Marketing assignment report on: Report analysis on SMART phones – Banking sector
Intend of this report is to discuss about mobile banking which is also known as M-banking. In this context, First part of this report describes the advantages and disadvantages of mobile banking. Afterward, it has focused on the bank’s approach to technologies in order to gain competitive advantage. In support, analysis of approach has also thrown light on the concepts related to information system’s strategic use. On the other hand, other ways of maintaining customer base and satisfaction have also been illustrated in relation to bank’s strategic approach. Finally, report has introduced a number of ways for using SMART phones in banking sector so that banks could ensure their competitive advantage.
Mobile banking consists of three key models which are mobile accounting, mobile financial information services and mobile brokerage. Moreover, it has been introduced by banks to check balance, credit applications, account and banking related transactions and payments. These performances are made through a mobile device either mobile or personal digital assistant. The services of mobile banking were offered over SMS. This service was also known as SMS banking service. In contrast, when smart phone primal smart phones were introduce in the market with WAP support and use of mobile web, first European banks offered mobile banking to their customers on this platform of using smart phones. Similarly, mobile banking is concerned with the prerequisite and benefits of banking and financial services with the support of mobile telecommunication tools (Westpac, 2012). Therefore, taking the extending use of mobile banking, both the perspectives of advantages and disadvantages have been discusses in the next segment of this report.
Advantages and disadvantages of mobile banking:
On the basis of research it has been noticed that mobile banking is really catching up the market for customers with the use of cell phones. One can easily access his/her account, make payments and transfer fund from one account to other with his/her mobile. Besides, connectivity of mobile phones is enormous therefore this has made mobile banking successful.
- One of the key advantages of using mobile banking is that it is an edge over online or internet banking. One should have internet connection and a device to use such as computer or laptop. Nonetheless, there is zero possibility with respect to connectivity in mobile banking. In addition, mobile banking can also be used in remotest place where it is difficult to get internet connection.
- It helps saving a lot of a person’s time while using mobile banking as transactions and bill payments are made on time.
- Moreover, the interface for using mobile banking is quite simple and user friendly. A person needs to follow the instruction mentioned on interface to make the payment. It also provides the customer with an option to record the transaction made (Gustke, 2012).
- On the other front of mobile banking, it is a cost-effective technique which banks provide at a lower rate in comparison to banking by self.
- There is one key advantage of using mobile banking service that it diminishes the risk of fraud during the transactions. A person receives an SMS from bank whenever an activity is performed in his/her account. These activities include cash withdrawals, transferring of funds, dropping a cheque and deposits.
- As use of mobile banking cuts down the tele-banking cost and is economical, it benefits the banks too.
- Banks remain in touch with their clients through mobile banking and promote their banking products and services on phone such as loans, LICs, credit cards, insurance schemes, etc to their customers.
- Another benefits of mobile banking include the service like fund transfer facilities, enquiry of account balance, bill payment alerts, minimum balance alerts, credit and debit card alerts, etc (Johnston, Bercum & Piscini, 2010)
The advantages of mobile banking use are undeniable, but there are also a few disadvantages that people have generally known about it.
- Security problems may arise with the use of mobile banking. It can take place when people using mobile banking service receive a fake SMS from a hacker posing itself as a financial institution. The users of mobile banking are asked for the details of their bank account. There are many people who have fallen for such trick and lost their money through this trick. This scam is named smishing.
- Other factor related to disadvantage of mobile banking is compatibility. Some banks do not provide this service on simple phones as compared to smart phones such as iPhone, blackberry, Samsung, Sony, etc popular smart phones. Therefore, if a person does not own a smart phone, the type of mobile banking he/she is provided with would be generally limited. In contrast, highly developed features such as transfer of funds are usually not available on simple and dumb phones that do not have smart applications and features.
- Other disadvantage of using mobile banking service is the cost associated with its use. It might not come out as a significant service if a person is already using other compatible device, but the person still requires paying text messaging and data fee. Likewise, some banks charge an extra fee for mobile banking service and in sum these charges add up if one accesses this service frequently (Mobile marketing association, 2009).
Technology adoption and advantage:
There are various mobile banking business models which cover a wide spectrum of banking services. First model is bank-focused in which traditional bank uses low cost delivery controls to offer their existing customers with banking services. Other models are bank-led and non-bank led business models. There are a number of technologies involved behind mobile banking such as interactive voice response, short messaging service, and wireless access protocol and standalone mobile application clients. With the use of these technologies, mobile banking service is made effective and approachable among the customers. Additionally, the banks which adopted and started mobile banking technologies first gained competitive advantage. With the use of mobile banking technology, banks started getting automated replies which benefited the bank for not hiring additional employees required for customer service (ITU News, 2012).
Other than this, there is a number of success stories of banks used mobile banking and gaining competitive advantage. One of them is of ABN Ambro bank which facilitates its existing customers to make an access to their account for transactions made and inquiry by the use of simple SMS. ABN makes it possible with the use of MPOWER application used in mobile banking. One can make following uses through MPOWER:
- It provides inquiry in relation to balance & transaction
- Informs about the share holdings of an individual in Demat account
- It also provided the facility of funds transfer to ABN Ambro bank and other banks
- Moreover, cheque inquiry and stop cheque information
- Information regarding bill presentment and payment
- Fixed deposits can be opened online through MPOWER application
- Additionally, requests are made for cheque books and account statements
- Other than this, requests are made for new PIN and changing PIN online (Infogile technologies, 2012).
Other banks providing mobile banking service are HDFC, Citibank, IDBI, etc. These banks provided a data stating the registered users of mobile banking which dictate that the banks have more than 1.75 lakh users for mobile banking service. Apart from this, IDBI also added that more than over 12% of their internets banking users also avail the service of mobile banking as well ( Donner, 2007)
Furthermore, Citibank also have advanced technologies in relation to mobile banking service which are being used to gain competitive advantage. It has two enduring trials for cell phone. In this context, the first trail involves the partnership with MasterCard, Nokia and AT&T. Through this, chips are placed in cell phones that allow debit and credit cards of Citibank to make payments by signaling an individual’s cell phone at a joining store’s register (Jones, 2000). Other technology used by Citibank in acquiring mobile banking service is partnership with Obopay that allows credit and debit cards to transfer money from one mobile to other. Besides, many analysts have researched that more revenue can be gained in coming years through mobile banking service when more advanced functions would be added to mobile phones such as international transfers, arrangements for travel booking, etc. Bank has added that it has subscribers more than its expectation (Infogile technologies, 2007).
Other than these technologies of bank, there is GCASH mobile banking service in Philippines and M-PESA in Kenya. These technologies allow banks to maintain good relationship with their customers and create a strong bond with them for future perspective of bank (ITU News, 2012). There is a Lebanese bank which started with mobile banking and adopted innovative and advanced technologies in this regard. The banks provided their customers state-of-the-art services allowing fast development of bank’s performance in a competitive market. In contrast, mobile service became a major factor for success of Lebanese bank (Ghaziri, 1998).
Role of smart phones in mobile banking service:
With the advent of 3G and 4G technologies in smart phones, mobile banking is hyped to be the next wave in banking sector. New devices and significant applications available in phones provide the customer with full security while making any transaction with their accounts. It involves the security from each angle like from making payments to store pushing coupons to the consumers inside the store and from getting passes to events to paying for tickets anywhere. The technologies in smart phones has the potential through which service providers can develop innovative and advanced solutions for their customers which were not possible with other competitive technology like Bluetooth (Kaul, 2012).
In sum, smart phones have made mobile banking more convenient for the customers and provide them solutions to handle their finances. There are some applications in smart phones, through which bill payment, money transfer and other transactions are made on time irrespective of the place where the person is. Smart phones help banking sector gaining the market share with its convenient use and immediate benefits. Furthermore, rupee times demonstrated in its report that easier and faster banking can be done with the use of smart phones. People will be able to operate their bank accounts through smart phones at every corner of the world. Customers can perform almost all the transactions which are non withdrawals at a click of their finger and without wasting the time. There are Google’s androids, Apple iPhone applications that have enabled many banks to liberate applications on cell phones with which customers can carry out multiple banking operations. The services available in smart phones for mobile banking are internet mobile payment service, pay bills, tickets, etc. Customers can make remittances through smart phones easily. Once they use their number for mobile banking service, it gets registered with the application and bank’s server and further transactions are made simply after that. Moreover, online bill payment includes Gas, insurance premiums, mobile, fixed telephone bills and electricity bills (Sharma, 2010)
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On the basis of overall discussion, it can be concluded that mobile banking has made its rapid growth in banking sector since its use. The landscape of global banking is changing and redefining its concepts. On the other hand, banks that are not providing mobile banking service to their customers may face complexities. Mobile banking through a service based on SMS requires lowest efforts and amount and is also economical and cost-effective. People can easily access their account information and content services through mobile banking. Similarly, payments & transfers made on time, services related to debit and credit cards are also accessed smoothly with mobile banking service.
On the other hand, there are some disadvantages of using mobile banking service on cell phones. It may cause security problems to the customers. Sometimes, people’s account and payment related information is hacked through fake servers. Similarly, it is not used properly on dumb phones as those phones do not hold applications and features required to access mobile banking. Some cases of bank’s success and technology adoption have also been illustrated that acquired this service first in their banks. To gain the competitive advantage in this modern business world, SMART phones play an important role in banking. The applications and features given in such phones make mobile banking user friendly and easy to use. It provides both the Bank and the customer immediate benefits to use in this service.