Thought line issue 38 jan 2011 - the banking & financial services e-newsletter from wipro...

JANUARY 2011JANUARY 2011

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ethe Banking & Financial Services -newsletter from Wipro Technologies

Volume IX Edition XXXVIII

the Banking & Financial Services -newsletter from Wipro Technologies e

Feedback & Suggestions aremost welcome. Please email to

[email protected]

Editorial Team

Abhishek GuptaVinodh Ravishankar

Uday Shankar Badampudi

Volume IX Edition XXXVIII

Index

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2the Banking & Financial Services -newsletter from Wipro Technologiese

For Wipro internal circulation only

• Foreword................................................................................................................3

• Know Your Domain Terms.......................................................................................4

• Demystification

• Innovation/ BTG Corner

• Account Speak

• Market Watch

Fun Corner...................................................................................................................27•

• Bridget Louise Riley...................................................................................................28

- Mobile Payments: Ready for the Big Leagues?............................................................5

- Mobile Payments: The Match Begins!.........................................................................8

- Wipro's home grown Mobile Banking Solution.........................................................12

- The Apt Architecture for Mobile Banking..................................................................14

- mTouch – Wipro's e-Mobility Solution.......................................................................16

- Mobile Banking for BFSI.............................................................................................18

- Mobile Banking trends in UK ....................................................................................21

- Risks and Regulations in Mobile Banking Adoption ..................................................23

- Mobile Banking and Tablets – The new era...............................................................25

Foreword 3the Banking & Financial Services -newsletter from Wipro Technologiese

Dear Readers, Warm Greetings!

We, the editors wish all the readers a "Happy New Year".

World is going wireless with the explosion of technology in the field of mobile and smart gadgets, financial institutions are trying to keep up with the technology by introducing various solutions to reach out to customers. Lately competing with the financial institutions are the retail sectors that have an advantage by holding the customer data.

As mobile and smart gadgets have become an integral part of human life and corporate strategies, we decided to put a detailed perspective on mobile banking industry through this January 2010 edition. We, the editors played host to our contributors who took the center stage to share a bevy of topics on this platform. To simulate a very understanding edition we have de mystified some key domain terms being used in this field. Then we have the article where author gives you a detailed description on the trends in mobile payments followed by the article analyzing the Industry structure in mobile payments. After having a detailed understanding on the mobile payment industry we present in our innovation corner with the Wipro's home grown mobile banking offerings to the financial industry. As part of the Wipro account speak section, the author gives an insight on the Remote Banking Application and Mobile wallet solution. After a comprehensive coverage of the trends and the challenges in the payment Industry, Wipro's home grown solutions and Account speak, we come to the Market Watch section where we have authors describing the direction in which the mobile industry is heading to in the UK Market, followed by risks, regulations and challenges faced in the mobile baking industry and the new era of mobile banking through tablets.

We are thankful to the authors who shared their valuable inputs to help us compile this edition. We also thank the design team for crafting a very attractive throughtline edition.

With each article presenting a wealth of knowledge and insight on the topics, we are sure this edition is worth reading and spending time.

Happy Reading!! Abhishek Gupta

Vinodh RavishankarUday Shankar Badampudi

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The views and opinions expressed in the articles/other contributions by individuals are strictly those of the authors and should not be viewed as professional advice with respect to your business.

Parts of the Images used in this Thought Line is from Reproductions of Bridget Riley's Paintings


Know Your Domain Terms

Browser-based Mobile Banking:

Installable Client-based Mobile Banking:

SMS Banking:

Push Message:

Pull Message:

One-time password (OTPs):

Short Codes:

A mobile banking solution accessed using a URL in a web browser on a mobile device. The handset does not store any information.

A mobile banking solution that is a software program that must be downloaded and installed on a mobile phone.

A service offering from banks to their customers allowing them to receive banking services over their mobile phones using Short Message Service.

Push messages are those that a bank sends out to a customer's mobile phone, without customer initiation. Examples: mobile marketing messages, alert messages related to account activity etc.

Pull messages are those that are initiated by the customer, using a mobile phone. Examples: Messages requesting information on account balance, currency exchange rates and deposit interest rates etc.

OTPs are credentials requested by consumers on a one-off basis when they want to transact online. The password which is sent to the consumer's phone via SMS expires after a single usage or a defined time.

Special telephone numbers that are four to six digits long. The idea is to make it easy for customers to send text messages to business organizations.

Enhanced Messaging Service:

Smartphone Operating Systems:

Android:

iOS:

Blackberry:

Symbian:

Windows Phone 7:

Microbrowser:

Mobile Portal:

EMS allows users to send and receive media items such as ring tones and operator logos to and from EMS-compliant handsets.

Here are a few popular smart phone operating systems in the market:.

Android is an open source, Linux-derived platform from Google, along with major hardware and software developers (such as Intel, HTC, ARM, Samsung, Motorola and eBay).

Apple iPhone, iPod Touch and iPad use the iOS operating system, which is derived from Mac OS X. iOS devices are developed by Apple.

This OS is focused on ease of use, especially for business users. There are over 15,000 downloadable applications in Blackberry's App World.

Symbian is a smart phone operating system (OS) from Ericsson, Psion and Nokia. It is an open source software platform.

A mobile operating system offering from Microsoft after the Windows Mobile platform..

A microbrowser enables web functionality in hand-held devices like mobile phones. The range of functionality is scaled-down when compared to a traditional browser.

A web site specifically designed for mobile devices. It is typically aimed at taking a wide

range of content, services, applications and links to the mobile user.

Bluesnarfing is a compromise of information safety on a wireless device using a Bluetooth connection. The implementation of Bluetooth on a mobile phone might make it an easy target to siphon off critical information without any warning or indication.

A n i n f o r m a t i o n a n d entertainment service that is based on mapping the geographical position of the mobile device. Location-based services have been put to excellent use in the banking sector to deliver information on the location of the nearest banking cash machine, branch etc.

Bluesnarfing:

Location-based Service:

References:www.netbanker.comwww.searchmobilecomputing.techtarget.com


Demystification

Mobile Payments: Ready for the Big Leagues?Sushankar Daspal Practice Head Channels, Banking and Financial Services

What are Mobile Payments?

Existing Market Structure

Handset and Handset Manufacturers

To begin with, we must have a common understanding of what constitutes Mobile Payments:

1) Making a purchase at a brick and mortar or online retailer using the mobile phone as a payment mechanism. This will be called as proximity payments in this article.

2) Transferring funds to a beneficiary using a mobile device as the origination mechanism; or uniquely identifying a beneficiary by specifying their mobile number. This will be referred to as Peer to Peer (P2P) Payments in this article.

There are more variations of what constitute mobile payments, but this article will focus on the above two. Please look at the glossary or other articles in this issue for explanation of some of involved mobile technologies.

An informed reader will be forgiven his skepticism when he reads the title of the article. After all, there is good basis for the reader to doubt that Mobile Payments are ready for the big leagues. We have been hearing from the year 2000, that mobile and mobile payments are the next big thing. Contrary to predictions - mobile payment has not really taken off. To understand this – one must fundamentally examine market structures and the constraints within it.

The following diagram will be useful for us to understand the key participants in the market. The market has been segmented into 3 classes of entities:

1) Devices: These are the physical instruments that act as enablers or constraints in the area of mobile payments

2) Users: These are the two counterparties in a sale transaction – the buyers and sellers

3) Intermediaries: These market participants – who are staking a claim to the revenue streams involved in the area of mobile payments.

The handset itself is a fundamental enabler in this entire transaction flow.

The handset must have the ability to support mobile payments.

For proximity payments (payments to brick and mortar retailers) – the handset must support technologies like NFC (Near Field Communication). The handset manufacturers are responsible for making the handsets. Technology is not the constraint here. NFC technology is already available. For P2P payments (peer to peer payments – payments from one individual to another) – current implementation use technologies like mobile web, SMS, downloaded app, inbuilt accelerometer and NFC (for “bump” based payments). However, for NFC technologies to be embedded into production runs, some party must be willing to bear the additional cost. The question is who will bear this cost?

Other technologies like mobile web, SMS and downloaded applications are already main stream. Almost 100% of current phones support SMS, over 80% of all phones support WAP. Estimates on downloaded app support on phones vary – but, at least 60% of the phones support it.

Newer phones in the market – especially smartphones are now enabled with built in accelerometers. These accelerometers have been used for innovative functionalities including determining when two phones are in proximity to each other and have been “bumped” or “touched” with each other.

For processing mobile payments in brick and mortar store, the point of sale terminals needs to be adapted / upgraded. This is to enable these terminals to handle NFC based technologies.

POS Terminals

Devices Users Intermediaries

Handsets

POS TerminalsRetailers

ConsumersCarriers

Payment Service Providers

Financial Institutions


Demystification

Retailers have a huge investment in these points of sale terminals. Upgrading these terminals has significant investment and operational implications. Terminals have to be replaced. Back end systems have to be modified to handle these new terminals. Staff has to be re-trained.

Customers are the “buyer” in a purchasing transaction. This is possibly one of the most critical roles in the value chain.

Technology can be available. All other market participants can be ready. However, if the customer is not willing to change their purchasing behavior – it will all come to naught.

In many developed markets – consumers have developed very high levels of comfort with their existing payment mechanisms like cards. What is the additional incentive for them to change their behavior and adopt the mobile phone instead?

One argument is– you can leave home with exactly one item –your phone. Your phone will become your wallet. It will enable you to access all your payment devices and bank accounts.

Your phone will act as your keys to your car, office and home (Surprised? Clarion Hotel is already testing this capability). However, ask your Jane and John Doe about their view of these developments. The first reaction is – “what if I lose my phone?”, “is it safe?”, and “who will pay for the new phone?” and “where can I use it?”

History has taught us one thing – never underestimate the inertia of existing consumer behaviors. Current environment factors have made another aspect clear to us – we have not yet answered who is paying for the new phone and whether the consumer has sufficient outlets in which they can use this new technology.

Retailers are the “sellers” in a purchasing transaction. As mentioned earlier, retailers have significant investments in existing point of sale equipments.

In many sectors, the retailer margins are as low as 5%. Retailers will only invest in supporting these new technologies if:

Customers

Retailers

- There is a large consumer demand for it- Their cost of payment processing is coming down. Current interchange

structures constitute a significant cost of doing business for many retailers.

Retailers are yet to see any widespread adoption of NFC based phones. There is hardly a business case for them to rip out their existing point of sale systems. As retailers avoid investing in NFC readers at POS terminals – consumers see a complete lack of acceptance points for their shiny new phones. This is a classic chicken and egg environment…

Carriers are the infrastructure providers for the entire mobile telecommunication ecosystem. The role itself contains the key dilemma that carriers are facing with. They are fighting to move away from the position of infrastructure provider into a position of a value added partner in the daily lives of their customers.

The current state is such that maturing telecommunication technology has made the cost of service provisioning to tend towards zero. Bandwidth is cheap. Basic services like voice,

messages and data are now commodities. ARPU is being challenged as prices for basic services come down.

Carriers have to identify new revenue streams. Mobile payments are especially enticing. If you get a slice of this market – you redefine the industry from being not just a communication provider – but, you become a financial services provider (take the example of Safaricom and M PESA from Africa).

This is even more critical in developed markets where carriers subsidize the cost of new handset devices to the customers. As a carrier – there is a business case for investing in new NFC technologies into the handsets that are being provided to the customer – but, only if a share of the revenue is assured.

However, for the past 8 year – banks and carriers have not been able to agree to a business model for sharing revenues. Ergo, carriers have not invested in enabling NFC technologies into the phones.

Carriers have instead examined a variety of solutions where they can leverage their existing investments:

- Usage of mobile airtime as a proxy for currency – this has been done extensively in some developing markets

- Leveraging their extensive billing infrastructure to enable customers to charge small purchases to their mobile phone bill. Typically, the amounts

Carriers


Demystification

are small – as the carriers take on credit risk. In order to mitigate this, the margins charged by carriers to retailers are as high as 50%. Thus, much of the focus on sale via carrier billing has been on digital goods – where the incremental cost of production is zero.

Payment Service Providers handle the payment processing for all non-cash transactions in a buy-sell relationship. Some of the most well known payment service providers are the card associations like Visa, MasterCard and American Express. Other widely used payment service providers are the ACH networks and Giro providers.

These entities have a vested interest in the entire mobile payment. After all they own much of the entire transactional space and process trillions in funds.

If mobile payments are expected to be a part of the future – they want a slice of it. They are also not interested in sharing any of their current revenue streams with any other party – apart from their traditional partners – financial institutions. Payment service providers have been in the forefront of multiple pilots in examining how mobile payments can be enabled via NFC and other bridge technologies like Stickers.

Financial institutions are the custodian and provider of financial services to the end customer. Banks have traditionally been very protective of their roles as financial service providers to the customers.

Their view points are:1) Customers trust us with their financial lives. In order to maintain that trust,

we have to complete own all aspects of their financial transactions. After all, a typical customer trusts the bank statement (they might not trust banks as entities). However, these customers have a sense of ambivalence about their telecom bill.

2) Fear of disintermediation: This is what keeps bankers awake at night. If we let go of any part of mobile payment activity to non-financial players like telecom companies – who will end up owning the customer? What will happen if the telecom company switches our customer to another bank or to a non-bank?

Payment Service Providers

Financial Institutions

3) What happens to our margins? Telecom companies are well known for squeezing margins in the entire value chain.

Banks have started enabling features in their mobile banking offering that do not require handset or carrier dependencies. These include Peer to Peer payments – where the funds transfers happen over the banks existing infrastructure.

This will explain the conundrum that exists today in the mobile payment industry. The issue is not about technology. The technology exists. It can be implemented into mass production today. The issue is about market structure and business models. Unless, these get resolved, mobile payments will not enter the big leagues.

Read the next article for a view of how some of the developments in this space are attempting to solve these structural problems.

The journey continues

Editor's note:

References:- http://bu.mp/ - http://www.huffingtonpost.com/2010/11/03/cell-phone-replacing-room_n_778097.html - http://en.wikipedia.org/wiki/Safaricom#Electronic_cash_service - http://en.wikipedia.org/wiki/M-Pesa

Starbucks Mobile App

Business Model

Consumer Behavior

Retail Readiness

Industry Consortiums Handset Changes


Demystification

Mobile Payments: The Match Begins!Sushankar Daspal Practice Head Channels, Banking and Financial Services

Structural issues in the area of mobile payments have stunted its growth over the past decade (Editors note: Read the other article in this issue for details). However, this author and many other observers of this industry are bullish about the prospects for mobile payments.

An issue to one entity is an opportunity for another. This has been very true in the area of mobile payments, where innovative start-ups have sensed the opportunity and have been preparing to capitalize on it. In addition – a number of different events are converging to set the stage for mobile payments to enter into mass adoption.

The following diagram will help put the changes that are occurring in context.

Here are a few key events that are influencing this space:

Starbucks is not the first name that strikes the mind when one thinks of mobile payment. Starbucks has introduced a mobile application using which customer can pay for their purchases at their stores and in their outlet located within Target.

Customers can load money into their mobile application. When they are ready to pay, the application displays a barcode on screen. Staffs scan the bar code shown on the mobile screen using their POS and the purchase is completed. The mobile application acts as a loyal application and users have access to functions that enable them to view their transactions, check their balances and reload the card. The impact of what Starbucks is doing – should not be ignored. This will cover 6800 stand alone stores and 1000 outlets in Target based stores.

Starbucks has opted to proceed with currently available technologies. Customers are not expected to buy new devices. They use the smart phones that are already available with them. They need to download an application onto these

Starbucks Mobile Application

Setting

the

Stage

Business Model

Consumer Behavior

Retail Readiness



Demystification

phones – again a behavior that is consistent with the early adopter segment. In return – the customers do not have to handle cash on a day-to-day basis and can optimize their shopping experience.

On the Point of Sale side – the impact is on training their staff to handle the scanning of bar codes that are shown on the mobile screen. Bar code scanning equipment is readied to ensure a quick and error free scan.

Starbucks case is interesting. They have not decided to wait for industry consortiums to work out the detailed business model for mobile payments. Starbucks has implemented a closed loop system. Some observers opine that this move might result in fragmentation of the mobile payment market (due to multiple closed loop systems). The jury is still out on this one.

Google can be the 800 pound gorilla in the area of mobile payments. This is driven by strategic concerns. The Chairman of Google has laid out the focus of Google for 2011 – and “they are all about mobile”. In these strategic focus areas; Mobile Money has been specifically called out as the second focus area.

How is Google planning to attack this space? The next release of Android 2.3 code name – Gingerbread; has APIs that support reading of NFC data elements. For one of the first times, a mainstream phone platform now has NFC support. It is expected that the next Nexus model will have an embedded NFC chip.

Google

It is yet to be seen the form in which Google will work with financial institutions to implement a mobile payment service. However, based on past business practices – it is expected to be an open wallet supporting multiple financial institutions and multiple payment accounts.

In order to understand Google's focus in this space – we must examine Google's motives.

We all think of Google as a search provider. However – Google is in the business of advertisements – specifically contextual advertisements. Advertisements are from where Google earns more than 90% of its revenues.

Where will be the next major platform where in people will search for information? Mobile. Factor in location based services (via GPS or cell tower triangulation), and Google will be able to return search results customized to the geographical position of the searcher.

With NFC chip, Google will now be in a position to cross sell to the customer as they make purchases at a point of sale. It would be able to learn about the customer's purchasing habits – just like Google today learns about a searcher browsing patterns and search queries. In a similar fashion, Google will be able to improve the results it delivers to the mobile.

A hint of Google's plan can be seen in the recent pilots it has executed in Portland Oregon. Retailers have been given NFC tags that they can position on their display window. NFC based phone users can read these tags and pull up information about these retailers. Google is activating 9 million devices per month. Once it starts shipping phones with NFC chips embedded – it will start controlling a key part of the value chain. Google intent and impact on this space should not be underestimated.

ISIS is a joint venture that has been created by 3 of the leading carriers in the US market: Verizon, AT&T and T Mobile. Collectively, these carriers have a subscriber base of over 200 million customers. In context – these carriers serve 60% of the US market. ISIS has also tied up with Discover Financial Services. Discover Financial Services has over 7 million merchant acceptance locations. BarclaysCard US is the first issue that will issue cards on the network.

ISIS is an evolving business. Significant amount of details are not available. It is expected that ISIS wallet will be a multiple financial account wallet. It is expected that credit, debit and prepaid applications will be launched on the ISIS network.

However, it is not clear whether they will be a true open system or whether all of these applications will be against a proprietary ISIS accounts.

ISIS

Google

Business Model

Consumer Behavior

Retail Readiness



Demystification

There are a few more open questions. What about the handset plans? Are there going to be special incentives for retailers to join in? Will the interchange structure be changed? How is ISIS going to have the acceptance coverage that a Visa / MasterCard has with its plastics? How will customers be encouraged to use this service?

There are many open questions – but, it would be wise to keep an eye out for ISIS moves in this market.

MasterCard and Visa have been very active in the space of mobile payments. After all, being the incumbents they have much to lose if the mobile payments market is captured by alternative payment service providers. MasterCard and Visa continue to work with traditional financial services organizations as they go about these pilots.

There are a few interesting facets about MasterCard and Visa pilots. An attempt has been done to adopt “bridge technologies” to mitigate the fact

that almost no mainstream phone today has NFC as part of its handset technology. The bridge technologies examined by MasterCard and Visa include embedding the NFC on a MicroSD card slot. It is estimated that 60% of all new phones sold today have the ability to accept a MicroSD card.

The NFC chip is embedded on these SD cards and the phone communicates with this NFC chip via technologies like SWP – Single Wire Protocol. These allow

MasterCard / Visa Pilots and Transit Trails

applications running on the phone to communicate with the NFC chip and provide a variety of sophisticated wallet related applications.

Some phones like Apple iPhone do not have SD cards. This problem has been mitigated by creating an iPhone body case. The body case has the slot for an SD card and the iPhone is slipped into the encompassing body case. Of course, this makes the phone bulkier – and this is not a solution that all iPhone users will adopt.

Two of the leading players in the MicroSD NFC space are DeviceFidelity and Tyfone. DeviceFidelity is working with Visa on many of the pilots.

Other bridge technologies include having a sticker on the phone. The sticker is physically attached to the body of the phone. These technologies fall under the category of passive tags. The phone cannot communicate with these tags – but, the user can swipe the phone near a reader. Not all user demographics will be interested in attaching a sticker to their phones. After all, we do term these as bridge technologies…

The most interesting pilots, from a consumer behavior standpoint, are being done with mass transit agencies. Transit riders will be able to pay their fares at the turnstile using their phone. This is a significant convenience for the transit user.

No standing in queue for tickets. No need to buy transit passes. No fishing in your purse or wallet for the pass. Your phone is much closer to the hand – just swipe and ride!

Imagine the viral effects when other passengers see the phone being used for making these payments. There will be intrigue, interest, and then adoption.

ISIS

Business Model

Consumer Behavior

Retail Readiness


Visa and

MasterCard

Pilots and

Transit

Trails

Business Model

Consumer Behavior

Retail Readiness



Demystification

It is the view of this author that these implementations do the most in making mobile payments mainstream. If you can pay for your transit ticket via the phone – it is a smaller leap of faith to start paying for your daily newspaper or breakfast with your phone…

This author is convinced that mobile payments will be able to make significant strides in markets where there are rapid mass transit systems and where in users are habituated to using contactless technologies to pay for their rides.

Fraud is definitely going to emerge as a key risk in the mobile payment side. Customers definitely view mobile payments as a risk. Consumers worry about losing their phones, and with their phone – control on their bank accounts. Data from merchants who accept mobile payments indicate that they face 40% higher fraud rates. 14% of these merchants also agree that fraud rates are increasing in the mobile channel.

The question is – do we even have a view of the full picture of fraud on the mobile channel?

Buckle up for the journey. The interactions between these varied players will make the mobile payment space a very interesting area! There would be new models created from this interaction – that today, are not yet conceived.

Risks

Closing Notes

References- http://www.technewsworld.com/rsstory/71694.html?wlc=1295634516&wlc=1295767900- http://hbr.org/web/extras/hbr-agenda-2011/eric-schmidt- http://www.nfctimes.com/news/google-builds-nfc-mobile-wallet-us-banks-interested- http://ipcarrier.blogspot.com/2011/01/googles-top-priorities-are-in-mobile.html- http://www.internetretailer.com/2010/11/17/three-major-wireless-carriers-back-mobile-

payments-program- http://blogs.forbes.com/velocity/2010/11/16/the-isis-mobile-wallet-are-visa-mastercard-and-

paypal-under-siege/- http://www.digitaltransactions.net/news/story/2809- http://blog.visa.com/2010/09/21/have-phone-will-travel/ - http://digitaltransactions.net/news/story/2655


Innovation BTG Corner

Wipro's home grown Mobile Banking SolutionKhushboo Goenka Business Analyst, Banking & Financial Services

With increasing competition in retail and corporate segment, banks are looking to increase their customer base in the Small and Medium Business (SMB) Segment. There is huge untapped revenue potential in this segment waiting to be unleashed by the banks just by providing pertinent products and services via the right channel.

Most SMB customers do not have access to a dedicated Relationship Manager who can provide them with dedicated services. Their key options are online banking, branch banking, and calling the contact center. There is a need for easy-to-use self-service channel that is sensitive to the fact that SMB owners are time crunched and mobile.

SMB owners might not spend all day at their desk in-front of the computer. But they would have important matters that need their immediate attention. An example would be approving some important payment. Accessibility with respect to their bank and/or internet becomes imperative at these moments. These SMB owners always have their cell phones with them. In fact, extensive usage of smart phones by SMBs makes it an attractive platform to offer feature rich solutions on. A survey by Egnyte group reveals that 25% of US SMB owners use their smart phones more frequently for business purposes than their computer. Hence, there is a great opportunity to bring the bank to the palm of their hands, providing them with instant financial access and connectivity.

Mobile banking and its usefulness to retail customers, corporates and small business is evident. However, current mobile banking offerings have been focused more on retail customers. There is also limited presence in the corporate segment. But an off-the-shelf retail or corporate mobile banking solution will not address the requirements of the small business owners. Banks need to build a customized solution to meet the needs of this customer segment and address the untapped market.

To address the needs of instant access, connectivity and pertinent SMB business and banking features on the go, Wipro is developing a comprehensive banking solution for SMBs that offers not just conventional banking functions but also SMB specific value added features. The solution will work on smart phones and tablets

Wipro's Home Grown Solution

as a downloadable application and will be offered by banks to their SMB customers. Intuitive user experience and native user interface makes the application easy to use and experience rich.

Wipro's solution addresses the entire arena of SMB banking needs as shown in Exhibit # 52 17WRC – E2 Towergroup as below:

The beauty of the solution lies in the fact that it elevates the bank from being just a traditional financial contact to a one stop shop for all business needs involving money, thereby creating exit barriers for the SMB. By providing this solution the bank will be able to provide the SMB with not just conventional banking features of viewing relationship summary and creating funds transfers but also special SMB business features like payroll management and expense claims processing. The solution will also provide value added services like positive pay and remote deposit capture which will empower the SMB with features they might never have access to if they use the run of the mill retail solutions currently being provided to SMBs.

The solution is being built of Wipro's accelerator home grown mobile platform that significantly reduces the effort needed to build native screens for different smart phone platforms. The solution is being built as a set of prebuilt components

Figure 1: Hierarchy of Small Business Needs



that will enable the banks to pick and choose the functionalities they want to offer to their SMB customers. It is a customizable solution and will fit well with banks looking for accelerated be-spoke development of the solution or just extending their existing mobile banking platform to SMBs. The solution will work on the existing banks infrastructure with quick integration efforts.

Mobile applications are the future of banking. It is the new normal. Providing these capabilities will enable the bank build deeper relationship with its SMB customers. As SMBs generally don't have their own IT infrastructure, giving them basic business functionalities like payroll management and expense claims will not only lock the SMB in and prevent it from moving to another bank but will also earn fee-based income for the bank.

Generally, retail banking applications are provided free of cost to customers. But, a recent study by Aite group reveals that 27% of small-business owners are likely to pay as much as $10 to $15 per month for mobile banking solutions offering remote capabilities such as transaction initiation and authorization. Hence the banks can earn additional revenue by providing this channel.

As per the Forrester report - The State of US Small Business Banking by Brad Strothkamp and Peter Wannemacher, 51% of SMB Owners prefer to keep business finances with same bank as personal account. If the bank can lock in the SMB customer by providing him/her best of the breed functionalities, the bank will also gain retail customers by way of SMB owners and employees.

What's In It for Banks?



The Apt Architecture for Mobile BankingDivye Kapoor Senior Business Analyst – BFSI

Nitin Sanan Senior Consultant – BFSI

Introduction

Mobile Banking: The Architecture Options

Messaging Based Mobile Banking

In today's world, as mobile phones become an increasingly indispensable medium of communication, consumers are expecting their banks to provide mobile banking as part of their standard services package. Industry analyst forecasts that eight of the top ten banks in the United States will soon offer mobile banking and that within five years, a quarter of today's online banking customers will bank by a mobile phone. However, there is still scope for financial institutions to achieve differentiation in this fast emerging mobile banking space. The key to gaining this competitive advantage would lie not solely in adopting the latest technology but rather in choosing the technology and architecture which best suits an institution's existing value proposition. Through this white paper we try to draw a comparison between the prominent architectures available to financial institutions to deploy new mobile banking solutions and also try to bring out the rationale as to why we think the native mobile apps would end up as the eventual winner.

Mobile Banking is essentially delivered in the following three ways:1. Messaging Based (SMS and USSD)2. Mobile Browser3. Downloadable Application

From any financial institution's perspective, the messaging based method is the easiest and hence the most popular method of launching its mobile banking offerings. There are essentially two mobile phone technologies in use for messaging based mobile banking: SMS (Short Message Services) Text and USSD (Unstructured Supplementary Service Data).

SMS banking solutions offer customers a range of functionality, classified by push and pull services, 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, when your balance goes below a particular amount. On the other hand, when the bank sends information as a

response to the request sent by the customers, it is termed as 'Pull'. So, if you request the bank to send a statement for the last few, say last 5 transactions, then it is a Pull based service. Clearly, push transactions are not as complex as their pull counterparts. Depending on the selected extent of SMS banking transactions offered by the bank, a customer can be authorized to carry out either non-financial transactions, or both and financial and non-financial transactions.

The main advantage of SMS mobile banking applications is that it works on virtually every phone, regardless of manufacturer, model or carrier. Also sending text messages is relatively cost-effective and accommodates two-way communication, allowing messages to be initiated by banks or by customers. However, SMS based transaction services face the challenge of convincing end users of the security front.

The second mobile phone technology in use for Mobile Banking Messaging is USSD (Unstructured Supplementary Service Data). Unlike SMS messages, USSD messages create a real-time connection during a USSD session. The connection remains open, allowing a two-way exchange of a sequence of data. This makes USSD more responsive than services than its SMS counterpart.

Mobile Browser Based Mobile BankingFinancial institutions have deployed Mobile Internet and WAP (Wireless Application Protocol) websites since the late 1990s but the consumer adoption has only been significant in recent years as a result of cheaper data network tariffs, advent of smart phones and faster mobile broadband networks. is the technology architecture that makes accessing Internet pages possible from a

WAP

http://computer.howstuffworks.com/wireless-internet.htm



mobile phone. The advantage of using a Browser based service is increased security as no information is left on the phone. Also since the browser is a universal application without the requirement of a special download, the rollout of such a service is pretty quick.

LLatest in the mobile banking world is the download of the application on the mobile device. This single application delivered by the bank to the customer's mobile device will act as a delivery channel interface to initiate various financial and non financial transactions. Mobile client applications are considered the most secure channel for data transmission because a combination of client application on the handset and the connecting mobile banking sever allows for stringent authentication and encryption. However the installation of such applications on the mobile device would be limited to smart phones based on iPhone, Android or Blackberry and other handsets capable of operating J2EE/J2ME applications. In a short span of time, mobile client applications have evolved to give the users access to services which are richer, faster and which do not necessarily require a dedicated connection. With smart phones gaining acceptance and the customer becoming mobile savvy day by the day the future of this mobile banking architecture certainly seems bright.

Mobile Client Applications

A comparison of all the three prominent architecture types is summarized in brief below:

With the number of people actually owning a smartphone (devices that let people download mobile apps) still being relatively less today, banks will need to continue

Conclusion

to offer message-based and browser-based mobile banking services to reach most of their customers. However, in the coming decade as the market share of smart phones grows to a sizeable chunk and they become the norm, banks would surely tread the path of offering mobile banking to their consumers through “Native Mobile Apps”. The reasons for this are multifold. Apps let banks create a 'proactive' channel that provides actionable information. In contrast, mobile Web sites are essentially a reactive channel that only provides information once customers decide to access it. Furthermore, unlike today's mobile Web sites, native apps can integrate with the handset's core functions like GPS and camera. Apps thus enable a wider set of functionality that is unique to the mobile channel like remote check deposits and ATM and branch finders. All in all, Apps can leverage some unique capabilities of the mobile channel and would eventually emerge the winner!

Parameters Message based Browser based Application based

Ease of use Very High

SMS alerts for transactions above a threshold and the daily account Balance update can be read by the masses.

Moderate

Requires internet literacy.

Low

Installing and Operating a banking a pplication on a mobile handset would require a basic technical knowledge.

Dependability on the device

Low

Almost every handset is capable of receiving text messages.

Moderate

Requires Internet Access.

High

Restricted to smart phones and handsets opera ting in J2EE/J2ME environment only.

Security Low

Vulnerability to malicious messages and End-to-end encryption is currently not available.

High

End-to-end encryption is available.

High

Strong encryption and authentication of sensitive data.

Infrastructure cost

Low Moderate

Though the initial cost in developing a web site is high but the subsequent roll -out cost involved is relatively low.

High

Relatively high as each and every model of handsetwould call for a new application.

Range of services

Low Moderate

Though Browser based banking can provide richer set of functionality compared to the messaging based medium but lacks the capability to fully exploit the handset features.

High

Allows for c ustomization and branding.

Time to market

Low Low High



mTouch – Wipro's e-Mobility SolutionRaghavendra Hosabettu Senior Consultant, Mobility Innovations Group

mTouch is a light weight customizable mobile application accelerator framework which can be deployed in any standard java container. It facilitates shorter time to market cycles and supports development, configuration and management of rich clients across multiple platforms. The mTouch solution accelerator framework consists of loosely coupled and extendable components available on client & server. It supports non standard Java based phones and PoS devices.

Solution Snapshot

Benefits- 30-50% of Reduction in development

cycle and effort- Reduced porting effort to additional

devices- Reduced testing effort as the

components are well tested and proved- Complete re-usability of server side

implementation- Control to update look & feel and

application behavior from Server- Web based interface to help define the

screens- Supports Mobile Web, SMS and

Downloadable application- Multiple application support (multi-

tenancy / multiple LOB)

Solution Snapshot

Time to Market

Extensibility & Reusability

• Facilitates shorter time to market cycles and supports both mobile web & downloadable clients where as other enterprise mobile platforms generally provide either of them.

• Deployment cycle time is less and it can be deployed in any standard java container where as other enterprise mobile platforms have their own proprietary protocols tied to a specific server restricting deployment.

• Provides a common UI tool which reduces the UI development time for multiple platforms.

• Handles rendering mobile content on a diverse range from smart phones to feature phones.



Manageability & Flexibility

Performance & Scalability

Complexity Reduction

Software Licensing & Cost

•• Can be developed on multiple operating systems and platforms with optimal

re-usability.

• A good track record of performance and scalability in multiple customer deployment scenarios.

• Ability to scale up and send large data size of more than 5 MB per transaction.

Less complex compared to other commercial mobile platforms in terms of• Maintenance• Development• Deployment• Configuration Management

• Uses minimal infrastructure and can be deployed using a shared infrastructure which results in reduced infrastructure cost

• Engenders a flexible commercial model

Location independent

Wipro's Experience - mTouch has been deployed for various clients in different domains like Telcos, Insurance (Telco Hosted and Enterprise hosted models). Dedicated teams of mTouch experts are available for development, enhancement and troubleshooting.

Key Differentiators


Account Speak

Mobile Banking for BFSIMadhavi Polepeddi Senior Business Analyst, Banking and Financial Services

Mobile banking market has grown significantly over the several past years. In the hyper-connected world of today, consumers are looking for solutions, which leverage the power of evolving mobile ecosystems to facilitate their transactions with the bank.

According to a January 2008 eMarketer article, “More flip-phones and clamshells will become portable ATM's, according to research firm Celent. Celent said that 10% online banking U.S. households will use mobiles by the end of 2008. A projected 30% of households will bank using their mobile phones in 2010.” The trend contributes towards the anticipated growth of mobile financial information services. As of today, there are only 39 iPad apps in the Finance category.

To service the ever-evolving applications designed for the mobile banking market, the underlying technology is changing just as quickly. SMS / text messaging, mobile browsers and mobile applications are the lynch pins behind the mobile capabilities.

The next generation of mobile banking is the most similar to the Internet banking paradigm. It requires an application -- either a browser or a standalone application -- and a more advanced Smartphone to run it.

A) WAP (Wireless Application Protocol) bankingWAP is the technology architecture that makes accessing Internet pages possible from a mobile phone because it includes the concepts of browsers, servers, URLs and gateways.

B) Standalone Mobile Application Some banks are now providing a downloadable client that mobile subscribers can use to access bank services. These mobile applications offer a reliable channel and enable users to conduct even complex transactions. They also allow banks to customize the interface and brand it accordingly. The ability to click on a banking button on the main screen and launch a perfectly sized online banking app shaves 30 to 45 seconds off the traditional browser-based approach.

Figure 2 clearly explains how the standalone system is built around the legacy system to enable its use via mobile technology

Mobile applications have developed to support both the retail and the investment operations of the FI's. Applications like mobile wallets and trade analysis have become one of the most important features of M-Banking.

We can take the example of an application like M-PESA or ZAP. These are the services that allow you to transfer money using a mobile phone. Kenya is the first country in the world to use this service, which is offered by mobile operators. These allow the account value to be stored as “e-money float”. It functions as shown in Figure 3:

In terms of investment banking sector the M-Banking application can be referenced to the recently launched Research Library iPad app by BofA Merrill

Remote Banking Application Schema

M- Banking Products (MOBILE WALLETS)


Account Speak

Figure: 2


Account Speak

Figure: 3

Lynch Global Research which features -search, b r o w s e a n d d o w n l o a d i n g i n v e s t m e n t recommendations, insights and other proprietary research content from anywhere and at anytime with all these functions available as widgets.

Near field communication (NFC) also known as proximity payments have shown enormous potential in the mobile banking sector to replace traditional bank and credit cards. This technology permits customers to purchase goods in-store by waving an NFC enabled handset in front of a contactless reader and entering a password. The total transaction takes a mere fraction of the time required for the typical

cash or credit card transaction. NFC is also being used to transfer money between phones, and swap information just by tapping the respective handsets together.

Customers at Chase Bank have a new way to deposit checks: Just snap, snap and tap. Chase has introduced an iPhone application allowing consumers to deposit checks with the camera-enabled smart device, which means no more trips to a local bank branch or ATM or hassling with deposit slips. Customers simply use their phone's camera to snap pictures of the front and back of the endorsed check and electronically send them to Chase. The

bank responds with a text message that says the images have been successfully uploaded.

The mobile banking consumer carries a higher balance than the average banking consumer carries and has a greater net worth. Understanding the unique needs of this lucrative segment could mean winning and retaining valuable customers.

References:- January 2008 ,eMarketer article- Celent banking blog - http://reports.celent.com - Article - What the finance sector has to look forward to

in 2011, by Brett King - http://www.buzzle.com - Blog post by Thought Capital

Associates


Market Watch

Mobile Banking trends in UKNaina Gupta Business Analyst, Banking and Financial Services

Mobile marketing is becoming increasingly important and convenient for many customers. The cross-channel customer is also a multi-device consumer and smart phones play an increasing role in communication, networking, social media usage and entertainment. Using mobile banking is slowly becoming easy with interactive and user friendly applications.

According to Morgan Stanley, within five years the number of mobile Internet users will surpass the number of desktop Internet users. And, according to the TNS Digital Life report, mobile users spend 3.1 hours/week on social networks and 2.2 hours on email.

Some of the key trends in mobile banking in 2011 are:More mobile traffic will make even greater demands on 3G networksThe consumer smart phone boom will continue to put increasing pressure on 3G networks. It's likely we will see even more providers resorting to tiered pricing plans for data and probably tie-up with banks to provide customers a better deal.

Mobile Banking is something that anyone can do while traveling, moving around etc thus making it even more convenient. Banks will move to make mobile banking a key feature for smart phone users in 2011. The challenge will be making the sign-up process effortless and the experience personalized. It is important that mobile devices and data plans are priced competitively to encourage more and more customers to sign-up for mobile banking.

2011 might be the year we see smart phones start to replace plastic for smaller credit card purchases in some countries. Google has announced that it will support NFC (Near Field Communications) in the next release of its Android mobile OS. Other mobile makers such as Nokia are also deploying phones with NFC. But it will take time for the merchant's to enable themselves for accepting contact-less payments.

Mobile banking a must have

Goodbye plastic and hello mobile

More mobile threats mean more demand for security

Smart phone makers get environmentally smart

Focus on Mobile Banking in UK

Various approaches to Mobile Banking

The mobile market is prime target for fraud, AML, security-breach etc thus increasing the demand for security. It's most important that you absolutely must have anti-virus and firewall protection on your smart phone; while banks can continue to have their multi-level security to access/ transact on accounts.

Smart phone makers may appeal to the environmentally conscious consumer by producing phones which are greener and have a smaller impact on the environment.

There are several indications that mobile banking is making a comeback in the United Kingdom. Interested participants including financial institutions, telecom operators and other service providers have entered the market through a variety of arrangements. Various research surveys by mobile money specialist Montise revealed that the U.K. mobile banking industry was growing at 30% per annum, outpacing credit cards, ATMs and online banking in mass market penetration. A large majority of U.K customers now have access to mobile banking offerings and are making good use of the facility, to perform more sophisticated transactions, more frequently. The growth of mobile remittances has been equally spectacular and is forecasted to touch £6 billion by 2012. The success of a leading financial institution tie up for NFC-based contact-less payments at terminals is testimony to its popularity; already, over 8,000 retailers have equipped themselves to accept mobile-based contact-less payment based on this system.

Financial institutions in the U.K. are deploying different modes of mobile banking, from simple SMS to secure downloadable applications, to attract customers.

Bank-focused model wherein a financial institution provides a banking service to its customers over a self-service channel such as the mobile phone. For instance, Barclays' .mobi domain online banking service provides a customized online banking user interface that allows customers to access the Barclays internet banking site over mobile web.

Bank-led collaboration model which enables a bank to reach out to a wider audience by allying with other participants in the mobile banking value chain, such


Market Watch

as mobile network operators, money transfer agencies and handset companies.Non-bank-led model wherein the financial institution might just hold the funds

in a transaction or not be involved at all.

Customers look for an easy-to-use interface that they can navigate intuitively. Research studies have highlighted that a poor prior experience on the mobile web makes users reluctant to visit the site(s) in question again. A large U.K. bank learnt this lesson the hard way, having to redesign its mobile banking site more than once before it received the approval of its users.

Security while transacting over mobile is the next concern which most customers have. The bugbear of online transactions - risk of identity, data or financial theft poses challenges in mobile banking adoption. While certain financial institutions have tried to address these fears by integrating best in class partner solutions dealing with security free of cost, the measures are inadequate, providing defense against malware and viruses on the mobile web and for mobile phone identity management, but nothing by way of protection against phishing, pharming and other sophisticated forms of identity fraud. The need of the hour is to provide total security through strong multi-factor authentication coupled with robust fraud detection and analysis. Banks can collaborate with top of the line security technology vendors to ensure adequate and uninterrupted safety of their customers' transactions.

Customers should be able to access the service from any part of the world on a 24/7 basis, 365 days a year. In order to achieve the desired performance levels, financial institutions can tie up with aggregators (payment / sms / technology companies providing almost 99.9% uptime with minimum latency across geographies.

Mobile banking applications use Java or .Net frameworks that run on top of a variety of operating systems such as iPhone OS, Symbian, Android and Windows Mobile. Since financial institutions lack the technical expertise to build, manage and support an online banking framework on their own, they must rely on the capabilities of a trusted mobile technology partner that can ensure uninterrupted delivery of the mobile banking service.

Banks are doing its best to serve existing customers but that isn't enough. How do the banks start building a larger customer base than their competitors? Performance and uninterrupted availability of the service under severe loading

Primary concerns of mobile banking customers

Primary issues faced by financial institutions

conditions is one way to do so. By partnering with mobile phone and network companies, financial institutions can extend their scale of operations by acquiring new customers.

How attractive is the value proposition? A report by a leading mobile network operator suggested that customers in the U.K. did not feel the need for mobile banking given the extensive ATM network in that country. And although there is acceptance of mobile banking as another channel, it appears that that is a result of marketing push rather than demand pull. Banks must convince customers about the attractiveness of this channel by clearly communicating its benefits and formulating supportive market strategies. Cost is another factor which is not competitive and may not encourage most customers to use mobile banking. Establishing a full-fledged in-house mobile banking service in all its forms requires investment in human resources, technology etc. and could be risky and expensive; banks should take the judicious option of partnering with mobile technology companies.

Where is the regulation? At present, the mobile banking market is largely ungoverned, although that may change in future. Once this mode of banking becomes more preferable and large, it is important that more regulations are included for the same.

Mobile banking is making a strong re-entry in the U.K., largely driven by the burgeoning handset and 3G market and the demand for mobile remittances. Statistics on internet usage, mobile banking adoption and the growth of online remittances point to the market's acceptance of this medium as a high convenience-low cost transaction option. Various players, financial and otherwise, have moved in on the opportunity with a slew of mobile banking, transaction and payment offerings. Some banks have chosen to go it alone whereas others have collaborated with technology and telecom companies to put forth a joint offering. That being said, U.K.'s mobile banking is still in its infancy, and both incumbent and new players can gain much by taking judicious action such as devising future implementation strategies and identifying potential partners as soon as possible.

Summary


Market Watch

Risks and Regulations in Mobile Banking AdoptionPankaj Kulshrestha Lead Business Analyst, Securities and Capital Markets

Rapid advancements in technology have empowered the modern day consumer to such an extent that they now have everything at their finger tips. Literally! Mobile phones which were primarily used to send and receive calls or text messages have transformed into smart phones which have the capability to perform not only the basic telephony functions but everything else from online browsing to GPS, calendar to alarm clock and from gaming to entertainment.

The financial industry has started to capitalize on this trend by offering various financial transactions through mobile banking. This is visible in the predictions being made by the leading research firms. Gartner predicts that the number of mobile payment users is likely to reach 190 million by 2012.

While firms are upbeat about its prospects, there is still an amount of skepticism among the consumers primarily because of the security risk that it comes with. A study conducted by Javelin Strategy & Research in 2010 suggested that nearly 52% of respondents surveyed cite security as the main reason for not using mobile banking.

Unsecure Text Messaging: Mobile banking initially started off with banks providing customers the facility to check their accounts balance, withdrawal and deposit alerts etc through SMS messages. This kind of banking contained inherent risk due to the unsecure nature of text messaging. The text messages are not encrypted and hence it is easier to breach security. However, banks realize this shortcoming and have thus limited SMS messaging to transactions where sensitive information is not transmitted through text messages

Mobile Browsing: Another option to access mobile banking is through browsing the banking website just as it is done through internet banking. In this case, the risks posed are similar to that of online banking since they are primarily using the same mechanism. The users need to be aware of phishing attacks, malwares, spywares and viruses which can be transmitted when transacting online. Mobile phones might be more prone to viruses and malwares depending on the handset capabilities since not all of them have anti-virus softwares installed which might lead to additional risk.

Risks in Mobile Banking

Applications: The latest entrant to mobile banking is the introduction of applications on smart phones. These applications allow users to experience mobile banking by providing easy access to their bank accounts. However, users need to be aware of malicious applications which might be collecting their confidential data for fraudulent purposes. In 2010, Google removed 50 applications from its Android market due to concerns that these might be malicious. There is very little or no authentication carried on by companies that own the application marketplaces which can lead to unscrupulous elements introducing applications that have malicious code in them. The banks and the application providers should keep an eye on the applications that are introduced in the market to ensure that they do not compromise with confidential customer data.

Misplacement of Handset: Since mobile phone is a portable device, there is an additional risk of it getting misplaced or stolen. It can be a relatively easier target for thieves and criminals to get hold of. In such a case it is important that users adopt adequate security measures to ensure that there is no misuse. Mobile phones can be secured with a password while remote wipe options can remove sensitive data from the device in case it gets stolen. However, these would again depend on the functionalities available on the handset. As there are various handsets with each having different features, it is difficult to establish a uniform guideline.

• Selective services should be provided. Bill payments, fund transfers, check balances deposits etc can be provided but services such as setting up new payees through online banking should be avoided

• Extra authentication layer can be introduced so that the risk is reduced. This can mean providing extra information to authenticate apart from username and password

• End to end encryption of messages should be provided• Applications available for download should be tested either by the banks

providing them or by the companies owning the application marketplace• Provide bank specific username and password rather than PIN Vault

(sharing of mobile banking username across multiple institutions)

Mitigation Measures


Market Watch

Regulations in Mobile Banking Space

References

Due to constant technological changes in financial services industry, the regulators have adopted the approach of suggesting guidelines rather than enforcing them through regulatory controls. This is primarily because mobile banking is an evolving field and it is important to be flexible enough to adapt to the changing environment. Although BIS committee on Bank supervision has not come up with a specific guideline on mobile banking, it has suggested a series of risk management principles on e-banking which is more or less applicable to mobile banking as well.

• In Philippines where mobile banking is immensely popular, the regulators have prescribed various processes which are concerned with assessment of the controls in place by the financial institution.

• In India, the RBI has issued various guidelines related to mobile banking such as KYC norms, access only to licensed and supervised banks, restrictions on cross border transfers, technology and security standards, transaction limits etc

• Mexico has published the e-banking regulations in 2006 which include minimum encryption standards for e-banking which is applicable to mobile banking as well.

• In USA, all financial institutions involved in mobile banking are obligated by the USA patriot Act which requires proper identification of parties who avail mobile banking services.

• Mobile banking is also subject to anti-money laundering compliance programs and Bank Secrecy Act of 1970.

To conclude, regulators should try to avoid imposing technology specific standards as this might impact the growth of mobile banking. They need to monitor the developments in the mobile banking area closely and identify any potential risks which could lead to greater repercussions. Although anti-money laundering and terror financing is still unheard of in mobile banking, it is very much possible that criminals might try to exploit the lacunae in this space. It is thus important for both regulators and financial service providers to ensure that while mobile banking continues to provide easy, quick and economical way of banking, the inherent risks are completely understood and taken care of.

- www.oecd.org/dataoecd/32/55/41837245.pdf- http://articles.moneycentral.msn.com/Banking/FinancialPrivacy/bank-fraud-there-is-an-app-for-

that.aspx- http://www.ehow.co.uk/list_7201401_mobile-banking-regulations.html

- http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=1660- http://www.gartner.com/it/page.jsp?id=995812


Market Watch

Mobile Banking and Tablets – The new eraVibhav Singh Business Analyst, Banking and Financial Services

The coming of the Tablet

The features evolution

In April, 2010 Apple launched the iPad a revolutionary new device that we all know as the tablet. The coming of the iPad heralded a new era in mobile devices; the tablet offers more functionality and improved user interface than the mobile phone and is essentially more portable than a laptop. Analysts after their initial reluctance are now predicting big things for tablets; IDC predicts that by the end of 2011 an estimated 44.6 million tablets will be shipped world wide and by 2012 it expects the numbers to rise to 70.8 million. Forrester estimated that around 10.3 million tablets were sold in the US alone in 2010 and forecasted that this number will grow to 35.1 million by the end of 2011.

What does the arrival of the tablet mean for banks? How does it impact the already existing mobile banking offerings of banks? Will the use of the tablet be limited to only servicing customers? Which are the platforms that banks should target and build upon?

Mobile Banking has turned a corner over the last couple of years, from being a novelty it has almost become a mainstream banking channel. Now analysts like Juniper predict that customers will increasingly base their banking choices based on the factor whether banks have mobile banking or not. The coming of tablets is not only going to hasten the adoption of mobile banking, but also lead to improved features and banking facilities being offered to customers on the mobile channel by banks. Banks will have to think beyond basic features such as account balances, transaction history, sms alerts and mobile payments to advanced features like mobile account opening, mobile personal finance management and mobile wealth management. To utilize the full potential of the tablet banks will have to innovate and think beyond the set piece mobile banking offerings currently out there in the market. “The superior hardware and user interface capabilities of tablets will offer banks the chance to innovate and bring in some distinctively new offerings to the market”.

There are several banks and financial services companies which have already understood the potential of tablets and have started to utilize tablets to offer to their customers improved and innovative services. A prime example of the same

would be Bank of America Merrill Lynch whose iPad App “Research Library”. The app allows institutional clients of BofAML to access research and analytics from the bank's 800 research professionals. Features of the app include personalization of reporting to allow the customer to focus on areas desired. Video commentaries to allow users to hear from their selected analyst teams on the areas on which they desire to focus.

Only Customer Service??The other question that looms in front of banks is that, are tablets just another customer service device? Which device customers will use only to interact and utilize the services of their banks? Frankly speaking no, tablets are just so much more than simple communication devices like mobile phones, they are media consumption devices. Far superior to the humble mobile phone which lacks processing and display capabilities of the larger platform, this means that financial


Market Watch

services can do far more with tablets. Apart from offering tablet based banking services, tablets can also be used for banks for internal purposes, to revolutionize the working of the bank staff. For example, senior management can use them to view reports and information on the organization/departments performance at an instant anywhere they wish. The larger form factor will allow for more detailed and visually appealing reports. Corrective action can be immediately taken and will not be necessarily limited to e-mails. Decisions making capability could be built into the software so that even while travelling senior executives will be able to view all approvals pending for them, approve or ask for further clarifications. The uses are practically limitless.

The other beneficiaries of such devices will be the sales staff of banks, who can use them on sales calls, view customer profiles before their next call on the move, display presentations to customers, use tools to calculate and personalize bank products for their customers. Even be able to file a lead for further follow up onto the bank's CRM systems. Track customer requests and product application statuses. The usage of tablets can extend the capabilities of the staff and allow them more flexibility than previously available from both laptops (which need WiFi connectivity) and mobiles (which do not have the capability to support such advanced functionality).

So the question now facing us is which tablet to target? Like mobile phones there are various tablets available in the market based on different Operating Systems. The diversity of software platforms for tablets is a significant challenge to all organizations considering their use. The answer to that question lies with the consumers. A quick look at the market will tell us that the Apple iPad is by far the most prolific and preferred tablet with a 95% market share (source Strategy Analytics).

Platforms to target

Tablet Market Share

Apple

Android

Others

Figure : Q3-2010 Tablet Market Share by Units sold (data source: Strategy Analytics)

This 95% market share makes it quite easy for banks to identify the platform they wish to target for customer facing apps. Although Android based tablets are being launched, their popularity is yet to reach the levels that the iPad has achieved. Although the market share is expected to decline to 80-85% in 2011, iPad will still continue to be the hottest selling tablet on the market.

The conclusion is clear for all to see, tablets are here to stay and will increasingly become more predominant in usage over laptops and net books. Apple will continue to dominate the market with their iPad series for a while to come. The first mover advantage and excellent app support that Apple offers to its customers is yet to be matched by any other vendor, although the market share of Android based tablets will come up eventually. As far as banking adoption of tablets, some of the banks are already beginning to bring out iPad based banking applications. In most cases these apps are scaled up version of the iPhone Apps of these banks, but in the future increasingly banks will move towards offering apps specifically for tablets especially the iPad. Banco Sabadell, Deutsche Bank and BNP Paribas in Europe, Bank of America, Chase and BBVA Compass from North America and St George Bank and National Australian Bank in Australia are the early adopters. Sooner than later banks will focus on banking apps for tablets, the question is not when but what? What should banks do to stand apart from the crowd, how to really offer customers a unique and fulfilling experience and how to make banking truly “anywhere anytime”.

Conclusion

References:- www.juniperresearch.com - www.sabadellatlantico.com - www.bankofamerica.com - www.strategyanalytics.com - www.forrester.com

Fun CornerFun Cornerthe Banking & Financial Services -newsletter from Wipro Technologiese

For Wipro internal circulation only

27

The winner of December 2010 Fun Corner is Vishal Kanvaty

Rush your answers to [email protected]

1. In which year were the first ever mobile banking services offered via WAP Wireless Application Protocol)?a. 1999b. 2004c. 1990d. 2001

2. OTP with respect to Mobile Banking stands for:a. Online Transaction Protocolb. One Time Passwordc. Operator Transaction Pind. Online Transaction Pin

3. Account Balance Enquiry is a:a. Pull Messageb. Push Message

4. Match the following:a. Andriod i Microsoftb. Symbian ii. Googlec. iOS iii RIMd. Windows Phone 7 iv Applee. Blackberry v Ericsson/Nokia/Psion

5. The Mobile phone messaging technology which creates a real time connection which remains open, allowing a two-way exchange of a sequence of data is known as __________

6. Expand with respect to Mobile applications:a. GPRS _______b. CDMA _______

7. The first tablet computer introduced by Apple was named _____ and it was launched in the year _____

1 NORMALISATION2 OLAP3 PROFILING4 ANOVA5 RANGE6 DATA7 MAPPING8 HEIRARCHY9 ETL10 XML11 REGRESSION

Answers of Fun Corner of December 2010 Edition

Abhishek Gupta

Feedback &Suggestions aremost welcome.Please email to

[email protected]

Bridget Louise RileyBy Channakeshava

Bridget Riley was born in London, England and spent her childhood in Cornwall and Lincolnshire. She was educated at Cheltenham Ladies' College. She studied art first at Goldsmiths College (1949–1952), and later at the Royal College of Art (1952–1955).Her early work was figurative with a semi-impressionist style. Around 1960 she began to develop her signature Op Art style consisting of black and white geometric patterns that explore the dynamism of sight and produce a disorienting effect on the eye.

It was during this time that Riley began to paint the black and white works for which she is well known. They present a great variety of geometric forms that produce sensations of movement or colour. In the early 1960s, her works were said to induce sensations in viewers as varied as seasickness and sky diving. Works in this style comprised her first solo show in London in 1962 at Gallery One run by Victor Musgrave, as well as numerous subsequent shows. Visually, these works relate to many concerns of the period: a perceived need for audience participation (this relates them to the Happenings, for which the period is famous), challenges to the notion of the mind-body duality which led some people to experiment with hallucinogenic drugs; concerns with a tension between a scientific future which might be very beneficial or might lead to a nuclear war; and fears about the loss of genuine individual experience in a Brave New World.

Designed by: [email protected]

Source: Wikipedia

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