Mobile Banking Evolution 1

Customers and Banks relationship has never been so closed. Banks create various innovative solutions to make sure customers are constantly in contact with banks. This becomes possible as mobile technology also becoming more advance then before. The use of mobile to provide banking services has started few years ago with what is known as SMS (Short Messages Service) Banking. The main advantages of SMS Banking are that it has high compatability with all cariers as well as handset type and transaction cost is cheap. However the perception of SMS Banking is not safe also arise due to its free text sending through the handset itself. This also then limit SMS Banking transactions to smaller amounts including introducing what is known as One Time Password (OTP) as a mean to protect any financial transaction. SMS Banking system will require a random password that valid only once and known only by the customer.

Another challenge for SMS Banking is for some people, to type SMS in order to do banking is not always convenient as it looks. This SMS Banking then also evolves becoming MENU Based - SMS Banking through SIM Application Toolkit (STK). Through STK, banks can create value added services in the SIM itself for Banking Transaction, however the technology that is used to send message is SMS.

This approach mandates Banks to build partnership with telco carrier so that the menu is installed in every sim card. Customers who has been used a carrier that has not had a partnership with the bank then can't do much except has to use to type the sms format as required to do banking transactions.

Having the limitation of SMS Banking, IT vendors and bank come up with different approach to help customers able to do banking easier by building a rich client or thick client. This will be discussed in the next article : Mobile Banking Evolution 2