mobile payments, their service
technologies like Near Field Communication providers are yet to adapt their strategies to the
(NFC) and Remote Deposit Capture (RDC), local market.
which have evolved in response to customers’
need for a mechanism to make quick in-store/ While on the one hand banks and FIs are
transit purchases and check deposits without upbeat about these mobile technologies, on the
visiting a branch or an Internet banking site? other, consumers are wary of using them on
account of security concerns.
As per a recent report from Javelin Strategy &
Research, consumer mobile banking has So far, banks and FIs have managed the risks
jumped from 19% to 30% in 2011 after two associated with commercial RDC services by
years of flat growth, thanks to an increase in offering them to select commercial clients who
both, the number of mobile banking offerings have been thoroughly vetted, or by putting a
and Smartphone ownership. Approximately ceiling on the value of allowable remote
37% of consumers who downloaded applications deposits. Three trends, namely, the impending
for their Smartphones, downloaded banking maturity of the commercial RDC market,
applications, making them one of the most competitive pressure, and a growing preference
popular applications. By 2012, Asia Pacific and for self service channels have led banks and
Japan will have the most mobile payment FIs to look at extending the RDC service to
users followed by Eastern Europe, Middle East, consumers. However, this may result in a
Africa and Latin America. The U.S. and Western dilution of security procedures, examinations
Europe will lag these regions. and standards, and consequently increase the
risk of fraud.
The advent of technologies like RDC and NFC
has expanded the portfolio of mobile payments / One of the common problems associated with
banking services. Although check usage is RDC technology is the poor image quality of
diminishing globally, it is still significant enough deposit instruments, which may hinder an
for both banks and consumers to want to adopt institution from detecting alterations, forgeries,
RDC technology, which enables checks to be missing endorsements and counterfeit items.
“deposited” by a Smartphone application that Some of the other potential risks leading to
transmits their photographic images to the fraudulent activity include identity theft, failure
bank. Already 6 of the top 10 Retail Banks and of customers to retain or destroy paper copies
more than 80 Financial Institutions (FIs) in the of a check and consequently depositing it
U.S. are providing this value-added service to multiple times at one or multiple institutions.
their customers. RDC can also be misused for money laundering,
especially in the case of checks that are
NFC is a fast growing wireless technology, deposited from foreign locations.
which allows communication between two
devices over short distances through short Though NFC technology is gradually replacing
wave, tap or touch. There is no need to whip plastic cards with chips imbedded inside mobile
out the wallet at a store to make a payment; phones, it is still riddled with data security
rather, the customer has to only wave/tap the issues. NFC allows fraudsters an easy way to
NFC-enabled Smartphone at a POS terminal. trace and hack personal information. The longer
Most major credit card companies are rolling out the operating distance of NFC instruments, the
NFC technology to enable contactless payments greater the risk of data theft and unwanted
using a mobile device. At Mobile Asia Congress, transfer of personal and financial information.
nearly 45 of the world’s largest mobile providers Also, long exposure to NFC radiation may lead to
committed their support to NFC technology. medical problems including cancer.
Mobile Banking – A Transformation
of Traditional Banking

3. As mobile banking matures, mobile payments the positive side, banks and FIs have already
will become a necessity for millions of people made efforts to tide over security issues, which
around the world. Using mobile payment services, has imparted momentum to mobile banking.
these people can access both traditional and
modern financial services required to meet their References
daily banking needs. Hence, it is imperative that 1. www.reuters.com/article/2011/05/20/us-
mobile application developers, wireless service summit-mobile-wallet-idUSTRE74J
providers and banks’ IT departments together 49Q20110520
address all their security concerns.
2. d g u i . w o r d p r e s s . c o m / 2 0 11 / 0 6 / 0 6 / t h e -
By exercising due diligence and restricting the undeniable-disadvantages-of-nfc/
deposit value, banks and FIs can mitigate
3. www.finextra.com/news/fullstory.aspx?
RDC-related risks. Investment in superior quality
newsitemid=23187
devices and a secure system of storage and
back-up may also minimize the risk of fraud. 4. jpkc.fudan.edu.cn/picture/article/217/57/89/
b0edb649422587f87d5e7abbb80c/15f4146b
The introduction of security measures, such as -0fe5-44ad-80f1-f1e43bd6aefc.pdf
facial/fingerprint recognition or a secured firewall
may help in maintaining the security of data 5. hexus.net/mobile/news/service-providers/
on NFC-enabled mobile phones. Like in the 32659-massive-adoption-sim-based-nfc/
case of infrared, the NFC operating distance 6. www.americanbanker.com/issues/175_
must be kept short and confined to a straight 162/mobile-remote-deposit-capture-
line of sight to reduce the possibility of malicious 1024491-1.html
attack, data corruption and “eavesdropping”
during wireless data exchange. 7. www.differencebetween.com/difference-
between-rfid-and-vs-nfc/
The financial industry’s desire to reduce branch 8. w w w. c o m p u t e r w o r l d . c o m / s / a r t i c l e /
maintenance/ service costs as well as footfalls 9133633/Gartner_Users_of_mobile_paymen
has hastened the transformation of traditional ts_to_double_by_2012
branch banking into a self-service online avatar.
But before traditional banking as we know it, 9. w w w. e h o w. c o m / l i s t _ 6 8 0 9 2 7 1 _ d i s
disappears altogether, mobile application advantages-remote-deposit-capture.html
developers, wireless service providers and
banks’ IT departments must together address
the critical challenges of scalability, reliability, Author
performance, handset operability and application Pooja Agarwal
distribution. Improved security protocols and a Consultant – Finacle
safer financial transaction environment will play Infosys Limited
a vital role in the success of mobile banking. On
Mobile Banking – A Transformation
of Traditional Banking