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MOS

Bank of America
by

ANKIT SHARMA

on 21 November 2012

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Transcript of MOS

MOBILE BANKING Bank Of America Apprehensive about security of transactions

Cost of transactions

Unawareness about mobile banking

Fewer services compared to internet banking

 Prevalence of entry-level handsets that do not support applications like JAVA  and internet browsing

Low comfort level of users due to poor literacy levels, language barriers, etc. Why have’nt many consumers adopted mobile banking yet? Banking through mobile reduces the risk of fraud. You will get an SMS whenever there is an activity in your account.

Various banking services like Account Balance Enquiry , Credit/Debit Alerts, Bill Payment Alerts, Transaction History, Fund Transfer Facilities, Minimum Balance Alerts etc. can be accessed from mobile.

Instant transfer of money to another account in the same bank using mobile banking. Benefits of mobile banking to consumers Convenience - Ease of access to Bank Accounts

More control of your money

You can make transactions or pay bills anytime. It saves a lot of time.

Mobile banking thorough cell phone is user friendly.

The interface is very simple. You just need to follow the instructions to make the transaction.

Cell phone banking is cost effective. Various banks provide this facility at a lower cost as compared to banking by self. Benefits of mobile banking to consumers Q1 What benefits does mobile banking provide to consumers? Why have’nt many consumers adopted mobile banking yet? Development of mobile applications is very expensive

Customers are not aware of the security functions and how secure mobile banking is. Very low adoption of anti-viruses in mobile phones by users.

Vulnerable to spying and malwares

SMS or text messages are not encrypted

Hard to prove fraud

Mobile browsers because of small screens do not display the visual security clues more easily seen on full browsers on PCs Risks and costs to the bank Localization – GPS location

Instant connectivity

Pro-active functionality – ensuring the right information at the right place and the right time.

Simple authentication procedure.

As more people use it, costs will decline Q2 What is BOA’s motivation to offer mobile banking to its customers? What are the associated risks and costs to the bank?
Mobile commerce is gaining increasing acceptance amongst various sections of the society.

More people are using smartphones now.

Its ubiquitous – users can avail mobile banking services anywhere.

It can be availed anytime at the tips of the fingers. Motivation to offer mobile banking Q.3 What lessons can a bank learn from its online banking operations? What are the costs and benefits of having customers migrate to online banking? 1. Bank should focus on “the right technology at the right time with a customer centric approach”

2. Strong on the ground customer education programme

3. Drive economics through value-added services

4.It should have products and interactivity spanning all mobile devices and market segments

5.Target products where handset capabilities are likely to be present in the future. Lessons from Online Banking Operations International remittances.

Expansion of services to support on-device applications and next generation devices.

Leverage regulatory environment to bank the unbanked via mobile .

Bank should offer customers different pricing options: pay-as-you-go, low fixed cost, bundled premium service.

At the bank’s mobile portal, customers should find free and paid content tailored to their interests (ring tones, music, games, ticketing) on some of which the bank takes a commission; plus appropriate financial offers (e.g., insurance products.)

Bank should introduce an ATM and branch locator, using GSM triangulation to advise customers of nearest facility Lessons from Online Banking Operations All routing of messages to the bank’s servers must be with the highest level of security with dedicated connectivity like leased lines / VPNs.

All transactions that affect an account should be allowed only after authentication of the mobile number and the PIN associated with it. Transactions only for information such as balance enquiry, mini statements, registered payee details, etc may be allowed with either mobile number or PIN.

Unless fool proof security is used in compiling and deploying the mobile banking applications, the PIN number should not be allowed to be stored in the mobile banking application on the phone. As, generally the application installed on the phone would be developed in Java, it may be possible to decompile it extract the PIN. Alternatively, the application should be so compiled that it should not be feasible to extract the PIN on decompilation. Security Framework for Online Banking All accounts, credit or debit cards allowed to be transacted through the mobile phones should have the mobile phone number linked to the account, credit or debit card. This mobile number should be used as the second factor authentication for mobile transactions.

Proper system of verification of the phone number should be implemented, wherever possible. This is so as to guard against spoofing of the phone numbers as mobile phones would be used as the second factor authentication, etc.

Any of the following modes of user interface may be used, provided the above listed security measures are taken into consideration:

SMS: SMS is the simplest form of communication, but is vulnerable to tampering. As long as there is a second level of check on the details of the transaction so as to guard against data tampering and the mPIN does not travel in plain text, this mode of communication can be used.

Menu driven application

Menu driven USSD application: USSD communication uses its inbuilt encryption technology to talk between the cell phone and the operator’s server. However, the decryption of the information happens at the cell phone operator’s server. Vulnerability of data may exists at this point. This information should be re-encrypted and transmitted to the service provider.

WAP/GPRS website Security Framework for Online Banking A mobile banking reaches to the unbanked and servicing customers in an efficient and cost-savings manner – both for banks and for their end customers.

Allows for ease of reach and use thereby considerably reducing the risks and costs of performing financial services for both the customer and banks.

Banks can develop their own mobile banking channel, set up their own technical infrastructure and manage their own agent network to service customers.  Cost Benefit Analysis Banks need to thoroughly understand the options, operational implications, technical and human resource requirements and most importantly, all the costs involved.

Widespread use of such mobile-banking would be a desirable outcome for the unbanked in the developing world. To transfer funds at a distance, particularly small amounts of money, m-banking/m-payments methods are generally less expensive than other alternatives. Cost Benefit Analysis Q4. How is mobile technology likely to influence
the banking industry in future? Banks deploying new mobile banking tools to serve an increasingly tech-savvy customer base

The trend is driven in part by new technologies and changing customer patterns, but also by financial pressures as banks seek cost savings

Will make banking faster, easier and more convenient for consumers Affects of Mobile Technology on Banking Industry Challenge:
Integration with existing channels

Repercussion:
1. In future, banking experts say that, while retail branch locations may still have their place, the traditional strategy of having a presence every two to three square miles is waning.

2. Banks wont continue to have the brick and mortar on every other street corner. Affects of Mobile Technology on Banking Industry Q. 5 How should McDonald and Brown respond to LOB manager’s request to include more functions in the bank’s mobile app? Mobile banking segment of the Bank of America had seen a very high adoption rate

Four million customers in three years – 5-8
times the adoption rate for online banking

Smart phones expected to capture around
46% of the mobile market in US by 2012

Annual mobile banking transactions were expected to grow by phenomenal rates by 2014 Bank of America Development costs for apps ranged from $40000 to several
$100000.However, these costs would be one-time costs
followed by only maintenance and updating costs

Also, costs per transaction via mobile banking were considerably lower and expected to fall even further

Better features and increasing awareness were some of the major drivers of growth of mobile banking McDonald & Brown should invest in development of more functions in the bank’s mobile app

Extreme care should be taken to keep the apps user-friendly

If the app becomes too complex by inclusion of many features, different apps should be made with different sets of features It should be noted that not all features should be incorporated into apps

BoA has become to be known as an innovator and therefore it is necessary to come up with new features to keep the customers satisfied

However, the Bank should also allow the market to be more mature before introducing additional features such as purchase of mortgages and credit cards on phone Risks and costs to the bank Risks and costs to the bank GROUP 2
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