Electronic Commerce - A Managerial

Electronic Commerce - a Managerial Perspective

Mobile Banking

Service Overview

Mobile banking is one of the fastest growing areas in m-commerce. In the past few years, m-banking has experienced tremendous development in terms of geographical expansion, number of customers using this service, or volume of transactions performed through m-banking. One of the consequences of m-banking is the emergence of new players in the financial services market, like online banks and online brokers. Future trends for m-banking reveal that this growth will be experienced in the future also, since it is expected that by 2010 approximately 35% of online banking households will be using m-banking, compared to 1% currently (Wikipedia, 2007).

The technologies used in m-banking are: second generation, third generation, and forth generation in the future, as it is expected. Since 1G systems are voice-oriented analogue mobile and cordless telephones that have low quality of transmission and exclusive voice orientation, they are not suitable for m-banking services. 2G systems are based on digital multiple access technology like Time Division Multiple Access (TDMA), or Code Division Multiple Access (CDMA). However, the most frequently used technology in m-banking is the Global System for Mobile Communication (GSM). The reasons for this are: a wide offer on voice and data communication services, compatibility with fix-line networks, automatic roaming and handover procedures, support for various types of mobile devices, and independence of device manufacturers (Tiwari & Buse, 2007).

From the customers' point-of-view, researches have revealed the following advantages of m-banking: ubiquity, immediacy, and overview over bank account and transactions. Approximately 95% of respondents favored ubiquity, the ability to conducts banking business anywhere, anytime. Overview over bank account and transaction was selected by 70% of m-banking users, while immediacy was selected by 30%. M-banking non-users that responded the questionnaire also gave extremely positive responses. The reasons for selecting these advantages were the practical side of the services, the provided comfort, the small amount of time it consumes, and technical feasibility. The most important disadvantage seems to be related to security (Tiwari & Buse, 2007). From the bank's point-of-view, representatives consider that the main advantages are: m-banking can be used as a very good distribution channel, it increases sales volume, it reduces costs of distribution, and it increases customer satisfaction.

Market Overview

The banking sector is characterized by intense and tough competition. The intensification of competition is mainly influenced by globalization. However, in order to counteract this matter, banks have the opportunity to provide their financial services across the world without investing important amounts of money, due to technical developments. This opportunity has allowed banks to enter new markets that otherwise required tremendous financial, technical, and human resources efforts. Another feature that characterizes nowadays m-banking sector regards customers' price-sensitivity, which forces banks to introduce innovative services.

Specific Applications

M-banking aims at three important target groups: the youngsters, the young adults, and the business people. The youngsters segment includes people aged 14-18 that require ubiquitous services. This segment is regarded as a future prospective clientele, the young adults segment is considered to be oriented towards technology and innovation. Its most important role is related to stock market activities and it is also regarded as a future financially significant clientele. The business people group is the most important target for m-banking operators (Tiwari & Buse, 2007).