Bernardo Nicoletti Auth. Mobile Banking Evolution or Revolution

Mobile Banking
Also by Bernardo Nicoletti
L’IMPRESA MONDIALE: Nuove Strategie di Produzione (with Michael J. Baker,

Kristian Moller and Stephen T. Parkinson)
STRATEGIA AZIENDALE E SVILUPPO TECNOLOGICO (with Giorgio Eminente)
CASI DI ORGANIZZAZIONE E MANAGEMENT (with Franco Fontana and Marco
Lacchini)
I CIRCOLI DI QUALITÀ
LA GESTIONE DELLA QUALITÀ
MANAGEMENT PER L’EDILIZIA
ASSISTENZA TECNICA E QUALITÀ TOTALE: Come migliorare la soddisfazione
dei clienti e la redditività delle imprese di assistenza tecnica
GLI STRUMENTI DEL LEAN & DIGITIZE
LA METODOLOGIA DEL LEAN & DIGITIZE
SERVIZI AZIENDALI PRE E POST VENDITA
LEAN AND DIGITIZE
CLOUD COMPUTING AND FINANCIAL SERVICES
LEAN PROCUREMENT
Mobile Banking
Evolution or Revolution?
Bernardo Nicoletti
University of Rome ‘Tor Vergata’, Italy
© Bernardo Nicoletti 2014
Softcover reprint of the hardcover 1st edition 2014 978-1-137-38655-7
All rights reserved. No reproduction, copy or transmission of this

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First published 2014 by
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To my father, who loved me so much and initiated me
into banking
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Contents
List of Illustrations x
List of Abbreviations and Acronyms xi
Introduction 1
1 Innovation in Financial Services 4

Introduction 4
Challenges for financial institutions 5
Mobile banking for a new model for financial
institutions 6
Financial institutions in the near future: evolution or
revolution? 12
Smartphonatics 14
New delivery channels 15
Conclusions 16
2 Mobile Banking 19
Introduction 19
A Lean and Digitize way to do banking: mobile banking 19
The value of mobile banking 28
Critical success factors for mobile banking 33
Architecture design 35
Analyze and process design 42
Payment services 62
m-POS 68
Mobile wallet 69
Mobile-only banks: another revolution in banking 71
Verify 75
Conclusions 78
3 Management of Mobile Banking 80

Introduction 80
vii
viii Contents
The economics of mobile banking 89

Conclusions 94
4 Opportunities, Challenges, and Remediation 96

Introduction 96
Mobility, risk, and change 98
Opportunities 99
Challenges 99
Remediation 102
Conclusions 104
5 Regulatory Framework for Mobile Commerce 105

Introduction 105
Regulations on customer and data protection 106
Mobile banking and mobile commerce 110
Conclusions 111
6 Mobile Security 112

Introduction 112
Challenges of mobile security 113
Potential threats 113
Consequences 115
Controls 116
Countermeasures 116
Security software 117
Penetration testing 122
Security recommendations for mobile banking 123
Conclusions 125
7 Mobile Banking throughout the World 126

Introduction 126
Mobile banking in the Americas 127
Mobile banking in Asia 130
Mobile banking in Europe 131
Mobile banking in Australia 137
Mobile banking in Africa 139
Conclusions 140
8 The Future 142

Introduction 142
Contents ix
Network technologies 143

Wearable handsets 143
Cloud computing 143
Future functionalities in mobile banking 146
(Big) data 148
Implementation 159
Conclusions 161
Conclusions 162
Innovation in products 162
Innovation in processes 164
Innovation in organizations 165
Innovation in business models 166
Glossary 170
Notes 186
References 193
Index 205
List of Illustrations
Figures
1.1 Some functionalities in mobile banking 13

1.2 Porter’s generic strategies model 17
2.1 The Lean and Digitize Method 23
2.2 The extended technology acceptance model 34
2.3 Some possible mobile banking functionality 43
2.4 The main functionalities of a mobile banking system 49
2.5 An example of a mobile banking transaction flow 51
7.1 Mobile banking spending priorities 140
8.1 New banking system components with
cloud-based service delivery 145
C.1 Three level financial institution processes distribution 166
C.2 The mobile banking ecosystem 167
Table
4.1 SWOT analysis for mobile banking 97
x
List of Abbreviations and
Acronyms
ABI Associazione Bancaria Italiana

ACH Automated Clearing House
AML Anti-Money Laundering
Apps Applications
ATM Automated Teller Machine
B2B Business to Business
BI Business Intelligence
BPM Business Process Management
BPO Business Process Outsourcing (also Business Process
Optimization)
BPR Business Process Re-engineering
BYOD Bring Your Own Device
C2B Customer to Business
CA Controlling Authority
CapEx Capital Expense
CDR Call Detail Record
CFO Chief Financial Officer
CI Credential Issuer
CIO Chief Information Officer
CLID Caller Line Identification
CRM Customer Relationship Management (sometimes Credit
Risk Management)
CSR Customer Service Representative
CTI Computer-Telephony Integration/Interface
CTQ Critical to Quality
CVM Card Verification Method
DM Direct Mail
ECM Enterprise Content Management
EIM Enterprise Information Management
EMV Europay, MasterCard, and VISA
EN 9000 European Norms for ISO 9000
ERP Enterprise Resource Planning
xi
xii List of Abbreviations and Acronyms
ETFs Exchange-Traded Funds

ETSI European Telecommunications Standards Institute
FAQ Frequently Asked Questions
FI Financial Institutions
GRC Governance, Risk, Compliance
GSM Global System for Mobile Communication
ICAAP Internal Capital Adequacy Assessment Process
ID Identification Data
IM Instant Messaging
IPR Intellectual Property Rights
ITIL Information Technology Infrastructure Library
ITU International Telecommunication Union
IVR Interactive Voice Response
IxD Interaction Design
KPI Key Performance Indicator
KYC Know Your Customer
LAN Local Area Network
MBPP Mobile Bill Presentment and Payment
MFI Microfinance Institution
MIB Man-in-the-Browser
MII Major Industry Identifier
MIM Man-in-the-Middle
MMS Multimedia Messaging Service
MNO Mobile Network Operator
MPOS Mobile Point of Sale
MPP Mobile Proximity Payment
MRP Mobile Remote Payment
NFC Near Field Communication
NIST National Institute of Standards and Technology
NLP Natural Language Processing
OCR Optical Character Recognition
OEM Original Equipment Manufacturer
OpEx Operating Expense
OTA Over the Air
OTC Over the Counter
OTP One-Time Password
OTT Over-The-Top
P2P Person-to-Person
PC Personal Computer
List of Abbreviations and Acronyms xiii
PCI DSS Payment Card Industry Data Security Standard

PDA Personal Digital Assistant
PDCA Plan-Do-Check-Act
PFM Personal Finance Management
POS Point of Sale
PPC Pay-per-Click
PSE (EU) Payment Services Directive
PSP Payment Service Provider
QR Quick Response
RDC Remote Deposit Capture or Remote Desktop Customer
RFC Request for Change
RFID Radio Frequency Identification
RM Relationship Manager
S2S Service to Sale
SDM Secure Domain Manager
SEO Search Engine Optimization
SEPA Single European Payment Area
SIM Subscriber Identity Module
SLA Service Level Agreement
SME Small and Medium Enterprises or Subject Matter Experts
SMS Short Message Service
STP Straight-Through Processing
TAM Technology Acceptance Model
TCO Total Cost of Ownership
Telco Telecommunication Organization
TLS Transport Layer Security
TSM Trusted Service Manager
UICC Universal Integrated Circuit Card
UN United Nations Organization
UPC Universal Product Code
USA United States of America
UT Usability Testing
VoC Voice of the Customer
VoIP Voice over Internet Protocol
VSC Virtual Support Centre
WAP Wireless Application Protocol
WEP Wireless Encryption Protocol
Introduction
The world has been in a financial crisis for a long time. It started in
2008, but it is still unclear when it will be completely over. In this
situation, financial institutions need to
• improve in a drastic way in terms of financial ratios;

• take strong actions to improve their positions in the markets and
become better at coping with their dynamics and the changing
socioeconomic factors. This means increasing their revenues and
reducing their costs.
One excellent way to progress toward this latter point is to become more
agile. This means to become leaner and use more digitization. Better
methods and effective technology can help if used in the right way.
Mobile is one of the most interesting trends today, not only in the
customer domain but also in business organizations.
Mobile is having a heavy societal impact, from a personal, social,
and business point of view. Financial services have traditionally been
cautious in making innovations. Yet the world is changing and, as
underlined by a McKinsey report, financial institutions are increas-
ingly aware of the need for innovation in products, processes, organ-
izations, and business models.1
Mobile is an ideal enabler of such innovations. The financial insti-
tution should consider mobile applications not with a passive atti-
tude but with a proactive posture. Mobile has the ability to transform
financial institutions and their relationships with their customers.
1
2 Mobile Banking: Evolution or Revolution?
Mobile banking is a service that operates outside the confines of

traditional infrastructures (physical branches, ATM’s, distributors,
and so on) by using mobile digital devices. The field is also expe-
riencing the entry by other organizations. As matter of fact, there
are potentially several new entrants (such as PayPal), but also other
services organizations, such as telecommunication organizations,
merchants, and others.
This means that the market to conquer is open for the time being.
The initial entrants will own it, as online banking has demonstrated
unless the incumbents do not act promptly.
This book analyzes mobile banking. It begins by reviewing the
transformation of financial institutions. Then, it moves to in-depth
discussions of the functionalities available and possible with mobility.
The book deals with the management of mobile banking, its risks but
also the remediation and especially the opportunities. It concludes
with a glimpse into the future.
The book deals with the aspects of the management, the function-
ality, the processes, the technology, and the structural points of view.
The author provides arguments in support of the following thesis:
• Financial services must become more agile and flexible in the

conduct of their business in order to increase revenues and
decrease costs. This means that financial services need to become
leaner and adopt in an increasingly way automation. The adoption
of new paradigms, new processes, and technological components
based on mobile can lead to the achievement of more revenues,
cost efficiency and control, increased pace of innovation, and
especially business agility.
• Mobile banking is a disruptive innovation. A disruptive innova-
tion helps create new markets and value networks.2 It eventually
goes on to disrupt existing markets and value networks (over a few
years or decades), by displacing earlier models. A disruptive inno-
vation improves a product or a service in ways that the market
does not expect, typically, first, by a design aimed at a different
set of customers in a new market and, later, by lowering prices
in the existing markets and changing the business world and
possibly also social models.
When cars were first introduced, they were like a carriage with an
engine instead of horses. In time, cars have proved to be a quite
Introduction 3
different product. The design and specification changes over time

have increasingly multiplied. The result of that innovation was not
only to replace the horses but also to arrive at a different organiza-
tion of the economics, the city, and the society. The consequences of
this innovation were “destructive” of the previous models.
With mobile banking, something analogous is also occurring with
regard to the financial services. Take, for example, mobile payments.
They are not just a replacement of a plastic card with a mobile phone
or a smartphone or similar devices for payments. They are substan-
tially different. A mobile payment with near field technology (NFC)
allows for the combining of several payment cards with a loyalty
card and other functionality within one device. A mobile phone
equipped with NFC may be a substitute for all these instruments.
It also allows organizations to use the mobile phone as a marketing
tool. Through this tool, it is possible to communicate promotions,
launch marketing messages, specify the value of the expenditure
incurred up to that time, and so on.
At the same time, mobile banking tends to blur the distinction
between financial institutions, telecommunication organizations
and merchants.
This new feature can lead us very far. For instance, the financial
services market becomes open to new type of organizations, allowed
by SEPA, in the Euro zone in Europe. The SEPA, or the single euro
payments area, is the area where citizens, organizations, public
administrations, and other economic agents can make and receive
payments in euro, both within the nation and among the countries
that are part of the euro area with the same conditions, rights, and
obligations, regardless of their location. Payment institutions are
not necessarily traditional financial institutions. They can issue
payments instruments like prepaid cards, but not be active in other
financial areas such as deposit-taking.
This book describes how mobile banking can help transform finan-
cial institutions in terms of new products, new processes, new organ-
izations, and new business models. This book moves from a vision
of the future financial institution to a possible strategy. Practitioners
should select tactical ways to progress. An excellent approach to
moving in this direction is “Lean and Digitize.”3
The aim of the author in writing this book is to provide useful
advices to managers, consultants, practitioners, academicians, and
students.
1
Innovation in Financial Services
Introduction
The main challenge standing in the way of change taking place in the
financial services industry is the conservative nature of many finan-
cial institutions. The less they change, the better their executives
feel. Consequently several outsiders have introduced innovations:
• A small financial institution in the Netherlands pushed for online

banking. It became a global leader in Internet banking: ING
Direct.
• An outdated post office launched a prepaid card in Italy and
became a leader there with almost eight million cards: Poste
Italiane.
• A telecom operator launched a person-to-person (P2P) money
transfer service using mobile phones. It became a market leader
in Kenya: Safaricom.
It is time for financial institutions to take the lead in innovation and

making the processes leaner and digitized. It is possible to do this
profitably in almost all the financial sectors. The requirements are
clear:
• New Product Innovation. Since financial institutions essentially

manage information, this should be relatively easy and not very
expensive.
4
Innovation in Financial Services 5
• Agility: for instance, in inquiries from the customer. Speed is the

name of the game. If a customer needs a mortgage or a loan, he/
she would like to have it immediately. Risks should be managed,
but with the right balance between customer satisfaction and loss
avoidance.
• Continuous and secure operations. This should be pursued by
moving to a multichannel strategy based on lean branches, online
banking, or entirely mobile banking. Security is at a premium.
It should not delay the speed of the operations. Digitization can
help quite a bit. In this case, an organization with a middle office
can help take the burden off the front office.
• Back Office. This should be reduced as much as possible. It should
be outsourced or offshored.
• Financial institutions for several reasons, including the forth-
coming Basel 3 regulation, will need additional equity. These
requirements imply substantial cuts in operating costs to free
needed funds.
Challenges for financial institutions
Today, financial institutions face several challenges. They can be

summarized as the six C’s:
• Culture
• acting customer-centric;
• balancing the interests of the shareholders and the
organization;
• being lean, automated, and agile.
• Customers
• empowered and demanding;
• complex and confused;
• sometimes malicious.
• Competition
• more and more aggressive;
• global.
• Computers
• based on new technology;
• always connected to networks;
• available through other devices, such as the mobile ones.
• Compliance
• more fraud;
• need for security;
• increasing legislation and regulation;
• governance, risk, and compliance (GRC) management.
• Costs
• huge push for improving the return on equity;
• more outsourcing.
To overcome these challenges and ensure the future of the organiza-

tion, it is necessary to accelerate changes. There is a famous state-
ment attributed to Charles Darwin:
It is not the strongest of the species that survives, nor the most intel-
ligent that survives. It is the one that is most adaptable to change.
This is true for the animal species as well as for organizations. They
need to innovate. They must find a better way to cope with the six
C’s. Organizations need to strive to add value to their customers
and to the organizations themselves, eliminate waste and to drive
competitive advantage. They should act on the four P’s:
• people
• products
• processes
• platforms
A correct approach should be based on leaning and digitizing.1

Adding value to the customers, process improvement, reduction of
cycle times, and waste cutting require knowing the processes and
being able to measure them. In theory, the improvements in proc-
esses should be relatively easy in a banking environment, since
financial institutions have in the past often been inefficient, and
they do not have physical products with complex supply chains, but
rather they essentially manage information.
Mobile banking for a new model for

financial institutions
Financial services need to change. The current economic and

financial crisis is a powerful accelerator in this respect. The crisis is
welcome since it is finally forcing financial services to change after

having been static and conservative for a long time.
The model of the services also needs to change in a drastic way.
This is a threat, but it is also a great opportunity. Consequently, there
will be significant changes in the share of the markets of the players
in financial services.
It is essential to change the structure of the costs in financial
institutions. For instance, in Italy, financial institutions use on
average roughly 125 euro of funds for each 100 euro of funds.
Equity and spread cover the differences. It is necessary to change
this ratio and lower it to 100–105. To achieve this result, it is essen-
tial to earn more through the services and reduce costs in drastic
ways.
There are two possible paths to take in order to meet these chal-
lenges. One possibility is to reduce working capital through the sale
of assets. Several financial institutions have embraced this path. It
does not seem that there is much more to squeeze. An alternative is
to cut the ratio of operating costs to operating income (the so-called
cost-income ratio, a simple indicator of efficiency). In 2008, in the
banking sector in Italy it was still at the levels of 1984.
This is a correct diagnosis, but it is not the recipe. It may be inter-
esting to analyze what financial institutions could do to try to
achieve the objective of cutting costs. Mobile banking is one of the
most interesting solutions. According to a report published by Javelin
Strategy Research, mobile banking could bring an additional saving
of $1.5 Billions in the United States alone.2 Mobile customers tend to
be valuable customers. At one extreme, they are rich and young. At
the other extreme, they are poor and unbanked. Both these sectors
are interested in innovative financial institution’s products and
services.
To be a viable competitor today, a financial institution has to offer
a robust mobile banking service.
Marketing analysis is becoming very important. As mobile banking
moves out of its infancy, financial institutions need to develop their
service offerings to meet customer expectations and accelerate
growth. Reaching maturity in mobile banking will require focusing
on several dimensions3:
• satisfying customers with enhanced functionality

• protecting customers with better security
• being effective and compliant

• enhancing solutions
Although these dimensions are interrelated, each of them encom-

passes its own set of complexities and challenges. The following
chapters will discuss each of these items in detail. The following
paragraphs define the playground for these aspects.
Satisfying customers with an enhanced experience

Pleasing customers today is no easy feat. The bar is set very high
for financial services institutions. In fact, pleasing customers is not
enough. It is important, to delight the customers ahead of the compe-
tion. Especially in the case of mobile applications, customers have
become used to the kind of experience that is possible when inter-
acting with the likes of Google or Amazon. This is what they want
from their financial institutions as well. On the other side, customers
expect a consistent level of service, security, and simplicity across all
financial services channels, including mobile, online, in person at
the branch, on the phone, or at an ATM.
Yet this kind of experience is insufficient, as financial institutions
must also be constantly accessible. They must deliver services faster
and more effectively than before. The proliferation of mobile appli-
cations has created the expectation that features and functions will
improve continuously and they will provide cheaply. If customers do
not see new features or multiple application updates during a single
year, they may be inclined to seek other institutions for a different or
more satisfying and advanced experience.
Delighting customers will also require new servicing procedures.
Financial institutions personnel in call centers, service centers,
and branches need to understand mobile features, functions, and
devices so that they can support their customers effectively. Training
employees so that they can encourage customers to use the new
effective and low-cost mobile services – as well as can help them
troubleshoot – will be essential in increasing the adoption rates for
the new technologies.
Protecting customers with better security

Financial institutions have to balance the pace at which they intro-
duce new and innovative features with the need to keep transactions
and data secure. Thus, financial institutions are forced to apply the
same level of rigor and scrutiny to mobile banking as they do to
their other channels, be they ATM’s, online banking, branches, and
so on.
Hardware and operating systems that are now available for mobile
banking are in their relative infancy. It is not easy to ensure the same
level of security enjoyed by other channels. Hackers are flocking to
these new media as they become more and more common. Therefore,
financial institutions will need to strengthen preventative and moni-
toring strategies to mitigate emerging threats and improve customer
trust.
Other key servicing procedures on which to concentrate attention
are fraud and anti-money laundering efforts. The mobile channel
might be more challenging in this respect. How financial institu-
tions monitor for fraud that is possibly generated through mobile
or person-to-person payments may not be materially different from
how they police other fraudulent behavior. Certainly, the mobile
media facilitate them. Financial institutions need to watch these
behavior patterns carefully.
Consider, for instance, what happens if a customer’s phone is
stolen. Does the customer call the financial institution first or the
telecom organization? Anticipating these kinds of situations and
preparing appropriate remediation are critical for financial institu-
tions that offer mobile services.
Effective and compliant financial institutions

More and more customers of the largest financial institutions are
using online banking; nevertheless, only a fraction uses a mobile
platform. When those numbers are included in the financial institu-
tion’s profit-and-loss statement, they still represent a relatively small
percentage of the overall business.
It is not easy to compute the cost benefit of mobile banking.
However, the value of mobile banking is widely recognized. Consider
the simple act of depositing a check. Compared to an in-branch
transaction or one at an ATM, where the cost of the facility, salaries,
and so forth is evident, the cost of the same transaction via a mobile
platform is several magnitudes less.
As the volume of mobile banking transactions grows, the finan-
cial benefits will become more apparent. It will then be possible to
evaluate more easily the benefits to the financial institution of the

new channel.
It is in the best interest of financial institutions to move swiftly
in shifting customers from traditional channels to mobile ones.
Marketing campaigns can increase customer awareness in the form
of scripts and training for branches and call center employees,
statement stuffers, and take-one fliers. It is also interesting to use
newer approaches, such as quick response (QR) codes that lead to
videos demonstrating how to use a mobile application or social
network.
Financial institutions need to move quickly with newer and
better mobile banking options in the face of growing competition
from many corners, including start-ups and smaller financial insti-
tutions. Because their size makes them more agile, it is easier to
use mobile and digital services as carrots for private customers and
start-ups to encourage them to switch organizations. A superior
mobile service can be bundled with something else – a no-cost card
or a higher interest on deposits – to entice customers to change
institutions altogether. This would enable smaller players to make
money on deposits, fees, and other traditional streams of banking
revenues.
Enhanced solutions
Among the immediate challenges for financial institutions to address
is how to integrate and make transparent services and systems so
that the right information gets to the right people at the right time
and place, from the right application on any channel.
The volume of data to which financial institutions have access is
growing drastically due to the expansion of online commerce, mobile
devices, and regulatory requirements regarding data storage and
reporting. Mobile devices can capture much more information than a
traditional transaction does. If users allow it, a mobile device can show
• where they are;

• what they are doing;
• which kind of device they are using;
• what kind of search they have done;
• what links they have clicked;
• what their browsing behavior on other sites was;
• pictures of some objects connected with the transaction;
• how many times the users visited a transaction page before taking
action;
• and so on.
All this is in addition to the other information the financial institu-

tion has about its customers through traditional channels.
Normally all these data do not reside in one place. Financial institu-
tions are not able to synthesize the data in ways that will give them
immediate insight into, for instance, what are the urgent needs of
their customers. The ability to do so is complicated by the need to
ensure that the security of the data is not compromised and that all
the necessary safeguards are in place to be compliant (especially with
data privacy) and provide customers with the confidence to use the
new channels.
What financial institutions require now is an architecture to aggre-
gate the data and analyze it in real time so that they can anticipate
their customers’ needs and make them satisfied. They also need the
ability to make changes to their applications quickly, easily, and in
a cost-effective way. This requires strong and effective data analytics
capabilities.
Quicker turnaround times are driven by financial institutions’ need
to compete in the face of innovation. The check-deposit application
whereby the customer can take a picture of a check via smartphone or
tablet is one example. Once introduced, other financial institutions
had to respond with similar technology or risk falling behind.
The ability to respond immediately requires a financial institu-
tion to have a forward-looking view of where it wants to be in the
future. Its architecture should be built around this flexibility, as
should its component base. An example would be mobile devices
themselves. Some financial institutions have separate technology
solutions for every device: Windows, BlackBerry, iOS, Android,
tablet, and so forth. Each time a new device is introduced, a new
solution has to be created. Each time new features are added,
each type of device has to be upgraded individually. In contrast,
a component-based, future-proof architecture is a single platform
that is consistent across the full range of available devices. The
component-based architecture
• reduces complexity and development costs;

• shortens time-to-market;
• gives financial institutions more control over the process:

• ensures less exposure from a data and security perspective.
There are other technologies and business decisions for financial

institutions to consider:
• how to evaluate new and untried vendors

• how to anticipate and react to new regulations
• whether to build, buy, or collaborate with other vendors in the
smart commerce ecosystem
While financial institutions have a number of key advantages and

capabilities, depending on their ambitions, they may need to join
forces with other partners in order to compete effectively.
The more defensive financial institutions allow access to mobile
payment services provided by others or white-labeled from others.
The more ambitious may decide to develop their mobile payment
solutions, and may do this in partnership with a technology organi-
zation to improve time to market.
The bottom line is that financial institutions need an innovative
set of people, products, processes, and platforms to operate a mobile
banking offering that is compelling to customers, competitive in the
market, and capable of delivering a return on investment.
Financial institutions in the near future: evolution or

revolution?
Mobile banking is a great opportunity that allows a multitude of

transactions (see Figure 1.1). According to a Javelin report, since
2010 customers have reduced their branch visits by 10 percentage
points.4 Financial services institutions should push more and more
on payments through mobile devices. This can be obtained also by
providing alerts, suggestions, or opportunities, and so on.
Mobile banking can help reduce costs. As the number of mobile
financial institutions has grown, customers’ visits to the branches
have decreased. In the future, they will not be more than 30 percent.
Mobile banking accesses have risen by the same amount. This is
bringing substantial cost reductions from $4.25 per branch visit to $
0.10 for a mobile access.5
Family
P2P
Gambling
Money order Parking
Checks Travel/Living
P2B
P2P Gasoline/Train/Bus
Payments
E2P BPP
Deposit Mobile banking
B2P Fines
P2G
P2B Taxes
Dividends Money order
Interests Wire transfer
Stocks
Investments
Move by accounts
Figure 1.1 Some functionalities in mobile banking
This means a drastic reduction in the number of branches and their

different positioning. If customers use branches only for obtaining
financial advice and consultancy, there is no reason for branches to
be on the streets. It will therefore be possible to move to the upper
floors of buildings or even to remote locations and to connect via
videophones or simply phones.
Mobile banking can do much more for financial institutions.
They will need to customize their relationship with each customer.
Financial institutions, which will move in this direction, will gain
big competitive advantages from taking these steps. It is essential
to move from mass banking to personalized banking. To do this,
financial institutions need to understand the requirements of each
customer and how to satisfy (and indeed delight) them. Of course,
financial institutions cannot afford the costs that they incur today
in private banking.
There will be a need to reduce the costs of mass private banking.
The two words seem conflicting, but modern technology can make
them compatible. Technology can help. Big data technology will
help in this respect. Big data is an advanced way to deal with data,
whether it is varied (structured or unstructured) and/or is very
large in volume. It especially offers the possibility of increasing the
velocity in accessing data. The following chapter goes into detail on
this aspect.
Smartphonatics
A study by Aci Worldwide and Aite Group analyzed the mobile

payment market in the first quarter of 2012. The survey included
4,200 customers in 14 countries. The results were the following:6
• The current use of mobile payments across the countries ranged

from roughly two-thirds of customers interviewed in China and
India to just a little more than one in ten in France and Canada.
The average was 35 percent.
• Mobile banking adoption is higher than mobile payment penetra-
tion in every one of the 14 countries surveyed, with an overall
average of 45 percent. India is leading the way with 76 percent
adoption;
• Citizens of the countries with the highest levels of mobile payment
adoption place the highest importance on mobile payments and
money transactions. In seven of the countries studied, at least
two-thirds of the customers surveyed were interested in replacing
their payment cards with their mobile phones;
• Across the globe, one segment of customers, which Aci and Aite
termed “smartphonatics,” is driving the demand for mobile
payments and banking. The distribution of smartphonatics across
countries varies widely. India has the highest percentage of smart-
phonatics, followed by South Africa. Germany, France, and Canada
have fewer smartphonatics; 36 percent of Generation Y are smart-
phonatics, as are nearly one-third of Generation X. Just 18 percent
of baby boomers and 6 percent of seniors are smartphonatics.
• There are strong differences in mobile payment and banking
behavior between smartphonatics and other customers. In the
past six months, 70 percent of smartphonatics had used their
mobile devices to make a payment. Eighty percent had used their
devices for banking. Less than a quarter of the other customers
had made a mobile payment, and one-third had made mobile
banking transactions.
• Smartphonatics are important due to their changing behavior.
They could provide a model for how later adopters of mobile
banking will behave.
• Smartphonatics are leading the move away from the use of cash
in the United States. Nearly two-thirds of US smartphonatics say
they are using less cash than they did three years ago. Among
other customers, roughly half had used less cash.
New delivery channels
Mobile banking has great potential, but it should be part of a wider

multichannel strategy of the financial institution. This strategy
should encompass all the different channels through which finan-
cial institutions provide access to their services such as
• front-office applications, such as branches and promoters;

• ATMs and POSs;
• phone financial services;
• exchange services;
• trade services;
• mobile banking; and
• online financial services.
Nontraditional delivery channels open up new scenarios:
• Thanks to technology integration, the majority of the functional

capabilities, such as user interfaces and process flows, should be
standardized and communized throughout all channels. Most
financial institutions have implemented multichannel integration
capabilities to provide enhanced customer experience. Financial
services integrated functions can be established across channels
regardless of the life cycle stage.
• Technology tools at the level of channel platforms have reached
a high degree of sophistication. This is achieved through a series
of functional products used for business process management,
customer relationship management, decision management, and
core financial services platforms. Tools such as Java and .Net tech-
nologies can deploy rich customer platforms using technologies
such as Adobe Flex and Microsoft Silverlight.
• Self-service solutions for digitization and workflow optimi-
zation have enabled the automation of almost all services
connected with retail financial services, commercial and private
banking, and payments systems. “Do-it-yourself” capabili-
ties are increasing rapidly with the aim of enabling customers
to perform by themselves virtually almost all the banking oper-

ations they need.
• Several functional activities are currently outsourced to partners
as business services. This trend is increasing. It is expected to align
well with the cloud computing delivery model.7
Conclusions
In concluding this chapter, it is interesting to analyze the possible

strategies for financial institutions in approaching mobile banking.
Michael Porter has described a category scheme consisting of three
general types of strategies that are used commonly by businesses to
achieve and maintain competitive advantage.8 These three generic
strategies are defined along two dimensions: strategic scope and
strategic strength. Strategic scope is a demand-side dimension and
looks at the size and composition of the market a business intends to
target. Strategic strength is a supply-side dimension and looks at the
strength or core competency of the firm. In particular, Porter iden-
tified two competencies that he felt were most important: product
differentiation and product cost (efficiency).
Porter reduces the possible best strategies to three (see Figure 1.2).
They are
• cost leadership;
• differentiation; and
• market segmentation (or focus).
Market segmentation is narrow in scope, while both cost leadership

and differentiation are relatively broad in market scope.
Financial institutions can launch mobile products following one
or more of these strategies:
• The cost leadership requires a basic product with no-frills. The

low price might be the free availability of a certain number of
optional services or an increase in the interest rate for customers
who use only mobile banking.
• A differentiation strategy requires the development of unique
capabilities to be delivered with a very high quality. They could be
for instance snap-on, that is, the possibility to read checks into the
mobile banking using the picture capabilities of smartphones.
Narrow Segmentation
strategy
Market scope
Differentiation Cost
Broad strategy leadership
Uniqueness Low cost

Competency
Figure 1.2 Porter’s generic strategies model
• The segmentation strategy requires the development of mobile

banking models for customers in certain niches of the market, for
instance small and medium-size businesses.
The low-cost strategy does not work in the long term. Moreover,
it normally requires a large share of the market, which would be
unlikely for new entrants.
In the medium term, the winning strategy is a segmentation
strategy. The ideal is a segment of one: in other words, a completely
customized mobile banking product. This can be achieved without
spending a significant amount of money. Technology can help.
Big data is the answer. It is necessary to use big data to develop
a one-customer insight, by analyzing his/her behavior, looking at
social networks, and, whenever it is cost justified, making direct
phone calls. In other words, the objective is what can be called
“mass private banking.” In other words, the objective is to do private
banking for the masses. This requires the use of a method of lean
and digitize. In other words, it is necessary to lean the processes of
mobile banking as much as possible. At the same time, it is essential
to use all the automation possible on the lean processes. The engine
behind all the applications would be a big data engine, able to cope
with the five V’s: volume, velocity, variety, veracity, and value for the
customers.
Mass private banking is excellent because it allows for the creation

of an ecosystem around mobile banking, also with the participation
of merchants and telecom companies. It would enable personalized
advertising or customized loyalty points.
The next chapter will concentrate on the services that can be
offered via the mobile channel.
2
Mobile Banking
Introduction
The general focus of this chapter is to provide more understanding

about customer behavior in the mobile banking context.
Some surveys have shown that customers have perceived positive
and negative values regarding the use of mobile banking. On the
one hand, the most important benefit connected to mobile banking
is the possibility of using the services wherever and whenever they
like. This supports immediate actions and time saving in service
consumption. On the other hand, the keyboard and the display of
the devices are the clearest inhibitors to the use of mobile banking.
This chapter aims to
• present the Lean and Digitize method recommended for use in

launching/improving mobile banking; and
• follow the steps of Lean and Digitize to arrive at a potential better
model of mobile banking.
A Lean and Digitize way to do banking:

mobile banking
The number of mobile phones is larger than the global population

since the end of 2013. A report by the US Federal Reserve Board
(March 2012) found that 21 percent of mobile phone owners had used
mobile banking in the previous 12 months in the USA.1 The Federal
Reserve reports that 48 percent of smartphone owners have used
19
mobile banking in 2012 (up from 42 percent the previous year) and
that 21 percent of mobile bankers have deposited a check using their
mobile device (double the number from the previous year). A quick
look at these numbers tells us that while the growth of smartphones
will slow, the adoption of mobile banking is really taking off.
A third of mobile phone users say that they may consider
performing some kind of financial transaction through their mobile
phone. Most users are interested in performing basic transactions
such as querying for an account balance and making bill payments.
In some countries with limited infrastructure and where it is diffi-
cult for people to reach financial institution branches (like Kenya,
Australia, etc.), the growth in the use of mobile banking has been
phenomenal. For instance, in Kenya, there are 17 million people
using the M-Pesa service for person-to-person money transfer.2
Based on a survey conducted by Forrester, mobile banking is attrac-
tive mainly to the younger, more “tech-savvy” customer segment.3
Actually, the name of this entire generation is the m-generation,
where m stands for mobile. The enthusiasts of smartphones are
called Smartphonatics.4
Mobile banking could be successful with a larger slice of customers.
There are several reasons for using the mobile for banking transac-
tions. The main one is convenience, since the mobile phones are
practically always on and with the customer. Another reason for
using the cell phone is cost, since it is normally very cheap to use
the phone for communication. With some telecom contracts, all the
traffic is included in the operator fare.
From the point of view of financial institutions, the main advan-
tages of mobile banking are cost reduction, since it helps these insti-
tutions become lean and digitized.
The concerns for customers in using mobile banking are mainly
security and handset operability (there are several variations iOS,
Android, BlackBerry, Windows 8, etc.). There are several ways to
remediate these issues, and a good consultant can be of great help.
Cloud computing is an excellent way to overcome some of these
disadvantages and, especially, ensure the availability and the reli-
ability essential to guarantee customer satisfaction with this innova-
tion. Subsequent chapters deals with these aspects.
Mobile banking is an interesting way to go for financial institutions
and for customers. Financial institutions need to take into account
Mobile Banking 21
that to launch mobile banking requires some time. First, it is necessary

to do an initial study. Then, it will be necessary to develop the applica-
tions and pilot them in the market. Finally, the new service should be
launched with an excellent marketing campaign. All these activities
might require between 6 and 12 months. For a financial institution,
this would mean launching the application around one year from
the decision to launch the project. Other financial institutions might
launch in advance similar applications and reap the benefits to be the
first in the market. As the case of ING, with online banking, demon-
strates, if an organization is the first in the market, it can get a larger
share of the market even outside their traditional territory. The time to
work for the launch or the improved mobile banking is NOW.
The launch and the improvement of mobile banking represent an
important moment in the life of a financial institution since this
channel will become increasingly important. Financial institutions
should use a sound methodology. The approach proposed here is the
Lean and Digitize method. The next section will present the method.
This book uses the same sequence of phases of this method in this
chapter to describe what should be a successful mobile banking.
The Lean and Digitize method

The road for launching or improving mobile banking is the one
described as Lean and Digitize.5 Many of the case studies mentioned
in this book refer to what you can do to carry out this process in
financial services.
Currently, every organization (and particularly financial insti-
tutions) must struggle to meet the needs of customers in terms of
products and services as they relate to quality and price. They need
at the same time to reduce the costs of production and the time to
deliver the services. To achieve these objectives, it is crucial to focus
on process improvement. The most effective methods for driving
process improvement are Lean Thinking and Six Sigma. These
methods are not always capable of responding to a number of impor-
tant questions:
• Can these methods also cover the automation of process

management?
• How can information technology and telecommunications
support Lean Six Sigma, rather than hinder them?
The methods of Lean Thinking and Six Sigma consider primarily

the analysis and the subsequent optimization of the physical and
organizational flows. They leave aside the study of the management
automation and the interactions between information systems and
telecommunications networks with physical and organizational activ-
ities. The risk is that once the physical and organizational improve-
ments are defined, the automation will clash with the management
of the processes due to the constraints imposed by those systems.
On the other hand, only after this rationalization and redesign of the
new processes takes place does it make sense to introduce or improve
automation effectively, efficiently, and economically. In this way, the
financial institution can enhance activities that add value with auto-
mation. A rule of thumb says that 50 percent of the improvement
of processes is independent of the automation, while the remaining
50 percent of improvements require automation. These percentages
are changing. Automation is becoming more and more important.
To obtain the most competitive advantages, the integration of auto-
mation and improvements through Lean Thinking and Six Sigma
is of fundamental importance. This is especially true in financial
institutions, where productivity has not increased in recent decades;
hence, a holistic approach is important to streamline and improve
processes from all points of view. This approach should be
• complete and operational;

• structured (through the use of the Six Sigma method);
• driven by the need to add value for the customer (in accordance
with the approach of Lean Thinking);
• not limited to a specific sector, but taking into consideration end-
to-end processes; and
• based on automation to enhance the benefits of Lean Six Sigma
improvements with a rational use of information systems and
telecommunications.
We have defined this approach as Lean and Digitize. The next section
describes this (see also Figure 2.1).6
It is essential to apply this method and its tools in close collabora-
tion with all the involved areas of the organization, quality manage-
ment, and support organizations (such as telecommunications,
finance, or operations). In this way, the new initiatives are not used
Mobile Banking 23
Prepare
Definitine
Replicate and
measure
Analyze
and
Verify
design the
process
Build,
Architecture
implement
design
and test
Figure 2.1 The Lean and Digitize Method
to solve specific problems or challenges, but rather become rooted in

the culture of the organization.
How to develop a mobility project using Lean and Digitize

The Lean and Digitize method. This is important since a mobility
project needs to cover what are called the four P’s:
• products or services
• people
• processes
• platform
A Lean Six Sigma can tackle the first three aspects, while digitization
can cover the last aspect.
The mobility project

The macro phases of the Lean and Digitize mobility project are
• Macro Phase 0: “Preliminary.” Initially, it is necessary to identify

the requests of the customers, the shareholders, and the employees.
It is necessary to consider the challenge of the competitors and to
have respect for compliance (for instance, laws and regulations).
In this macro phase, it is necessary to define a Vision in order
to tackle the problems of effectiveness, efficiency, economy, and
quality of the processes involved in the mobility project and, if
necessary, of the entire organization. Based on the Vision, it is
necessary to write down a strategy in order to define the processes
to be implemented and/or improved and the project plans.
• Macro Phase 1: “Define and Measure.” The macro phase 1 of the
mobility project aims to determine the precise Identification of
the problems in the processes, in order to understand, at a high
level, the profile of the existing mobility and the challenges that
it is necessary to deal with, in order to enable/improve the use of
mobiles within the banking processes.
• Macro Phase 2: “Analyze and Process Design.” The macro phase
2 features interviews and workshops to discuss, in enough depth,
technical and business requirements, and analyze strategic and
operational aspects in order to understand the current perform-
ance levels and the final objectives.
• Macro Phase 3: “Architecture Design.” The macro phase 3 is the
evaluation or assessment in which the team defines and prior-
itizes, based on the previous analysis, a series of recommenda-
tions. In this macro phase, it is necessary to present the roadmap
to achieve the objectives of the project and prioritize.
• Macro Phase 4: “Build, Test and Deploy.” The macro phase 4 deals
with the implementation and the integration of mobility services.
It is important to devote enough attention to the deployment of
the security architecture and the way to manage the services to
operate, monitor, and maintain the new mobile banking service.
• Macro Phase 5: “Verify.” The macro phase 5 is one of the most impor-
tant. It is based on providing constant and continuous improve-
ment to ensure that the strategy of mobility continues to meet in a
consistent and adequate way the changing stakeholder needs.
• Optional Macro Phase 6: “Replicate.” Finally, it is necessary to
consider the possible extension of the initiative to other entities
Mobile Banking 25
in the Group (as, for instance, BNP Paribas is doing with the Hello
Bank in its different subsidiaries around the world) or to the
launch of similar products and services.
A mobile banking conceptual model

Mobile banking refers to the provision and use of banking and finan-
cial services with the help of mobile telecommunication devices.
The scope of the services may include transactions to do banking or
personal investments, administer accounts, and access customized
information.
Mobile banking consists of three interrelated concepts:7 mobile
accounting, brokerage, and financial information services.
Most services in the categories designated as accounting and
brokerage are transaction based. The nontransaction-based services
of an informational nature are essential for managing the transac-
tions. For instance, the customer might like to do balance inquiries
before making a money remittance. The accounting and brokerage
services are therefore offered invariably in combination with infor-
mation services. Information services, on the other hand, may be
used as an independent module.
Mobile banking: the voice of the customer

According to a Lean and Digitize approach, when starting an initiative,
the first steps should be to listen to the voice of the customer (VoC).
In the past, financial institutions have interpreted the potential
use of mobile banking as rather limited. Initially, mobile banking
was implemented through exchanges of short message service (SMS)
messages, most of the time one-way: from the financial institution
to the passive customer. Since then, many financial institutions
have translated what the functionality of PC banking modules to
the mobile handset. Actually in the case of tablets, some financial
institutions have been advising customers simply to use online PC
banking through the mobile browser.
Both interpretations are rather limited. Great benefits can come
from a mobile banking that makes use of the real competitive advan-
tages of mobile handsets. One benefit is the possibility of using the
apps everywhere and anytime, since for the individual, the mobile
is even more important than his/her. So the characteristic of this
channel is that it offers the possibility of accessing the data of the
financial institution anywhere and any time. Another distinctive
feature of mobile banking is the integration of more than one service

and function that is available on the mobile, such as geolocalization,
picture taking and processing, voice processing, biometrics, optical
character recognition (OCR), contactless features, and so on.
The following benefits of mobile banking are the most important:
• In traditional banking, there is a separation of different func-

tions: deposits were a different function with respect to payments;
trading was different from corporate banking; and so on. With
mobile banking, this separation does not make sense anymore.
Customers can now use their handsets to manage their savings,
but thanks to near field communication (NFC), they can use
the handsets as payment devices and to do any other banking
transaction.
• The handsets can work as many “cards” as the customer wants,
since the cards become virtual cards. They can be debit, credit
and prepaid cards. They can also be loyalty cards and identifica-
tion cards.
• At the same time, the handsets are also a communication device.
The users can communicate with the financial services operators
via voice, chats, or SMSs and video.
• Thanks to the Global Positioning System (GPS), the handset can
also tell the user the nearest automated teller machine (ATM) or
branch of the financial institution and where it is.
• The customer can use the handset for bill presentments and
payments.
• The customer can buy tickets for museums, theaters, transporta-
tion, parking, or other events, and use the device as an access
control system.
Netbiscuits has published findings from its study on customer

behavior on the mobile Web. The survey results were compiled
with responses from 5,000 customers.8 Netbiscuits found that the
starkest differences in mobile usage were between developed and
emerging markets. Participants in the survey from 8 out of 10 coun-
tries said that speed of actions was the most important factor for
their mobile experience. The exceptions were the UK and Australia,
which identified security as the most important aspect. In the USA,
faster downloads (59 percent of respondents), an experience closer to
Mobile Banking 27
the personal computer online banking (39 percent), and ease of use
(36 percent) headed up the items that would improve the user mobile
experience.
The Dutch Group ING has surveyed 11,000 customers in 12 coun-
tries in understand more the needs and desires of mobile banking
users.9 The results show that customers appreciate very much the
possibility of managing with their mobile their relationships with
a financial institution, mainly because in this way they can get fast
banking services.
The ING survey shows that mobile banking can bring substantial
benefits to customers. Actually, access to their accounts from mobile
devices allows customers to have greater control of their money. Even
more important, it allows customers to go into the red less frequently.
In Italy, there are approximately 10.7 million online financial
institution accounts, according to the 7th Annual Report on “Multi-
channel banking” of the Consorzio Bancomat – ABI.10 According to
this survey, seven out of ten Italians surveyed claim to have more
control of their money thanks to mobile banking. Four customers
surveyed out of ten believe that they can save more thanks to the
use of mobile banking. By using the mobile, they can access their
accounts more frequently.
Some of the reasons why the mobile banking option is agreeable
to Italian customers are that it is a means to control their balance
(61 percent) and take care of their payment of utility bills (14 percent),
compared with a European average of 52 percent and 24 percent
respectively.
Customers also welcome the agility of the service and the opportu-
nity to avoid queues at the branches. Forty-four percent of respond-
ents, in fact, said that they had resorted to mobile banking to save
time. Two out of ten Italians surveyed consider mobile banking as a
way to simplify the reporting of their banking activity and manage
better their finances.
The users of mobile banking also mentioned that they use social
networks (Facebook and Twitter) to follow the activities of their
financial institutions. Their objective is to find a channel where they
can communicate with the institutions without having to wait to
go into a branch and interact with a teller. Social media account
holders like to receive tips on how to spend, save, or invest in the
best possible way.
Customers expect more and more direct interaction with the

financial institution through mobile banking with targeted services
such as, for example,
• alert systems to inform them that some bills are due;

• notification that the account is in or is approaching the red
(48 percent);
• interactive features for direct connection with the contact center
of the financial institution (47 percent);
• advice on how to manage their savings (46 percent);
• ability to use social networks as a channel of payment (as occurs
with peer-to-peer functionality).
Mobile banking also has a social value. It is available to the disabled

or to people with limited mobility. This is an important aspect due
to the ageing population.
The value of mobile banking
A Lean and Digitize approach requires introduction in the organiza-

tion of a culture, a method, and a set of tools to improve the value of
the products and processes.11 Mobile banking can be an important
factor for innovation in the area of banking if it becomes a source of
value for various stakeholders such as
• the first dimension

• customers looking for the possibility to buy anywhere, any
time, and on any device;
• financial institutions and schema (such as Visa, Mastercard,
and American Express) looking for new models to disseminate
electronic banking;
• telecommunication operators, in search of new categories of
value-added services for their users;
• the second dimension
• the merchants, in search of sources of process optimization
and improvement of customer service;
• the public administration, looking for sources of cost reduc-
tion, improved service to citizens, and to fight tax evasion;
Mobile Banking 29
• the community at large for improving the life and the economics
of their constituencies.
The value for the customers

The value of mobile banking for the customer depends on the ability
of the operators (be they financial institutions or merchants) to
take advantage of all the possible functionality of mobile banking.
Services should be
• faster, for instance, by reducing the time in line at the branches

or providing the ability to completely avoid the line to pay for a
product or a service;
• more convenient than other channels, such as providing an oppor-
tunity to renew insurance without having to go to the agency and
to buy one’s ticket directly on the bus using a mobile phone;
• more accessible, for example, by encouraging the purchase of a
last-minute promotion at any time and any or specific places;
• cheaper, because it would require less effort and cost.
The value that the customer can draw from the experience of mobile
banking extends more generally to the benefits of a mobile experi-
ence. In this regard, for instance, mobile banking can enable two
other categories of services:
• Services related to banking. The mobile phone can help improve

the deposit, payment, and investment experience, for example:
• placing an order while waiting in line to be served (as happens
today for instance at Starbucks);
• controlling expenditure with data analytics;
• receiving and using digital discount coupons;
• using the phone as a loyalty card and accumulating points
automatically;
• sharing with friends, opinions on operators or services/
products.
• Services not closely related to banking. An NFC mobile phone
can become a corporate badge or an ID card, or become a self-
scanning tool in stores. The mobile application can help the
customer, for instance, pay bills or renew bonds.
The value for the financial institutions

For financial institutions, mobile banking represents an opportunity
to reduce costs, grow the use of electronic money, and improve inter-
mediation margins.
It is important for financial institutions to consider the value that
the mobile brings in terms of the relationship with the customer. The
potential entry of the so-called Over the Top (OTT) operators (for
instance, Google) could put at risk the quality – in terms of confidence
and stability – of the relationship with customers. Past experiences
with OTTs clearly show how these entities monopolize the relation-
ship with the end users. They have never shown accommodative
behaviors. Rather, they have put in place aggressive and often disrup-
tive strategies against the business models of the incumbents, some-
times relegating them to service providers with low added value.
The value for the telecommunication organizations

The telecommunication operators (telco) are experiencing a progres-
sive reduction in revenues (increased competition, a switch to flat
rates, reduction in the use of SMS, and so on). Therefore, they have
a great interest in finding new sources of revenue that will open up
to new business (for instance, services which can be provided by
using the NFC contactless capabilities). Mobile banking is another
opportunity for telcos to redefine the competitive balance around
the object “mobile phone”: historically guarded by the telecommu-
nication organizations, but besieged by other parties.
The value for the merchants

The merchants – such as stores, food markets, tobacco shops, movie,
transportation organizations, vending machine operators, restaura-
teurs, and e-Commerce operators – are a category of actors pivotal to
the spread of mobile banking and especially mobile payments in all
their forms.
On the one hand, the propensity of merchants to invest in mobile
payments by developing applications or by changing the technology
and processes in the store, and to pay related transaction fees, depends
on a clear understanding of their benefits. On the other hand, many
of the benefits for the the mobile customers depend on through the
ability of merchants to transform this innovation into better services
and/or lower prices. Proper awareness of the value of mobile banking
Mobile Banking 31
for merchants is therefore a decisive factor for both the diffusion of

services and the full potential of benefits to all stakeholders.
In the case of mobile payments, there are four major potential
sources of value for merchants:
• The reduction in the costs of cash management includes the costs

for counting, cash, and possible errors, and the risks of losses, theft,
and robbery. The cost of handling cash varies from 0.5–1 percent
of sales for tobacconists, 1–2 percent in hypermarkets, and up to
15 percent for operators of vending machines.
• The shorter time of payment at the till allows merchants to reduce
the overall time of service, the risk of lost sales, and/or operating
costs incurred in guaranteeing a given service time. The reduction
of the time of payments compared to cash and traditional cards
can range from 5–30 seconds, with an impact on the perform-
ance of service more than proportional to the increase in the rate
of adoption. The final benefit would be a reduction in the costs
(estimated at 1–2 percent), thanks to a reduction in the number of
checkout positions.
• The digitization of processes and documents, from the manage-
ment of the vouchers to the management of tickets for accessing
the service. The savings for the merchants come out of less paper
handling and more security in the operations.
• The spatial and temporal ubiquity is the possibility of paying
anywhere and at any time, thus creating a channel of purchase/
payment, which in certain cases might create unique experiences
or be less expensive for customers.
Many merchants – with some notable exceptions – unfortunately

tend to be passive with respect to mobile payments. They have not
developed a specific analysis or a quantification of impacts on their
processes. They expect that the customers predominantly pull this
innovation.
Some operators have already developed solutions for mobile loyalty
and, to a lesser extent, for mobile couponing (for instance, Conad,
TotalErg, Marcopolo Expert, Mediamarket, Prenatal, and others have
done so in Italy). Many merchants have declared a strong interest in
the potential of mobile payments. At the international level, there
are relatively few but growing applications (for instance, in France, a
number of stores in the chain Casino, or Apple’s own stores, with the
EasyPay solution). In Italy, Auchan had done very interesting appli-
cations in support of mobile payments.
The most important sources of value for merchants are in mobile
couponing and mobile loyalty, with
• customization;
• timeliness;
• dematerialization;
• process automation;
• enhanced ability to reach customers.
The value for the public administration

The public sector charges various transactions as an operator: taxes,
fees, and fines, in addition to health and education services, as well
as television license fees in some countries. The public administra-
tion could start accepting payments via mobile, either in proximity
with public offices using a contactless POS or in remote (for payments
closer to the profile of a mobile user, such as fines or taxes due).
No less important would be the weight of the additional serv-
ices that could be developed for the so-called smart city, adding
the mobile component of e-Governance projects and substantially
reducing operating and distribution costs.
The use of mobile banking could help reduce the number of trans-
actions in black markets, which aim to avoid revenue taxes. Mobile
banking can also help in microtransactions, where the incidence of
the black market is higher.
The value for the community

Apart from all the above considerations, it is important to take into
account that mobile banking can (and it now has in a certain number
of countries around the world) have a social value. This is indeed
also a critical success factor. It is necessary always to remember that
financial institutions, customers, and community are three distinct
but closely related actors.
Mobile banking and mobile payments have the potential to
expand financial access to the unbanked and underbanked persons
by reducing transaction costs and increasing the accessibility of
financial products and services.12
Mobile Banking 33
Mobile banking can help foster and sustain microfinance. This

is an important aspect in the economies of developing countries.
Microfinance and mobile money reduce vulnerability by providing a
safety net for the working poor, whether they work for wages or are
self-employed.
There are several projects aimed in this direction. For instance, the
Grameen Foundation invested in Musoni Kenya – the world’s first
100 percent mobile microfinance institution – to help extend mobile
financial services to poor people, especially those living in remote,
rural areas.13 During a visit to Kenya, Grameen Foundation president
Alex Counts met with a group of Musoni customers in Juja, a town
22 miles outside the country’s capital, Nairobi. Their experience
demonstrates the exciting promise that mobile financial services
offer for reaching remote communities. Although Kenya remains the
leader in this area, interest is growing in other countries throughout
the emerging world.
Critical success factors for mobile banking
Once the VoC is collected, the Lean and Digitize method requires
that the measures of success be defined: the critical success factors. It
is interesting to analyze some excellent models developed in the past
to examine the determinants of computer technology acceptance
and the utilization of the technology acceptance model (TAM).14
A number of recent studies have adopted this model to study the
acceptance of the Internet and mobile-related technologies, such as
mobile payments, mobile banking and m-Commerce.15 16 The evalu-
ation of TAM is based on the premise that the fundamental determi-
nants of the adoption and use of new technologies are
• the perceived usefulness (PU), which is the degree to which people

think that using a particular system will enhance their perform-
ance. The measures of PU include performance increase, produc-
tivity increase, effectiveness, overall usefulness, time saving, and
increased job performance; and
• the perceived ease of use (PEOU), which is the degree to which
a person believes that using a particular system will be free of
effort. The measures for PEOU include ease of control, ease of use,
clarity, and flexibility of use.
These two beliefs create a favorable disposition or intention toward

the use of a technology and consequently affect its use.
It seems that there are other factors to take into account when
considering mobile banking with respect to the basic TAM model.
Despite the unique benefits of mobile banking, overcoming trust
issues is a major challenge to the adoption of any mobile service.
A more complete model for TAM should include (see Figure 2.2)
• behavioral intentions (BI), which is the propensity to adopt the

new technology;
• perceived economic factor (PEF), which has a significant and
direct effect on the intention of the rural unbanked to adopt
mobile banking services;
• perceived usefulness (PU), which has a significant and direct
effect on the intention of the customer to adopt mobile banking
services. It is determined by the level of convenience (CON) and
affordability (AFF) derived from mobile banking services;
• perceived ease of use (PEOU), which has a significant and direct
effect on the intention of the rural unbanked to adopt mobile
banking services;
• perceived trust (PT), which has a significant and direct effect on the
intention of the rural unbanked to adopt mobile banking services;
Perceived
economic
factor
Mobile
operator Perceived
trust Behavioral
Non quality intentions
Convenience Perceived
usefulness
Affordability Perceived
ease of use
Age Gender
Figure 2.2 The extended technology acceptance model

Source: Barry, C. & Albertazzi, D. (2011).
Mobile Banking 35
• age and gender of the rural unbanked, which affects their perceived
ease of use of mobile banking services;
• mobile network operator (MNO) characteristics ;
• Non quality (NQ).
Architecture design
The next macro phase in the Lean and Digitize method is the archi-
tecture design.
The mobile banking applications must offer many of the capa-
bilities that customers consider “must haves” for a mobile applica-
tion. This section analyzes the solution in detail against several key
performance indicators:
• modes and devices supported

• authentication and fraud prevention
• exploiting of native phone functions
• richness of functionality
• navigation and usability
• alerts
• dynamic rendering
• personalization
• application distribution
• native phone functionalities
Mobile modes
Users can access mobile banking in different ways:
• SMS was one of the first modes offered to customers to perform

simple mobile banking transactions. A customer with a traditional
cell phone can conduct many basic banking transactions, such as
alerts or checking an account balance.
• Web-based technology provides mobile Internet, delivered via
a Wireless Application Protocol (WAP) or mobile optimized
websites (for instance, a microsite) using the browser of the smart-
phone. It essentially mimics the experience a user would have
using online banking on his/her computer. The user experience
tends to vary greatly depending on the mobile device. The mobile
web is typically the easiest solution to implement mobile banking
for financial institutions. It offers broad functionality. It is very
consistent with online banking for customers. It is not a secure

way to use online banking on a mobile, however. Sometimes it
might be cumbersome to perform on the small screen of some
smartphones. It is much easier to perform this type of operation
with a tablet.
• Customer-based downloaded applications, or simply “apps,”
streamline the mobile experience. The main limitation is that
they are specific to a mobile device type and its operating system.
Apps can be downloaded on the device from the online stores
of many vendors, such as the Apple iPhone, Google’s Android,
BlackBerry, and Windows mobile stores. The banking application
is downloaded through a secure and authenticated process to the
mobile device. Once downloaded, the mobile application provides
an optimal user experience. Smartphone users tend to prefer these
rich customer applications.
There are advantages and disadvantages in each of these modes.17

A Javelin Strategy Research report on mobile banking security eval-
uates the specific security issues that mobile financial institutions
face when using these three mobile banking channels: web browser,
application, and SMS texting.18 The survey has shown that
• forty-four percent of banking customers use the mobile browser.

It is perceived by the customer to be the most secure. Mobile
financial institutions with smartphones view the browser as an
extension of online banking;
• the second most widely used channel is downloaded apps, used
by 25 percent of customers surveyed. The architecture is the safest
for mobile financial institutions. App banking has the potential
to replace online banking altogether and serve as the customer’s
primary access to the financial institutions;
• nineteen percent of mobile financial institutions use SMS banking;
however, it is declining in popularity. It is the least secure channel
and suited only to simple transactons.
The trend is to move toward rich customer applications. They can

assure
• the best user experience;

• the highest security;
Mobile Banking 37
• native phone functions support;

• the highest transaction speed.
Today, most mobile banking offerings include the so-called “triple

play.” This approach combines all three access modes so that finan-
cial institutions and their customers can pick and choose the serv-
ices that best fit their needs.
Devices
The Javelin 2012 Tablet and Banking Report assessed the booming tablet
banking market.19 Mobile banking by tablet owners is now growing
at twice the rate of nontablet owners (49 percent vs. 22 percent). This
growth will continue, as overall tablet adoption is forecast to grow
to 40 percent by 2016. The majority of the top financial institutions
have iPad and Android apps. Some financial institutions in the USA,
such as Bank of America or Citibank, have emerged as tablet banking
market leaders.
One of the reasons for the limited adoption of mobile by some
customers, especially in business, is the form factor of mobile
phones. The small screen of a smartphone is not the optimal setting
for consuming the large amounts of information that a person in a
business looks at on a daily basis.
The rise of tablets could be the solution to this. In addition to
capabilities such as the ability to process payments and deliver cash
reporting, a mobile app that a financial institution is offering to its
business customers should be able to deliver tools that simplify their
relationships with the financial services.
In the case of corporate mobile banking, tablets could give execu-
tives the ability to perform data analytics to support their actions in
commercial banking. For instance, the mobile banking app should
provide key performance indicators of the state of the cash, account
balances in different currencies, and many of the functions the
financial institution already provides their business customers in an
online environment.
The expectation is that corporate people will be able to use the
mobile banking features on tablets for complex transactions requiring
large displays. They will use their smartphones for quick approvals,
receiving alerts, or similar simple transactions.
Different financial institutions have pursued a different strategy in
tablet banking. Financial institution of America leads with native – or
tablet-optimized – apps. While a majority of the top 25 financial

institutions have iPad and Android apps, fewer than 20 percent have
native tablet apps specifically designed for the iPad, Android, or
Kindle Fire (Android-based platform) versus ported over smartphone
apps.20
Authentication and fraud

Ensuring the highest levels of security is essential for the success of
any mobile banking offering. The need for security is increasingly
important to customers. They need to be able to authenticate them-
selves securely when it comes to accessing their accounts.One possi-
bility is to use a token for authentication. Tokens have become the
industry standard for large corporate security. The downside is that
they require users to carry them. Biometrics technology, voice pattern,
and even facial authentication offer greater convenience than tokens
and other security methods by allowing users to prove their identity
without having to carry a device or remember a password. Biometric
technology is also a natural fit for mobile technology.
According to a survey by Osservatorio Mobile Banking of the
Polytechnic of Milan, 90 percent of Italian banks have a double level
of authentication.21 There is a continuous monitoring of the transac-
tions in 75 percent of the cases.
Chapter 6, on “Mobile Security,” will discuss this issue in greater
detail.
Usability
A challenge of mobile banking is the usability of the applications.
Mobile banking should not be the source of too many calls to the help
desk of the financial institution. Complexity in using mobile banking
should not cause the customer to abandon this channel in banking.
A rich customer application has the ability to deliver the highest-
quality user experience. Its absence can deliver customers a poor
branding and navigation experience, or even reduce its perceived
security. Designing for a mobile application is not just about
designing for a smaller screen. It is different from designing websites
or online applications. These differences are multiplying rapidly as
mobile devices with additional functionality and unique hardware
characteristics enter the market.
Mobile Banking 39
In order to increase the value for the customer of the mobile

banking experience, designers must meet the following usability
principles:22
• A mobile banking solution must have an intuitive and user-

friendly interface. Users must be able to quickly access desired
information or do the correct transaction without navigating
through multiple screens or be forced to push too many keys.
• There should be cross-fertilization between the teams working for
the retail side and for the commercial side of mobile banking.
Many lessons learned from consumer use can also be transferred
to the commercial solutions for mobile banking.
• Developers should focus on providing the most critical user infor-
mation on the login page. As a result, at the login stage, users
should be able to see a snapshot summarizing all of their relation-
ships with the financial institution, including possible investment
accounts. Users should also be able to easily group account balances
in order to see their total status, in accounts, savings, cards, and
investments. In this way, they can quickly view the most relevant
data in a way that is customized to their specific needs.
• The solution should offer the possibility to enter manually antic-
ipated debits and credits to those already posted to the system
for fast decisions and more accurate cash positions, projected
balances, and excess funds estimates. This tool allows for simple
cash budgeting.
Since the users will be very different, designers should make sure
that there will be some kind of error correction feature to protect
the customer and the financial institution. To cater to the maximum
number and variety of users, designers should give users the possi-
bility of customizing their application, adding flexibility.
Following the philosophy of Steve Jobs, simplicity in using mobile
banking is extremely important. His requirement that “I want a
computer with just one button” translates in this case to “I want
to transact with one click.” Customers might accept two clicks, for
instance, to be sure that they did not make an error in keying the
data in the transaction. No more than two clicks, however. Similarly,
labels, messages or instructions should be extremely clear and crisp.
Richness of functionality
Integration, security, and usability are by far the most important
challenges in launching mobile banking. Yet, there are other chal-
lenges as well. It is important to provide as much functionality as
possible. The mobile banking user might need much functionality.
Designers might want to keep the customers away from the bank
branches as much as possible. More functionality should not hamper
simplicity. This is the challenge.
Financial institutions want mobile banking to be able to sell more
services and gain more customers rather than just cannibalizing
existing customers. The richer and more convenient the set of func-
tionality on the mobile, the more the financial institutions will be
able to meet this challenge.
Branding
Branding is another important aspect. The mobile banking applica-
tion will be the “image” of the financial institution to the customers.
It must be appealing and effective.
Strictly connected with branding, there is the need to adopt the
right style of communication with the customer and use the connec-
tion with him/her through the mobile device to offer more and more
services. The financial institution must have a channel policy that
assures consistency, cross-fertilization, image reinforcement, integra-
tion, and so on across all channels, be they physical (branches, ATM,
POS), or virtual.
Alerts
Alerts, especially for pending transactions, are critical for all
banking transactions. Customers are used to this in the PC online
channel. They expect alerts to carry through to mobile. This is
even more important because the mobile is always on and with the
customer.
Customers of financial institutions should be able to receive noti-
fications with regard to movement on their accounts. They should
be able to keep track of their accounts at anytime with information
sent straight to their phones. This basic account functionality should
provide customers with alerting capability available to all types of
mobile banking. This service should generate push and pull alerts
depending on customer preferences/settings.
Mobile Banking 41
Alerts types are
• scheduled alerts, which are notifications configured by the user

or the financial institution to run periodically at predetermined
times in order to communicate valuable financial information.
Scheduled alerts include daily/weekly/monthly cash-position-no-
tification or transaction-deadline reminders.
• threshold alerts, which are triggered when an account or a trans-
action goes above or below a predetermined amount. This might
include account balances, aggregated transactions, and/or excep-
tional individual transactions.
• security and event-based alerts, which are triggered at the occur-
rence of an event, such as a password or credential change.
• actionable alerts, which enable users to take action or instruct the
financial institution to take action on their behalf. For example,
users receiving a low-balance notification would immediately be
able to initiate a transfer of funds to their low-balance account from
another source of funds. A suspicious-transaction notification would
allow the user to make a pay or no-pay decision. Actionable alerts
should leverage all mobile access modes. For example, there could be
an SMS prompt where the user responds with an SMS containing one
or more keywords, such as “yes,” or a push notification automatically
prompting the user to log into his/her mobile banking application.
• service-based alerts, which might be research alerts to inform
customers of excellent investments or trading opportunities or
threats.
Dynamic rendering
The rich customer application needs to understand dynamically the
capabilities of the mobile device that is used. It should automatically
choose the presentation screens and end-user functions that can be
rendered effectively on that specific device and horizontal or vertical
display. It also needs to generate specific screens, scrolling functionality,
functions, and buttons in order to create an optimal user experience.
Personalization
Mobile applications should support personalization such as
• preferred language;
• date/time format;
• amount format;
• default transactions;
• standard beneficiary list;
• alerts.
Application distribution
Due to the nature of the connectivity between financial institutions
and their customers, it would be impractical to expect customers
to regularly visit financial institutions or connect to a website for
regular upgrade of their mobile banking application. The expecta-
tion is that the mobile application itself checks the upgrades and
updates and downloads necessary patches (so-called over-the air
updates). However, there could be many issues as far as implementing
this approach, such as upgrade/synchronization of other dependent
components.
Native Phone Functions

Many interaction points directly influence mobile-design considera-
tions. These include
• gesture detection (pinching, flicking, dragging, and so on);

• touch detection (allowing for direct interaction with content);
• on-screen, software, or physical keyboard;
• location-awareness information and feedback; and
• camera utilization.
Analyze and process design
The next phase in the Lean and Digitize method is analyze and
process design.
When people started to think about mobiles, they imagined them
as a way to make payments. The idea was to move the plastic card to
the handset, and use it to wave (rather than swipe the plastic card)
in front of a contactless reader. This was indeed a limited way of
looking at the mobile. It was an evolution of the credit card. Mobile
banking can be much more.
Yet, the mobile is not only a way to move to the dematerialization
of the plastic card. It can be a complete tool to satisfy very different
Authentication
Help desk
Voice
Information
Dictation
emails
Help
p desk
Chat
Nearest ATM/branch Data Consulting
Local offers Geolocation m–Commerce
Get direction to the nearest ATM/branc
A h P2P Persons to persons payments
Alerts Payments
Balance SMS NFC Identication
Smartphone
Stock quotations Sensors ATM recognition
Biometrics for security Gate opening
p g
RFID
Scrolling Parking
Touch
Natural gesturing Driver licene for application
Typing Read checks
Picture read QR
Facial recognition
Cameras
Bill presentments and payments
Training
Video Help desk
Consultancy/Advise
Figure 2.3 Some possible mobile banking functionality

needs. Actually, it can be a holistic tool to interact for financial serv-

ices. Today, banks are almost the only operators with financial serv-
ices. In the future, there will be more and more actors working in
the financial services arena. Already, the likes of Googles or eBays or
SEPA payment institutions are moving into the arena that was exclu-
sive territory of financial institutions in the past.
Mobile banking can be much more. Its main advantage is the
opportunity to integrate and consolidate in one tool much of the
functionality connected with financial services and make them
accessible any time and place. As an example, this can be presented
in the form of a mind map, which is a diagram used to outline
information visually. A mind map can be created around the term
“mobile banking,” which is placed in the center, and to which asso-
ciated ideas, words, and concepts are added. Major categories radiate
from a central node, and lesser categories are subbranches of larger
branches. Categories can represent words, ideas, tasks, or other items
related to a central key word or idea.
The draft mind map in Figure 2.3 shows what mobile banking can
(and will) be in the future.
The following sections describe some typical mobile banking func-
tions for
• retail banking;
• business banking;
• wealth management and private banking;
• payments.
Retail banking services

At a recent conference, one of the speakers stated that customers
do not want to just buy or use products and services. They have a
different set of requirements. Customers want to
• have live experiences;

• drive their activities by taking into account values for them from
difference points of view;
• enjoy innovation via breakthrough technology, which is about
connecting the dots (connecting people, disciplines, ideas,
cultures, and so on);
Mobile Banking 45
• be able to enjoy a new world of opportunities;

• use a Lean and Digitize approach.23
The word “experience” is the most important in this list. Connecting

with the customers is essential for tying them. An exceptional
customer experience creates loyalty, which in turn creates promoters.
This translates directly into a strong, enduring, and expanding rela-
tionship, with a direct effect on the bottom line of the financial
institution.
Financial institutions should maintain their connection to the
customer and not be relegated to a commodity role. This means that
they must act to engage their current customers in unique ways. At
the same time, they also need to find reasons for new persons to join
the financial institution as customers.
The customer experience is important. Nevertheless, it is not easy
to provide a virtual experience though mobile banking, since the
customer is not physically in one of the financial institution loca-
tions. There is no contact person there to provide the services. There
are just the customer and his/her handset. Certainly, handsets are
becoming more and more functionality rich. They are more and
more a mobile computer rather than a phone handset. How can you
use these capabilities to provide a rich and delightful experience to
the customer?
The challenge is to create designs that delight the user, which
transmit the brand. The designs should fully support a task. For a
mobile corporate banking application, this means using standard
controls and delivering an interface that is purely utilitarian. It
would not be necessarily so for the retail customer. Designers should
use guidelines, such as Apple’s standard User Interface Guidelines, in
order to define graphical standards and usage patterns for the user.
In the case of financial services, the experience should be a peace-
of-mind experience, since financial institutions must always reassure
customers that their savings or payments are safe. The customer is
interested in a secure experience. Security is paramount in his/her
relationship with a financial services institution.
Therefore, in developing a mobile banking solution, designers
should give priority to security. There must be ways to ensure that
the person who is connecting is indeed the customer accessing his/
her account. This is not enough. It is essential also to provide a secure

connection, which very likely means encryption in the transmission
and storage in the handset.
The financial institution needs also to ensure privacy at the
maximum level in the transaction. Regarding this aspect, mobile
banking is at a premium since, when a customer uses a mobile, he/
she is not disclosing his/her business to an employee of the financial
institution. The customer wants to be reassured that nobody will
access his/her data and transactions.
Security and privacy are nonnegotiable characteristics in mobile
banking.
A satisfying experience would also mean the possibility of
performing more than simple transactions like looking at the balance
in a current account. Customers should be able to perform payments,
money transfers, selling/buying shares or bonds, and so on.
Finally, the design of applications should be beautiful, enhance
its usability, be absolutely ergonomic, and be characteristic of the
financial institution. ING, with its orange account, is superb in this
respect. New mobile financial institutions such as Hello Bank from
BNP Paribas are also well designed and crafted.
Interesting enough, the European Hello Bank has a different
brand and colors with respect to its holding bank BNP Paribas.
Differentiation regarding the traditional conservative financial insti-
tution is an important aspect of mobile banking.
Current mobile banking services

Typical mobile banking services may include
• registration
• account opening with digital signatures (subject to local
regulations)
• password provision, changing of password, and reminders of
the need to change them
• account management
• withdrawal
• deposit
• account information
• ordering checkbooks
• blocking of (lost, stolen) cards, checks, and accounts
• payments, deposits, withdrawals, and transfers
Mobile Banking 47
• bill presentment and payment

• peer-to-peer payments
• commercial payment processing
• due date of payment (functionality for stopping, changing,
and/or deleting a payment execution)
• micropayment handling
• direct debit
• domestic and international fund transfers and money orders
• within the same bank
• with external financial institutions
• proximity payments (for instance, NFC driven)
• use of mobile at POS and at ATM
• initiation of transaction requests and communication with
financial institution to solicit transaction authorization
• remote payments
• to pay for a good at store
• to make withdrawals in specific shops and shopping malls
• money transfer
• interaccount transfer
• transfer within same financial institution within the same
country
• transfer within same financial institution across the globe
• transfer to other financial institutions within the same
country, region, and globe (there might be limitations in some
countries)
• digital downloads with limited streams such as gaming
• phone top-ups
• purchasing tickets for
• travel and entertainment
• events and transportation
• car park
• monitoring of term deposits
• information
• view financial institution balance
• transaction history
• recent transactions
• status on checks
• 360-degree view of the account including, for instance, saving,
deposits, loans, cards, mutual fund, stocks, insurance, and so on.
• statementing, with access to
• the account statement

• loan statements
• card statements
• mini-statements and checking of account history
• technology-led value-added facilitation
• remote mobile deposit
• check image view
• servicing and support
• profile-driven changes (for instance, address change)
• back office-driven support
• money management and personal finance
• personal financial management
• portfolio
• account aggregation
• mobile based value-added transaction offerings
• stock trading
• mutual funds / equity statements
• ancillary products
• bank assurance
• insurance policy management
• pension plan management
• charity donations
• real estate search
• featured phone-driven capabilities
• calendar
• scheduling based on calendar incorporated with banking
transactions
• calculators
• productivity tools
• relationship-driven enrichments
• cross-selling banners
• behavior-based messaging
• loyalty coupons
• general customer communications
• event-driven customer communications
• profile-driven customer communications
A specific function should enable the system to verify whether the

customer has sufficient funds in his/her account and authorize a
deposit or withdrawal transaction at the virtual agent in the device.
Payment Clearing & Customer
Start Processing Reporting
initiation settlement service
Information Format Data

User log in Application Alerts
verification validation management
AMLL & fraud Password

Confirmation Authorization Encryption
yp Statementing
detection
d t ti generation
App on Message Distribution Account

Options Analytics
mobile conversion & routing information
Mobile Return Service

Authentication Maintenance Reporting
browser handling to sale
Sending Financial Information’s

Processing
SMS settlement on mobile
Customer Accounting Credit Bureaux Rewards
M-Payment
RTGS Customer
provider
Network service M-Payment Local/Sepa Regulatory

Customer
provider provider ACH bodies
Card Production
Merchants Banks
processor support
Figure 2.4 The main functionalities of a mobile banking system

Figure 2.4 shows a synthesis of the main functionalities of a mobile

banking system.
The following paragraphs analyze in greater detail some of these
functionalities.
Account transfers
Customers should easily be able to transfer funds between accounts
via their mobile device, not necessarily within the same financial
institution. In doing so, the user should be able to see quickly balances
available for transfer as well as information for his/her account into
which the funds are being transferred.
Customers should be able to transfer funds between their accounts
on the move. This basic account service should come as a standard
mobile banking functionality.
This function may also be rather complex to implement. See a
simplified diagram in Figure 2.5.
Mini statement/transaction history

Customers should be able to see their statements at least for the last
90 days at a glance.
Social networks
Social networks lend themselves to several innovative services such
as real-time assistance (especially on Twitter), contests and promo-
tions, some banking transactions (for instance, donations), or the
opening of financial institution accounts for specific projects.
ATM branch locator

The branch/ATM locator is a basic service that comes as a standard
service with some financial institutions. It is a practical service
allowing customers to find their nearest financial institution branch or
cash machine. In some cases, the functionality also provides location-
related information and integration with location mapping.
Other functionality
In many countries, there are also interesting examples of mobile
banking services well beyond the current account as, for example,
apps for
• management of pension plans (ICBC);

• proposal for insurance policies (BNP Paribas);
Verification
New funds Transaction
3 and
transfer completed
confirmation
Payments-
recharge
2
Lookup
Home
Transversal services
manage
page 4 action
Integration layer
8 Look-up for
1 beneficiary list
7
Import
value date, 5
notes
Payments- Verification
recharge Transaction
Beneficiary 6 and
completed
confirmation
Mobile device database

Home Notes
page
view 1
view 3 view 4
view 2
Figure 2.5 An example of a mobile banking transaction flow

• information services on museums and exhibitions or news

(Deutsche Bank);
• search for retail estate for sale (Ing Direct);
• donation for environmental sustainability (La Caixa).
Business mobile banking

Mobile banking was born essentially as a product for customers,
in support of the retail side of financial institutions’ operations.
Certainly, at the start it was a product for private customers. In time,
it has been extended to businesses and professionals. Actually, the
traditional office desk is becoming more and more a mobile device.
Managers and employees are becoming increasingly mobile and not
tied to a desk where their desktop is sitting.
Mobile banking consumerization: a trend that financial

institutions need to manage
One of the trends in the use of information systems and telecommu-
nication is so-called Information and Communication Technology
(ICT) consumerization, meaning that innovations are now launched
in the consumer markets initially and later they move to the busi-
ness world. This is contrary to what was happening in the past when
ICT innovations were launched first for businesses and later moved
to the consumer world. A clear example is the computer. Initially,
the mainframes were targeted only to businesses that could afford
their costs and were able to use them. Only later was the personal
computer launched for the consumer market.
There are several examples of ICT consumerization. A typical
example is the smartphone. On day one, the iPhone was targeted
to consumers. Only later, mainly with the Blackberry, did busi-
nesses start to use it. Similarly, this is happening with tablets.
Another interesting case is cloud computing. Almost all consumers
have their private emails or similar applications in the cloud.
They access the application from distant servers, yet they do not
know where they are based. They access that application through
Internet. Most of the time, consumers do not pay for the applica-
tions. When they are charged, they pay on the basis of their use
of the resources (an example is storage with Dropbox). Now, busi-
nesses are moving their applications to the cloud, and they are
enjoying a similar model.
Mobile Banking 53
It is interesting that a similar trend is occurring also in other sectors.

A clear example is mobile banking. Mobile banking was essentially
born for the consumer market. It is enjoying a growing success. Only
later did financial institutions start to launch mobile banking for the
businesses. JP Morgan was one of the pioneers in this field in the US.
Only now, many other financial institutions are starting to launch
mobile applications that are especially suited to small and medium
enterprises. In Europe, one of the best practices is Barclays P2P Pingit
mobile application, which was launched for individuals. Only later
was it extended to small businesses.
The requirements for business mobile banking are different than
for individual consumers. In most cases, the business requirements
are more stringent. Let us consider the example of security. The
amount of the money involved in business transactions tends to be
much higher for businesses with respect to individuals. Some appli-
cations are specific to the business world. Some examples are
• massive money orders;

• bill presentments;
• payments;
• the authorization workflow, since in most of the cases more than
one manager must be involved in authorizing a payment.
Mobile banking is an excellent product for business. This section

analyzes the importance of business mobile banking as a critical
component of any bank’s commercial banking technology strategy.
The great benefit of business mobile banking is that if offers the
possibility of using it everywhere and at any time:
• Operators can use mobile banking everywhere for invoice present-

ments and payments.
• They can use their handsets as purchase cards.
• They can use mobile banking to manage their expense reports
and as a corporate card.
• They can use mobile banking for money transfer or for cash
advances.
The future will see interesting developments in this direction. More

and more ERPs are being redesigned to be used also from mobile
devices, for example, the Infor 10 ERP. It has interesting features in

terms of mobile access.
There are apps built on ERP platforms that provide business
managers the ability to approve pending transactions, release wire
transfers, and view previous-day transactions, among other func-
tions. The next generation of business mobile banking apps will have
more transactional capabilities, as well as informational ones, such as
the capability for viewing account balance snapshots. This trend will
spearhead the widespread adoption of business mobile banking, as
more organizations will want to take advantage of these capabilities.
Not only ERPs are moving to the mobile, but there are also inter-
esting expansions to ERP, for instance, in support of procurement.
Recent developments of Ariba and Bravo Systems are exactly in the
direction of the networked economy.
The next step will be the integration of these corporate applica-
tions with mobile banking. They are great ways to move to an agile
corporation that is lean and digitized.
The requirements of business users

The main limitation of mobile banking for business applications is
the small screen size of most smartphones. Finance departments for
instance need to access large amounts of information. This could
prove inconvenient and awkward to display on small devices.
The biggest concern, however, is security. Treasurers and business
executives might like the convenience of smartphones in their daily
activities. Given the sensitive nature of corporate data, every precau-
tion must be taken to protect their data and transactions.
Businesses are increasingly accepting the policy of Bring Your
Own Device (BYOD) for their employees. In this situation, it makes
to extend to mobiles the functionalities traditionally done on
computers, since very likely all new employees will use smartphones
as their personal device.
It may only be a matter of time before there is a “mobile revo-
lution” in the business space that is similar to what has happened
in consumer banking. A survey showed that investing in business
banking technology is a top priority for 64 percent of the CIOs and
technology executives at large financial institutions surveyed around
the globe.24 These managers have understood the importance of their
corporate customers and small and medium-size businesses. They
recognize that more than 60 percent of finance departments believe
Mobile Banking 55
that their financial institutions do not fully understand their needs

which could be satisfied by mobile banking. Mobile banking needs to
increase the quality and amount of actionable information provided
to persons in the business. In this way, financial institutions can not
only retain these important customers but also improve their satis-
faction and increase the potential of cross-selling a greater number
of banking services.
For example, if a financial executive needs to approve a payment
quickly, it is generally easier to log on to a mobile application and
handle the approval that way, than to go through an online portal. A
popular use of mobile for finance departments is for wire approvals.
In fact, Wells Fargo processed $17 billion in wire traffic in 2012 from
the mobile channel.25 This is clear evidence that also finance depart-
ments are becoming more comfortable in using mobile services.
Another mobile function that is becoming popular with business
customers is the ability to manage commercial card accounts and
expenses via mobile. This service should give cardholders the ability
to add out-of-pocket expenses, view charges, and check available
credit on smartphones. At the same time, it provides program admin-
istrators with the ability to edit limits and review transactions. It can
also feature an electronic workflow that includes online routing and
receipt imaging. Program managers can reimburse cardholders via
automated clearing house (ACH) direct deposits and set spending
and reimbursement limits and organization policies.
Small and medium-size enterprises

Small and medium-size enterprises (SMEs) represent the bulk of the
economy sector in many nations all over the world, but especially in
Italy and in emerging countries.
Financial institutions have not paid particular attention to this
part of the market. From the risk point of view, banks have consid-
ered SMEs with suspicion since their rate of delinquency tended to
be higher than in corporate companies or in individuals.
Small banks, however, tended to devote more attention to this part
of the market. They were not able to compete with larger banks in
other parts of the market:
• The corporate market was difficult for them since they did not
have the resources, the expertise, and the geographical coverage
that large companies demand.
• From the customer point of view, small banks had a small market
share for two reasons:
• Geographical coverage was much smaller with respect to larger
banks.
• Since they could not enjoy the economies of scale of large
banks, they were not able to compete on prices with large
banks in this part of the market.
Small banks valued SMEs. They tried to offer them a highly person-
alized service and make possible an excellent customer experience.
It is not surprising that in many cases, small and medium banks
have pioneered mobile banking for SMEs. Recently, a medium bank
in Italy launched an interesting mobile banking application particu-
larly directed to small and medium-size banks.
Throughout the industry, applications designed for SMEs are few.
Industry analysts attribute the lack of small business mobile apps for
SMEs to many factors, including the following:
• Businesses adopt technology more slowly.

• Their needs are more complex.
• Even defining the category is a challenge for SMEs, where entre-
preneurs mix personal and business matters.
It may be hard for financial institutions to come up with a one-size-

fits-all product for all their business customers whose needs vary. For
instance, some may require wire transfers, some require cash flow
tools, while others may require need invoicing and bill pay.
Some financial institutions will rebrand their retail platforms
with minor tweaks, such as changing the logo, and decide it is a
small and medium enterprise platform. This is not sufficient. Unlike
consumers, business customers potentially
• have more users;

• need more complex products;
• need entitlements, added security measures, and more robust
audit trails;
• manage multiple business accounts alongside their personal
accounts;
Mobile Banking 57
• check balances and statements, including up to several years of

transactions;
• make payments and transfer money between accounts, all from
within the app, a feature that enables financial institutions to
service their retail and business customers alike – a valuable prop-
osition for winning new business customers.
The commercial mobile market and opportunity26

Business mobile banking offerings have been primarily limited to the
largest institutions (for instance, financial institutions in America
such as Wells Fargo, JP Morgan, Citibank, and the Royal Bank of
Scotland). Many of them run homegrown applications. Many more
are in development, or they are at the planning stage. Mobile busi-
ness banking in most cases is therefore in its infancy. This is a great
opportunity for financial institutions to be the first mover in this
segment of the market and be the leaders.
A 2011 Aite Group survey of the global financial institution CIO’s
and ICT executives found that 25 percent plan to increase their
investment in business/corporate mobile banking technology over
the next two years, while 50 percent in North America plan to do
so.27 Further, the Aite Group forecasts that 40 percent of the 100
largest US financial institutions rolled out corporate mobile banking
in the near future. Many of these institutions will select solutions
offered by their technology providers.
Drivers for business mobile banking

In order to be successful in the launch of a mobile banking initiative
for businesses, it is important to understand what the critical success
factors of such a move are. Actually, there are several such factors,
and this section attempts to list the most important of them.
Requirements of business mobile banking

Finance departments want the convenience of mobile banking. An
October 2010 Aite Group survey found that approximately two-
thirds of global finance departments would be at least “somewhat
likely” to use mobile corporate banking services to perform basic
transactions (for instance, checking balances, transferring funds,
managing bill presentments and payment) over the next 12 months
if their financial institution offered it; 42 percent of survey partici-

pants described themselves as “likely” or “very likely” to do so.28
Additionally, 56 percent of survey participants expressed interest in
performing advanced functions. Examples of such functions include
approving transactions (such as wires and the release of payroll
batches) and initiating payments.
Customer satisfaction levels dropped during the financial crisis,
and they have remained low. The role of finance departments has
thus become strategic and global. Financial institution offerings
have not evolved quickly enough to address these new demands.
Finance departments need easy access to a real-time or near-real-time
consolidated global view of their cash positions. They require more
analytical tools in order to perform new responsibilities effectively.
In addition, business managers are often on the road today, and tech-
nology must evolve to ensure that the productivity of those individ-
uals remains high. Many financial institutions are addressing these
needs through next-generation corporate online portals and mobile
offerings that provide fast access to information and eliminate delays
resulting from time spent outside the office.
Corporate transactions often require multiple levels of approval.
If the responsible person is away from his/her desk, the traditional
way to authorize transactions might create delays and issues. These
delays might result in the loss of revenues, in the case of sales activi-
ties, or in an increase in costs. In the case of sourcing initiatives
to businesses, the loss of these transactions might create a loss of
fees to financial institutions. Business mobile banking helps elimi-
nate delays in processing, and therefore results in accelerated fee-
generating activities for the financial institution.
In addition to accelerating receipt of fee revenue, corporate
mobile banking in and of itself has the potential to create a new
stream of revenue for financial institutions. Finance departments
in the businesses for instance recognize the value of mobile access.
Approximately 49 percent would be willing to pay for it, based on an
Aite survey.29 Generating revenue for mobile offerings will require
a shift in mindset: financial institutions must stop viewing this
service as an extension of their online offering, and instead view it
as an important service that can be bundled as part of a commercial
customer offering in order to obtain more business.
Mobile Banking 59
Functionality for business mobile banking

Account information and transaction capabilities It is critical that
the finance departments in businesses be able to perform many
of the same transactions through the mobile channel that can
be performed online. The following functionalities are especially
important:
• registration
• cash position
• approvals
• consolidation of reporting
• positive-pay decisioning
• other important functionalities
Registration Easy registration for a mobile offering is critical to

adoption. Registration for business mobile banking is more complex
than that found in the retail environment. It is necessary to incor-
porate the necessary steps in order to mirror corporate processes
and ensure the highest levels of security. In many corporate mobile
offerings of large financial institutions, origination requires a two-
step registration process with onboarding controlled by the security
administrator. Customers are first required to use the service at the
organizational level. Emails and/or messages are sent to the organi-
zation security administrator, which also invites new employees to
register. Security administrators should have complete control over
the origination process, and users are unable to register themselves
without an invitation from their administrator. This process adds an
additional layer of security. It is appreciated by businesses, as most
administrators allow only limited usage of mobile banking at their
organizations.
Cash position Checking account balances and/or determining

cash positions are the most frequently performed transactions by
finance departments on their bank’s online portal. The same is
likely true for the mobile device. As such, users should be able
to log into the bank’s corporate mobile banking applications and
view a quick snapshot of their cash position across all asset classes.
The user should be able to specify the accounts to be included and
have the ability to drill down through a single click to see specific
details of each account, such as account balance and recent trans-
actions. Account nicknames established through the online portal,
as well as entitlements assigned to each user, should also carry
through to the mobile offering.
Approvals While finance departments are the most likely to use

mobile devices to quickly view account balances and cash positions,
as described earlier, business managers would also like the ability to
approve transactions such as
• automated clearing house (ACH) batches;

• wires;
• pay or no-pay decisions on potential fraudulent checks flagged
through the positive pay service.
The ability to do so will prevent productivity delays for the corpora-

tion. Many institutions are split in their opinion of whether or not to
allow users to initiate payments via the mobile channel. While they
see approvals as a “must-have” feature in mobile banking, many see
payment initiation as a security risk. In time, the expectation is that
such fears and restrictions will decrease.
Consolidated reporting Even smaller businesses often have multiple

relationships and therefore require multiaccount capabilities. The
information presented to a business person should therefore be
consolidated and represent account information possibly across
financial institution relationships. The user should also be able to
view account balances by currency or any other groupings selected
or created. Data displayed and accessed should be across asset classes
and include investment accounts.
There are aspects still not fully available. Recent statistics in
the USA show that a corporation uses on the average 20 different
bank accounts for several reasons. This is a requirement completely
different from the customer market, which normally has relation-
ships with just one financial institution. This consolidation is very
important for businesses in order to know their cash position. Due
to reasons of competition, it is not easy for financial institutions to
share such sensitive information. The need is there, however. Perhaps
Mobile Banking 61
in the future there will be brokers that will offer such a service. Now
some central banks or credit bureaus offer a similar service, but only
to display the credit exposure of customers.
Positive pay decision Positive pay is a fraud prevention service that

flags potentially fraudulent checks before payments are processed
and presents check images to corporations for their review.
Additional functionalities Other important functionalities are
• set up and execution of controlled disbursement reporting;

• payroll-driven services;
• stopping of payments;
• check capture;
• adding of a check issue;
• multilingual capabilities (possibly Spanish, French, Japanese,
and English (in non-English-speaking countries) the two main
Chinese languages);
• voice-pattern authentication;
• performance of comprehensive small and medium business kit
from e-invoicing, accounting, and reporting;
• performance of easy searches for accounts and specific transac-
tions. Search capabilities further enhance the user experience and
support the mobile value proposition of providing fast anytime
access to a host of information.
These functionalities enhance the customer experience. In time, the

use of mobile banking will become almost natural in conducting
business.
Wealth management and private banking

Wealth management and private banking suit mobile banking very
well. However, it is necessary to take into account their specific
requirements. For these types of banking, it is important to allow
customers to access and transact at any time, anywhere, and from
any type of device and model, including tablets.
The mobile application must be robust, trusted, and standards
compliant. This service should be deployed in a simple and cost-
effective manner. It can be facilitated on-premise or hosted in the
cloud.
Some functionalities in support of mobile wealth management

and private banking are summarized below.
Balance enquiry
Customers should be able to see the available balances for all their
accounts from their smartphones or tablets. This service should come
standard with any mobile banking deployment.
Remote deposit capture

Banking customers should to be able to deposit money via their
mobile banking app. Customers could simply take a photo of the
check, enter the amount of the deposit, select their checking or
savings account, and validate the amount, which then appears
within the selected account.
Personal financial management (PFM)

Customers should have an instant overview of their spending within
their mobile banking app, enabling them to budget, plan, and track
their spending to reach their financial goals
Call agent
Customers should have a phone number in their mobile banking
app to contact their financial advisers. There should be a simple
“click-to-call” service in case they want to make an investment, or
they lose their cards or are in need of urgent assistance with their
finances.
Account management
Customers should be able to view all of their accounts and perform
financial institution account management in their mobile app.
This basic service comes as a standard mobile banking deployment
whereby financial institution customers are able to manage their
investments accounts, do their trading orders, pay their credit cards,
and view transactions and standing orders.
Payment services
A Javelin report forecasts payments trends at the point of sale

through 2018.30 It predicts significant growth in mobile payments
Mobile Banking 63
and moderate growth in prepaid cards, with further decline in cash

and checks.
According to the report, the highest growth for any payment
type is in mobile payments. Mobile proximity payments (MPP)
accounted for only 0.01 percent of the $3.98 trillion in retail point
of sale payments in 2012. Javelin predicted that through mobile
adoption and the industry push for mobile payments, the total
amount of mobile payments at the point of sale would increase from
$398 million in 2012 to $5.4 billion in 2018.
While the cost for merchants to update their hardware for mobile
payments may appear as an obstacle to adoption, merchants in the
USA who comply with Europay Mastercard, Visa (EMV) standards will
already be on their way to accepting mobile payments. The growth
in mobile payments will in turn spoil the need for cash as customers
become accustomed to paying with their mobile device. The Javelin
report found that 81 percent of customers had used cash to pay for an
in-store purchase in the last 30 days, down from 83 percent in 2011.
Checks are expected to have the steepest decline in the next few years.
Payment via mobile device can be part of a business process that
runs entirely on the mobile channel (in connection with mobile
commerce) or on part of a multichannel business process. In the latter
case, mobile payments can be classified into the following categories.
• Mobile Remote Payments (MRP) use the cellular network for

payments. This typically (but not necessarily) enables payment
transactions in which the customer stands remotely with respect
to the operator (or the payment device of the operator).
• Mobile Proximity Payments (MPP) for contactless payments (for
instance. using NFC, whose range could be up to a maximum of
10 cm). This functionality enables payment transactions in which
the customer (with a mobile device) and the operator (with a
payment device) are “close.”
This distinction is useful for market analysis because these two

classes of mobile payments impact on two different markets, in terms
of user experience, involvement of the supply chain operators, and
the players involved. However, these two classes, once established,
can coexist in a complementary way, developing multichannel and
multiparadigm experiences.
It is interesting to examine the case of the Italian market. The

number of mobile phones is larger than the Italian population
and, roughly, 50 percent of them are smartphones. Yet mobile
payments are only now growing steadily. Twenty-three million
Italians (76 percent of the population between 18 and 54 years old)
made in 2012 at least one payment via mobile for a total value of
900 million euro, of which over 500 million was for the purchase of
mobile digital content – such as news, games, music, phone cards,
or donations. Mobile commerce in goods and services recorded
strong growth, reaching 180 million in 2012, often as an extension
of e-Commerce initiatives. Mobile proximity payments were rather
limited to experimentation.31
Mobile commerce and the mobile remote payment are based on
a mature technology and are increasingly used. Successful exam-
ples of the second type in the USA are Fandango (for movie ticket
sales), depleted by over 20 million users and Starbucks (orders in the
queue), with over 30 million transactions in a year. In France, mobile
remote payments have also been a great success (several million down-
loads), for instance with Mobile SNCF. Through it, customers bought
in 2011 more than 3 percent of rail tickets.32 Everything will depend
on the ability of operators to include the mobile channel in their
marketing strategies. They should use the best the characteristics of
the channel:
• spatial ubiquity
• temporal availability
• ease of use
Mobile remote payments

Thanks to the growing popularity of cells and smartphones, MRP
are expected to expand rapidly in the coming years. Some estimates
at the global level are very optimistic. The value of transactions
through this channel are estimated up to $ 670 billion in 2015.
Currently mobile payments have spotty diffusion around the
world. They are popular for paying for mobile digital content (such
as music, ringtones, e-books, or apps). Mobile commerce of goods
and services is supporting their expansion.
Mobile commerce and remote payment show a mature and widely
available technology, although it is in constant evolution.
Mobile Banking 65
• Mobile commerce includes those services for which the mobile

device supports all phases of the business process – including the
stage of selection and issuance of the order – such as the purchase
of a flight via an app or through a mobile site of a good. Even if
the payment stage – as typically happens – ends on the mobile
device, mobile commerce includes, in fact, an experience of
mobile remote payment.
• Mobile remote payment in the narrow sense identifies those serv-
ices for which the payment phase assumes a central role. The
other phases of the purchase process are developed through other
channels or because the sales process is so simple as to make the
other phases of little significance (such as the purchase of a bus
ticket or the payment at a parking lot);
• Mobile money transfer is the transfer of money between people
through mobile phones. It could be included in a broad sense
within the mobile remote payment class. Mobile money transfer
has many similarities with the mobile remote payment, from a
technological perspective, and possible contamination (money
transfer services can evolve into mobile remote payment in the
strict sense, such as M-Pesa in Kenya or, as is happening with
Pingit from Barclays Bank).
The dynamics of the development of mobile commerce – and the

MRP – are clear. The technology, albeit in evolution, is mature and
widely available. The diffusion process depends on the ability of
the operators that will have to include the mobile channel in their
marketing strategies and multichannel relationships. In this way, it
is possible to take full advantage of the characteristics of the spatial
and temporal ubiquity of the mobile channel,
The market for mobile remote payments

A comparative analysis of the dynamics involved in mobile commerce
products and services, and mobile commerce and payment of digital
content can help identify the factors on which to base support for
the development of MRP.
The development of mobile commerce products/services depends
on an expertise accumulated over years of operation in the world of
e-Commerce, which is proving very useful in preparing well-config-
ured services for the mobile channel, as well as for the operational
processes of the back office. The market of mobile commerce and

payment of digital content has reached a significant size, thanks to
two key elements: the number of operators and the use of phone
credit. Due to these two characteristics, anyone with a mobile phone
can access the services of mobile commerce and payment simply and
without registering.
The MRP of products/services cannot instead leverage many of the
enabling factors mentioned above.
In particular, virtually all traders operating in the MRP sector
enter the world of e-Commerce skills for the first time. Moreover,
the current legislation is based on the European Payment services
directive (PSD). It excludes the possibility of using the phone billing
system to broker payments for products and services that do not have
digital content. It is therefore natural that the development path is
more difficult, slow, and fraught with obstacles.
Mobile proximity payment

Mobile Proximity Payment potentially has a high pervasiveness
(involving all business relationships in the physical outlets). It uses a
technology included natively in many new devices on the market.
The context of MPP is different. It has a much higher pervasive-
ness, covering virtually all trade relations in physical outlets. Briefly,
there are two key points:
• The technology is converging toward NFC. The number of

NFC-enabled handsets and POS is increasing and the technology
is mature.
• The business model is moving toward collaboration between
operators and financial institutions. The objective is to provide
values to all the stakeholders in the stream.
The ability to make the service usable on any phone, with any
payment tool and any telephone operator can only be guaranteed by
the implementation of collaborative models between operators. This
has happened for instance with
• Cityzi, a project born from the collaboration of the entire French

ecosystem;
• Cep-T Cuzdan, initiated by Turkcell in Turkey, telco market
leader; and
Mobile Banking 67
• Quick Tap, developed by Orange (Now Everything Everywhere),

and Barclaycard.
There are several interesting initiatives related to MPP. Normally,

they are limited, with the exception of Japan and South Korea, but
they are now expanding in the USA and Europe for a whole range
of socioeconomic reasons, including legislative (the SEPA), techno-
logical, and organizational.
In several countries, there are some initiatives to use mobiles
for the payment of transportation tickets. These initiatives show
that MPP time is ripe. The technology is well established, and it is
expected that in 2015 there could be between 20 and 25 million NFC
smartphones in Italy alone. The estimated numbers of MPP for the
European market confirm that the focus on a collaborative model for
the system will generate to telecom operators and financial institu-
tions returns to cover investment and operating costs.
The international scenario is characterized by strong turbulence.
This is symptomatic of a high interest, but at the same time it is also
a source of uncertainty.
The success of MPP will depend on the future actions of the actors
in the ecosystem: by the end of 2016, their attitude will lead to be
able to process about 4.7 billion euro to 10.8 billion euro.
Consolidation and competition

The revenues and operating costs of mobile payments are decreasing.
Nevertheless, it will not be easy to cover the capital expenditures and
ensure a fair return to the ecosystem level. In many countries – in the
USA as in Europe – there are more and more partnership agreements
between the telecom operators and in some cases some financial insti-
tutions for the creation of interoperable platforms for the MPP (MPP).
Consolidation and competition are the key words for the MPP in
Europe and in the world.
Even the technology, in this sense, helps to keep alive the compe-
tition between different architectures. In addition to NFC smart-
phones natively, there is an offer of alternative solutions (from the
add-on for the iPhone micro-SD with onboard communication and
Secure Element, to the QR).
Some of these solutions clearly have the character of a solution bridge.
Others will be able to maintain their use in the future, depending on
their success within the ecosystem and the target customers.
The estimated numbers for the market for MPP confirm that the
focus on a collaborative model for the system between telecommu-
nication organizations and financial institutions will help cover the
investment and operating costs and increase the margins.
Still taking the year 2015 as a reference, the estimation is for no
less than 8 million users of payment services of proximity and several
hundred million euro additional revenues per year.33 They will help
finance investment and ongoing operating costs.
These numbers are the result of conservative estimates. They
support the sustainability of the paradigm of mobile payments. They
contain two other important messages:
• It is important a comprehensive approach taking into account all

the potential contributors. It should aim to ensure the achieve-
ment of an adequate user base, pursue maximum efficiency invest-
ment, and operate in a coordinated manner in the ecosystem for
a quick upgrade of the POS.
• Mobile payments will be only a part of mobile banking, and will
not be the most consistent part.
Opportunities for MPP that arise by combining the interaction

of proximity to the potential of the smartphone are far reaching.
MPP can be combined with advertising, promotion, loyalty, and
couponing services. Some of these services (such as couponing)
involve merchants and acquirers. Other services are enabled only
by the spread of mobile NFC. They see a preponderant role of opera-
tors (such as interactive applications to support the process purchase)
and the secure element issuer (for instance, advertising based on the
profiling of applications in the secure element). These considerations
highlight the role of the merchants for the mobile NFC ecosystem.
An important part of the returns for the system depends on the
operational benefits that merchants will obtain (cash management,
optimization of the crates, and so on) and the ability of the systems
to transform these services in additional revenues.
m-POS
A different way to extend mobile payments is with the use of a

Mobile Point of Sale (m-POS), which is a mobile device that can be
Mobile Banking 69
used as a merchant point-of-sale terminal. Mobile POS proximity

payments made up just 0.01 percent of total retail POS volume
in 2012. Mobile devices (that is, smartphones and tablets) have
forever altered the in-store shopping experience, acting as both
a payment option and a channel for purchasing. Over the next
several years, an industry-wide push for mobile technology will
help propel mobile payments to astonishing growth: the estima-
tion is that it will allow mobile POS proximity payments to reach
$5.4 billion by 2018.
Mobile wallet
One of the most interesting developments in mobile banking is the

so-called mobile wallet.
The beauty of the mobile phone in connection with financial
services is that there is no longer the need for a one-to-one corre-
spondence between the device and its uses. This is the beauty of the
computer. It is a machine very different from the traditional one, like
an engine. Thanks to the software component, the computer can
perform many and distinct tasks at the same time: text composing
and editing, accounting, computation, and so on. The mobile adds
the possibility to interface directly with the network.
The mobile wallet is a metaphor for the leather wallet. It can
contain many types of documents: cash but also cards, identifica-
tion documents, and so on.
In the mobile wallet arena, there is the competition among the
so-called OTT (over-the-top) operators. These are, for example,
Google, which launched an e-Wallet NFC in the USA, and PayPal,
which has tried out some payment schemes in northern Europe.
Definition
The Mobey Forum offers a nice definition of mobile wallet:34
A mobile wallet is a functionality on a mobile device that can

securely interact with digitized valuables. Mobile wallet may
reside on a phone or on a remote network/secure server. It may
be accessed via mobile devices. It can also be managed and “used”
with it. Most importantly, it is controlled by the user of the
wallet.
When the mobile wallet is an open platform, the ultimate decision

on opting for and managing services rests with the user. From a
branding point of view, the wallet could very well be white labeled.
The user would be able to choose what services and brands to use and
connect with. Branded services and goods exist within the wallet,
not on top of it.
Functionality
The Mobey Forum lists some of the possible functionalities of the
mobile wallet.35 A mobile wallet contains a wide range of valuables.
The user scenarios can be rich and variable. The content will most
likely vary rapidly.
A mobile wallet can contain, generate, and facilitate multiple
items, such as
• financial
• mobile banking application
• single or multiple account access;
• account status / balance information;
• financial transaction options (money send/transfer, bill
payment, cash-in or cash-out, wealth management, stock
exchange investments, and so on);
• transaction or wallet information, history, and logs;
• payment cards from multiple issuers (debit, credit, prepaid)
• mobile remote payments: paying for goods and services;
paying for digital goods;
• mobile proximity payments: typically done at a point-of-
sale (POS);
• stored value account or accounts from multiple service
providers.
• identity
• digital identification done with a mobile device, supplied by
various issuers, like governmental organizations, telecom oper-
ators, or financial institutions;
• digital signatures
• access control (physical or digital) via log-on credentials;
• authentication;
• membership cards, boarding passes, driver’s licenses, and so
on.
Mobile Banking 71
• mobile commerce or m-Commerce

• Mobile commerce is any transaction that involves the transfer
of ownership or rights to use goods and services, which is initi-
ated and/or completed by using a mobile device. The holder of
a wallet with rich content – not necessarily in monetary terms,
but in value-related terms – can give permission to loyalty
schemes to send offers or coupons:
• coupons and offers;
• loyalty cards;
• tickets for transport or entertainment
• receipts for usage or transactions;
• mobile advertising;
• alerts;
• location-based or contextual services.
Note that this list and this categorization are not necessarily exhaus-
tive. In time, the mobile wallet could contain other functionalities
that right now are difficult even to imagine. For instance, it could
contain the customer health record to facilitate emergency treat-
ments. Going back to financial items, it could contain the customer
investment portfolio and be used to manage it. There is no limit to
the possibilities as far as the content of a mobile wallet.
Mobile-only banks: another revolution in banking
A certain number of mobile-only banks have been launched recently.

Their characteristic is to offer the full set of banking products on the
mobile (including smartphones and tablets), and only on the mobile.
History repeats itself. People certainly remember that one of the
first online banks, ING Direct, was similarly launched initially as
online banking only. Later, they started to open branches in certain
countries.
The initial launches of many mobile-only banks have been
successful: in a short time, there have been a relatively large number
of new subscribers.
Until now, there is not a standard model for mobile-only banks,
even if some common features are emerging. Mobile-only banks’
concept and ease-of-use resonates well with younger, tech-savvy
customers, but any user of the mobile could come to like it. It is very
important that the apps, websites, and various features be quite easy
to navigate and understand.
Normally these mobile banks have an online back-up accessible
via Internet for emergency.
The following paragraphs describe some interesting cases of
mobile-only banks.
Africa
M-Pesa is one of the most successful examples of a mobile payment
initiative. It was born in Africa, in Kenya. MTN has partnered with
the retail chain Pick ’n Pay to offer South African customers a new
mobile bank called Tyme Capital.
Tyme (which stands for “take your money everywhere”) is not
just a mobile wallet. A full-scale mobile-only bank, it offers most
of the services one would expect from any other banking service.
It offers customers the ability to send, receive, deposit, and with-
draw money. Using Tyme, customers can also make payments and
purchase prepaid electricity and airtime. Tyme is using some local
outlets to allow physical transaction such as give and take money.
Customers can withdraw and deposit cash till points at any one of
Pick ’n Pay’s hundreds of stores across the country, as well as from
Boxer stores. There are no monthly charges or a minimum balance
requirement (although some transactions do require a small fee)
in the case of Tyme, as is the case with almost all other mobile-
only banks launched throughout the world. There are certain
limitations. For example, an account holder’s maximum balance
cannot exceed R 25,000 (roughly US$2,800). A certain number of
the transactions (like debit transactions, airtime purchases, with-
drawals, and debit orders) are limited to a R 1,000 (US$111) daily
cut-off point.
Europe
BNP Paribas’ “Hello Bank!” claims to be Europe’s first fully digital
mobile bank. It was launched with a smart orchestra stunt to show
what a customer could do with just his/her mobile phone.
Taped during a performance in Prague, and led by conductor Libor
Pesek, 60 musicians put aside their musical instruments for a special
performance of “Carmen.” Phones and tablets were hooked up to 227
different interfaces, and linked together via Wi-Fi.
Mobile Banking 73
Another mobile-only bank was launched in April 2013 in the Czech

Republic. It has demonstrated the possibilities of a mobile-only bank.
Its aim is to bring the social aspect into the area of personal finance
in such a way as to unlock the viral growth in user acquisition, and
become the Dropbox of retail banking.
Its key features are
• real-time activity stream;

• add comments, photos, and Foursquare venues to purchases;
• send money to Facebook friends;
• send money to nearby Instabank users;
• up to 10 percent annual percentage rate (APR) for checking
accounts;
• ATM map showing the distance to the nearest free ATM;
• share purchases on Facebook;
• search purchases using keywords;
• split a bill with friends;
• design one’s own debit card using Instagram photos; and
• personal finance manager with expense category statistics and
analytics.
Americas
The first bank designed for mobile use that was launched in the USA
seems to have been GoBank. It does not have an overdraft or penalty
fees. It allows the customer to pay up to $9 a month as a membership
fee. But members can use the same account features even if they do
not pay a fee. Customers receive a free debit card, or they can create
a custom debit card with a photo of their choice for $9. The company
gets most of its money through merchant fees when the customers
use their cards. There is a bill-pay feature, and the accounts are FDIC-
insured. At the launch, the company offered free custom debit cards
as part of a promotion with store partners like Rite Aid and Barnes
& Noble college bookstores. Members can use fee-free ATMs from
more than 42,000 locations around the country and add cash at over
3,900 ATMs.
GoBank is available in the iTunes App Store. Android phone users
can download the app for free via Google Play, and MetroPCS will
distribute the mobile application across its compatible Android device
portfolio. One of the most intriguing features of GoBank is that users
can view their balance on the log-in screen, which the company says
is the primary reason why a person logs into his/her bank account.
GoBank also allows users to send money at no charge through text or
email. If a customer wants to send money to someone who does not
use GoBank, he/she can use PayPal.
The $4.1 billion Pennsylvania State Employees Credit Union
(PSECU) in Harrisburg, Pennsylvania, tells a similar story. Despite
its size – it ranks among the top 25 credit unions in USA, PSECU has
only one branch. It is effectively a branchless institution. If it were
not for mobile, it would face pressure to open branches.
Asia
Another interesting initiative is UMPay, a Joint Venture between
Unionpay and China Mobile, as well as eBank, an Internet bank
leader in Japan. It is owned by an e-Tailer: Rakuten Group.
Jibun Bank, a Japanese bank, whose name translates as “my bank”
in English, is another innovative bank. Jibun Bank was launched
in July 2008 by the Bank of Tokyo-Mitsubishi UFJ (BTMU) and
KDDI, the Japanese telecommunications operator. It was designed
purely and simply for mobile telephone use. Jibun Bank has around
400,000 customers. That might look a small number, but it is good
for a mobile-only bank in a mature market like Japan. Jibun Bank
is growing at quite a pace compared to other banks. It has taken a
5 percent market share already. The bank does not want to stop here.
This is just the start, as the bank has announced aggressive targets
in terms of accounts and deposits. This 24-hour bank is designed for
mobile phone subscribers of KDDI’s service. It allows customers to
pay for goods and services they purchase with their mobile handsets.
Its revenues come from money transfers between customers. Its use is
simple. For a money transfer, it is sufficient to key into the phone, the
recipient’s telephone number and the amount of money to transfer.
The model of this bank is different from that of traditional deposit
takers and lenders, as Jibun Bank expects to generate half their income
from fees and the other half from investments on deposits.
The number of such mobile-only banks will grow in the near
future.
Jibun Bank Corporation started accepting applications from
customers for new accounts in July 2008, with full customer services
via mobile phones (NTT DoCoMo, and Softbank Mobile), the Internet
(PCs), and the telephone (IVR/operator). Jibun Bank is striving to
Mobile Banking 75
become a financial institution that has top customer satisfaction –

a “personal bank for each individual customer” – providing high-
quality financial services that are both convenient and secure.
Security is always a concern with mobile banking. The objective
is to provide Jibun Bank customers peace of mind. This service has
a high level of security through various functions, such as making
it impossible to access mobile phone banking (including the Jibun
Bank Book software) with a mobile handset other than the regis-
tered one.
Verify
The Lean and Digitize method requires that, once a new product or
process is launched, it is essential to verify the improvements in the
critical success factors.
Cisco conducted a global survey, in early 2013, for retail banking.
It includes responses from 1,514 customers and 405 financial insti-
tution professionals across ten countries.36 The report studied
customers’ views of how and when they were engaging with their
financial institutions across multiple channels for activities ranging
from account monitoring to obtaining financial advice. The majority
(69 percent) of US customers’ would welcome more personal finan-
cial services to help simplify the management of their finances over
multiple channels, including online, mobile phones, telephones,
video conferencing, and financial institution branches. Customers
desire a more seamless and personalized customer experience from
the financial institutions with which they are working. Customers
globally identified the most important attributes when interacting
with their financial institution or financial advisor as
• availability (63 percent);

• competence (65 percent); and
• efficiency (68 percent).
Customers indicated a willingness to exchange more details about

their financial habits. They expect financial institutions be more
active in financial advices. In order to do this, customers desire
• greater protection from identity theft (83 percent);

• increased opportunities for saving (80 percent globally);
• personalized service (78 percent); and

• greater simplicity (56 percent) in managing their finances.
Only 54 percent of global customers expressed a desire for auto-

mated systems to provide financial advice or recommendations.
Fifty-nine percent of responses showed that they would be comfort-
able with location-sensitive recommendations delivered to a mobile
device.
The majority (71 percent) indicated that they were comfortable
with the increasing use of virtual communications in addition to
in-person financial conversations. Customers from emerging econo-
mies expressed a slight preference for on-demand access to expertise
(48 percent globally over speaking with a particular individual. The
latter choice was favored more in emerging economies [52 percent]).
Customers want personalized services from their financial
institutions:
• Seventy-seven percent indicated a desire for more identity theft

security.
• Seventy-three percent wanted advice on increasing their savings.
• Sixty-seven percent requested more financial education.
• Forty-seven percent wanted an assessment of their financial status
as compared to other customers (as available in websites such as
Mint or Bundle).
The survey examined also financial institutions’ ability to deliver

personal financial services:
• Forty-six percent of USA customers feel that their financial insti-

tution has enough information to offer them personal services.
• Fifty-eight percent of USA financial institutions feel that they
have enough personal information on their customers.
With reference to customers’ willingness to share private informa-

tion with the financial institutions, the results were
• fifty-three percent of USA customers would provide their finan-

cial institutions with a fingerprint or other biometrics to verify
Mobile Banking 77
financial transactions to protect the customer against dangers

such as identity theft;
• globally, 61 percent of customers would share biometrics data,
with Japanese customers least likely, at only 33 percent, and
Chinese customers most likely, at 94 percent;
• sixty percent of USA customers would provide additional personal
information in order to receive greater simplicity in managing
their finances.
Relative to keeping personal information in the vault, the indica-

tions were
• fifty-seven percent of USA customers would not want their finan-

cial institutions to share their personal information outside the
bank, even if it would improve quality of service in other areas;
• seventy-two percent of customers in Russia and Germany were
unwilling to have their financial institution share personal
information.
The majority of global customers could be virtually connected to

their financial institution. There was a willingness to have virtual
meetings with the personnel of financial institutions:
• Sixty-three percent of USA customers are comfortable commu-

nicating with their financial provider using technology (such as
texting, email, or video) instead of visiting them.
• Globally, seven in ten customers and 92 percent of financial institu-
tions are comfortable communicating using virtual technology.
Even mortgages and loans could be managed virtually. Almost half of

customers in the USA (48 percent) would be comfortable in securing
a loan or mortgage using technology like video to communicate with
their financial institutions.
In terms of the media used to communicate, computers were
preferred to smartphones for video connections:
• Twenty-one percent of USA customers would favor a smartphone

for video conversations with financial institutions.
• Most customers (79 percent) preferred laptop or desktop

computers.
Physical presence is still important, especially to capture new

customers: 46 percent of USA customers would open an account with
a financial institution virtually if it offered the best and more secure
services. French customers were least likely to meet virtually, at only
44 percent, and Chinese customers are most likely, at 91 percent.
Conclusions
The characteristics of potential customers continue to evolve and

become strategic. It is essential that financial institutions keep pace,
ensuring that customer needs are met. Mobile banking is about
matching patterns in people’s lives and servicing customers securely,
efficiently, and through multiple channels. In today’s global economy,
where customers and employees are often on the road, technology
must evolve to ensure that the productivity of those individuals
remains high despite time spent out of their home or their office.
Industry leaders such as JP Morgan Chase continue to raise the
bar for what customers, businesses, or individuals expect from their
financial institutions through the mobile channel. Additionally, it
is essential that corporate customers continue to urge their banking
partners to move forward with planned initiatives. Business mobile
banking must be viewed as more than an extension of the online
channel. Mobile banking has the potential to be a game changer
for the financial services industry. Aite Group therefore makes the
following recommendations to the business customers of a bank’s
mobile offerings:37
• Work with your financial institution providers to give them a

better understanding of your requirements and pain points.
• Ask questions about mobile security to ensure a greater comfort
level with the technology.
• Push your financial institution partners to continue improving
the usability of mobile offerings to match the user interfaces of
merchants and other providers that are leading the curve with
mobile technology.
Mobile Banking 79
• Push on mobile also with economic incentives the customer.

Gallup’s research showed that more than half of customers would
be willing to use a more massive digital channel if it meant
receiving incentives, such as a raise of interest rates on deposits
by more or less 0.25 percent or a decrease in interest rates on
outstanding loans of 0.25 percent. On the contrary, the use of
disincentives to force somehow the migration of customers to
mobile banking is, according to Gallup, practice that can have
serious consequences, such as the loss of the customer.
• Be clear from the start on the mix strategy, online and offline, for
the channels. Immediately place the new customer to the channel
that the financial institution prefers to promote.
The following chapters analyze the challenges, opportunities, and

status of mobile banking.
3
Management of Mobile
Banking
Introduction
The marketing and the economics are Two important aspects in

the implementation, launch, or upgrade of mobile banking are its
marketing and economics.
In order to examine these aspects, it is important to consider the
characteristics of the customer and a multigenerational view of
mobile banking. Actually, the marketing, the benefits, and the costs
change according to the characteristics of the customers and the
mobile banking functionality.
Once the benefits and the costs are defined, it will be possible to
consider the return on investment (ROI) and the actions necessary to
make the mobile banking a success in the specific situation.
Different types of customers in mobile banking

The rapid adoption of mobile banking is transforming the marketing
of financial institutions. These changes introduce new ways in which
customers do banking and communicate with the financial institu-
tions. In this context, it is imperative to differentiate between catego-
ries of customers based on what they consider a priority, such as an
application’s performance, functionality, price, and so on.
Ericsson ConsumerLab produced a report that identifies six different
categories of customers of smartphones. Each category attaches
different priorities to the services offered by the telecom operators.1
It was based on qualitative interviews conducted in Sweden, the UK,
80
Management of Mobile Banking 81
the USA, and Italy. It is possible to use a similar approach to evaluate

the possible categories of the customers of mobile banking.
Three key factors influence the customer experience and the rela-
tionship the customers have with their financial institutions: quality,
cost, and experience. The quality of the functionality offered is one
of the most important factors that have an impact on the loyalty to
an institution. As a result, the security, simplicity, and range of func-
tionality offered are essential for the financial institution in building
a lasting relationship with the customer.
Experience is the name of the game in customer relationships as well
as in other services. The value of services is a decisive factor for many
customers. Mobile banking that meets the financial services needs of
the customer is important. It is not sufficient to ensure the loyalty of
customers. There are other factors that can significantly improve the
experience of the customer and hence generate his/her loyalty.
Many customers perceive their relationship with their financial
institution as distant and unfamiliar. The majority of customers do
not experience a negative relationship with mobile banking. However,
they may miss having a personal touch and the human relationship
with a financial institution employee. Financial institutions may
appear too defocused in mobile banking. It is therefore essential to
improve the relationship between the customer and the financial
institution. Programs that reward loyalty and personalized offers
can help very much in this regard. This approach makes customers
feel more involved, and thus increases their levels of satisfaction.
Even devices that includes an operator in their tender are
important to some customers, including smartphones and more
new areas in their tender is another important element that
allows financial services to consolidate the relationship financial
institution – customer.
Based on these factors and similarly to the Ericsson ConsumerLab
survey, it is possible to identify six categories of customers:
• Performance Seekers, who consider the fundamental quality of

the functionaly offered and the connection. They think that we
can do everything through a connected device if proper func-
tionaly available.
• Smartphonatics, customers for whom the smartphone is not only
a communication tool but an object that represents a lifestyle
and a status symbol. The choice may also depend on the provider
which can make available more functionality in mobile banking.
• The VIPs are those customers who consider it essential for the
interaction with the financial services provider. They love to feel
privileged customers through personalized services and promo-
tions, offered to meet their needs.
• The Cost Cutters, which give priority to the pricing of the finan-
cial services offered. They are looking for cheap deals and reward
financial institutions that do not surprise you with unexpected
additional costs.
• The Curious Novicers, however, are those customers who are
entering the world of the mobile banking. They are gradually
discovering the potential of the new channel. For this category,
priority is the relationship with the financial institution, from
which they expect technical support and friendly advices. The
performance of the network, the functionality, and the device, as
well as its ease of use, are other key elements that affect the rela-
tionship with the operator of this category of customers.
• Control Seekers, those who, to avoid unpleasant surprises in
billing, shall monitor the use of the mobile banking constantly.
A multigenerational view of mobile banking

It is important to consider a multigenerational model of the func-
tionality that can be offered through mobile banking. The model
should define a progression from relaying information to customers,
through enabling transactions, interacting with customers around
their financial needs, being part of their lifestyle management, and
also engaging in nonfinancial activities.
Several analysts have introduced models that consider the possible
life cycle of mobile banking. Tower Group has introduced one of the
most successful.2 It essentially considers the following generations:
informational
• balances and transactions history
• SMS alerts
• ATM location finder
transactional
• remote deposit capture
• transfers
• bill pay
• stock trading
interactive
• actionable alerts
• personal financial management
• personal lifestyle management
• mass marketing
• transaction verification
• person-to-person (P2P) payments
orchestrative
• opt-in preference management: marketing alerts, offers, and
coupons
• location- and context-aware service
• cross-channel process management
• bill capture
Beyond the generations in the Tower Group model, there are some
further generations:
social
• social media integration
• exchange of information, and especially of experiences
• comparison of lifestyles among friends or acquaintances
• gamification
• voice recognition
• streamlined P2P
multienterprises
• partnerships with merchants
• mobile wallet
• targeted marketing
• advanced payment systems
• cardless and contactless cards
• geolocation marketing (for instance, merchant-funded rewards)
In the future, there will be additional generations. Financial institu-

tions need to reimagine continuously the possibilities of increased
access, bandwidth, and how those factors will affect people.
The marketing mix of mobile banking

The marketing mix is a business tool used by marketing professionals
to define policies and strategies. The marketing mix is often crucial
when determining a product’s or a brand’s offering. It is often synon-
ymous with the four P’s: price, product, promotion, and place. In the
marketing of services, the four P’s have been expanded with three
additional P’s to address the different nature of services.
The original four P’s are3
• product, which is an item that satisfies what a customer demands

or that resolves his/her problem. It is a tangible good or an intan-
gible service.
• price, which is the amount of money a customer pays for the
product and the way in which he/she pays.
• promotion, which is all of the methods of communication that
a marketer may use to provide information to different parties
about the product. Promotion comprises elements such as adver-
tising, public relations, personal selling, and sales promotion.
• place (or distribution), which refers to providing the product at a
place that is convenient for customers to access.
The additional three P’s in the marketing the services are
• physical evidence, which is the elements within the selling point –

the storefront, the uniforms that employees wear, signboards, the
website, and so on.
• people, who are the employees of the organization with whom
customers come into contact.
process, which, along with the systems within the organization,

affect its marketing processes.
It is interesting to analyze how, in the case of mobile banking,
these seven P’s become the following:
• In terms of Products, mobile banking allows the financial

institution to
• mix in an excellent way the different products: payments,
deposits, trading, and so on.
• combine with different media, as in taking pictures of checks

or of the driver’s license when the customer applies for a new
account.
• In terms of Price, mobile banking brings a dramatic reduction of
the total cost of the service. Mobile banking does not require that
a customer go to a branch or an ATM. This opportunity reduces
costs for the customer in substantial ways. Mobile banking can be
accessed everywhere. In most cases, access does not require addi-
tional costs. Many financial institutions do not charge for down-
loading the app or for most of the transactions. In some cases, the
financial institution is willing to share its cost reduction with its
customers through, for instance, an increase in the interest paid
on deposits.
• In terms of Promotion, mobile banking allows the financial insti-
tution to send personalized promotions, based on location, thanks
to the Global Positioning system (GPS) function in the mobile.
• In terms of Place (distribution), mobile banking can be accessed
from anyplace, from any device, and at any time.
Mobile banking also changes and improves on the additional three

P’s. Unfortunately, many financial institutions do not devote much
time and effort to these important aspects:
• The Physical evidence underlines the importance of the branding

and the usability of the applications. This aspect is critical due to
the smaller size of many smartphone screens.
• The People are important essentially in terms of the Relationships
Center and the Help Desk. The mobile phone helps in this regard
since it is a tool that was born for communication.
• The Processes are extremely important. They must change in
respect to the traditional branch work. They need to provide an
excellent experience to the customers.
How to market mobile banking

Financial institutions should market mobile banking with a
multichannel approach, which should communicate to prospec-
tive customers and educate existing customers on the benefits of
mobile banking. It should include television, online, and mobile
components. It should highlight multiple areas of the financial serv-

ice’s mobile banking features, such as mobile deposit and transfers.
The approach should show how mobile banking is a natural exten-
sion of what customers already do on their mobile devices and actu-
ally makes it more convenient. For instance, it would be possible to
use a video on the mobile to show customers how they could use
their devices to transfer funds to a merchant, a friend, or a family
member. Additionally, buttons could redirect customers to pages on
the financial institution’s website, where they can either compare
accounts or sign up for additional services.
To promote the microsite, the financial institution should leverage
a variety of different advertising initiatives:
• television and online video components to show customers how

to easily use additional functionality
• commercials that advertise the functionality available in mobile
banking
Mobile banking continues to grow. However, customer education

is still a challenge for many financial institutions. Therefore, lever-
aging other channels such as television and online to promote mobile
banking is an interesting way for financial institutions to attract new
customers and retain existing users.
Mobile web marketing in mobile banking

Marketing basically means thinking about people’s needs and
adjusting to those needs in order to ultimately give customer a sense
of satisfaction. Mobile web marketing strategies can be tailored to
this mobile banking objective.
Web marketing is definitely more than just a theoretical expres-
sion. It is a brand new, different way to approach the customer. The
starting point is the same as that in traditional marketing: an anal-
ysis of the customers’ (targets’) needs.
Organizations can advertise their products on television or in news-
papers. They are introducing interruptions in whatever the reader/
watcher is doing to deliver the organizations’ messages. Customers
are passively suffering violence: the break in the middle of a movie
or their reading.
But in web marketing, the world is upside down. The potential

customer is not passive anymore. If he/she has a need, he/she can
look for it on a search engines.
With a well-designed site, the customer will be able to find the
functionality he/she needs through the search engine on the finan-
cial institution site. Once it is found, he/she will enter the financial
institution page. Then, he/she can browse, looking for more detailed
information on the product/service that he/she is seeking.
Mobile web marketing is the newest branch of web marketing. It
uses the same principles of the classic web marketing, but it should
be adjusted to a very different medium: the mobile.
The revolution between the old marketing and the new web
marketing lies in the role of the customer, who is not the prey
anymore, but rather the predator.
Financial institutions should, for example, run banner ads in the
smartphone app store that feature scrolling animation to promote
their mobile services. Additionally, the financial institution could
use YouTube masthead ads.
The possible use of social network/media in the

marketing of mobile banking
A certain number of financial institutions use social networks such
as Facebook or Twitter in mobile banking. They are useful tools to
promote many different services and business. They especially fit
into small/medium-size financial institutions that want to improve
their customer base by reaching more potential customers.
Social networks cannot really help banks improve the customer
experience in mobile banking, however. These platforms are perfect
for having fun, get updates on news, being part of a virtual group,
and doing many other things. Yet few bank customers would use
them for mobile banking.
A possible useful social media tool for marketing mobile banking
would be the Foursquare, which a location-based social network. It
allows a person’s friends to know where that person is at a particular
moment.
Thanks to a specific application, a person can check-in at a public
place (such as a merchant location), and then his/her friends will
know immediately, through the same social network, the location
where that person is. If the person’s friends want to and if they are
not too far away, they can even contact that person. Applications like
Foursquare can reduce the distance between the social network and
the real world.
Foursquare might be not the perfect solution for combining mobile
web marketing and mobile banking. Nevertheless, location-based
social networking is excellent to combine mobile banking and real,
everyday life.
A potential scenario for using a location-sensitive social network
in combination with mobile banking could run this way:
• A financial institution provides a list (an online map would suit

best) of merchants to its mobile banking customers.
• The institution and the merchants have already agreed to make
available a certain discount to customers who check-in there.
• The mobile banking customer is motivated to choose a specific
merchant (included on the map) and buy their product/service,
enjoy the product/service, take a picture of an interesting product,
and, finally, share it online with a comment attached. Other
friends, who are customers of the same financial institution and
therefore are part of the same mobile banking club, can see it and
can plan to go there in the near future.
Each party would win in this approach:
• The customer using his/her smartphone would save money. He/

She could choose among a wide range of opportunities always at
his/her disposal online.
• The merchant would get free advertising for their business, which
would draw more customers.
• The financial institution would attract more potential customers, and
it would increase their loyalty and their use of banking services.
Different merchants available on mobile banking could compete

with each other, for instance, by proposing and promoting different
types of discounts.
The difference between this potential mobile social banking and
what other websites do (like Groupon) lies in the way in which the
discounts are promoted. Traditional discount sites mainly use emails
to let customers know about the discounts. Mobile banking, using

geolocalization, can be much more social.
QR codes
Financial institutions could use QR (quick response) codes for
marketing their mobile banking. QR is the trademark for a type of
matrix barcode, which is a square two-dimension code. Its main
feature is to redirect users to useful information about a merchant.
The user takes a picture of the code and he/she is immediately linked
to a website URL that contains specific information. There is no need
to search, browse, or waste the user’s precious time.
QR codes can support mobile payments. These codes can also
compensate for the few flaws in location-based social networking.
Just consider this possible scenario: a mobile banking customer goes
shopping. The customer does not like social networks, especially loca-
tion-based ones. This person does not like being found by anybody.
Nevertheless, he/she is a mobile banking customer. QR codes can
help in approaching such a customer. The merchant would need to
place a QR code at the main entrance of a shopping mall. The finan-
cial institution could provide (through the QR) all the information a
mobile banking customer would need to know about the merchants
in that location that provide discounts or special offers only to the
bank’s customers. This would
• be a clever way to help customers;

• give an effective service to customers who do not like to use
complex applications; and
• increase the business of the most competitive merchants.
Of course, this approach would not be as smart, posh, and flexible

as the scenario previously described in the location-based solution.
Yet it could help diversify the service by targeting a wider range of
customers.
The economics of mobile banking
To evaluate a business case for mobile banking or some of its enhance-

ments, it is useful to compute its ROI. To this end, it is necessary to
evaluate the possible revenues and the costs.
Revenues
Revenues come from a balance of transaction fees, interest earned,
and service charges. The key drivers of profitability of mobile
banking, considered as a new business line, are the average transac-
tion numbers and the average float value.
The benefits connected with mobile banking are different
according to the level of functionality offered. The following para-
graphs refer to the modified Tower Group multigenerational model
for mobile banking that is presented at the beginning of this chapter.
From one generation to the next, the benefits are additional to that
specific stage, and they overlap among generations.
Informational stage
• Improving customer satisfaction. According to Fiserv data
(compiled from interviews with several financial institutions
ranging from $2B to $28B in assets4), a good rule of thumb is
to assume that the potential exists for 20 percent of all transac-
tions to migrate to the mobile channel over the course of a year,
allowing the branch to reduce costs. In the case of Italian banks,
there was a 32 percent improvement in the image of banks and in
the customer satisfaction.5
• A Forrester consumer survey backs up the notion that mobile
banking can reduce service costs.6 US users of mobile banking
mentioned that mobile has changed their use of other banking
channels. Forty-three percent said they had made fewer phone
calls to their bank’s call center since adopting mobile banking.
More than one-third (35 percent) said they visited branches less
often than they did before adopting mobile banking. Forrester set
up a model of a bank with 500,000 retail customers. The model
bank could achieve a savings of more than $150,000 per year by
the reduced traffic in the branches and call centers, thanks to
mobile banking.
Transactional stage
• Mobile banking customers are less likely to leave. In the Forrester
study mentioned above, the attrition rate for all mobile banking
customers was 40 percent lower than that of online banking
users, and the attrition rate for customers using both mobile
banking and bill pay was 53 percent lower than that of online
banking users. A customer survey also reinforced the idea that
mobile banking increases customer retention. Thirty percent of
US mobile banking users say mobile banking has made them more
likely to stay with the bank from which they receive the service.
This increased customer stickiness results in recurring revenue
for financial institutions. Forrester analysts project that a bank
with 500,000 retail customers could save more than $450,000 in
annual revenues from reduced attrition among their customers.
• Mobile banking customers are more profitable. SunTrust found
that their customers who use mobile banking were 32 percent
more profitable. Customers using mobile banking and bill pay
were 46 percent more profitable than online banking customers.
• Mobile banking generates activity. Mobile banking customers used
their debit cards more frequently after enrolling in the service.
They generated an average of 3.4 more transactions per month,
resulting in more revenue for the financial institution. In the case
of mobile banking through the use of tablets, Italian banks have
seen an increase in banking and trading activities of 50 percent.7
Interactive stage
• Mobile banking at the interactive stage further reduces channel
costs. Mobile banking enables the migration of customers from
the high-cost offline channels, such as call centers and branches,
to the lower cost, higher convenience mobile channels. To project
savings, financial institutions must first know the average trans-
action costs of each banking channel and determine how the
expenses are offset by diversion to the mobile channel.
• Mobile banking helps in capturing remote deposits. Financial
institutions can reduce direct branch costs by implementing
mobile banking (typically by approximately $4.00 per transaction
at a rate of approximately 15 deposits per year, according to Fiserv
customer interviews).
Orchestrative stage
• Mobile banking tends to generate more transactions. Its use
encourages value-generating activities such as debit card usage.
Thanks to the simplified access to banking services, customers
increase their average transaction numbers and the average float

value. This increases the number of revenue-generating transac-
tions. It simplifies transactions with relatively high revenue such
as money transfer, deposit, debit card use, and so on. For example,
in a Tower Group/SunTrust study,8 mobile banking customers
demonstrated the propensity to make more debit card transac-
tions per month, likely because they were better able to vali-
date their account balances from mobile devices when making
purchases at the point of sale (POS). SunTrust Bank demonstrated
that their mobile banking customers were on average 32 percent
more profitable than their online customers, generated 19 percent
more revenue, and were 53 percent less likely to attrite. Assuming
results similar to the behaviors of SunTrust customers, if the active
mobile banking user generates 40 additional debit card purchases
per year at today’s interchange rate of $0.06 per debit card trans-
action, additional card revenue could potentially equate to $2.40
(annualized) per active mobile banking user.
• P2P Payments are a great functionality in mobile banking. The
financial institution could ask the customer to pay a fee when he/
she uses his/her mobile device to make a P2P payment. According
to responses from some surveys, some customers might be willing
to pay $.50 to $1.00 per transaction.
• P2P payments, like bill payments, also increase customer loyalty
in measurable ways. Once friends, family members, roommates,
and merchants use P2P, they can stop writing and mailing each
other paper checks. Transaction volumes can increase with a
network effect. According to the Tower Group/SunTrust study
already referenced, customers who used both mobile banking and
bill pay showed even better results: profitability was 53 percent
greater than online users, and attrition was 82 percent less.
Social stage
• Mobile banking helps in expanding the customer base. It can
attract new customers by positioning the institution as innova-
tive, in sync with the pace of today’s households and the need for
customers to save time and make transactions on the go.
• Social networks are excellent ways to capture customer behavior
and status data. By connecting mobile banking with social
networks and using an advanced data analytics model, it would
be possible to personalize services to a specific customer.
Multienterprise stage
• Mobile banking can provide merchant-funded offers. Merchants
are willing to pay fees to financial institutions when customers
pay for their offers via their mobile devices.
• The mobile banking service provides a way to promote services
through the mobile channel. It could help cross-sell other banking
products and services. It does not represent a large portion of
the benefits. Forrester’s survey found that 18 percent of mobile
banking users say they are more likely to buy more products from
the financial institution. This could bring to the financial institu-
tion additional revenue of $20,000 per customer per year from
cross-selling products like credit cards to mobile banking users.
• Mobile banking is 32 percent more profitable overall and
46 percent more profitable than online customers if using mobile
banking and bill pay.
Costs
Accenture studied ten cases of mobile banking introduction in finan-
cial institutions distributed around the world. They found full imple-
mentation costs ranging between 1.2M$ and 2.8M$.9
The main operational costs come from call center staff, software,
and hardware maintenance/operations, the cost of communications,
and plastic bank cards (if they are used).
Major areas of fixed costs derive from the acquisition and devel-
opment of software and hardware and the establishment of a call
center. Opportunities to lease the software and even the hardware
from a host that provides the service on a per-transaction basis are
beginning to emerge.
Marketing is a semi-variable cost. In some senses, it is closer to
a fixed cost since it is difficult to tie it to the numbers of accounts
either activated or active. Since mobile banking is a new concept for
most banking customers and banking is itself a new concept for some
people, successful implementation requires significant expenditure
on marketing and education. Customers need to feel that they can
trust the provider as well as understand how to use the service.
The cost of acquiring a new account derives mainly from
• the cost of the download of the software;

• the commission paid to the distribution channel;
• the employee or the outsourcing costs;

• the cost of calls if a relationships center is required.
Compliance is also a big (and increasing) driver of costs since mobile

banking might increase the amount of documentation collected as
well as the information to be stored and reported.
Return on investment
The higher the cost of acquiring new customers to mobile banking,
the larger the number of transactions necessary to reach a reasonable
payback period per account.
The final measure in the case of finance is the ROI. In this
case, there are several evaluations that diverge widely. Forrester
Research reached the conclusion that the ROI for mobile banking is
15.7 percent.10 This estimate, based on a hypothetical financial insti-
tution with 500,000 customers, is based on cost reductions, customer
retentions, and cross-selling through a mobile banking service.
Accenture analyzed ten cases with financial institutions around
the world. In some of these cases, there were ROIs of more than
300 percent.11
Mobile banking investments have very high ROIs when largely
successful (by way of customer impact, cost, and adoption). The
performance of less-successful implementations could potentially be
small (possibly even with negative ROIs) when adoption is very low.
Therefore, it is important to approach mobile banking by taking into
account its peculiarities.
In the presence of such different estimations, it is difficult to
reach firm conclusions. Certainly, ROI does not depend solely on
the product. It depends on its design, its launch, its performance, its
functionality, and, not last, its marketing.
Conclusions
This chapter stressed the fact that channel marketing and economics
are very important in mobile banking. Financial institutions should
take into account several points.12
Financial institution needs to understand the economic impact on
the entire customer relationship. The mobile channel is still early
in its maturity. Financial institutions should consider it as a fully
fledged channel, with a dedicated, passionate support structure.

In this respect, it is important to define an effective multichannel
strategy.
Minimizing fees drives greater engagement from customers, which
will be critical for future opportunity capture.
Measurement matters. The most advanced financial institutions
in mobile banking generally have the best sense of the mobile’s
effect on customer behavior. Measuring outcomes is essential to the
development of an impactful initiative. Measurement enables stake-
holding. This would avoid the risks of considering mobile banking
only as cost generation or applying pressure to provide revenues
from mobile banking fees.
Marketing is important in mobile banking. For instance, it allows
financial institutions to cross-sell both financial and nonfinancial
products. It offers the potential to reach virgin markets, like the
underbanked and in the unbanked persons. These are the potential
next generation of mobile users, who otherwise may not ever become
customers of the financial institution.
It is important to orchestrate lifestyle management, such as prefer-
ences, content, social relationships, and information.
Financial institutions can be successful in being technologically
or functionally strong. The more successful institutions in mobile
banking are the ones which are strong on both aspects. Leaders in
mobile banking continually monitor and leverage the evolution of
mobile technology.
Top management support and staff engagement are widely
mentioned as critical in this as in many other initiatives that finan-
cial institutions can take.
4
Opportunities, Challenges, and
Remediation
Introduction
One of the most interesting analyses, when considering a product or

a service, is the so-called SWOT analysis.
SWOT analysis is a structured planning method used to evaluate1
• strengths: characteristics of the business or project that give it an

advantage over others;
• weaknesses: characteristics that place the team at a disadvantage
relative to others;
• opportunities: elements that the business or project could exploit
to its advantage;
• threats: elements in the environment that could cause trouble for
the business or project.
Identification of SWOTs is important because they can support in

planning to achieve the financial institution objectives.
Users of SWOT analysis need to ask and answer questions that
generate meaningful information for each category (strengths, weak-
nesses, opportunities, and threats) to make the analysis useful and
find their competitive advantage.
In the case of mobile banking, such analysis can help to under-
stand the feasibility of reaching the objectives of the initiative and
find the competitive advantages of the financial institution. Mobile
banking is characterized by (see Table 4.1) the following:
96
Opportunities, Challenges, and Remediation 97
• The strengths of mobile banking are clear. The customer can

access his/her bank from everywhere, always, and with the level
of privacy that the customer determines.
• The weaknesses are also clear. The mobile coverage might not
be available or be of low quality. The situation is improving, but
certainly, it is still a problem in a certain number of areas.
• The opportunities for mobile banking are great. Young people
are an interesting part of the market, not only because they are
mobile addicted but also because they represent the future. If the
financial institution can make them faithful customers, the dura-
tion of the relationships could be rather long.
• The threats are similarly rather powerful. The handset can be lost
or stolen and with it will go even the possibility to contact imme-
diately the support that would block any further transaction.
Latency might be a problem, especially if the financial institu-
tion has not designed the application well and does not operate it
properly. The integration with the rest of the banking operations
(other channels, other applications, and so on) might be chal-
lenging and not always easy to implement.
Overall, this is the status. The actions are clear: enhance your
strengths and reduce your weaknesses, and chase the opportunities
and minimizes the threats.
The reward might be very high. The results might be well worth
the efforts. The final recommendations are
Table 4.1 SWOT analysis for mobile banking
Strengths Opportunities
Everywhere Young people

Always on Unbanked
Privacy Underbanked
Weaknesses Threats
Coverage Device lost or stolen
Size of the screen Latency
Multiple OS Integration
• have a clear vision of where you want to go;

• perform a comprehensive and detailed SWOT analysis for your
target market;
• set detailed achievable goals and objectives;
• proceed cautiously: one step at a time. You can eat an elephant,
but only in bites.
Mobility, risk, and change
In approaching mobility in the organizations, it is essential to balance

improvements and risks connected with its uses.
In the past years, there has been a path of revolutionary transforma-
tion in the mobile sector. More change will come in the near future.
There are radical innovations that the advent of wireless technolo-
gies, combined with the cloud, is preparing to deploy widely. Cloud
computing is making it much easier to use mobile devices to connect to
the applications and data of an organization.2 Therefore, it is important
to analyze the challenges and the precautions that the decision-makers
should embrace to continue to enhance this growth and innovation.
The reasons why mobile devices are used more and more are
several: lower costs, ease of use, and mostly demand from customers
and businesses.
Users tend to prefer to use their own mobiles, tablets, and laptops
rather than the one supplied from the organization. This is the
so-called Bring Your Own Device (BYOD) approach.
BYOD policies certainly have raised the risk to organizations with
regard to internal threats. The primary challenge is the ability to
manage the risks associated with mobile access to corporate data and
applications, while securing respect for the organization’s policies.
It is important to balance anything personal with the proprietary and
regulated world of corporate data and applications. Even if an organiza-
tion uses tools to manage the devices, it still has limitations and issues
to overcome. One relevant issue is dealing with a difficult user base.
The users may be concerned that the organization can spy on them
and monitor their every move. Some regulations in some countries
make difficult to use such monitoring and management systems.
The situation today is that
• malicious threats to mobile devices are increasing;

• user carelessness is prevalent; and
• customers demand less expensive ways to use services, content,

and data.
All these are challenges for ICT, security, and compliance leader-
ship to adapt and innovate in this area continuously. This mobility
market is moving faster than most departments can keep up with
it. This mobility environment is worthy of a discussion of perspec-
tives and of a presentation of experiences on how to face and address
these challenges.
It is very important to define and enforce policies. In their defini-
tion, ICT should include the risk, legal and compliance departments.
The organization should define policies on aspects such as
• acceptable use;
• use of social networking;
• cellular networks;
• mobile devices;
• data governance;
• employee agreements.
Opportunities
Mobile banking customers are valuable customers: rich, young, and

flush with profitable financial institution products and services.
These services are saving institutions money. As the number of users
of mobile banking has grown, branch visits have decreased consider-
ably. Javelin Strategy Research released a report entitled Leveraging
an Omnichannel Approach Financial Institutions: Fight for $1.5 B in
Mobile Banking Profits.3
The evidence is growing that the rising customer adoption of digital
technologies alters the branch-based distribution model. Since 2010,
branch visits have dropped dramatically by 10 percentage points,
while mobile banking has risen by the same amount. For the typical
financial institution, the cost for the in-person transaction is esti-
mated at $4.25 per transaction, while it drops to $0.10 for transac-
tions done via mobile banking.4
Challenges
There are many challenges connected with mobile banking. This

chapter lists some of them. They should not prevent a further
diffusion of mobile banking. Certainly, they do require appropriate

remediation to reduce their probability of occurrence and their
impact.
Security
Security is one of the major challenges because in mobile banking,
the financial institution does not have control of the network and
especially of the devices. It is important also since many customers
have concerns about security. It must be faced and remediated as
much as possible. Penetration testing is a great way to test the robust-
ness of the security in mobile applications.
The next chapter deals in detail with security.
Integration
A relevant challenge with mobile banking is the integration with the
remaining banking systems. The integration is necessary. Interesting
enough, this is a technological problem mimicking the organization
problem. For the latter, one of the solutions (as in Hello Bank) is a
complete separation with respect to the traditional financial institu-
tion. This is not possible in the case of information and telecom-
munication applications. Financial institutions need to integrate
mobile banking applications with the hundreds of other applica-
tions of the financial institution (core banking, financial systems,
risk management, reporting and compliance applications, and so
on). The launch of the mobile financial institution on a public cloud
might solve some of these challenges and allow a quicker launch in
the market. Not all financial service institutions are yet willing to
take this route.
Handset operability
One challenge is the fact that with mobile banking it is necessary to
take into account that there are many operating systems, handsets,
operators, and so on, and that none of them is under the financial insti-
tution’s control. Potentially, the financial institution would like to allow
the access to mobile banking from any device, any time, and anywhere.
This requires, for instance, the ability to cater for different operating
systems like iOS, Android, Windows, Palm, Black Berry, and so on.
There are a large number of different mobile phone devices.
Therefore, another big challenge for financial institutions is to offer
mobile banking solutions on any type of device. Some of these devices

support Java ME, and others support SIM Application Toolkit, a WAP
browser, or only SMS.
There is a challenge of interoperability between mobile banking
applications due to a perceived lack of common technology for
mobile banking. In practice, it is too early in the service life cycle
for interoperability to be addressed within an individual country.
In practice, banking interfaces are well defined, and money move-
ments between financial institutions follow the IS0–8583 standard.
As mobile banking matures, money movements between service
providers should naturally adopt the same standards as in the
banking world.
Risk management
The possible concerns about mobile banking are real, if not in the real
world, then certainly in the mind of a certain number of customers
and managers. It is useful to try to see how to approach the issues in
a rational way. Risk management will certainly help. The approach
should be based on the so-called “3Ps”: be predictive, proactive, and
prescriptive.
Enterprise risk management is a process in place to identify poten-
tial events that may affect the organization’s performance, with the
aim of managing threats within the limit of acceptable risk and to
provide reasonable assurance regarding the achievement of corpo-
rate objectives. It should be a continuous process, pervasive and
repetitive, that affects the entire organization. It should be used
throughout the organization both in its individual assets (in each
line of business and in any organizational unit).
The phases of a project for risk management are
1. identification of the value for the customer: identify targets to

attain;
2. risk identification: to identify what are the risks within an
organization;
3. risk evaluation: to determine the probability, impact, and ability
to be able to have early warning of the realization of identified
risks may have on the organization;
4. risk setup: locate the internal/external sources needed for meas-
urement and risk identification key risk indicators (KRIs);
5. risk monitoring: organize a structured model of reporting that

allows a financial institution to monitor the evolution of risks and
highlight in a timely way the increased likelihood/impact of each
risk;
6. risk response: take action when a risk arises, in terms of remedia-
tion, reduction, insurance, or even acceptance.
Skills and experiences

Another challenge connected with mobile banking is that there
are not many skills available in the market to design, develop, test,
deploy, and maintain mobile banking channels and their secu-
rity. The use of excellent consultants and organizations is strongly
recommended.
Remediation
There are many ways to remediate the challenges mentioned previ-

ously in this chapter. The next chapter will deal with the remedia-
tion to the security challenges.
Once the mobile banking application is launched, the most impor-
tant remediation is provided by excellent support. This can be done
in the ways detailed in the next sections.
Human support
The financial institutions expect to see consistent adoption, at least
in the short term, once they make mobile banking available to their
customer base. Help-desk requests must be minimal, as a verification
of the usability of the application.
On the other side, the customer might need help. It becomes essen-
tial to provide a help functionality that also includes the possibility
of chatting, talking, or exchanging messages with the help desk.
Talking would be best, since other modes might lead to misunder-
standing or require too much keying. Financial institutions desire to
use less expensive ways of communication.
Another possibility is to provide for a “steward of the technology.”
This is a proven approach, for example, in air transport, in which
organizations have begun to implement self-check-in machines in
airports as an alternative to physical check-in. If left alone in front
of the unfamiliar machine, the passenger may prefer to get in line
rather than try to check-in with the machine. But if, for the start-up
phase, the organization makes available attendants who invite the
passenger to try the do-it-yourself machine, and assist the passenger
for the first two or three times, the passenger may then go directly to
the automatic kiosk the fourth time. Similarly, financial institutions
may have to provide services (via online or telephone) that are well
structured to accompany their customers in the move to mobile. The
fact that a customer has a phone available will simplify the process.
This migration to mobile banking opens an interesting scenario
in which the branch is no longer considered as a place where any
banking transaction is done. The branch tends to assume a higher
and specialized profile. It becomes a possible reference and a focus,
even in the customer’s mind. This requires a complete reorganization
of human resources: the front line employees should devote more of
their time to manage more complex tasks with high added value, for
which the branch continues to remain a reference point.
Live chats
Mobile chats are essentially text messaging with a financial insti-
tution associate. However, the live web chat is still not present in
most of the largest financial institutions. However, given customers’
rising dependency on mobile banking and increasing usage of text
messages, mobile chats address these two trends and present a
win-win scenario for financial institutions and their customers.5
Mobile chats benefit everyone. They are less formal than an email
and less time-consuming than a phone call.
For financial institutions, mobile chats allow customer service
agents to address multiple inquiries all at once. If the chat feature is
offered after the log-in phase, financial institutions can offer a much
more personalized experience. It is possible to display customer
information, account history, and past customer service interactions
for the agent to see. As a result, these sessions are likely to be shorter
and more effective. A in-app mobile chat feature can help reduce
call-waiting and time in line inside the branch.
As with every other form of communication, customer mobile
chats are another channel to push on service to sale (S2S). The asso-
ciates interfacing via the mobile chat provide assistance. They also
use the opportunity of the contact with the customer to offer other
services.
Furthermore, financial institutions may consider improving

mobile chats by connecting them to their secure customer-
messaging platforms if they offer one. The secure messaging plat-
form can assist the mobile chat feature by continuing the conversa-
tion even after the chat has ended. Follow-up for service evaluation,
for example, can play a major role in enhancing the customer service
experience. Chats can allow also screen-sharing so that agents can
show customers how to navigate the mobile apps and sites. The next
stage of the evolution of mobile chat will be live video chats.
New mobile-centric financial startups have the most to gain in
the USA from providing a mobile chat service. Organizations such
as Simple, Moven, and GoFinancial institution in the USA are posi-
tioned to act as catalysts for the adoption of mobile chats.
Conclusions
Mobile banking has not only many challenges but it also can provide
many opportunities to increase the value to all parties, reduce costs,
and get more customers. The mobile channel is particularly effective
in the way in which customers and financial institutions interact
and transact.
To close this chapter on a positive note, the outstanding character-
istic of mobile banking is that it is virtual and not physical. It allows
its use and launch in as many markets as a financial institution
wants. BNP Paribas launched Hello Bank in four European markets
in a matter of months. This will bring great and large economies of
scale. The challenge here is that the financial institution needs to
design one solution for many countries, languages, cultures, econo-
mies, types of customers, and so on. Globalization helps, but finan-
cial institutions want to retain control.
Finally, mobile banking is one of the best examples of how to use
Lean and Digitize in a banking environment. With the economic
crisis continuing, this is a great opportunity.
5
Regulatory Framework for
Mobile Commerce
Introduction
Mobile banking is a success due to many reasons, such as
• the easy and relatively inexpensive access to telecommunication

networks;
• low market barriers; and
• the increasing global nature of the commerce and the interactions
between people.
Mobile banking, similar to e-Commerce, requires transparent and clear

regulations as the contracting parties are not in physical contact.
The lack of physical contact makes many potential customers
suspicious of such a channel. On the part of the customer, there
are concerns about the privacy and security of personal data (espe-
cially, for instance, pins or credit card information) and the potential
misuse of transmitted data while carrying out electronic transac-
tions. On the part of financial institutions and the regulators, there
are concerns about fraud and money laundering issues.
The contracting parties, therefore, should be able to rely upon the law
to protect them for transactions they execute using mobile devices. The
customer should be able to trust the privacy of his/her personal data. A
clearly defined regulatory framework is essential to boosting customer
confidence and increasing acceptance among the potential customers
of mobile banking as well as to ensuring its smooth functioning.
105
The legal regulations aim to safeguard and balance the interests of

both the customer and the financial institution by setting rules and
regulating the market, as well as the usage of existing and emerging
technologies. They tend to impose the highest level of restrictions
that govern legally carried-out transactions.
The good news is that most of these transactions are processed just
like any other financial input or output transaction. As such, when
dealing with mobile banking, one can focus on those functions that
are different with respect to other channels, such as remote device
connection (RDC), person-to-person (P2P), and financial institution
mobile apps.
Regulations on customer and data protection
The European Union (EU) defines personal data as “any informa-

tion relating to any identified or identifiable natural person” (EU
Regulation 45/2001, Article 2).
The regulations applicable to mobile banking are guided generally
by five principles:1
1. legal enforceability of contracts;

2. customer protection;
3. privacy of data (no unnecessary, unauthorized data collection);
4. confidentiality of data (protecting data from misuse);
5. right of self-determination (to carry out or reject a communication).
Mobile banking, being a relatively recent phenomenon, has not yet

attracted much attention of the lawmakers as an independent busi-
ness field. Its transactions in many countries are governed by the
Electronic Commerce and Telecommunication regulations. Some
European states have formulated regulations that are expected to
provide a reliable and modern legal framework in order to better
exploit the benefits of these new technologies while ensuring a high
degree of customer protection.
Many of these regulations have their origins in multilateral trea-
ties, such as those of the EU or the United Nations Organization
(UN). Other international organizations, such as the Organization
for Economic Cooperation and Development (OECD), the World
Trade Organization (WTO), and the World Intellectual Property
Organization (WIPO), have been actively supporting member
Regulatory Framework for Mobile Commerce 107
countries in formulating regulatory frameworks. These international

regulations are important due to the international characteristics of
the Internet, even if the degree of regulations might differ across
states.
The EU has issued 12 directives to ensure legal certainty and
customer confidence. They stipulate the regulatory framework for
(among others)2
• legally binding electronic commercial contracts;

• determination of jurisdiction and applicability;
• customer and data protection;
• protection of intellectual property rights (IPR);
• dispute resolution;
• cybercrimes; and
• taxation regimes.
These EU directives stipulate the regulatory framework for member

states while ensuring compliance to international treaties, most
importantly, the “Model Law on Electronic Commerce” passed
by the United Nations Commission on International Trade Law
(UNCITRAL).
Regulations on mobile banking products, services, and practices
continue to evolve alongside the technology that supports these
next-generation solutions. It is imperative for financial institutions
that are entering the new world of mobile to keep up to date on the
rules and requirements.
Not meeting the letter of the law subjects the financial institu-
tion not only to the risks of regulatory scrutiny and possible fines.
It also undermines customers’ confidence in the financial institu-
tion’s ability to provide adequately and fairly the latest technology
to protect their customers.
In terms of vendor partners and technology providers working
with the financial institution (for instance, in the USA) in the execu-
tion of the customer’s mobile strategy, it is important to verify some
important points:3
• Does the information security program of the vendor comply

with the Gramm-Leach-Bliley Act?
• Are the proper disclosures and notifications accessible to
customers?
• Are updates easily communicated and accepted by the

customers?
• If credit information is available, does the system comply with the
Truth in Lending Act (Regulation Z)?
In addition to getting the answers to these questions, it is important

for the financial institutions to be sure to have a compliance team
(or an individual assigned to compliance) in place to keep track of
changing regulations that may affect the mobile banking applica-
tion. Actually, this is a requirement by the central banks in many
countries.
Regulations can be tricky. While they may not seem to have a
bearing on a mobile app specifically, there can be an indirect impact
that could put the financial institution in a bad situation if it is not
in compliance by the stated deadline.
When financial institutions launch mobile banking, they need to
consider how to authenticate their customers in the mobile banking
environment. This is especially important since security is foremost in
the minds of customers. The American Federal Financial Institutions
Examination Council (FFIEC) Guidance on Authentication in an
Internet Banking Environment is a good source to consult. The guid-
ance was originally issued in October 2005 with a supplement issued
in June 2011. While neither specifically mentions mobile banking,
the FDIC Winter 2011 Supervisory Insights refers readers to the guid-
ance.4 It requires financial institutions to perform a risk assessment
for every new technological innovation, such as mobile banking. It
is important to complete a full assessment for mobile banking to be
renewed every year.
Title V of the Gramm-Leach-Bliley Act should be taken into
account in the USA. The Act requires financial institutions to keep
customer information secure. The financial institution needs to
perform, on at least an annual basis, a risk assessment on the secu-
rity threats to mobile banking information in order to remain in
compliance.
The protection of the private sphere of the customer and the
prevention of unauthorized use of personal data have been of
primary concern for lawmakers in order to safeguard the public
interest on the one hand and to increase customer confidence in the
electronic form of commerce, on the other hand. For this purpose,

several stringent regulations have been put in force, for instance,5
1. personal data may only be collected, processed, or used with the

explicit and written consent of the user;
2. if the user is offered the choice to give his/her consent electroni-
cally, the provider/vendor must guarantee that such consent
can only be given by an unambiguous and deliberate act by the
user;
3. the text of such consent should be accessible at any time by the
user;
4. the consent may be withdrawn by the user at any time;
5. personal data cannot be processed for any other purpose than
the one for which it has been explicitly collected;
6. there should be separate processing of user data for the use of
different services;
7. data that is no longer required must be deleted without delay;
8. customer profiles, even if anonymous, can only be created with
the consent of the customer;
9. the user may demand from the financial institution information
on the data on the user that is stored at the institution;
10. violation of these regulations by the financial institution or the
failure to inform the user of his/her rights constitutes an admin-
istrative offence, punishable with a monetary fine.
Before a financial institution begins to offer mobile banking, it is impor-

tant to review existing disclosures to see if the disclosures cover also
the mobile channel. If not, the institution needs to send out updated
disclosures. The updates should include any limits and restrictions for
mobile banking. It should also remind customers that data storage and
mobile phone usage charges will apply and in which transaction.
If the financial institution allows P2P, then it is necessary to consider
any remittance rule. In the USA, the Regulation E Amendment
specifically acknowledges mobile apps and allows mobile disclosures
when the transactions are conducted via a mobile device.
These regulations are basic, general norms. The law provides for
exceptions in extraordinary situations. Government authorities
would authorize such exceptions.
Mobile transactions (investigations, transaction monitoring)

Once a customer initiates mobile banking services, there is a host
of new and old compliance to consider. In the USA, the financial
institution is responsible for Regulation E errors. This is regardless
of whether they occur when the customer uses his/her bank-issued
debit card in a mobile application or through the mobile banking
app. Primarily, all of the traditional rules for error resolution still
apply, such as the definition of “error,” limitations on customer
liability, investigations timing, and provisional credit.
How the financial institution investigates reported errors, however,
becomes more complex because people tend to share phones in a
way that they do not share their wallets.
Mobile banking and mobile commerce
It might be interesting to analyze the German law-regime for the

mobile commerce closely connected to mobile banking,6 since it is
typical of regulations in many countries in Europe.
Mobile commerce is organized in Germany under the ambit of the
Information and Telecommunication Services Act (“Informations –
und Kommunikationsdienste-Gesetz,” known as IuKDG). This act
consists of a large subset of related clauses. The cornerstones of this
law-regime are7
1. the Act on Legal Framework Conditions for Electronic Commerce

(Gesetz über rechtliche Rahmenbedingungen für den elektronischen
Geschäftsverkehr, also known as the Elektronischer Geschäftsverkehr-
Gesetz, or EGG);
2. the Teleservices Act (Teledienstgesetz, known as TDG);
3. the Teleservices Data Protection Act (Teledienstedatenschutzgesetz,
known as TDDSG);
4. the Conditional Access Services Protection Act (Zugangskontroll-
diensteschutzgesetz, known as ZKDSG);
5. the Interstate Agreement on Media Services (Mediendienstestaats-
vertrag, known as MDStV ).
Another relevant law that is not a part of the IuKDG is the Act of
Distant Sales (Fernabsatzgesetz). These regulations follow an EU
directive on Electronic Commerce (2000/31/EC). The regulations are

integrated in Book 1 (General Part) and Book 2 (Law of Obligations)
of the German Civil Law.8
Conclusions
This chapter, although not exhaustive, provides an overview of the

legal restrictions that must be kept in mind when designing mobile
applications.
6
Mobile Security
Introduction
Mobile security has become increasingly important in mobile

banking. Twenty percent of all online financial services transactions
in July 2013 in the USA originated from a mobile device such as a
smartphone or tablet based on an analysis of 1.5 billion devices.1
This is up from 18 percent between January and July 2013, and
11 percent in 2012.
Mobile technologies are causing profound changes in the organi-
zation of information and communication systems, and therefore
they have become the source of new risks. Indeed, smartphones
and tablets collect and are used to process an increasing amount of
sensitive information. The access must be controlled to protect the
account information, the privacy of the user, and the intellectual
property and reputation of the financial institution.
All smartphones, as computers, are preferred targets of attacks. These
attacks exploit weaknesses related to smartphones that can come from
means of communication, such as short message service (SMS), multi-
media messaging service (MMS), Wi-Fi networks, and global system
for mobile communications (GSM), application software vulnerabili-
ties, and weak behavior on the part of the average user.
Various security countermeasures are being developed and applied
to smartphones and tablets, from more stringent security in different
layers of software to the actions to increase the awareness of the user.
There are good practices to be observed at all levels, from design to use.
112
Mobile Security 113
Challenges of mobile security
The security of financial transactions, which are executed from some

remote locations and through the transmission of financial informa-
tion over the air, is the most complicated challenge that needs to be
addressed jointly by mobile application developers, wireless network
service providers, financial institutions’ ICT departments, and the
customers themselves.
The following aspects need to be addressed to offer a secure infra-
structure for financial transaction over wireless networks:
• the physical part of the handheld device. If the financial institu-

tion is offering smart-card-based security, the physical security of
the device is more important;
• user ID/password authentication of the bank’s customer is not
enough. It would be ideal to use a physical or virtual token.
One-time passwords (OTPs) do not rely on traditional character-
based passwords. OTPs must be used by the customer each time
he/she wants to perform sensitive transactions using online or
mobile banking devices. When the request is received, the pass-
word is sent to the customer’s phone via SMS or read on the OTP.
The password expires once it has been used or once its scheduled
life cycle has expired;
• encryption of the data being transmitted over the air;
• encryption of the data that will be stored in the device for later/
offline analysis by the customer.
Potential threats
Customers are concerned that fraudsters are using increasingly

sophisticated and malicious techniques to
• thwart existing authentication controls;

• gain control of customer accounts; and
• transfer funds to money mules that facilitate the movement of
those funds beyond the reach of financial institutions and law
enforcement.
Many of these schemes target small to medium-sized business

customers since their account balances are generally higher than
customer accounts, their transaction activity is generally greater,

making it easier to hide the fraudulent transfers and normally
they cannot afford strong defenses on respect to large business
customers.
A smartphone user is exposed to various threats when he/she
uses his phone. Just in the last two quarters at the end of 2012, the
number of unique mobile threats grew by 261 percent, according to
ABI Research.2
Financial institutions should be aware of the types of potential
threats that can affect their mobile banking services.3 These threats
can disrupt the operation of the smartphone or tablet, and transmit
or modify the user data. For these reasons, the applications deployed
must guarantee privacy, protection and the integrity of the infor-
mation they handle. In addition, since some apps could themselves
be malware, their functionality and activities should be limited (for
example, accessing location information via the Global Positioning
System [GPS], address book, transmitting data on the network,
sending SMS, and so on).
There are two prime targets for attackers in the case of mobile
banking:4
• Data: smartphones used in mobile banking may contain sensitive

data like pins, card numbers, authentication information, private
information, and so on.
• Identity: smartphones are highly customizable, so the device or its
contents are associated with a specific person. For example, every
mobile device can transmit information related to the owner of the
mobile phone contract. An attacker may want to steal the identity
of the owner of a smartphone or tablet to commit other offenses.
The sources of these attacks are the same actors found in the
nonmobile computing space: professionals, who focus on the targets
mentioned above, and thieves who want to gain income through the
data or identities they have stolen. Thieves will attack many people
to increase their potential income.
The possible attacks are
• based on the Global System for Mobile (GSM) networks. The

attacker may try to break the encryption of the mobile network.
Mobile Security 115
Once the encryption algorithm of GSM is broken, the attacker can

intercept all unencrypted communications made by the victim’s
smartphone or tablet.
• Access Point twins in which an attacker can try to eavesdrop on
Wi-Fi communications to derive information (for instance, user-
name, password). This type of attack is not unique to smartphones.
However, they are highly vulnerable to these attacks because very
often, Wi-Fi is the only means of communication that attackers
have to access the Internet.
• based on vulnerabilities in software applications.
• based on flaws in the operating system or applications on the
phone.
Consequences
When an attacker is able to infect a smartphone or a tablet, he/she

can attempt several things:
• manipulating the device as a zombie machine, that is to say, a

machine with which the attacker can communicate and send
commands that will be used to send sensitive transactions;
• recording conversations between the user and others and send
them to a third party, which can cause user privacy and economic
security problems;
• stealing a user’s identity, usurping its identity (with a copy of
the subscriber identity module [SIM] card, telephone, and so on),
and thus impersonate the owner. This raises security concerns
in countries where smartphones or tablets can be used to place
orders, view financial institution accounts, or are used as an iden-
tity card.
A tool used effectively by fraudsters is key logging malware. A key

logger is a software program that records the keystrokes entered
on a device on which it is installed and transmits a record of those
keystrokes to the person controlling the malware over the Internet.
Fraudsters use key loggers to steal the log-on ID and password, and
challenge the question answers of financial institution customers.
This information alone or in conjunction with stolen browser cookies
loaded on the fraudster’s device may enable the fraudster to log into
the customer’s account and transfer funds to accounts controlled

by the fraudster, usually through wire or Automatic Clearing House
(ACH) transactions.
Other types of more sophisticated malware allow fraudsters to
perpetrate man-in-the middle (MIM) or man-in-the browser (MIB)
attacks on their victims. In a MIM/MIB attack, the fraudster inserts
him-/herself between the customer and the financial institution.
He/she hijacks the online session. In one scenario, the fraudster is
able to intercept the authentication credentials submitted by the
customer and log into the customer’s account. In another scenario,
the fraudster does not intercept the credentials, but modifies the
transaction content or inserts additional transactions, not author-
ized by the customer, that transfer funds to accounts controlled by
the fraudster.
MIM/MIB attacks may be used to circumvent some strong authen-
tication methods and other controls, including one-time password
(OTP) tokens. Since the OTP is generally only good for 30–60 seconds
after it is generated, the fraudster must intercept and use it in real
time in order to compromise the customer’s account.
Controls
Customers should be aware of the security techniques that can be

used to help detect and prevent the types of attacks described above.
Some of these techniques have been in use for some time, while
others are relatively new.
Countermeasures
The security mechanisms in place to counter the threats described

above are presented in this chapter. They are divided into different
categories, since not all function at the same level. They range from
the management of security by the operating system to the behav-
ioral education of the user. The threats prevented by the various
measures are not the same, depending on the case. Considering
the two cases mentioned above, in the first, one would protect the
system from corruption by an application, and in the second, one
would prevent the installation of suspicious software.
Mobile Security 117
Application control
Antivirus and firewall
Antivirus software can be deployed on a device to verify that it is
not infected by a known threat, usually by signature detection soft-
ware that detects malicious executable files. A firewall, meanwhile,
can watch over the existing traffic on the network and ensure that
a malicious application does not seek to communicate through it.
It may equally verify that an installed application does not seek to
establish suspicious communication, which may prevent an intru-
sion attempt.
Transaction confirmation
In the same vein as above, it is important to confirm certain actions
by a user decision. The Turing test helps in distinguishing between
a human and a virtual user. It often comes as a captcha (Completely
Automated Public Turing test to tell Computers and Humans Apart).
It is theoretically impossible for a computer to solve such a test, and
therefore suspicious activities may be subject to approval or denial
by the user.
An easier way is to confirm certain relevant transactions (such as
money transfer) by using a physical or virtual token.
Security software
Above the operating system security, there could be a layer of secu-

rity software. This layer is composed of individual components to
strengthen various vulnerabilities to prevent malware, intrusions,
identification of a user as a human, and user authentication.
It contains software components that have been learned from
experiences with computer security. On smartphones or tablets, this
software must deal with greater constraints.
The following sections help clarify some of the security software
available.
Authentication
Financial institutions should take a layered approach to security and
authentication. For example, in the first layer, financial institutions
can require customers to register their mobile device to an existing

online account. In the second layer, they can require customers to
enter a password each time they access their account via the mobile
device. However, it is important to note that none of the controls
discussed absolutely ensure the prevention or detection of a successful
attack, also because the type of attacks are innovated constantly.
Customers should be aware of the fact that a number of institu-
tions are requiring the “out-of-band” authentication or verification
of high-value and/or anomalous transactions. Out-of-band authen-
tication means that a transaction that is initiated via one delivery
channel (for instance, a mobile) must be reauthenticated or verified
via an independent delivery channel (for instance, a telephone) in
order for the transaction to be completed. Out-of-band authentica-
tion is becoming more popular given that customers’ mobiles are
increasingly vulnerable to malware attacks.
However, out-of-band authentication directed to or input through
the same device that initiates the transaction may not be effec-
tive since that device may have been compromised. For business
customers, someone other than the person who first initiated the
transaction can provide the out-of-band authentication or verifica-
tion. It can also be combined with other administrative controls.
Additionally, the use of out-of-band authentication or verification,
for administrative changes to online business accounts, can be an
effective control to reduce fraudulent funds transfers.
The Federal Financial Institutions Examination Council provides
some guidelines to improve the security:5
• The use of restricted funds transfer recipient lists or other controls

over the administration of such lists, can reduce funds transfer
fraud. Fraudsters must frequently add new funds transfer recipi-
ents to an account profile in order to consummate the fraud.
• Overall, all agree with security experts who believe that institu-
tions should no longer rely on one form of customer authenti-
cation. A one dimensional customer authentication program is
simply not robust enough to provide the level of security that
customers expect and that protects institutions from financial
and reputation risk.
Layered security controls do not have to be complex.6 For example,

they could be based on implementing time-of-day restrictions
Mobile Security 119
on the customer’s authority to execute funds transfers or using

restricted funds transfer recipient lists, in addition to robust log-on
authentication.
Financial services institutions have continued to innovate in
response to the increasing cyber threat environment. Other
control methods for customer authentication include keystroke
dynamics and biometrics based responses. Additionally, insti-
tutions can look to traditional and innovative business process
controls to improve security over customers’ online activities.
Some examples include
• establishing, requiring, and periodically reviewing volume and

value limitations or parameters for what activities a business
customer in the aggregate, and its enrolled users individually, can
functionally accomplish while accessing the online system;
• monitoring and alerting on some exception events;
• establishing individual transaction and aggregate account expo-
sure limits based on expected account activity;
• listing or registering those users who are being provided a partic-
ular privilege, service, mobility, or access (for instance, the cash-
management service employed to deter check fraud) and/or
blacklisting them;
• requiring every ACH file-originating entity to provide a proactive
notice of intent to originate a file prior to its submission; and
• requiring business customers to deploy dual control routines over
higher risk functions performed online.
Access control
The key differentiator between the mobile channel and other self-
service channels, such as the Internet, is the concept of “known
device.” Device identification is a key part of mobile security because
it is the second factor of a two-factor security model. In the context
of rich-customer applications security, the application has the capa-
bility for local storage and data processing. This allows for the support
of security features in addition to those supplied natively by the
phone and by the telecommunication operators. For example, each
instance of a downloaded application should have its own unique
ID and pin, allowing validation of server requests and detection of
potential spoofing activities.
Because a dedicated ID is delivered with each application down-

load, the rich-customer application inherently delivers multifactor
authentication. It is recommended that the mobile solution be inte-
grated into the financial institution’s existing multifactor authen-
tication infrastructure. Examples of other strong authentication
measures include hardware and software tokens or biometrics.
Device fingerprinting
A device fingerprinting process further augments security capabilities
by dynamically capturing mobile-specific elements such as mobile
operator, device type, and mobile phone number. These elements
are then used to determine which transactions may be allowed,
providing a higher level of certainty for financial institutions and
users alike, especially when dealing with high-dollar transactions.
Biometrics identification
An effective way to differentiate customers, albeit the method is still
not in wide use, is biometrics. Biometrics is a technique of identi-
fying a person by means of his/her morphology (by recognition of
the fingerprint, or the iris of the eye or the face, for example) or
the behavior (the signature or style of writing, for example). One
advantage of using biometrics security is that users do not need to
remember a password or other secret combination to authenticate
and prevent malicious users from accessing their device. In a system
with strong biometrics security, only the primary user can access the
smartphone or the tablet. Commercial devices with such identifica-
tion are more and more available in the market.
Antimalware software
Antimalware software may provide a defense against key loggers7 and
MIM/MIB attacks. Antimalware is a term used normally to describe
various software products referred as antivirus or antispyware.
Antimalware software helps in preventing, detecting, blocking, and
removing adware, spyware, and other forms of malware such as key
loggers.
Antimalware is generally signature based. Some advanced versions
of malware continuously alter their signature.
Transaction monitoring/anomaly detection software has been in
use for a number of years. Similar to the manner in which the card
industry detects and blocks fraudulent card transactions, systems
Mobile Security 121
are now available to monitor mobile banking activity for suspicious

funds transfers. They can stop a suspicious money transfer before
completion and alert the institution and/or the customer so that the
transfer can be further authenticated or dropped.
Manual or automated transaction monitoring/anomaly detec-
tion could assist in preventing many fraudulent money transfers as
they might be clearly out of the ordinary when compared with the
customer’s established patterns of behavior. Automated systems may
also look at the velocity of a transaction and other similar factors to
determine whether the transaction is suspicious.
Encryption
It is possible to encrypt in two ways:
• Encryption of stored data. Smartphones and especially tablets

have a significant memory size and their storage capacity is
increasing. They can carry several gigabytes of data. The user
must be careful about what stored data it carries and whether
it should be protected. No private data should be stored locally
within the application. All sensitive information held in memory,
such as passwords, pins, and encryption keys, should be possibly
erased or overwritten by the application itself. Furthermore, when
a user gets rid of a device, he/she must remove all personal data
on the device.
• Transmission Encryption. Because it is always possible that data
that is exchanged can be intercepted, communications, or even
information storage, should rely on encryption to prevent a mali-
cious entity from using any data obtained during the communi-
cations. This poses the problem of key exchange for encryption
algorithms, which requires a secure channel.
The primary option for encryption is transport layer security (TLS).

All smartphones or tablets support TLS. It provides a proven, industry
standard security protocol for the transport of data from the phone
to the financial institution’s internal servers.
Resource monitoring
When an application passes the various security barriers, it can
take the actions for which it was designed. When such actions are
triggered, the activity of a malicious application can be sometimes
detected if one monitors the various resources used on the phone.

Depending on the goals of the malware, the consequences of infec-
tion are not always the same. Malicious applications are not intended
to harm the devices on which they are deployed.
Memory, network, or any other mobile resource usage is inherent
in any application. However, if one finds that a substantial propor-
tion of the mobile resources is used by an application, it may be
flagged as suspicious. The application should send an alert or stop
the transaction altogether.
This observation is essentially an alert, because some legitimate
applications can be very resource-intensive in terms of resource
utilization, the best example being streaming video or downloading
images.
Network control
On a smartphone, many applications are bound to connect via the
network, as part of their normal operation.
Penetration testing
An application penetration (or just pen test) is the simulation of

an attack to a web or a mobile site with the aim of evaluating the
effectiveness of an application’s security controls. The objective is
to find the risks posed by possible exploitable vulnerabilities. The
penetration test model is built around a manual testing process by
friendly hackers. This process can go much further than the generic
responses, false positive findings, and lack of depth provided by
automated application assessment tools.
Mobile device and mobile app penetration testing can help organi-
zations pinpoint and correct flaws in their mobile applications and
devices, as well as understand the risks posed by new mobile plat-
forms or applications.
Financial institutions should regularly conduct mobile penetration
testing as new features are added to applications and new threats
appear in the environment.
Experience dictates that pen tests are very useful in learning a
lot about the holes in the security. They help greatly developers to
improve their work.
Mobile Security 123
Security recommendations for mobile banking
Understanding these security risks and implementing the highest

levels of security into mobile offerings through a broad range of
measures is critical to the success and adoption of the product. In
fact, 43 percent of the finance departments that responded to Aite
Group’s October 2010 survey stated that they would not adopt
banking via a mobile device due to concerns about security.8
In order to improve security, there are many actions that should
be taken. Their effectiveness is not 100 percent. They certainly can
reduce in a substantial way the risks connected with the use of
mobile banking.
User awareness
User awareness is the most important measure to take. It is important
not only to prevent security breaches but also to improve the detec-
tion and remediation of security issues.
Much malicious behavior can cause harm due to the carelessness
of the user. The user has a large responsibility in the cycle of security.
He/She may
• leave the device without a password;

• fail to give precise control of permissions granted to applications
added to the smartphone or the tablet; or
• share the passwords with other persons.
Financial institutions should not aim to scare their customers away

from using mobile banking. Yet, they should launch from time to
time a campaign to increase awareness of the danger of being care-
less with a mobile device or application.
These precautions are important if the user is an employee of an
organization that uses business mobile banking. Detailed below are
some precautions that a user can take to manage security on a smart-
phone or a tablet.9
• Users should be careful to protect their phones through simple

gestures and precautions, such as
• locking the smartphone when not using it;
• not leaving their device unattended;

• not trusting applications;
• not storing sensitive data in the device; or
• encrypting sensitive data that cannot be separated from the
device.
• Users should not believe everything that may be presented. Some
information may be phishing or attempting to distribute a mali-
cious application.
• When installing applications, it is good to warn the user against
sets of permissions that, grouped together, seem potentially
dangerous, or at least suspicious. Along with the app stores a new
feature for mobile apps has appeared: remote revocation. First
developed by Android, this procedure can remotely and globally
uninstall an application on any device that has it.
• New versions of various software components of a smartphone
or a tablet, including operating systems, are published regularly.
They can correct many flaws over time.
• The mass distribution of applications is accompanied by the estab-
lishment of different permissions mechanisms for each operating
system. It is necessary to clarify these permissions mechanisms to
users, as they differ from one system to another.
Forensic
Digital handheld forensics is the examination of hardware or soft-
ware in the pursuit of evidence to disprove or prove an allegation.
Handheld devices are rooted in their own operating systems, ﬁle
systems, ﬁle formats, and methods of communication. Dealing with
this creates unique problems for examiners. Performing a forensic
exam on a cell phone or personal digital assistant (PDA) takes special
software and special knowledge of the way these devices work, as
well as where possible evidence could be stored.
A sound forensic foundation is no different from other forensic
foundations when dealing with handheld devices:10
1. evidence collection;
2. evidence preservation;
3. analysis;
4. reporting.
Mobile Security 125
These foundations are the core to dealing with all types of tradi-
tional digital devices. However, when it comes to the nontraditional
devices like handhelds, these foundations change regarding how a
forensic examiner would apply them.
Conclusions
Security is certainly a threat for mobile banking. The concern is also

has to do with the possible magnitude of the attacks. Thanks to the
computing power of these applications, the extent and the size of the
damage could be substantial.
However, there is technological support to help prevent and to
manage security threats.
The real effective defense against threats is the actions that the
user of the mobile phone can take. In this respect, actions to increase
the awareness of the users are very important.
As the next chapter will detail, the future will be more interesting
but also more challenging in terms of security.
7
Mobile Banking throughout
the World
Introduction
The launch of successful mobile banking is a nonsimple initia-

tive. There are many sources of uncertainty, and many aspects are
profoundly new. The opportunities are many and varied. Financial
institutions can take advantage of every customer previously inac-
cessible to financial institutions. The outlook is positive, and the
benefits, quantified in a very clear way, can be substantial.
Mobile banking is used in many parts of the world. A special case
is where there is little or no fixed phone infrastructure, especially in
remote and rural areas. Mobile banking is also popular in countries
where most of the population is unbanked or underbanked. In the
majority of these places, branches of financial institutions can only
be found in big cities. Customers would be forced to travel many
miles to the nearest financial institution branch to use banking
services.
In 2010, mobile banking users soared in Kenya, China, Brazil,
and the USA, with rates of growth of 200 percent, 150 percent,
110 percent, and 100 percent respectively.
Financial institutions are waking up. In Europe, a financial insti-
tution consortium is launching MyBank in direct competition to
PayPal, which was launched by eBay, a nonfinancial institution.
This chapter describes some interesting applications of mobile
banking from all over the world. It is not exhaustive neither can be
updated at the time of reading, since the world of mobile banking is
very dynamic and growing fast. Nor is there an intent to present best
126
Mobile Banking throughout the World 127
practices. The main objective is to present a variety of interesting

implementations of mobile banking.
Mobile banking in the Americas
A Javelin Strategy Research’s report examines and evaluates the 25

leading USA retail financial institutions’ mobile banking offerings by
comparing features, mobile access, app, web and text banking, and
mobile alerts.1 The survey shows that mobile banking is on the rise.
It is now used by 33 percent of mobile customers, up from 24 percent
in 2011. Of the top 25 USA USA financial institutions by deposit,
about half are offering mobile person-to-person (P2P) transfers and
mobile remote deposit capabilities.
Javelin awarded Best-in-Class to Chase in 2012 for the second year
in a row, citing such advanced offerings as P2P transfers, mobile
deposit, and near real-time, actionable alerts. Financial institution
of America came in at second place and scored highest for providing
the widest mobile accessibility both through devices and modes.2
Credit Unions in the USA are outperforming community financial
institutions in mobile banking, with nine out of ten Credit Unions
offering web-based mobile banking. Meanwhile, three out of ten
community financial institutions, reviewed by Javelin, do not offer a
single form of mobile banking.3
Mobile banking offerings vary by size of financial institution, and
customer adoption varies accordingly. Among the top ten Credit
Unions, 50 percent offer the “triple play,” that is, mobile web, app,
and text banking. The percentage of customers using mobile banking
at Credit Unions is only 19 percent. Credit Unions can still grow,
as 80 percent of the largest regional financial institutions provide
all three services, and adoption increased to 28 percent. Customer
mobile banking growth will follow.
Isis in the USA and the mobile wallet

Mobile banking can support innovation in several new ways. People
think of mobile banking as a product innovation. Actually, it can be
much more. It can be an innovation in
• products;
• processes;
• organizations;
• business models.
This is exactly what is happening. Some financial institutions are

using mobile banking just as an online PC that makes banking acces-
sible from the smartphone. Yet mobile banking can be much more,
thanks to the use of several technologies, such as cloud computing,
NFC, GPS, and so on. The integration influences all four aspects of the
innovation and especially the last one: business model innovation.
For instance, the traditional payment model is a plastic card used
for making a payment. The process is rather complex. It involves
merchants, acquirers, issuers, and schema players, such as MasterCard,
Visa, American Express, or China Union Pay (CUP).
With mobile banking, this business model can drastically change.
The schema players become less relevant, since, thanks to the mobile
phone and the cloud, the authorization request can go directly to the
issuer or to a partnership among issuers.
It is possible to analyze this kind of change more deeply. A good
example is the Isis project in the USA. Isis is speeding up to promote
the widespread adoption of near field communication (NFC) tech-
nology for contactless payments. This American joint venture was
set up in the USA in 2011 by the major American telecom organiza-
tions: AT&T, T-Mobile USA, and Verizon Wireless. They were ready to
invest more than $ 100m. The Isis mobile system has as partners the
Discover network and Barclaycard US.
Isis is launching a mobile wallet (m-wallet) on a national basis
in the USA. The Isis mobile wallet uses NFC technology to allow
customers to make wireless payments and use coupons and loyalty
cards via smartphones.
To use the mobile wallet, Isis users must have an NFC-equipped
smartphone with a special subscriber identity module (SIM) card for
ad-hoc security. The users make contactless payments by waving their
phones at a point-of-sale (POS) terminal to pay for goods or services.
For mobile devices that are not NFC-enabled, the customer can add a
sleeve that goes over the device and has an NFC chip embedded.
The Isis pilot project began in October of 2012. A trial showed that,
on average, active users of the Isis mobile wallet used the service more
than ten times a month. Seventy-five percent of users agreed to receive
offers and messages from favorite brands, following an average of
seven brand per customer. According to Isis estimates, users who use
the service of m-payment adhere to loyalty and product offerings with
twice the frequency of the payments made in the traditional way.
The mobile payments area is drawing potential competitors.
For instance, Google launched a rival Google Wallet service as its
contactless payment method of choice.
Examples of US business mobile banking

Many financial institutions in the USA have launched business
mobile banking:4
• Wells Fargo launched CEO Mobile, the mobile version of its

Commercial Electronic Office online banking product for corpo-
rate customers, in 2007, prior even to the launch of the iPhone.
While its initial functions were limited, CEO Mobile has been
upgraded over the years. Users can perform tasks such as making
and approving payments, monitoring accounts, viewing reports,
and more.
• SVB launched a mobile banking app to US commercial customers –
big and small organizations alike. The financial institution included
standard retail banking features like the ability to view account
balances and approve and schedule outgoing wire transfers.
• City National Bank of Los Angeles has been quietly rolling out
small business apps.
• JP Morgan Chase has offered small business owners a mobile app
for its Ink credit cards for many years. Jot, the name of the app,
lets customers track and organize expenses, including the ability to
attach receipts to the transactions, among other things. Chase, like
other bigger financial institutions including Wells Fargo and BBVA,
allows small business customers to use its retail app. Its small busi-
ness customers tend to prefer to have separate mobile app logins:
one for business, one for personal use. JP Morgan is offering some
interesting functionality in terms of corporate mobile banking,
labeled JP Morgan Access Mobile. It is a homegrown corporate
mobile application that was launched in July 2011. It is fully inte-
grated with the JP Morgan Next Generation Access portal.
• Frost Financial institution launched a smartphone app in March
2013. It decided to create one app with separate logins for small
business and retail customers.
Mobile banking in Asia
Mobile banking is particularly popular in emerging countries for

many reasons. There is a large presence of people in rural or remote
areas of these countries. Many people are afraid to go to traditional
branches. Finally, there is a large diffusion of mobile phones due to
the lack of a fixed phone infrastructure.
In Iran, financial institutions such as Parsian, Tejarat, Mellat,
Saderat, Sepah, Edbi, and Bankmelli offer mobile banking.
Telenor Pakistan launched in 2009 a mobile banking solution,
in coordination with Taameer Bank, under the label Easy Paisa.
Eko India Financial Services, the business correspondent of State
Financial Institution of India (SBI) and ICICI Bank, provides finan-
cial institution accounts, deposit, withdrawal and remittance serv-
ices, microinsurance, and microfinance facilities to its customers
(nearly 80 percent of whom are migrants or the unbanked section of
the population) through mobile banking.
Dutch-Bangla Financial institution launched a mobile banking
service in Bangladesh in 2011. This service was launched with
“Agent” and “Network” support from mobile operators Banglalink
and Citycell. There are around 160 million people in Bangladesh,
of whom only 13 percent have financial institution accounts. With
this solution, Dutch-Bangla Financial Institution can reach out to
the rural and unbanked population, of whom, 45 percent are mobile
phone users. Under the mobile banking services, bank-nominated
“Agents” perform banking activities on behalf of the financial insti-
tutions, like opening mobile banking accounts, providing cash serv-
ices (receipts and payments), and dealing with small credits. Cash
withdrawal from a mobile account can also be done from an auto-
mated teller machine (ATM), validating each transaction by “mobile
phone PIN” instead of “card PIN.” Other services delivered through
mobile banking are
• person-to-person (for instance, fund transfer);

• person-to-business (for instance, merchant payment, utility bill
payment);
• business-to-person (for instance, salary/commission disbursement);
• government-to-person (disbursement of government allowance)
transactions.
In May 2012, Laxmi Bank Limited launched the very first mobile
banking in Nepal with its product Mobile Khata. Mobile Khata ran
on a third-party platform called Hello Paisa that was interoperable
with all the telecoms in Nepal, namely, Nepal Telecom, NCell, Smart
Tel, and UTL, and was also interoperable with various financial insti-
tutions in the country. Other partners which joined the platform
after Laxmi Bank Limited, were Siddartha Bank, Bank of Kathmandu,
Commerz and Trust Bank Nepal, and International Leasing and
Finance Organization. Such a platform that is interoperable between
multiple financial institutions and multiple telecoms was one of the
first of its kind in the world.
Mobile banking in Europe
Hello Bank: a complete Lean and Digitized mobile bank

An interesting example of a mobile financial institution is Hello
Bank. It is only available online. BNP Paribas launched it in 2013. It
was extended to its subsidiaries in Europe (Belgium, Italy, Germany,
Poland, and so on). The basic services are completely free, while addi-
tional services (such as checks or additional security features) are at
a cost. It has been very successful.
Two-thirds of the customers of Hello Bank are new to BNP Paribas,
demonstrating that a mobile financial institution is a great way to
acquire new customers.
The customers of Hello Bank can access the services via smart-
phones and tablets. They can start by opening via mobile a current
account, a saving account, credit facilities, insurance, and so on.
They can transfer money or apply for a debit or credit card (P2P). The
help desk can be accessed via chats or short message service (SMS),
by using a navigation mode very similar to what can be done using
an e-commerce application.
Hello Bank is lean in a simple way for interacting with the services
via the handset. BNP Paribas has dedicated particular care to making
the customer experience unique and delightful. The ergonomics of
the transactions is superb. Even the color of the brand has been care-
fully selected. It is inspired by the ceramic artist Theodore Deck.
While Hello Bank is seen as a product that is completely separate
from the traditional banking of BNP Paribas, it has two points in
common. For a charge or a fee, some operations can be done in the
branches of the BNP Paribas financial institution. The blue color of

the brand is different, but similar, from the light green of the BNP
Paribas Bank.
Hello Bank has an objective of obtaining 200,000 new customers
in five years’ time. Most of these customers need to be new. Today,
BNP Paribas has roughly 2,200 branches in France, most of which are
in urban areas. The customers are middle class and in the middle-age
to older segments. Hello Bank, in contrast, aims to service completely
different segments of customers. They must be young, located in
remote locations, or conducting a nomadic life. The simplicity and
the lean approach cater to this type of customer.
The lessons learned from this new digital financial institution are
clear:
• Separate mobile banking from the traditional fixed branches

institution: aim at the prospects who cannot be reached through
the traditional channels.
• Pick an entirely new solution, not an add-on to your current
product line.
• Separate mobile banking also as a brand from your traditional
banking business.
• Be innovative in the services offered.
• Create an experience for your customers, using the way that the
m-generation (the mobile generation following the X or Y genera-
tions) interacts with their mobile applications.
• Be lean and simple.
• Transfer to the customers part of the savings that you are obtaining
from this new channel.
• Push the automation to the maximum level possible.
• Reassure customers that their security is catered to and that it is
your first priority.
• Create a path to your other services, but leave the choice to the
customer.
At its launch, Hello Bank was a physical bank for three days. The
launch took place at a physical stand located at la Defense suburb in
Paris, near the Grande Arche and to the subway exit. The message is
once again very clear: Hello Bank is not a traditional financial insti-
tution located in the financial center, but rather it wants to be near
the people and provide them with an excellent experience.
Barclays Pingit
Barclays introduced Pingit in the UK in February 2012. Since then,
Barclays has steadily added new functionality. As of 2013, Pingit
had 1.5 million customers. It is a so-called P2P (person-to-person)
payment system for sending and receiving payments.
Pingit is a system for the mobile transfer of money. Initially, it
was only available to customers in the UK with a current Barclays
account, a UK smartphone, and who were older than 18 years.
In time, Barclays has eliminated most of these restrictions:
• The system can be used by persons older than 16.

• They can have a current account with any British bank.
• It is possible to send money also to small businesses that bank
with Barclays.
• It is possible to do international fund transfers to selected coun-
tries from the UK.
• The recipient does not need a smartphone any longer, since he/
she can either receive notice of a payment on his/her phone with
a text message or can go to an ATM to draw the cash.
• There is also an option to receive payments on the Barclays website,
which is open to all app users and also to UK small businesses that
bank elsewhere and to Barclays corporate customers.
• Pingit is also a way to “donate with the Gift Aid’ function.”5
People who use the app to donate to charity can now ensure that
their donation is tax deductible. Pingit users can donate to charity
by scanning the QR (Quick Response) two-dimensional barcodes
on the charity’s marketing materials, or by selecting their charity
from the app’s business directory. Macmillan Cancer Support,
Dogs Trust, and Charities Trust are some of the British charities
making use of this new functionality.
The benefits connected with Barclays Pingit are substantial. There

are no charges for the service for either the sender or the recipient.
Pingit transactions take a short time to arrive at the recipient’s
account. The Pingit service works on the faster payment scheme, so
payments are effectively instantaneous, even between Barclays and
non-Barclays customers. Finally, there is only a limit of GBP 750 per
day per transaction.
In the wake of the success of Pingit, VocaLink launched a similar
service called Zapp.
Mobile banking in Italy

ABI Lab and the School of Management of the Politecnico di Milano,
Italy, presented in June 2013 the third Report of the Observatory of
Mobile Banking.6
The report evaluates the status of the services of mobile banking
in Italy each year. It is based on a survey of 30 financial institutions/
banking groups (representing 65 percent of the number of branches
in Italy).
Mobile banking is now a reality in Italy, not only for the quality and
variety of services available but also for the actual use of the channel
by the customers. Ninety percent of the financial institutions in Italy
offer some form of mobile banking. Most financial institutions make
available simple functionality, but they are expanding mobile serv-
ices by the day.
In Italy, there are about 25 million smartphone users and
3.6 million tablet users (as of the end of 2012). Roughly 2.5 million
people use mobile banking services, 6 percent of which are used
from tablets. This figure compares with a similar survey in the
USA, where, according to the Federal Reserve, 48 percent of smart-
phone owners have used services like this in the last 12 months of
2012.
In Italy, another 4.5 million people use mobile banking services in
the form of SMS messages. If one considers only the 2.5 million users
of smartphones, in 2012 the accesses via apps were slightly higher
than those from the mobile banking websites. The most often used
functions were
• informative (balances of the current account, 83 percent of

respondents);
• placing of orders, such as mobile phone top up (55 percent) and
money transfers (40 percent);
• geolocation services to find ATMs (45 percent) and branches
(41 percent) closer to the device, which is one of the clearest
examples of the exploitation of some specific feature of mobile
devices.
The average satisfaction level is very high (7.93 on a scale of 1–10).

This is mainly due to accessibility in real time, speed, and autonomy
in the management of the account. Regarding the frequency of
use, 76 percent can be defined as heavy users (enter one or more

times per week), much larger than the 61 percent of generic mobile
surfers.
The survey showed also a strong variability among respondents on
the way the mobile app should be designed for banking. All financial
institutions agree on the importance of the user experience and ease
of use, and almost all agree on the robustness and security of data.
The other results are very inhomogeneous. Integration with other
offline channels is considered important only by 11 percent of the
financial institutions surveyed.
There is a convergence of opinion with respect to the development
of mobile services for the tablet. There are
• those who are replicating existing services for the PC (35 percent)
or a smartphone (12 percent);
• those who are developing solutions for existing computers and
smartphones (30 percent);
• only 23 percent who are developing new services specifically for
the tablet (23 percent).
With regard to mobile banking, the report highlights the preference

for the tablet in giving instructions or performing trading.
From the point of view of customers, 76 percent are “assiduous
mobile surfers” with at least one access per week.
One area in which the mobile is a source of great innovation for
the financial institutions is payment services and money transfers.
Phone cards are an example of success. One hundred percent of
financial institutions now allow their customers to buy via mobile
phone cards. Payment services bulletins with a QR code and money
orders are rarer. Other functionality to be launched in Italy are P2P
money transfers from personal checking accounts to the contacts
of the customers, bill payments, check deposit, and sending money
also via SMS or via Facebook.
Only two financial institutions in three (64 percent) carry out a
systematic monitoring of social network and media with regard to
mobile banking services offered by the financial institution. Their
motivations include prevailing sentiment analysis on the financial
institution and its competitors, identification of new customer needs,
and gathering customer feedback.
Mediolanum Mobile Pay

The Mediolanum Mobile Pay is an example of a successful imple-
mentation of mobile payments by Banca Mediolanum in Italy. Its
aim is to allow the customers of the financial institution to pay with
their smartphones with NFC, SIM, and app, so that the users can
shop by placing their mobile phone on a reader POS.
Banca Mediolanum also launched voice commands within its
mobile application in partnership with Nuance, a leader in the devel-
opment of speech technology.
Through virtual assistance to the voice interaction, Banca
Mediolanum customers can access all the information contained in
the application: balance and movement of their checking or savings
accounts and cards; equivalent value of its portfolio funds/securities
and insurance policies and investments, market trends, and the loca-
tion of the nearest ATMs.
The market responded enthusiastically. The Banca Mediolanum
experience is an important and significant way to provide a great
experience to customers. It shows that some financial institutions
are sensitive to adopting solutions that improve the customer experi-
ence and increase reliability and safety.
This is an important aspect, since it uses a unique characteristic of
mobile: the possibility of using by speaking to it. This will be more
and more the way people (and especially individuals) will interact
with computer and mobile applications.
Banco Desio
Banco Desio, a medium-size regional bank in the northern part of
Italy, launched in 2013 a mobile remote banking product: one of the
first services of remote banking for corporate customers that uses
the channel mobile in Italy. The application is compatible with all
smartphones and tablets. It works with iOS, Android, and Windows
as a free download from the app stores. It allows businesses to carry
out major banking tasks in full mobility.
The app is simple and straightforward. It allows the users with a
few easy steps and at any time to
• interact with the accounts and trading transactions;

• present pending bills to authorize the provisions;
• find the location of the closest ATM and get directions through
the browser on a smartphone, thanks to the services of geolocali-
zation; and
• use any other functionalities.
All of these functionalities can be used via the Web with a security
one-time password (OTP) token device and by consulting the infor-
mation of Banco Desio.
Thanks to technological flexibility, the Banco Desio app enables
high customization capabilities of the services layout. In addition,
the technology that is used allows every new feature or update to
be available immediately on all the mobile platforms that are most
used.
The Business Plan 2013–2015 of the Group emphasizes the devel-
opment of a range of services via the Internet and mobile to better
serve customers, especially small and medium enterprises. The objec-
tive is to assist the customer-focused companies in the dispatching
of daily banking operations, in order to enable them to devote more
time to the business.
The Mobile Remote Banking of Banco Desio can certainly be used
an example for other small and medium-size banks.
Other countries in Europe

There are many initiatives in other countries in Europe. For instance,
Intesa Sanpaolo Bank has introduced a mobile banking service called
M-Intesa in Bosnia and Herzegovina. The new service allows users to
conduct financial transactions and view their account balances via
a mobile device anywhere and at any time. Users have access to all
Intesa Sanpaolo Bank products (accounts, savings, loans, and cards).
They can make payments in Bosnia and perform money transfers
and conversions, as well as carry out other operations. To use the
m-banking service, users must have a current account with Intesa
Sanpaolo Bank and sign an appropriate agreement.
Mobile banking in Australia
Financial institutions can go it alone in offering mobile banking, or

they may also work in partnership through consortiums, temporary
arrangements, joint ventures, and so on. This would be similar to

what Visa was for the credit cards when it was founded. Other exam-
ples are
• Google Wallet, which a cooperative that also includes Sprint,

Citibank, and MasterCard;
• The Visa wallet, which includes 14 financial institutions in the
USA and Canada;
• The Isis Mobile Wallet, which includes AT&T Mobility, T-Mobile
USA, and Verizon Wireless, as well as Visa, Mastercard, Discover,
and American Express;
• Financial institution of America, Wells Fargo, and Chase, which
created clearXchange to allow P2P payments between their
customers.
Another type of partnership is based on a federation to offer mobile

banking rather than setting up a formal consortium. An inter-
esting example in this respect is in New Zealand, which has already
demonstrated open-federation success.7 Initially, financial institu-
tions and mobile carriers in New Zealand adopted one-to-one part-
nerships and go-it-alone strategies. It soon became apparent to the
providers, however, that one-to-one partnerships were duplicating
efforts and narrowing the addressable market. In 2005, financial
institutions and mobile operators decided to support a common
interchange gateway for mobile banking and payments that would
offer a “secure, independent, multi-bank, multi-operator mobile
transaction” system. The solution was standards-based to attract
new partners and support a full-spectrum of mobile banking
services.
An open-federation model combined six leading financial institu-
tions and two mobile operators to create a shared financial-service
gateway. The common shared-service platform reduced costs and
resulted in a rapid uptake of mobile banking services. More than
5 percent of New Zealanders use mobile banking, and the number
is growing. This figure encompasses upward of 40 percent of an
individual financial institution’s total customers. Mobile banking
in New Zealand has resulted in heightened customer retention and
increased self-service.
Mobile banking in Africa
Kenya’s M-Pesa mobile banking service is one of the most successful

stories in mobile payments. It allows customers of the mobile phone
operator Safaricom to hold cash balances that are recorded on
their SIM cards. Cash may be deposited or withdrawn from M-Pesa
accounts at Safaricom retail outlets located throughout the country.
The service may be used to transfer funds electronically from person
to person as well as pay bills to organizations.
Another of the most innovative applications of mobile banking
technology is Zidisha, a USA-based nonprofit micro-lending platform
that allows residents of developing countries to raise small business
loans from web users worldwide. Zidisha uses mobile banking for
loan disbursements and repayments, and the transfer of funds from
lenders in the USA to the borrowers in rural Africa using nothing but
the Internet and mobile phones.
In Côte d’Ivoire (and nine other countries in Africa and the Middle
East), Orange has a commercial offer called Orange Money that
includes8
• money transfers (users can send money using their phone to any
other customer in the country), deposits, and withdrawals;
• financial services, including solutions facilitating savings and
insurance;
• payments, giving users a way to pay their bills (and buy mobile
phone credit) electronically and to pay for goods at shops that
accept orange money electronically without cash;
• investments;
• portfolio management services;
• real-time stock quotes;
• personalized alerts and notifications on security prices;
• status of requests for credit, including mortgage approval, and
insurance coverage;
• checkbook and card requests;
• exchange of data messages and emails, including complaint
submission and tracking;
• ATM locations;
• content services;
• General information such as weather updates, or news;

• loyalty-related offers;
• location-based services; and
• support.
Conclusions
In concluding this chapter, it is interesting to refer to a survey

conducted by Temenos in collaboration with Deloitte of 205 senior
managers from a broad range of financial institutions around the
world.9 The survey provides a rich data set for analysis of the changes
in the banking industry. From the survey, it is possible to draw inter-
esting insights about the industry.
On the subject of mobile banking, most of banks’ efforts – almost
60 percent – are being directed to two areas (see Figure 7.1): building
out the basic services (such as balance transfers and alerts) and devel-
oping apps. Within that, new apps account for 30 percent of spends,
and basic services for 26 percent.
In large part, these findings reflect the big spread that is observed
within the industry in terms of adoption and maturity. For instance,
in the USA, which alongside countries such as Japan and South Korea,
is well advanced in terms of mobile banking, banks are collectively
allocating less than 10 percent of their budgets to rolling out the basic
Mobile apps location
Based services NFC
Corporate banking
Services mobile
Payments basic services
(e.g. Balance transfers)
None
0 5 10 15 20 25 30 35
(%)
2012 2013
Figure 7.1 Mobile banking spending priorities

services, compared with 43 percent channeled into developing apps

and 12 percent to NFC initiatives such as contactless payments.
In the Middle East and Africa, 29 percent of bank budgets are being
directed to rolling out the basic services. The proportion of budgets
being allocated to basic services has fallen from 32 percent in 2012 to
26 percent in 2013. This shows a growing level of sophistication. The
proportion of banks that claim not to be directing any significant
budget to mobile banking has fallen significantly from 8 percent in
2012 to 2 percent in 2013. This underlines the urgency of action
needed and the risk of doing nothing.
After apps, the area seeing the most growth is mobile payments.
The proportion of banks’ mobile banking budgets directed to mobile
payments has risen from 3 percent in 2012 to 7 percent in 2013.
This suggests, in accordance with the increased perceived threat
from mobile payments competitors, that the industry is taking
mobile payments more seriously. Taken together with spending on
NFC, the industry is spending 19 percent of its budget on mobile
payments, compared to 11 percent in 2012. Nonetheless, firms in
the Asia Pacific and North America regions continue to spend signifi-
cantly more than the mean, both at 23 percent, while the figure for
European banks is just 12 percent, suggesting that many banks in
the latter region remain somewhat apathetic about the risk posed by
mobile payment providers.
Interestingly, among all of the different banking segments, the
microfinance industry is devoting the highest proportionate spending
to mobile payments and NFC, at 36 percent. All this underlines the
importance of these channels to the microfinance community and
the extent to which this industry is driving the acceptance and adop-
tion of mobile banking services in many countries.
8
The Future
Introduction
Among digital channels, mobile banking is a clear investment priority

as financial institutions attempt to add value to their services and to
capitalize on the features unique to mobile, such as location-based
services. New, interesting developments are on the near horizon.
If one considers end-to-end mobile banking, there are several
components:
• the handset;
• the network;
• the central processing;
• the applications.
In the last component, it is interesting to distinguish between the

functionality and the data.
This book does not consider all possible and foreseeable develop-
ments. It concentrates on some of the most interesting ones for each
of the previous categories:
• wearable handsets;
• network technologies;
• cloud computing as the new paradigm of computing;
• new functionalities;
• (big) data.
142
The Future 143
The near future will bring some interesting developments, especially

in the last two categories. This chapter concentrates on them.
Network technologies
4G is being deployed in terms of new technology protocol for

transmission. New standard releases beyond 4G are in progress by
standardization bodies. They are not considered as new mobile
generations, but rather under the 4G transmission umbrella. 5G is
already looming. It is a technology to support the next major phase of
mobile telecommunication standards beyond the 4G/IMT-Advanced
standards. As of 2014, no official document has been made public by
telecommunication organizations or standardization bodies such as
3GPP, WiMAX Forum, or ITU-R.
Wearable handsets
Wearable technology, tech togs, or fashion electronics are clothing

and accessories that incorporate computers and advanced electronic
technologies. Their designs often incorporate practical functions
and features. They may also have a purely aesthetic purpose.
Wearable technology is related to both the field of ubiquitous
computing and the history and development of wearable computers.
With ubiquitous computing, wearable technology shares the vision of
computers as a pervasive technology into all products and services with
frictionless interaction. Through the history and development of wear-
able computing, this vision has been both contrasted and affirmed.
The calculator watch, introduced in the 1980s, was one original
piece of worn electronics that was widespread. The Google eyeglass
is a more recent example.
According to ABI Research, due to the relative ease of compatibility
with smartphones and other electronic devices, the wearable technolo-
gies market will spike to 485 million annual device shipments by 2018.1
All these new devices will make the use of mobile banking simpler
and faster.
Cloud computing
The handset and the central processing are important mobile banking
components. The central processing is normally composed of several
applications: the core banking systems, the credit bureau, the schema,
and so on. Already now, but more and more these applications will
be done in the so-called cloud. The cloud computing model provides
access to a delocalized, easy to deploy and use, and on-demand set of
shared computing resources (network, servers, storage, applications, and
services). They can be quickly acquired and released. The organization
can use a variable workload, while maintaining a minimal impact on
operations and on costs. Organizations can access this set of resources
using a pay-per-use model, in which the service vendor undertakes to
provide certain types of processing through a service level agreement
(SLA). Cloud computing is not only a technology. It is a completely
different way of looking at computing. It will lead in time to a complete
revision of products/services, processes, and organizations.2
The cloud can do a remarkable job of addressing some of the short-
comings of mobile devices, while those same devices let us reimagine
what “applications” should do. The cloud has reached such a degree
of performance and flexibility, whether public, private, or hybrid,
that its uses are only limited by the imagination and resources.
Complete, high-performance virtual desktops can be streamed to a
low-cost, low-power tablet. Big data analytics can become accessible
anywhere because resources in the cloud do the number crunching
with mobile devices acting as smart portals.
The mantra of cloud advocates is “anytime/anywhere.” Mobile
devices are driving revolutions in entertainment, work-life balance,
collaboration, and productivity. What many organizations do not
recognize, though, is that virtually every service, made easier to
access with a tablet or a smartphone constantly at their sides, can
leverage the cloud computing at its best.
Until now, business outsourcers have been able to provide a
complete and integrated range of services to financial institutions,
such as full outsourcing, application solutions, facility management,
business process outsourcing, printing and mailing services, busi-
ness information, and many others services. Over time, however,
the provision of ICT services for the financial services sector will
also follow a plug-and-play approach toward new distribution chan-
nels, products, services, and processes delivered through on-demand
cloud integrated solutions. Today, a great part of the enterprise soft-
ware used by financial institutions consists of a range of vertical
solutions implemented in ICT systems. In the future, cloud vendors
The Future 145
Payment institutions cloud

services
Cloud SaaS • Digital payment transactions Web-based banking
• CRM • Money transmission services apps
• Collaboration • Payment cards services • Open “social” platform
• HR: recruitment • E-Invoicing for bank apps project &
processes, payroll, development
benefits adm. Social
networking
Delivery
channels
Clo
Cloud PaaS mng.
• New products R&D
• Portfolio product
mng. Cloud laaS
Cloud BPass
• Data storage
• HR business processes
• Computing on demand
• General ledger
• New products R&D
• Regulatory reporting
• Call center
• Document mng.
services
Integration &
Identify & access Service Service
orchestration management management integration
layer
Common support
processes
DWH
Accessory Bank client &

Core banking
services transaction data
Figure 8.1 New banking system components with cloud-based service

delivery
and software vendors will extend their applications offerings in an

integrated way to cloud computing environments.
Figure 8.1 shows the business processes, functions, and ICT compo-
nents (application, platform, or infrastructure) that are candidates
to migrate to the cloud. They could be delivered through an “as a
service” mode in the short to medium term.
Other cloud-based financial services-specific solutions are the
following:
• Cloud-based e-Payment systems, which are a leading-edge

payment solution aimed at enabling financial institutions
to provide value-added services to their corporate and retail

customers, either engaged in e-businesses or institutions/organi-
zations, accepting e-Payments to facilitate customers. SaaS e-Pay-
ment solutions enable a secure, real-time, online payment bridge
between the trader’s customer and the acquiring financial institu-
tion’s back-end systems.
• Payment cards services in the cloud offer a full-outsourced service
for payment cards issuing and processing activities and related
services. They specifically offer facilities for the production and
management of cards, as well as related account management and
card owners’ management. This solution can also add other serv-
ices such as disputes management, fraud investigation, and call
centers.
• Cloud-based payment-acquiring services support payment insti-
tutions, such as those provided by PayPal. The final objective is
to aim at the development of a global merchant-acquiring market
through cross-border consolidation.
• Cloud-based invoice management services integrate several tech-
nologies and software solutions to make the passive accounting
more efficient. This is obtained by dematerializing and opti-
mizing the entire process, from the invoice receipt, presentation,
workflow approval, payment up to the final storage in the data-
base, be it paper-based or electronic.
Also in the case of cloud computing to cater for the maximum security
is paramount to support the further diffusion of the model. Financial
institutions should define a policy for using cloud computing based
on a preliminary assessment of the associated costs and benefits.
Future functionalities in mobile banking
Based on the “International Review of Business Research Papers”

from the World Business Institute, Australia, following are some the
key functional trends possible in mobile banking.3
With the advent of technology and the increasing use of smart-
phone and tablet-based devices, the use of mobile banking func-
tionality will enable the customer to connect across the entire
customer life cycle much more comprehensively than before.
The Future 147
With this scenario, the current mobile banking objectives of, say,
building relationships, reducing cost, and achieving new revenue
streams, will transform to enable new objectives. Financial institu-
tions will target higher-level goals such as building the brand of the
financial institution. Emerging technology and functionalities will
enable the creation of new ways of lead generation, prospecting,
and developing deep customer relationships. The mobile banking
world will achieve a superior customer experience with bidirec-
tional communications.
Following are some of the key functional trends possible in the
world of mobile banking:4
• communication enrichment: video interaction with agents and

advisors;
• pervasive transactions capabilities: comprehensive mobile wallets,
including a lot of functionality not only related to banking
activities;
• customer education: “test drive” for demos of banking services
and great support for helping the customer;
• connection with new customer segment: connect with smartpho-
natics using games and social networks customized to support
financial institutions’ offerings (for instance through the so-called
gamification, that is the application of typical elements of game
playing (e.g. point scoring, competition with others, rules of play)
to financial services, typically as an online marketing technique
to encourage engagement with the service offered by the financial
institution);
• content monetization: micro level revenue themes such as music,
e-book, or news download;
• vertical positioning: positioning offerings over mobile banking-
specific industries;
• horizontal positioning: positioning offerings over mobile banking
across all the industries;
• personalization of commercial banking services: personalization
experience for multiple roles and hierarchies in business banking
as against the simple enhancements in the current context;
• building of a brand: bank’s brand built while enhancing the
“mobile real estate.”
(Big) data
Introduction
Mobile financial institutions are making banking available on any
personal devices. Mobile banking should mass customize the expe-
rience that each customer has in accessing the mobile financial
institution.
This is not an impossible task, thanks mainly to new technologies
that are increasingly available, such as big data and data analytics.
This section analyzes this aspect.
The amount of structured and unstructured, internal and external,
data available in every organization is increasing exponentially. Data
today comes via varied and disparate sources, including customer
interactions in channels such as call centers, telematics devices, social
media, agent conversations, smartphones, email, faxes, day-to-day
business activities, and others. Gartner predicts an 800 percent
growth in the availability of data from 2011 through 2016.5
Mobile phone use, in particular, is a rich source of data, especially
in the emerging world, where mobile phone use extends beyond
phone calls to trade and banking. In those countries, mobile data
can provide information on which types of financial institution
products are most popular with customers.6
Ten to fifteen percent of available data is in structured form, while
financial information, in contrast, is available in an unstructured
format. While managing the overwhelming data flow can be chal-
lenging, financial institutions that can capture, store, search, aggre-
gate, and possibly analyze the data can find themselves obtaining
real benefits such as increased productivity, improved competitive
advantage, and enhanced customer experience. This value, however,
does not necessarily come from simply managing big data, but rather,
from harnessing the actionable insights from them. Financial insti-
tutions that can obtain objective-driven business value by applying
science to effectively mine data for customer insights, support, and
offering new products/services will have clear competitive advan-
tages and stay ahead of the curve in this information age.
Definition
Big data refers to analytical technologies that have existed for years,
but that can now be applied faster, on a greater scale, and that are
The Future 149
more accessible. Big data can be defined as the tools, processes, and
procedures allowing an organization to create, manipulate, store,
and manage relatively large amount of data for an organization.
Big data operations can be processed locally. As organizations
migrate to the cloud, so will their corporate data. Moreover, cloud-
based architectures will become more important as individual enti-
ties (that is, both devices and people) generate continuous data
streams that can be collected, stored, processed, analyzed, reported.
Big data provides opportunities in existing environments. It also
creates new opportunities for financial institutions’ stakeholders.
These opportunities were not possible by dealing with structured
content in traditional ways. Big data is a combination of the following
five characteristics:
• volume: Big data refers to the large – and exponentially growing –

amount of data flooding into and out of every financial services
institution. Of course, the word “big” should be interpreted in
relation to a specific organization. Examples of these can be found
in a variety of sources including
• the structured granular call detail records (CDR) in a call
center;
• detailed sensor data from telematics devices, such as PC,
mobile, Atm, Pos, and so on;
• external information, including open data, marketing research,
and other behavioral data;
• unstructured data from social media, reports of different types,
and so on.
• variety: Data can come from disparate sources beyond the usual
structured environment of data processing. It would include
mobile, online, agent-generated, social media, text, audio, video,
log files, and more. The analysis of unstructured data types is
another challenge. Unstructured data differs from structured
data in that their format varies widely. It cannot be stored in
traditional relational databases without significant effort at data
transformation. Sources of unstructured data, such as email, word
documents, PDFs, geospatial data, and so on are becoming a rele-
vant source of data analytics for financial institutions.
• velocity: Financial services institutions must be able to process,
access, analyze, and report huge volumes of information as quickly
as possible in order to make timely decisions, especially in the

operational environment. Financial institutions also need to
• reduce latency to optimize transparency, cross-selling and
upselling in the different channels;
• provide quick enterprise intranet documents search to study
the impact of different events;
• reduce business delivery time for reports in a data warehousing
environment.
• veracity: The quality, dependability, reliability, and consistency of
data is a critical issue for financial institutions looking to extract
from data meaningful information to support their decision-
making processes. This runs true for both big data and “small data”
as well. In some cases, such as in voice-to-text conversions or social
network conversations, data quality can result in meaningful infor-
mation. This is true especially if financial institutions are trying to
analyze macro-level phenomena such as in sentiment analysis.
• value: Financial institutions that adopt customer-centric
approaches can get valuable insights from data analysis. In order
for financial institutions to derive true value from big data, they
must enable innovations in products, processes, organizations,
and business models.
Value for the customer is the most important of these five character-
istics. If the customer finds value in the relationship with the finan-
cial institution, value will be collected also by the organization.
Value creation from big data

According to McKinsey Co., big data creates value for the customers
and the organizations in five ways:7
• Managing big data can increase transparency, making data more

easily accessible to relevant stakeholders.
• As they create and store more transactional data in digital form,
organizations can collect accurate, detailed performance data in
real-time or near real-time, enabling proof of concepts to identify
needs, improve performance, but especially to provide new prod-
ucts and services to add value to the customer.
• Big data provides organizations the means to improve customer
segmentation and then better develop and tailor products, serv-
ices, processes, and promotions to each specific segment.
The Future 151
• A big data strategy can include sophisticated analytics to provide

actionable customer insights that minimize risks and improve
decision-making.
• Big data can be essential for organizations looking to create new
business models and improve products/services, processes, and
organizations.
Leading-edge financial institutions should start to exploit big data in at

least 12 different ways.8 Each of them would add value to the customers
and the organization in one or more of the ways described above:
1. Combining customer channels. By combining and making trans-

parent direct customer connections (email, call center, agent,
portal, faxes, reports, and so on) with indirect customer connects
such as social media, blogs, log files, and so on, a more holistic, 360 0
view of each customer is provided. This helps create a personalized,
unified communication response, enabling marketing to achieve
better brand value and gain competitive advantages, while directly
influencing the bottom line by reducing communication waste.
2. Optimizing call center and middle offices workload. Analyzing
network data from the switches (call detail records) and combining
them with transactions helps in understanding who performed,
what activity was performed, and how efficiently. It can be used to
provide training guidelines for employees. Temporal call patterns
analysis on voluminous and raw telecom and processing data can
help assist in staffing optimization as well.
3. Financial Institutions can use data to derive prescriptive and
predictive value. They can investigate how analytics can improve
the user experience by sensing data and responding in near-real
time. Prescriptive analytics can provide alerts on risky behavior in
terms of transactions;
4. Leveraging cross-sell and upsell potential. By analyzing text
and speech in a near-real time environment, organizations are
presented with new opportunities to convert the call center from
a cost center to a service-to-sales (S2S) center by providing cross-
sell and upsell capabilities.
5. Using natural language processing (NLP) and text analytics for
social media, as well as speech analytics for call center conversa-
tions, financial institutions can improve their sentiment analysis
to better meet customer service improvement objectives.
6. Using social media to introduce new products and services,

financial services marketing can exploit social media to intro-
duce new products and services. They can target customers in
specific regions in a cost-efficient and effective way compared
to capital-intensive paper, television, and Internet promotions,
innovatively changing the business model. Financial institu-
tions can experiment with different segments, and then upgrade
their strategies to a higher (national or international) level.
7. By closing the loop between pricing risk, transactions, and finan-
cial effects, credit officials can study the loss and fraud propen-
sity of existing customers in order to better price risk for new
prospects, especially in the credit business. This helps in mini-
mizing risk and to a large extent, pricing the risk appropriately.
It can help also in improving in real-time credit decisions.
8. Leveraging external data for more accurate pricing. Using real-
time location and business characteristics, data can lead to more
appropriate pricing on customer credit financial services based
on how and where customers actually do their business.
9. Enhancing search capabilities. Many financial institutions and
financial services agents are using big data to discover innova-
tive ways to search their intranet documents in order to provide
fast search capabilities in unstructured documents that were not
possible previously. These can be used by their financial depart-
ments, as well as in call-center scenarios to provide real-time
recommendations.
10. Creating comprehensive customer satisfaction surveys and feed-
backs. Most financial services organizations perform customer
surveys using a relatively small customer sample size. Big data
enables financial institutions to survey their entire customer
base (and possibly prospects through social media), processing
the survey results in a fast and cost-effective way in order to
obtain a truer picture from their customer service responses.
Harnessing and harvesting big data for mobile banking

Big data platforms do not replace existing traditional data manage-
ment and analytics platforms. They simply complement, extend,
mature, and improve upon existing environments and capabilities.
Big data consists of two processes: harnessing involves collection,
The Future 153
extraction, transformation, loading, administration, and manage-

ment of big data; and harvesting is the artful skills and techniques
required to apply science to the data, in order to derive actionable
and meaningful insight from it to drive actions.
The harvesting and harnessing processes are complementary to
one another. They are two sides of a big data initiative.
Harnessing big data

At the most basic level, the harnessing process consists of
• the collection of big data;

• the extraction, transformation, and loading of big data;
• the management of big data; and
• the setting up of an ecosystem that can not only create big data
but sustain it as well.
In the past, the data harnessing process was much easier than it is
today. The benefits of using this data were more limited. Today, the
complexity arises from
• a combination of additional sources of data like social media;

• the complex technology that exists today to give financial institu-
tions access to that data as well as the ability to analyze it;
• the diversity of data.
• Gartner estimates that between 80 percent and 90 percent of all
data produced today is unstructured.9 Today, financial institu-
tions can tap into a treasure trove of unstructured data of all vari-
eties: text, audio, video, adjustor notes, click streams, and log files,
for instance, and combine it with other structured types such as
currency exchanges, stock exchange performances, demographics
and geographic data, and so on.
Harvesting big data

Big data harvesting can be classified in two ways. Data analysis uses
descriptive and predictive models to gain valuable knowledge from
data, and uses this insight to recommend actions or to guide deci-
sion-making and communication. The latter is called operational
analytics.
Data cannot be consumed in its raw form. It must be processed

into a consumable form before it can be both interpreted and acted
upon.
The harvesting process utilizes technology and algorithms that
enable financial institutions to
• analyze;
• deliver actionable insights;
• support process intelligence;
• get real value from big data.
Analytics is the discovery and communication of meaningful

patterns in data. It is especially valuable in areas rich with recorded
information. Analytics relies on the simultaneous application of
statistics, computer programming, and operations research to quan-
tify performance. Data visualization is particularly important in
getting value from harvesting the data.
These challenges are the current inspiration for much of the
innovation in modern analytics information systems, giving birth
to relatively new machine analysis concepts such as complex event
processing, full text search and analysis, and even new ideas in
presenting the information to support successful decisions.
One more emerging challenge is dynamic regulatory needs. For
example, in the financial services industry, Basel 3 or Solvency 2
in insurances, and future capital adequacy needs are likely to force
even smaller financial institutions to adopt internal risk models. In
such cases, cloud computing and open-source tools can help smaller
financial institutions adopt risk analytics and support branch-level
monitoring by applying predictive analytics.
Organizations may commonly apply analytics to financial institu-
tions’ data, to describe, predict, and improve business performance.
Specifically, areas within analytics include
• enterprise decision management;

• marketing optimization and marketing mix analytics;
• web analytics;
• sales force sizing and optimization;
• price and promotion modeling;
• predictive science;
The Future 155
• credit risk analysis; and

• fraud analytics.
Skill sets such as statistics, data mining, econometrics, business

analytics, visualization techniques, and more are in high demand
as they provide a solid foundation for deriving useful insights from
the data. Academic institutions have started trying to fill the supply-
demand gap by offering various graduate programs to prepare for the
next generational skills needed to mine actionable insights, such as
the so-called data scientists.
While the ability to successfully harness and harvest data is critical
to a big data strategy, the harvesting process is where financial insti-
tutions can derive the true value from their data, with the help of
analytics and process management. Defining use cases and hypoth-
eses becomes crucial when following a focused “top-down” approach
to creating actionable insights.
Although this is a focused approach, many times financial institu-
tions need to do some initial work in order to perform data explora-
tory analysis in order even to come up with the use cases that use
big data to start with. This initial bottom-up approach is a prereq-
uisite for determining and prioritizing use cases to support proof of
concepts (PoCs) for big data.
Real value is derived when actionable insights can make a positive
difference in achieving the strategic objectives and especially adding
value to the customers and eliminate waste in internal processes.
Analytics can be used to harvest the data in different fields, such as
• marketing;
• risks;
• portfolio analysis;
• operations;
• and so on.
The following sections examine in more detail the first four fields.
Marketing optimization Data analytics supports both strategic

marketing decisions (such as how much to spend overall on
marketing, how to allocate budgets across a portfolio of brands, and
the marketing mix). It can also support more tactical campaigns in
terms of getting customer insights. This would help in targeting the

best potential customers with the optimal message, in the most cost-
effective medium, at the ideal time, and thanks to the mobile in the
right place.
Marketing has evolved from a creative process into a highly data-
driven process. Marketing organizations can use analytics to
• define how to conduct campaigns;

• determine the outcomes of campaigns or efforts;
• guide decisions for investment and customer targeting;
• use demographic studies, customer segmentation, conjoint anal-
ysis and other techniques on large amounts of customer purchase,
survey and panel data to understand and communicate marketing
strategy.
Web analytics allows marketers to collect session-level informa-

tion about interactions on a website. Those interactions provide the
web analytics information systems with the information to track
the referrer and search keywords, IP addresses, and activities of the
customer or prospect. With this information, a marketer can improve
the marketing campaign, the site creative content, and the informa-
tion architecture.
Analysis techniques connected with big data that are frequently
used in marketing include
• online campaigns;
• marketing mix modeling or, as it is commonly referred to, attribu-
tion modeling, in the digital or mixed-media context;
• pricing and promotion analyses;
• customer analytics, for instance, segmentation;
• web analytics and optimization of websites;
• sales force optimization.
All these techniques now frequently work hand in hand with the
more traditional marketing analysis techniques.
Risk analytics The use of credit scores is aimed at predicting the

individual’s delinquency behavior. Scores are used to evaluate the
credit worthiness of each applicant and rate it for the processing loan
The Future 157
applications. Financial institutions use predictive models to reduce

uncertainty across the risk scores for individual customers.
Business analytics can support portfolio analysis. In this case, a
financial institution has a collection of accounts of varying value
and risk. The accounts may differ by the social status (wealthy,
middle class, poor, and so on) of the holder, the geographical loca-
tion, its net value, and many other factors. The financial institution
must balance the return on the credit transaction with the risk of
default for each credit transaction.
The challenge is how to evaluate the portfolio as a whole. The least-
risk debit holders are the rich customers. There are a very limited
number of wealthy people, and normally they do not need credit
from financial institutions. However, there are many low earning
people who can receive lending, but at greater risk. A balance must
be struck that maximizes return and minimizes risk. The analytics
solution may combine time series analysis with many other issues in
order to make decisions on when to lend money to these different
borrower segments, or decisions on the interest rate charged to
members of a portfolio segment to cover any losses among members
in that segment.
Operational analytics Operational analytics includes, but is not

limited to (and some of these overlap)
• a lot of things that happen at the time of customer interaction;

• ad serving, web page personalization, and so on;
• on-the-fly fraud or credit assessment;
• most of automated price resetting;
• most of automated risk analysis;
• algorithmic and/or high-frequency trading;
• much of what might in general be called the “next best action.”
In the simplest terms, operational analytics is done on the fly as part

of operational business processes. By way of contrast, investigative
analytics is done at the speed of research, not the speed of opera-
tional business processes. There are borderline cases in this version
of the dichotomy too, such as when the analytics are highly urgent,
yet otherwise investigative in nature.
Big data and mobile banking

A survey on the relationships between big data and mobile banking
showed very interesting results.10
Customer churn and engagement has become one of the top issues
for most financial institutions. Several empirical studies and models
have proven that churn remains one of the biggest destroyers of enter-
prise value. Most financial institutions are aware of the importance
of a big data strategy. When it comes to understanding customers,
many are still unsure of how to effectively assess and use their data
to improve customer loyalty and lower attrition.
The survey revealed that
• approximately 44 percent of financial institutions claim they

do not have the right resources in place to take advantage of big
data;
• sixty-eight percent say that one-to-one targeting and personal-
ized product offers are or will be an important business driver for
their big data initiative;
• seventy-six percent of financial institutions say that the business
driver for embracing big data is to enhance customer engagement,
retention, and loyalty;
• seventy-one percent acknowledge that in order to increase their top
line, financial institutions need to better understand customers,
which big data will help them do; and
• fifty-five percent of financial institutions feel that having a real-
time view of data provides a significant competitive advantage, as
the availability of batch mode data is ineffective.
Financial institutions can deliver an excellent customer experience to

their customers. They can move beyond the payment into the heart
of the transaction, thereby adding value and meaning to customers
and merchants alike. In this way, customers can use the financial
institution’s infrastructure from any device for any value: real or
virtual or loyalty points, with the same security and ease of use to
which they are already accustomed. In this way, mobile banking
becomes a “brand wrapper” for the financial institution instead of
a disintermediation.
Financial institutions are in a vulnerable stage when it comes to
losing customers to outside businesses. Financial institutions own
The Future 159
very useful data. Data can help these institutions better understand
what their customers need and what they are interested in. By quickly
finding a way to access and use this data to their benefit, as well as
working with the customer on how they can better control financial
services, for example through opt-in programs, financial institutions
will greatly improve customer retention rates, and improve profit-
ability from each customer. In this way, they can win in the mobile
banking competition.
Quality of big data

As big data and analytics become more prevalent and important in
understanding customers, ensuring data quality can be a great chal-
lenge. A white paper produced by Experian QAS surveyed 300 ICT
and business leaders across several industry verticals. Some results
were the following:11
• On average, 25 percent of the data those organizations collect is

inaccurate.
• Eighty-two percent of the respondents said their organization has
an analytics department for improving customer intelligence.
• Forty-three percent of them acknowledged that they are not able
to maintain accurate information for daily operations.
Organizations will never be able to fully realize the potential of data

and analytics if they cannot make up for that deficiency in accurate
data. To start improving the quality of their data, Experian’s research
suggests that organizations need to link customer records across all
of their departments, improve their data collection processes across
all channels, and make sure they are getting accurate information
from third-party sources.
Regulatory bodies are paying more attention also to the use of
data within financial institutions. For example the Bank of Italy in a
recent directive stresses the importance of data governance.12
Implementation
Big data solutions encompass a new generation of software and

architectures designed to extract value in velocity, from relatively
large volumes, and a variety of structured and unstructured data
information on how to provide better value to the customer and the

enterprise. This is achieved by enabling rapid data capture, discovery,
and/or analysis. According to Novarica, the financial institutions
that will be able to profit from the potential value of big data will
be those that have created a culture in which business leaders trust
analytics and act on the insights provided.13 All financial institu-
tions should take steps to create that culture today if it not already
exists in their organizations.
The key is to start small with a proof of concept (PoC). In a PoC,
ICT is interested in using a big data environment to speed up long-
running processes of extraction, transformation, and loading (ETL)
in a traditional data warehouse environment using structured data.
This would allow situations to be overcome in which the organiza-
tion currently is missing meeting the SLAs for business.
It is important for financial institutions to develop a good busi-
ness use case for meeting the strategic objectives of the lines of busi-
ness. In addition, solid backing from a C-level executive is required.
This is essential not only for funding but also for evangelizing and
communicating the objectives and need to the entire organization,
including partners and vendors.
Although the initial scope and investment in terms of people, tools,
technologies, and infrastructure might be small, the architecture
should keep the long-term view in mind. For the right harnessing
and harvesting, good collaboration between ICT and business is
imperative to iteratively experiment and drive actionable insights.
Financial institutions can then use this incremental success to obtain
increased funding for the next phases and/or use cases.
As financial institutions identify and understand the scenarios for
applying big data within their businesses, they will need to improve
their existing processes in a Lean and Digitize approach. This is
necessary to be able to
• take into account the data “variety”;

• have good “veracity”;
• increase “volume”; or
• grow the need of real-time “velocity”;
• derive objective-driven actionable “value” for the customers and
the organization.
The Future 161
Financial services organizations that are able to develop a fact-based

culture, learn how to harness the power of big data, and harvest the
valuable information and insight that big data provides can create
competitive advantage and positively impact their brand and their
top and bottom lines.
Conclusions
Innovation is key to the success. There are plenty of opportunities

in new developments also for financial institutions to innovate in
terms of products, processes, organizations, and business models.
Big data is essential to provide a personalized experience in mobile
banking. Financial services institutions are moving in this direction.
However, it is necessary to speed up the processes. The combination
of mobile banking with cloud computing can further simplify the
process and make it possible to enjoy the benefits of big data in a
quicker and less expensive way.
Conclusions
In the future, financial institutions will need to further innovate in

these four ways:
• products (services);
• processes;
• organizations;
• business models.
This chapter examines each one of them and tries to forecast what
can be expected.
Innovation in products
The financial institutions of the future will be more personal and

tailor-made. Financial institutions today find themselves stuck
with legacy technology systems. These systems are so cumbersome
and poorly documented that is very difficult to migrate to modern
systems. Financial institutions cannot assume that their customers
will always suffer from such inertia.
New technology and regulations will make it so easy for customers
to change the financial institution they are usingthat there will
be a strong push to financial institutions to customization based
on customer insight such as behavioral-based pricing of financial
services, which will be based on big data processing and analytics.
Customers whose behavior makes them more profitable and/or
162
Conclusions 163
reliable will receive preferential pricing to keep them delighted and

loyal. Personal financial management platforms will provide the
perfect data set to put this new service model in place.
The financial institution of the future will be a hub for identity
and security. If there is one service that a customer would be willing
to pay for (and it does not really exist today), it is using the financial
institution as a data locker for all their digital assets.
Value-add mobile features offer potential revenue play. Financial
institutions can realize the full potential of mobile banking by
offering personalized customer experiences and advanced mobile
wallet capabilities, according to a study by Cognizant and Monitise.1
The study surveyed more than 700 customers from a diverse group
of US financial institutions, age ranges, annual incomes, genders,
ethnicities, education levels, and employment backgrounds to
understand their mobile banking expectations, emerging trends,
and current and future needs.
Customers are increasingly expecting financial institutions to help
improve their mobile lifestyles by providing any time, anywhere, any
device capabilities; customized user experiences, shopping and social
features, and value-added services. This, the study states, represents a
new opportunity for financial institutions to drive customer loyalty,
attract new business, and generate more revenue.
Key findings in this study include the following:2
• Any time, anywhere, any device capabilities: Customers are

looking for greater functionality as they seek more options. This
strongly relates to the segmentation of customer interest and
behavior. Interest in remote check deposit and real-time alerts on
unusual account activity are important features across segments
that could induce customers to switch financial institutions.
• Customized user experiences: Tablets have emerged as a unique
and valued user interface with 41 percent of survey respond-
ents wanting to use tablets compared with smartphones, and
60 percent of tablet owners preferring a tablet for mobile banking.
Customers are now using both devices for different purposes and
want features optimized to suit each device’s form factor. Feature
personalization like rearranging tabs and functions is also impor-
tant to more than 75 percent of the customers surveyed. Offering
this flexibility can give financial institutions a competitive edge
and help retain customers.
• Better shopping and social experiences: Customers want their

financial institution to offer better shopping and social experi-
ences. They also prefer offers from financial institutions rather
than from other mobile payment mediums. By offering discounts
and offers from merchants on customers’ mobile devices, financial
institutions can increase mobile payment traffic. Customers are
also open to using social networking features on mobile banking
apps/websites for accessing information on new products, sharing
opinions and provide suggestions.
• Value-added services: Customers are seeking services that drive
security, ease mobile payment use and provide insights on
spending and bill payment patterns. They are willing to invest
in these products. More than one-third of customers surveyed are
willing to pay for advanced security features such as biometrics,
and nearly 30 percent of respondents indicated a willingness to
pay for mobile payment capabilities.
Innovation in processes
Technological development in the mobile sector, like 5G and

improved displays of devices, will likely change the current scenario
and further expand and improve wireless service consumption.
Data input may still be a bottleneck in the consumption of some
mobile financial services. This is the field in which one can expect
major developments. Near field communication (NFC), barcode
readers, or picture-taking phones could be used to reduce the burden
and perceived uncertainty of the customer and to increase conven-
ience in mobile bill paying by copying the account numbers, index
numbers, and the sums and due dates from the printed bill into the
mobile phone. The customer would only need to accept or reject the
payment.
Remote Deposit Capture (RDC) is a mobile product that allows users
to deposit items electronically from a remote location. Customers
can take a picture of the front and back of a check and send the
photo in lieu of the check via their mobile banking app. It is inter-
esting to offer this solution to business customers. FFIEC Guidance
SR09–2 provides a good general overview of the product, although it
focuses more on business customers.3
Conclusions 165
Imaging technology would be able to reduce by up to 80 percent

the amount of data that new customers have to enter. Biometrics,
using facial and voice recognition technology, will be more and
more common. Voice commands will become more available and
reliable. Since thousands of years, persons interact via words, Such
interactions will reduce also the size of the devices used for commu-
nicating and processing. Wearable devices will become more and
more common.
These innovative processes require additional regulatory analysis
and implementation. Primarily, it is necessary to determine what
liability rules apply as determined by the manner in which the data,
images, and voice are ultimately cleared.
Innovation in organizations
With more and more remote users, the traditional organization of

financial institutions in the front office and the back office will
become insufficient. Now more and more financial institutions have
three logical levels. They correspond to the three areas that consti-
tute the benchmark architectural reference of the financial services
sector (see Figure C.1):
• Front office is the trade side. It is composed of all customer-centric

services that can be activated directly by the intermediary opera-
tors in contact with the customer or, in most of the cases, by the
customer themselves. It is directly linked to the channels and will
become more and more automated.
• Middle office ensures the control and processing of transactions.
It represents the point of conjunction between the customer side
(front office) and the operational side (back office). The middle
office includes all those activities that have the goal of maxi-
mizing the match between supply and demand. Its relevance has
increased with the widespread use of online and mobile banking.
• Back office is the operational side. It is composed of all the product-
oriented services that do not require contact with the customer.
• The middle office is a great way to speed up the front office opera-
tions. At the same time, it makes available a much cleaner input
to the back office.
Front office Contact with customers and partners
Middle office Service definition and control
Back office Service execution
Figure C.1 Three level financial institution processes distribution
From a strategic business perspective, this organizational innovation

in financial institutions will be the driver that will lead to
• a focus on customers rather than products;

• customer interaction through multichannels, with the concept of
everywhere, every time, and in every possible way;
• leaner front, middle, and back offices;
• process management strongly integrated with digitization; and
• business and ICT alignment.
Innovation in business models
Matteo Rizzi, in a blog published in 2013, urged financial institutions

to move into new businesses (seemingly) unrelated to banking.4
Aside from the question of which new banking services customers
will be willing to pay for, it is possible to make educated guesses
about which services customers will not be willing to pay for (or, at
least, not as much as they pay today).
To make the same statement for the lending side would be even
easier. Apart from Zopas, there are start-ups innovating in the areas of
crowd funding, person-to-person (P2P) lending, and credit compen-
sation. In this model, if organization A is a creditor of organization
B and is in debt to organization C, and B owes C or vice versa, each
player only pays the net invoice, thereby moving less money around
and saving in transaction fees.
Financial institution services in the future will adapt to a more
entrepreneur-friendly world. This characteristic derives from
Conclusions 167
• easy global access to customers;

• computing power that is available on demand; and
• some nontraditional players that have reached a scale to disrupt
fundamentally the models used in the past.
To survive and prosper, financial institutions will therefore have to

adapt not only their traditional offering, but get into markets that
today are totally unrelated to them. As a successful example, CIC, a
French financial institution, began selling mobile phones and related
plans a few years ago.5 It now has a significant portion of the market,
and also has one of the French market’s highest ratios of customers
who use mobile banking services.
In other words, it is necessary to create a mobile banking ecosystem
(see Figure C.2). Financial institutions could, for example, decide to
use their customer data to make relevant coupon offers and other
marketing activities to their customers.
As a matter of fact, it is becoming a popular notion in the finan-
cial services industry that the key to customer adoption of mobile
banking is providing targeted and timely coupon offers to customers
that will entice them to pay with their phones. Many also believe
that this puts financial institutions in a strong position in the mobile
Financial
MNO
institution
Mobile
Technology banking Handset
partners manufacturers
Merchants
Figure C.2 The mobile banking ecosystem

payments ecosystem because of the data that financial institutions

have and can process to develop relevant offers.
A survey released recently by Ngdata and Clear2Pay found that
80 percent of financial institutions thought that financial institu-
tions make mobile wallets more enticing for customers by offering
such targeted marketing activities. Three-quarters of the respond-
ents said that their financial institutions would be interested in facil-
itating commerce between merchants and their customers through
such offers.6
The data behind those marketing activities will determine how
enticing the offers are and how successful the mobile banking initia-
tives that they support will be. Some financial institutions have real-
ized this and are looking at new ways to leverage more customer data
(such as big data and analytics) to push adoption through better and
easier marketing and e-commerce activities.
OP-Pohjola, a Finnish bank, took a survey of its customers.7 The
results highlighted the customers’ desire to monitor their status as
loyal customers and their spending using their smartphone, with
more ease. Based on customer feedback, OP-Pohjola took a bold
initiative to create a new kind of shopping experience that brings
benefits to both Finnish customers and retailers.
The positive and abundant feedback that is unusual when it comes
to banking services has been a very pleasant surprise to the bank.
OP-Pohjola is also developing new Pivo features and services that its
customers have suggested, for example, importing loyalty schemes
to the mobile application and mobile payment number.
Arming customers with real-time information regarding their
current financial position is useful. However, combining finan-
cial data with GPS technology will enable financial institutions
to provide value-added services not traditionally associated with
financial institutions, as well as counter the threats of nontradi-
tional competitors. An example is location-specific services such as
customized or special offers. A message on the smartphone or tablet
can inform the customer that he/she is two blocks from a favorite
merchant, which is offering 50 percent off the customer’s favorite
brand of jeans. The smartphone can also act as a payment device.
Embracing the smartphone as a device to replace debit or credit cards
also provides financial institutions with an answer to NFC and radio
frequency devices, as well as new financialservices.
Conclusions 169
ICT services provider Mahindra Satyam is taking a different

approach to the challenge of using data to push relevant offers to
customers. All of the customer data that can be used today to make
relevant offers is often divided up among many organizations. Telco
providers, financial institutions, and card networks all have different
data on the same customers, and combining all of that data across
the organizations could lead to more relevant offers than any one of
those organizations could provide on their own.
With that in mind, Mahindra Satyam designed a platform called
the Global Inter-Carrier Gateway for Context Aware m-Commerce
that can combine data from different organizations to produce offers
for mobile customers.8 The platform connects with issuers, mobile
network operators, payments processors, merchants, and card
networks.
If customer adoption of mobile banking depends heavily on
customer data, then financial institutions are going to have to figure
out also how they want to use their data to participate in the mobile
payments space, and with whom – if anyone – they are willing to
share that data.
Finally imagine an entrepreneur with an idea, and a financial insti-
tution delivering everything from the incorporation of the organi-
zation to the financial institution account to credit and payment
facilities. It would be very interesting. Understanding potential
customers before they become real ones is the simplest, most inno-
vative, and rewarding thing a financial institution can do today.
Glossary
Acquirer or Acquiring Network: The acquirer is an institution that proc-

esses credit and/or debit card payments for a merchant.
Adoption Rate: How quickly it takes the public at large to adopt new
technologies.
Advertising based pricing model: A pricing model with services to customers
at low or no cost. The vendor obtains most of its revenues from advertisers
whose ads are delivered to the customer along with the service.
Agility: How quickly the vendor responds, as the customer’s resource load
scales, allocating additional resources to the activity.
Android: It is an open mobile phone platform developed by Google and,
later, the Open Handset Alliance. It consists of the operating system (on
which everything runs), the middleware (allowing applications to talk to
a network and to one another), and the applications (the actual programs
that the phones will run).
Anti-money laundering (AML): It is the effort through legislation, regula-
tion, and systems to track, identify, and stop the laundering of illicit funds
within the mainstream banking system.
App: It is short for application. It is a program or piece of software, especially
as downloaded by a user to a mobile device.
Application Programming Interfaces (API): It is a specification for the
interfaces used by software components to communicate with each other.
An API may include specifications for routines, data structures, object
classes, and variables.
Application/App store: It is the distribution for digital applications available
on many mobile devices.
Application: Software program that uses the basic software and network
environments to achieve a specific function related to the purposes of the
organization.
Audit and Compliance: It is the ability to collect audit and compliance data.
That authentication authority is capable of exchanging credentials.
Augmented Reality (AR): It is the overlaying of digital data on the real
world.
Authentication: The authentication procedure of verifying the identity of a
user by a system or service.
Authorization: Authorization procedure that checks whether a customer or
another person inside or outside the organization has the right to do a
certain action, for instance, to transfer funds or access to sensitive data.
Automation: It is the automated handling of services. It is also the percentage
of requests to the vendor handled without any human intervention.
Availability: Percentage, usually calculated on a monthly basis and net of
planned service stops in terms of time of service coverage.
170
Glossary 171
B2B: Business to business. It refers to organizations that relate to other organ-

izations, rather than customers.
Basel 2 and 3: The second and third of the Basel accords was signed in 2004
by the G10 central financial institution governors (Basel 1 was signed in
1998). Basel 2 is a package of measures designed to introduce new rules for
prudent credit risk management. Financial institutions are required to put
aside capital to reduce the risks of their lending and investment activities,
thereby bringing greater transparency to financial institutions’ solvency.
In 2010, further proposals were introduced for international banking regu-
lation in the Basel 3 reforms.
Basic software: It is the set of software programs that enables a user to
perform basic operations such as building and actually running a program
or managing a database. Typical examples of basic software are the oper-
ating system, the editors, compilers, and the management systems of
databases.
Benchmarking: It is the comparison of processes and/or measures to other
processes and/or measures implemented by well-organized entities.
Bitcoin: It is a type of peer-to-peer digital currency.
Blog: It is a contraction of the term “web log.” It is a type of website, usually
maintained by an individual, with regular entries of commentary, descrip-
tions of events, or other material such as graphics or video.
Broad Network Access: Broad network access facilitates network capabili-
ties and their access through standard mechanisms. Heterogeneous thin
or thick customer platforms promote the use of the platform. Notebooks,
tablet PCs, PDA’s, smartphones, and so on are the devices that can access
the network.
Business Intelligence (BI): BI is a broad category of applications and tech-
nologies for gathering, storing, analyzing, and retrieving and providing
access to data to help users make better organization decisions. BI appli-
cations include the activities of decision support systems, querying and
reporting, online analytical processing, statistical analysis, forecasting,
and data mining. In some cases, it is also indicated as Analytics.
Business Process Management (BPM): It is the management of processes in
order to improve them substantially.
Business Process Outsourcing (BPO): It is the practice of outsourcing some
or all of the business’s back-office processes to an external organization or
service provider. Examples are common with call centers and information
technology (IT) support.
Business Process Re-engineering (BPR): It is the drastic re-engineering
business processes to either reduce costs or improve the flow of a process
for customers.
Caller Line Identification (CLID): It is a system that identifies a customer
based on the phone number he/she uses to call a service provider.
Card Verification Method (CVM): It is the method to ensure that the
person presenting the card (embedded in the mobile device) is the person
to whom the card was issued.
172 Glossary
Card Verification Value 2 (CVV2): It is the three digits at the back of a credit
card.
Churn: This refers to customers moving from a service provider within one
specific product category to another, based on price, value, or some other
factor. Cloning: It refers to copying the identity of one mobile phone to
another, thereby allowing the perpetrator to masquerade as the victim.
The intent normally is to use the phone for calls and other services billed
to the victim’s cell account. In the case of mobile banking, cloning could
give the hacker access to the victim’s financial accounts.
Cloud: A metaphor for a global network. It was initially used to refer to the
telephone network. It is now commonly used to refer to the Internet or to
cloud computing services.
Cloud Computing: It is a computing capability that provides convenient
and on-demand network access to a shared pool of configurable computing
resources. These resources can be rapidly provisioned and released with
minimal management effort or vendor interaction. Cloud computing has
six essential characteristics: pay-per-use, self-service, broad network access,
resource pooling, rapid elasticity, and measured service. In general terms,
cloud computing enables Infrastructure as a Service (IaaS), Platform as
a Service (PaaS), Software as a Service (SaaS), and Business Process as a
Service (BPaaS).
Cloud-based Payments: Cloud-based payments store credentials remotely.
An end user who wishes to make a cloud-based payment, must use soft-
ware and connections to remote servers.
Collective Wallet: A mobile wallet that is designed by a group of creden-
tial issuers so that payment credentials from only this group of credential
issuers may be bound and used for payment.
Companion Application: A companion application is associated with a
payment application to increase functionality (for example, personal code
management or transaction log). The companion application is provided at
the discretion of the installer of the payment application.
Compliance: It is the respect for the internal and external compulsory rules
of the organization.
Computer Security Incident: Every event that involves a violation or immi-
nent threat of violation of the rules and business practices in the field of
information security (for instance, computer fraud, attacks through the
Internet, malfunctions, and faults).
Configuration Management: It refers to the ability to federate configura-
tion data for services.
Consumption-based Pricing Model: A pricing model in which the vendor
charges its customers based on the number of services the customer
consumes, rather than on a time and material-based fee. For example, a
cloud storage vendor might charge per gigabyte of information stored.
Contactless: It is a method of communicating that does not require physical
contact between two devices (see NFC for specifics).
Contactless Stickers: These are stickers that use NFC technology to transfer
information.
Glossary 173
Controlling Authority (CA): The CA manages key exchanges in an “open

wallet model.” This is a model recognized but not mandated in the NFC
Mobile Payments Reference Model. This document is an alternative to
many-to-many relationships between a payment credential issuer’s TSM
and a secure domain manager’s TSM.
Credential: It is the secure, encrypted information associated with a specific
payment product.
Credential Issuer (CI): It is the organization that issues and supports the
payment products.
Credentials Information: It refers to information used by a user for authen-
tication to a system or service. They are included in the definition of
the physical tools that provide or store information (for instance, pass-
word generators of a nonreusable smart card) or something that reminds
the user (for instance, a password) or represents (for instance, biometric
characteristics).
Crisis: It is a situation formally declared as a service interruption or the dete-
rioration of one or more critical processes or as systemically important as a
result of incidents or disasters.
Cross-Selling: A method of targeting and selling new products to an existing
customer.
Computer-Telephony Integration/Interface (CTI): It is a system that inte-
grates telephone systems with computer networks.
Customer: In this book, it refers to the customer. It could be either external
or internal to the organization. In some cases, the word “customer” indi-
cates the access device. In this latter meaning, there will be always in this
book a specification (such as a thin customer).
Customer: The customer, contracting authority of the contract.
Customer Relationship Management (CRM): It is an information system
for managing relationships with the customers. It is a tool to manage the
whole customer life cycle, from the acquisition of new customers to the
growing of relationships with the most relevant ones, to loyalty building
with customers who have more relations with the organization. It allows
the optimization of relationships with customers by increasing loyalty,
selling more products and services, and so on.
Customer Service Representative (CSR): It is the staff working in a call
center to assist customers with enquiries.
Data Governance and Compliance: Governance defines who is responsible
for what, and the policies and procedures that persons or groups need to
follow. Data governance requires governing the organization’s own infra-
structure and also the infrastructure that the organization does not totally
control. Data governance has two key components: understanding compli-
ance and risk and organization performance goals.
Database: It is a set of computer files organized in such a way as to be quickly
accessed.
Default: A payment application or credential that is set to be used unless
another payment application or credential is selected.
174 Glossary
Detection and Forensics: Separating legitimate from illegitimate activity,

before or after a break in security.
Device Software: When a payment application and payment credentials
are stored on the embedded secure element, the device software plays the
role of the umbrella application to locate payment credentials and connect
these with the NFC controller.
Digital Natives: They are the Y-Generation, or the younger users of technology.
Disruptive Technology: It describes innovations that improve products or
services in unexpected ways and change both the way things are done
and the market. Cloud computing is often referred to as a disruptive tech-
nology. It has the potential to completely change the way in which ICT
services are procured, deployed, and maintained. As a matter of fact, cloud
computing can also change in a drastic way the products and processes of
the organization.
Dual Mode: In a dual mode, the MNO or SDM has sold a portion of the
secure element to the credential issuer. The credential issuer has full owner-
ship and rights to that portion of the secure element. Keys are exchanged
between the MNO or SDM and the credential issuer (or credential loader)
as part of the sale. The credential issuer can put any application on the
secure element and does not need any permission from the MNO or SDM.
Durability: It is a measure of how likely it is that the data is lost.
ECM: Enterprise Content Management is the management of all contents
(data, unstructured documents, email, voice, video, and so on).
ECN: Electronic Communications Network is an electronic network that
facilitates trading between stock or commodities exchanges.
Ecosystem Participants: Set of organizations or individuals that can work
together in order to gain synergies.
Electronic Receipt: A receipt that is presented and stored as data only. No
hard copy of this type of receipt is issued.
Emergency Situation: It is caused by accidents or disasters affecting the
operator, and is characterized by the need to take appropriate technical
and managerial exceptional actions aimed at the early restoration of
normal operations.
Encryption: Coding to protect the customer’s information assets.
End User: (Or customer) The end user is the final user of mobile payment
and mobile connectivity services.
Enterprise Resource Planning (ERP): It is the extension of the Manufacturing
Resource Planning II to the remaining functions in the organization, such
as engineering, finance, and personnel administration and management.
It consists of a software package with a single data model that facilitates
the horizontal and vertical integration of all interorganizational proc-
esses, improves process efficiency, and monitors processes through special
Key Performance Indicators (KPI) (Key Performance Indicators) according
to quality, service levels, and timeliness. Some components of an ERP
are: accounting, industrial accounting, payrolls, sourcing, warehouse
management, production, project control, sales, distribution, and facility
maintenance
Glossary 175
Europay, Mastercard, and Visa (EMV): An international standard for smart

credit cards that have a built-in CPU chip. It is used with brand names such
as Chip and PIN. The smartcard provides greater safety than a magnetic
stripe since it can support sophisticated security methods and make deci-
sions on its own.
Facebook: It is a hugely popular online social network founded in 2004 for
helping friends stay in touch and share information
Federation: It is the act of combining organizations, data or identities across
multiple systems or companies.
Financial Institutions (FI): They are the institutions that handle finan-
cial transactions and are normally the place where people deposit their
money.
Frequently Asked Questions (FAQ): They are functionality which lists the
questions asked frequently by the users.
General Packet Radio Switching (GPRS): It is a packet-oriented mobile data
service available to users of 2G and 3G cellular communication systems in
Global Systems for Mobile Communications (GSM).
Generation Y (Gen Y): It is a term commonly used by marketing profes-
sionals to describe the segment of the population born between 1977 and
1994, especially in the USA.
Generation Z (Gen Z): It is a term commonly used by marketing profes-
sionals to describe the segment of the population born between 1995 and
2000, especially in the USA. This generation is sometime called also-gen-
eration, due to their use of mobile devices.
Geolocation: It is the technique of identifying the geographical location
of a person or device by means of digital information processed via the
Internet.
Gilder’s Law: Proposed by George Gilder, this law states that bandwidth
grows at least three times faster than computer power.
Global Systems for Mobile Communications (GSM): It is the primary
standard for digital mobile phones, and is in use by 80 percent of the global
mobile market.
Governance: Governance refers to the controls and processes that make sure
the effectiveness, efficiency and economics of a sector. The sector might
refer to the entire organization or to a organization unit, a process, or
data.
Handset Manufacturers: They are the organizations that manufacture
mobile phone handsets and similar products.
High Risk: Payments that meet the risk criteria established by payment
networks or credential issuers. High-risk payments are subject to addi-
tional CVM steps.
High Value: Payments that exceed certain payment network or credential
issuer value criteria or a combination of value and spend category criteria.
High-value payments are subject to additional CVM steps.
Hijacking: The attacker takes control of a communication between two enti-
ties, masquerading as one of them. As with cloning, hijacking could give
the hacker access to the victim’s financial accounts.
176 Glossary
Hybrid Payments: They are the solutions that could handle both prox-
imity and remote payments. This category contains solutions that extend
existing behaviors. It can be card payments that become mobile with a
smartphone card reader, for instance, iZettle.
Identity Management: Managing personal identity information so that access
to computer resources, applications, data, and services is controlled properly.
Incident: It is any event that is not part of the standard operation of a service
and that causes or may cause an interruption to, or a reduction in, the
quality of that service.
Information Risk: It is the risk of incurring financial, reputational, and
market share losses in relation to the use of information technology and
communications. In the integrated view of the business risks for pruden-
tial purposes (ICAAP), this type of risk includes operational, reputational,
and strategic risks.
Information Technology and Telecommunication (ICT): It is the combina-
tion of computers, storage, network, applications, and so on that provides
integrated computer-based services.
Information Technology Infrastructure Library (ITIL): It is a methodology
for the management of ICT services.
Instant Messaging (IM): It is a protocol for communicating between two
parties using text-based chat through IP-based customers.
Integration: It is the process of combining components or systems into an
integrated entity.
Interaction Design (IxD): It is a customer-led design methodology for
improving the interaction between customers and systems.
Interactive Voice Response (systems) (IVR): They are the automated tele-
phone support systems that people hear when they call a free phone help
line or customer support number, which uses menus and responses via
touch-tone and/or voice response for navigation.
Internet Protocol (IP): It is the primary protocol for transmitting data or
information over the Internet.
Internet Service Provider (ISP): It is an organization that provides Internet
access to customers.
Interoperability: It is concerned with the ability of systems to operate in
multiple environments.
iOS: It is the Apple mobile operating system for its iPhone, iPod touch, iPad,
Apple television, and similar devices.
Key Performance Indicators (KPI): It is the metrics (or measures) used
within corporations to measure the performance of one department
against another with respect revenue, sales lead conversion, costs, customer
support, and so on.
Know your customer (KYC): Applications used to know the customer better
using the data in the application. In some countries, it is mandatory for
anti-money laundering or blacklisting verifications.
Lean and Digitize: Makes the process simultaneously lean and automated. It
is a method based on re-engineering the process to make it lean and at the
same time to automate wherever it is necessary.
Glossary 177
Least Privilege: It is the principle that states that each user or system admin-
istrator is assigned the qualifications strictly necessary for the performance
of assigned duties.
LinkedIn: An online social network for business professionals.
Logical Security: It is a set of processes and activities aimed at obtaining
confidentiality, integrity, and availability of data and information through
the adoption of measures: techniques (system for access control, antivirus,
firewalls, intrusion detection systems, and so on), organizational (defini-
tion of policies, safety standards, user profiling and related ratings, and so
on), and procedural (process definition).
Loyalty Service Provider: The administrator of loyalty and rewards
programs.
Malicious Code: It is the software in the form of a virus, worm, or other
malware that is loaded by hackers onto the handset, the SMS gateway, or
the financial institution’s server to perform an unauthorized process that
will have an adverse impact on the confidentiality, integrity, or availability
of financial information and transactions.
Malware: It is a contraction for malicious software that is inserted into a
system, usually covertly, with the intent of compromising the confiden-
tiality, integrity, or availability of the victim’s data, applications, or oper-
ating system, or otherwise annoying or disrupting the victim.
Man-in-the-Middle Attack (MIM): An attack on the authentication protocol
exchange in which the attacker positions him-/herself between the
claimant and verifier with the intent to intercept and alter data traveling
between them.
Merchant: The merchant is the provider of goods or services for which the
end user is paying.
Microcredit: It is the granting of small loans to entrepreneurs or artisans
who cannot access traditional financial institution loans, usually because
they cannot offer adequate guarantees or collateral. It first emerged in
developing countries. It enables micro-projects to be implemented. It
encourages economic activity and wealth creation. It is now also practiced
in developed countries and transition economies. Microcredit is part of a
wider field that includes other financial tools such as saving, micro-insur-
ance, and other products that together comprise microfinance.
Microfinance: A range of financial tools (loans, savings, insurance, money
transfers, and so on) designed for people who do not have access to the
traditional banking system.
Microfinance Institution (MFI): It is an alternate form of financial institu-
tion found in developing countries that provides microcredit lending.
Micro-SD Card: A memory card that is designed to integrate with the mobile
phone and other mobile devices.
Mission: The mission is the way to proceed toward the Vision.
Mobile Banking: Platforms that enable customers to access financial serv-
ices such as transfers, bill payments, balance information, and investment
options. It also encompasses SMS (short message service or text messaging
178 Glossary
alerts), using a smartphone to access a bank’s Internet site as well as serv-

ices provided directly through a bank’s app on a smart phone.
Mobile Device: It includes smartphones, feature phones, and tablet
computers. The term “mobile device” is also used interchangeably with
“mobile handset” or “handset.”
Mobile Money: Bank-like services delivered over mobile services to enable
payments between two parties. Examples of successful providers include
M-Pesa, Edy, G-CASH, MTN Money, T-money, Edy, and Suica.
Mobile Network Operator (MNO): The MNO is the provider of mobile device
connectivity services. For the purposes of this document, this role is some-
times used interchangeably with the OEM and Secure Domain Manager.
Mobile Payments: It is a payment service that includes digital money, either
transferred or placed in a mobile wallet. The transaction is performed on a
mobile device. Mobile payments are defined as either Proximity Payments
or Remote Payments.
Mobile Portal: It is a website designed specifically for mobile phone inter-
faces and mini-browsers.
Mobile Wallet: A digital account, denominated in a currency, held on a
mobile phone that can be used to store and transfer value. A service that
allows customers to pay via payment instruments such as a credit card or
checking account, in their digital “wallet” without revealing their finan-
cial information to the payee. Examples of mobile wallets that exist today
include Google Wallet, Obopay, PayPal, and the Visa digital wallet.
National Institute of Standards and Technology (NIST): NIST is a US
Department of Commerce agency that, among other stated responsi-
bilities, promotes effective and secure use of cloud computing within
organizations.
Near Field Communications (NFC): Near field communication allows for
simplified transactions, data exchange, and wireless connections between
two devices in close proximity to each other, usually by no more than
approximately 10 centimeters. NFC transactions for mobile payments will
be transmitted using ISO 14443 A/B standard.
Network Software: Network software is the set of specialized programs for
the management of communications. Typical examples of network soft-
ware are the mailers and products management and sharing of distributed
resources.
Network Virtualization: This form of virtualization is a method for
combining the available resources in a network by splitting up the avail-
able bandwidth into channels. Each channel is independent of the others.
Each one can be assigned (or reassigned) to a particular server or device in
real time.
NFC Controller: The hardware and software that, in combination, control
the NFC radio signals transmitted to and from the mobile device.
Non Blocking Failure or Malfunction: System “malfunction,” but the oper-
ation of the system is not substantially compromised and the services for
which the system is used can continue to be provided.
Glossary 179
Norms: Alternative to the word standardization.

Open Wallet: A mobile wallet that is designed so that payment credentials
from multiple credential issuers can be bound and used for a payment.
Although “open,” this type of wallet still requires agreements and busi-
ness relationships between credential issuers and wallet providers before a
wallet may be bound to credentials.
Operating volume: The strength and serviceable distance of the NFC radio
on a mobile device.
Organization: In this book, this term indicates an organization, a public
institution, either central or local, or a nonprofit organization.
Original Equipment Manufacturer (OEM): The OEM produces the mobile
device hardware that is used by the end user. For the purposes of this docu-
ment, this role is sometimes used interchangeably with the MNO and the
Secure Domain Manager (SDM).
OTA/Over-the-air: The transmission of data using a wireless network.
Output: The result produced by a system or process. The final output is a
product or a service.
Over the Counter (OTC): It refers to physical transactions or trades done on
behalf of a customer by a trader or customer representative who has access
to a specific closed financial system or network.
Over-The-Top Content (OTT): It describes broadband delivery of video and
audio without a multiple system operator being involved in the control or
distribution of the content itself. The provider may be aware of the contents
of the IP packets, but is not responsible for, nor able to control, the viewing
abilities, copyrights, and/or other redistribution of the content.
Pass Code: The mobile pass code is entered into the end user’s mobile device
as a card authentication method.
Payment Application: A payment application provides the security require-
ments for making a payment and storing the payment credentials.
Payment Credential Issuer or Credential Issuer: The PCI (or the Payment
Application Owner) is responsible for the encryption, safety, and security
of payment credentials. The relationship between the end user and the CI
is based on financial services offerings and products.
Payment Network: (or the Payment Application Creator) creates the non-
user facing payment application software and manages the payment
network (for instance, Visa, MasterCard, CUP, and so on).
Payment Service: Provider-independent organizations that develop a
payment solution. It could be entrepreneurs, online payments services, or
technology organizations
Payment Task Force: The Payments Task Force was a working group formed
by the Canadian government in 2011 to evaluate the future of payments
in Canada.
PayPal: A leading P2P payment provider; others include Square, i-Zettle,
ClearXchange, Dwolla, PingIt, PopMoney, QuickPay, Vermo, and ZashPaY.
PCI Compliant: Complying with Payment Card Industry data security
standards.
180 Glossary
Peer-to-Peer or Person-to-Person (P2P): It is a method of passing informa-

tion or data via IP-based communication methods between two individ-
uals connected to the Internet via computer or mobile devices.
Peer-to-Peer Payments (P2P): Payments that occur directly between end
users. A schema is not involved in this transaction.
Personal Productivity Software: Software used for processing individual
standard (e.g., WinZip, Adobe, MS Office, MS Project, and so on).
Person-to-Person (P2P) Payment: P2P payments can be from a customer to
another customer or to a small business.
Phishing: Tricking a victim into disclosing sensitive personal information or
downloading malware through an email.
Physical Security: It is a set of processes and activities aimed to achieve
confidentiality, integrity, and availability of the assets of the organiza-
tion through the adoption of measures: “active” (systems that can detect
and report an event, stop it, turn on the intervention of ad hoc); “passive”
(measurements, generally physical type of structural measures to resist
passively to any dangers, delaying the possible effects); “organizational”
(set of procedures for prevention and control is applied by external person-
nel-security guards, policemen, and so on).
Plan-Do-Check-Act (PDCA): It is the improvement cycle introduced by
Deming. It is based on the sequence of actions: plan, do, check and act.
Point of Sale (POS): It is the device that a merchant uses to capture payment
credential information.
Policy: A policy is a general term for an operating procedure.
Portability: Portability is the ability to run applications, components, or
systems running on one implementation and to deploy it on another
implementation, for instance, of another vendor.
POS: Point of Sale is the location where a retail transaction occurs. A POS
terminal refers more generally to the hardware and software used at
checkout stations.
POS Application: The POS terminal hosts a payment application that
complies with MasterCard PayPass, Visa, or local scheme contactless
specifications.
Pay-per-Click (PPC): It is a method of paying that appears in search engine
results by bidding and paying for specific keywords. You then pay at the
successful bid rate every time a user/visitor clicks on your link.
Primary Account Number (PAN): It is based on 16 digits: a six-digit Issuer
Identification Number (IIN), the first digit of which is the Major Industry
Identifier (MII); a variable length (up to 12 digits) individual account iden-
tifier; a single check digit.
Problem: It is defined as the cause that creates an incident. Incidents that
cannot be resolved due to the lack of available solution to the problem
will be communicated to the process of problem management, as well as
repeated incidents related to a known issue (“known problem/error”).
Process: A set of interconnected activities that transforms a set of inputs in
one or more results. Sometimes a process is identified with a system. In
fact, it would be more correct to consider it as a system component.
Glossary 181
Process Improvement: It is a continuous effort to learn from the causes and

effects in a process, aiming at reducing the complexity, the variation, and
the cycle time. It is obtained by improving and eliminating the wrong
causes, and then by redesigning the process in order to reduce the root
causes of the most common variations.
Process Management: It is a methodology used to optimize the organiza-
tion as a system, determine which processes need to be improved and/
or controlled, define priorities, and encourage leadership to initiate and
sustain process improvement efforts. It manages the information obtained
because of these processes.
Process of Continuous Improvement: This is a structured approach that
improves the overall performance of the organization by using methods
appropriate to its problems. Its scope may be the quality or social respon-
sibility of the business.
Proprietary Wallet: It is a mobile wallet that is designed so that only the
payment credentials from the wallet provider may be bound and used to
make a NFC mobile payment.
Proximity Payments: It is the type of payment that is done at the merchant
point-of-sale. You check out at the cashier with the mobile device, and
money is transferred from your mobile account to the store.
Quality: This concept is not easily defined because there are many variations,
sometimes determined by an adjective or specifications. In general, quality
is customer satisfaction in a way that is profitable for the organization.
Quick Response Code (QR): It is the trademark for a type of matrix barcode.
It is basically a squared two-dimensional code, of which the main feature
is to redirect the user to useful information about an article in a magazine
or any other information.
Radio Frequency Identification (RFID): It is a short-range radio communi-
cation methodology that uses “tags” or small integrated circuits connected
to an antenna that, when passed within the range of a magnetic reader, is
able to send a signal.
Redirecting: Intercepting a communication by substituting a fraudulent
address or identity, potentially by using a Man-in-the-Middle attack.
Relationship Manager (RM): It is a dedicated customer service manager
assigned to look after specific customers, usually high-net-worth
customers.
Reliability: How often or the percentage of time the service is available.
Remote Payments: It is the opposite of proximity payments, remote payments
can be done remotely without requiring a physical contact between the
actors in the payment process. It is either done between persons or to a
merchant over the wireless network or SMS.
Reporting: Reporting consists of the supplying and updating of representa-
tive data and indicators whose degree of detail tends to vary depending on
the person or organization for whom or for which they are intended. For
the purposes of sustainable development, tools such as the GRI (Global
Reporting Initiative) enable a standardized methodology to be agreed on
at the international level. In France, Article 225 of the NRE (New Economic
182 Glossary
Regulations) Law requires that all organizations beyond a certain size

publish a Corporate Social Responsibility (or “sustainability”) report.
Request for Change (RFC): It is a request to open a change (infrastructure
or applications).
Residual Risk Information: It is the information risk to which the interme-
diary is exposed after application of the mitigation measures identified in
the process of risk analysis.
Return Transaction: It is a POS reversal transaction associated with the
return of goods.
Search Engine Optimization (SEO): It is the science of optimizing websites
so that they appear in the top results for search engine inquiries.
Secure Domain: It is a subdivision of the secure element.
Secure Domain Manager (SDM ): It manages access to the secure element.
This role is often, but not always, combined with the role of the MNO. In
this book, this role is sometimes used interchangeably with MNO.
Secure Element: Refers to the embedded secure area or secure area on the
UICC where encrypted information is stored.
Secure Key: Secure key issuing is a variant of ID-based cryptography that
reduces the level of trust that needs to be placed in a trusted third party by
spreading the trust across multiple third parties.
Serious Incident of Security: It is a security incident, and results in at least one
of the following consequences: a) high economic losses or prolonged disrup-
tion to the intermediary, even following repeated minor incidents; b) signifi-
cant disruption to customers and other stakeholders (for instance, brokers or
payment infrastructures), and the assessment of the severity considers the
number of customers or counterparties involved and the amount potentially
at risk; c) the risk affects the bank’s ability to comply with the conditions
and obligations provided for by law or regulatory provisions.
Service Provider: The service provider is an organization such as a bank,
a telecommunication organization, a merchant, and so on that provides
services to be integrated with NFC mobile payments.
Short Message Service (SMS): It is a system of communicating by short
messages over the mobile telephone network.
SIM Card: Subscriber Identity Module (SIM): It is the module that securely
stores the service-subscriber key (IMSI) used to identify an individual
subscriber on a mobile phone.
Simple Mode: In a simple mode, the MNO or the SDM allows the credential
issuer to use its secure domain for the payment application. The right to
the secure domain remains with the MNO or SDM. Any updates or changes
to the payment application must be managed through the Secure Domain
Manager or MNO.
Siri: It is an application on the iPhone that lets the user use his/her voice to
send messages, make calls, set reminders, and more.
Six Sigma: It is a philosophy and a performance objective. As a method, it
is a structured approach to the continuous improvement of processes. The
objective is a measure of process performance defined in terms of defects,
with 3.4 defective parts per million opportunities.
Glossary 183
Skype: A computer and mobile application company allowing web, video,

and phone chats.
Smartphonatics: People who are fanatics about mobile phones. The term
was introduced by Aci and Aite.
SMiShing: A contraction of “SMS phishing.” This attack uses SMSs to facili-
tate bogus requests for personal information.
Software Development Kit (SDK): It is a package provided by a mainstream
software or operating system provider to the developer community to
assist them with application construction.
Spam: It is unsolicited bulk email sent out simultaneously to thousands
of email addresses to promote products, services, organizations, or
individuals.
Spoofing: Sending a network packet that appears to come from a legitimate
source, rather than its actual source;
Stakeholder: An individual, group, or organization that is likely to be
affected, directly or indirectly, by an activity, a program, or a particular
arrangement of an organization. Stakeholders include all those groups
that participate or are otherwise involved in its economic life (employees,
customers, suppliers, shareholders), those who observe the organization
(unions, nongovernmental organizations), and those that it impacts either
directly or indirectly (civil society, local authorities, and so on).
Stored-Value Card: Monetary value stored on a card not in an externally
recorded account. Examples are the Octopus, Oyster, and Suica systems
used to replace public transport ticketing.
Straight-Through Processing (STP): It is the implementation of a system
that requires no human intervention for the approval or processing of a
customer application or transaction.
System: According to Deming, it is a network of interacting components
that cooperate to achieve the goals of the system. It can also represent
the organization as a set of customers, vendors, a flow of materials, and
information.
Tablets: It is a general-purpose computer contained in a single panel, with a
touch screen as the input device.
Technical Rules: They are compulsory indications for technical standardiza-
tion or compliance.
Telematics: It is a synergy of telecommunications and informatics. In this
book, it is a synonymous with ICT.
Throughput: How quickly the service responds.
Token: A cryptographic value provided by a card issuer as proof that a dele-
gated management operation has been authorized.
Total Cost of Ownership (TCO): It is a metric that takes into account the
costs all along the lifecycle of the solution it refers. Typically, it includes
purchasing costs, installation, testing, maintenance, use, and disposal at
the end of the useful life.
Touch point: Any channel or mechanism by which a customer has day-
to-day interaction with a retail service organization, such as a bank, in
order to transact or conduct business.
184 Glossary
Transaction: It is the action of executing a function or an application. An

example of a transaction is the execution of the purchase at the point of
sale and also the processing of authorization and clearing messages.
Transport Layer Security (TLS): It is a cryptographic protocol that is
designed to provide communication security over the Internet. Its pred-
ecessor was Secure Sockets Layer (SSL).
Trust: It is the ability for two parties to define a trust relationship with a
formal authentication of the two parties.
Trusted Service Manager (TSM ) (or Payment Application or Payment
Credential Loader): It is a neutral broker facilitating the connection
between the handset manufacturer, the MNO, the user, and the PSP. It
controls the secure element in the phone and identifies the user and finan-
cial institution when the transaction is performed.
Twitter: A social media website that supports micro blogging between partic-
ipants in the network, sort of like an SMS broadcast system for the Web.
Umbrella Application: The umbrella application is used only when a
payment application is stored on the UICC. The umbrella enables the
communication between a wallet and all payment applications related to
this wallet. The relationship of the umbrella application to payment appli-
cations is a one-to-many relationship. For an embedded secure element,
this role is played by the device software.
Unbanked: Persons who do not have a current account or a savings account
with a financial institution.
Underbanked: It is a person who has a financial institution account that is
not used at least once per year.
Universal Integrated Circuit Card (UICC): It is the smart card used in
mobile terminals in GSM and UMTS networks as defined by ETSI Project
Smart Card Platform (EP SCP).
Universal Product Code (UPC): It is the standard used to name products in
a unique way.
Up-Selling: A system of selling an additional service of a higher margin or
total revenue within the same product or asset class to a customer, typi-
cally upgrading from one class of product to another.
Usability Testing (UT): It is the science of testing how users interact with a
system, product, or interface through observation.
Value: Value is defined by the end customer. Conceptually, it is the rela-
tionship between benefits and cost/damage of a product or service. It
is expressed in terms of a product/service that can meet the customer
demands at a given price and at a given moment. It is also possible to
refer to value as perceived by the customer, and see all the product/service
characteristics that the customer considers as necessary and valuable. Any
activity that consumes resources (including time) and does not bring value
to the customer or to the organization is waste (Muda, in Japanese)
Vendor: A person or organization that provides goods or services for use
in a process, such as public clouds. In the case of the private cloud, the
“vendor” is part of the organization.
Glossary 185
Video chat: From the English word “chat,” meaning to converse or discuss
informally. It is a web technology facilitating long-distance discussions in
real time, combining video, sound, and text.
Virtual Currency: Currencies such as Bitcoin, Linden dollars, QQ coins,
Project Entropia Dollars (PED), and so on that exist in the virtual world
and can be exchanged for real currency by users.
Virtual Support Centre (VSC): It is a call center virtually supported by
customer service representatives who typically operate from home (for
instance, homesourcing) or distinct locations.
Vishing: It is a contraction of “voice and phishing,” in which victims are
tricked into disclosing sensitive personal information through a phone call.
Vision: It is an expression of what would represent a success for the organi-
zation. The objective is to produce a mental image to aim at generating
creative tensions between the current reality and the vision in the organi-
zation. In order to be valuable it must be shared by the whole organization.
This requires many efforts and much patience. The mission is the way to
proceed toward the vision.
Voice of the Customer (VoC): It is the voice of the customer, or voice of the
citizen, in the case of public organizations.
Voice over Internet Protocol ( VoIP): It is an Internet-based protocol
that allows users to use voice communication, such as over a telephone
system.
Wallet Application or Wallet: The mobile wallet is the end-user facing
application that may be installed on the mobile device. The application
allows users to enter and manage account specific information to be used
in an NFC mobile transaction. It may be possible for one or more mobile
wallets to reside on a mobile device at any given time.
Wallet Provider: Provides the end-user facing interface (for instance, Google
Wallet, ISIS, Visa, MasterCard, FIs, or other third parties).
Web 2.0: It is the web applications that facilitate interactive information
sharing, interoperability, user-centered design, and collaboration on the
World Wide Web.
Widget: It is a generic type of software application that is usually portable
and works across different operating systems and devices.
Wireless Access Protocol (WAP): It is the original protocol for simple
Internet browsing or a simple menu interactions via mobile phones.
Note
These definitions are summarized; therefore, they will not be necessarily
precise. Please consult the text for a more complete presentation of the terms.
Only some terms have been explained, according to the eventual need to
find a quick reference during the reading of this book. The sources of most
of the definitions are websites with definitions of mobile banking, to which
we refer for more detail.
Notes
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186
Notes 187
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6. Ibid.
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188 Notes
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24. Barry, C., Albertazzi, D. (2011), op. cit.
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27. Barry, C., Albertazzi, D. (2011), op cit.
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32. Ibid.
33. Ibid.
34. Mobile Wallet Task Force (2011), Mobile wallet – definition and vision,
Mobey Forum’s Series on Mobile Wallets, November.
35. (2011), ibid.
36. Cisco (2013), Cisco customer experience research retail banking results
global data, http://newsroom.cisco.com/documents/10157/1142732/
CiscoCustomerExperienceReport_for_Retail_Banking_Global.pdf,
3 Management of Mobile Banking

1. (2013), Policy and charging: the path to service personalization, Ericsson
White paper 284 23–3203 Uen, May.
2. Tower group (2010), “Top 10 Business drivers, strategic responses, IT
initiatives in US mobile banking and payments,” a research paper from
Tower group.
Notes 189
3. McCarthy, Jerome E. (1960). Basic Marketing. A Managerial Approach,

Richard D. Irwin, Homewood, IL.
4. Value Partners (2012), Mobile Financial Services: A Competitive (and
Fragmented) Landscape
6. Crosman, P. (2011), What’s the ROI of mobile banking? Bank Technology
News, May.
7. Osservatorio Mobile Banking (2013), op. cit.
8. Schmidt, A., (2012), SunTrust Consumer Mobile Banking Value Analysis:
Finally, Quantitative Results! CEB Tower Group, July.
9. Accenture (2010), Mobile banking case studies, An Accenture Research
Paper, October.
10. Crosman, P. (2011), op. cit.
11. Accenture (2010), op. cit.
12. Ibid.
4 Opportunities, Challenges, and Remediation

1. Humphrey, A. (2005), SWOT analysis for management consulting, SRI
Alumni Newsletter (SRI International), December.
Macmillan, London.
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5 Regulatory Framework for Mobile Commerce

1. This chapter describes some basic regulations that are relevant for mobile
banking transactions. This information aims to provide a general over-
view of the legal framework governing mobile banking. It neither intends
nor claims to provide all-exhaustive, updated, and correct information
on the subject. We refer to the work of Sczyrba, M., Healy, T., and to the
work of Tiwari, R., Buse, S., included in the References list at the end
of this book. We have taken many ideas and words from them.Tiwari,
R., Buse, S. Herstatt, C. (2006), From electronic to mobile commerce:
opportunities through technology convergence for business services,
Tech Monitor, September.
2. Tiwari, R., Buse, S. (2007), The Mobile Commerce Prospects: A Strategic
Analysis of Opportunities in the Banking Sector, Hamburg University Press,
Hamburg, Germany.
190 Notes
3. Christensen K. (2013), Non-compliance creates significant risk with

mobile banking products, August 8, http://www.atmmarketplace.com/
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4. Kopchik, J.M. (2011), Mobile Banking: Rewards and Risks, FDIC Winter
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5. Tiwari, R., Buse, S. Herstatt, C. (2008), From Electronic to Mobile
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6. Tiwari, R., Buse, S. (2007), op cit.
7. Ibid.
8. Becker (2002), Bürgerliches Gesetzbuch, BMJ, p. 1.
6 Mobile Security
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billion dollar mobile security services market in 2013, http://www.abire-
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4. Bishop, M. (2004). Introduction to Computer Security, Addison Wesley
Professional, Boston, MA.
5. The Board of Governors of the Federal Reserve System, Federal Deposit
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of the Comptroller of the Currency, Office of Thrift Supervision,
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Internet Banking Environment, Paper of, Federal Financial Institutions
Examination Council, SR 11???9.
6. (2003), FFIEC IT Examination Handbook, Information Security Booklet.
7. A computer program that records every keystroke made by a computer
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confidential information.
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Notes 191
7 Mobile Banking throughout the World

1. (2012), 2012 Mobile banking financial institution scorecard: three keys to
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2. Ibid.
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8 The Future
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August 13, 2013.
Macmillan, London.
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7. McKinsey Co. (2011), op cit.
192 Notes
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9 Conclusions
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2. ht t p :// w w w. m o n it i s e . c o m /a m e r i c a s / n e w s - a n d - e v e nt s / p r e s s -
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Index
3GPP, 144 Frost Financial, 130

4G, 144 GoBank, 73, 74
5G, 144, 165 Gramm-Leach-Bliley Act, 107,
108
ABI, 27 Isis, 127, 128, 129, 130, 139
ABI Lab, 134 JP Morgan, 53, 57, 130, 189
ABI Research, 114, 144 Access Mobile, 130
Aci Worldwide, 14, 184 PSECU, 74
Adobe, 15, 181 Regulation E, 109, 110
Africa, 72, 140, 142 Sprint, 139
Cote d’Ivoire, 140 SunTrust Bank, 92
Kenya, 4, 20, 33, 65, 72, 126 Truth in Lending Act, 108
Juja, 33 Wells Fargo, 55, 57, 130, 139
M-Pesa, 20, 65, 72, 140, 179 AML, 171
Musoni, 33 analytics, 155, 156, 172
Safaricom, 4, 140, 202 Android, 11, 20, 36, 37, 38, 73, 100,
South Africa, 14 124, 137, 171
Tyme, 72 Apple, 32, 36, 45, 177, 192
Aite, 14, 57, 58, 78, 123, 184, 187, EasyPay, 32
188, 189, 191 iOS, 11, 20, 100, 137, 177
Alex Counts, 33 iPad, 37, 38, 177
Amazon, 8 iPhone, 36, 52, 67, 130, 177, 183
America, 127, 142 iTunes, 73
Brazil, 126 Asia, 74, 131, 142, 187, 188, 189,
Canada, 14, 139, 180 191, 198
USA, 19, 26, 37, 60, 63, 64, 67, 69, Bangladesh, 131, 200
73, 74, 76, 77, 78, 81, 104, Banglalink, 131
107, 108, 109, 110, 112, Citycell, 131
126, 127, 128, 130, 135, Dutch-Bangla Financial
139, 140, 141, 176, 194, 196 Institution, 131
American Federal Financial China, 14, 74, 126, 128, 198, 200
Institutions Examination ICBC, 50
Council, 108 UMPay, 74
Bank of America, 37, 189 Unionpay, 74
Chase, 78, 127, 130, 139 India, 14, 131, 195, 196, 202, 203
Citibank, 57, 139, 189 ICICI Bank, 131
City National Bank, 130 Iran
Credit Union, 74, 191 Bankmelli, 131
Federal Reserve Board, 19, 187, Edbi, 131
194 Melia, 131
205
206 Index
Asia – continued CDR, 150

Parsian, 131 CIO, 57
Saderat, 131 Cisco, 75, 189
Sepah, 131 Clear2Pay, 169
Tejarat, 131 ClearXchange, 139
Japan, 67, 74, 141, 202 cloud computing, 20, 98, 144, 145,
BTMU, 74 173, 175
Jibun Bank, 74, 75 Cognizant, 164
KDDI, 74 Consorzio Bancomat, 27
NTT DoCoMo, 74 consumerization, 52
Rakuten Group, 74 contactless, 26, 30, 32, 42, 63, 83,
Softbank Mobile, 74 128, 130, 142, 181, 199,
Middle East, 140, 142 201, 202
Oman, 202
Nepal, 132 Darwin, Charles, 6
Bank of Kathmandu, 132 data governance, 99, 160
Hello Paisa, 132 Deloitte, 141
Laxmi Bank Limited, 132 Deming, Edwards 181, 184
Mobile Khata, 132 Dropbox, 52, 73
NCell, 132
Siddartha Bank, 132 e-Commerce, 30, 64, 65, 66, 105,
Smart Tel, 132 196
Pakistan ecosystem, 12, 18, 66, 67, 68, 154,
Taameer Bank, 131 168, 169, 192
Telenor Pakistan, 131 e-Governance, 32
South Korea, 67, 141 Encryption, 46, 113, 114, 115, 121,
ATM, 2, 8, 9, 26, 40, 47, 50, 73, 82, 180
85, 131, 134, 138, 140, 202 e-Pay ment, 146, 147
e-Procurement
Basel Ariba, 54
Basel 1, 172 Bravo Systems, 54
Basel 2, 172 Ericsson, 80, 81, 189
Basel 3, 172 ConsumerLab, 80, 81
big data, 13, 17, 145, 149, 150, 151, ERP, 54, 175
152, 153, 154, 159, 160, Infor, 54
162, 192, 193 ETL, 161
biometrics, 26, 76, 77, 119, 120, 165 European Union, 106, 107, 110,
Bitcoin, 172, 186 196
Black Berry, 100 Europe, 3, 53, 67, 69, 72, 110, 126,
branch, 8, 9, 12, 26, 27, 50, 74, 85, 132, 138, 189, 195, 199, 201
87, 90, 91, 99, 103, 126, Belgium, 132
155, 190, 195 Bosnia and Herzegovina, 138
bundle, 76 Czech Republic, 73
Business Intelligence, 172 Instabank, 73
Business Process Management, 172 Prague, 72
BYOD, 54, 98, 191 Finland,
Captcha, 117 OP-Pohjola, 169
Index 207
France, 14, 31, 64, 133, 182, gamification, 83, 148

198 Gartner, 149, 154, 192, 202
BNP Paribas, 25, 46, 50, 72, Generation
104, 132, 133 Generation X, 14
Hello Bank, 25, 46, 72, 100, Generation Y, 14, 176
104, 132, 133 geolocalization, 26, 89
CIC, 168 Gilder, George, 176
Cityzi, 66 GoFinancial, 104
Germany, 14, 77, 110, 132, 188, Google, 8, 30, 36, 69, 73, 130,
190, 195, 198, 200, 201, 139, 144, 171, 179, 186
202 Google Wallet, 130
Deutsche Bank, 52, 196 GPS, 26, 85, 114, 128, 169
Italy, 4, 7, 27, 31, 32, 55, 56, 67, Grameen Foundation, 33, 188
81, 132, 135, 136, 137, Groupon, 88
160, 196 GSM, 112, 114, 115, 176, 185
Banco Desio, 137, 138 Guidance on Authentication,
Intesa Sanpaolo Bank, 108
138
Mediolanum, 137 ICT, 52, 57, 99, 113, 145, 146,
Politecnico di Milano, 135, 160, 161, 167, 170, 175,
189, 190, 192 177, 184, 197
Poste Italiane, 4 interoperability, 101, 186
The Netherlands, IPR, 107
ING, 4, 21, 27, 46, 71 ISO, 101, 179
Poland, 132 ITIL, 177
Russia, 77 ITU-R, 144
Spain, IVR, 74, 177
BBVA, 130
La Caixa, 52 Java, 15, 101
Sweden, 80 Javelin, 7, 12, 36, 37, 62, 63, 99,
Turkey, 127, 187, 188, 189, 190,
Cep-T Cuzdan, 66 192
UK, 26, 80, 134, 187, 188,
194, 195, 196, 197, 198, Kindle Fire, 38
199, 200 KPI, 175, 177
Barclays, 53, 65, 134
Barclaycard, 67, 128, 199 Lean
Pingit, 53, 65, 134 Lean and Digitize, 3, 19, 21,
Everything Everywhere, 67 22, 23, 24, 25, 28, 33,
Quick Tap, 67 35, 42, 45, 75, 104, 161,
Royal Bank of Scotland, 57 177, 187, 188, 200
e-Wallet, 69 Lean Six Sigma, 21, 22,
Experian, 160 23
Lean Thinking, 21, 22
Fiserv, 90, 91, 197 Libor Pesek, 72
Forrester, 20, 90, 91, 93, 94 Linden, 186
Gallup, 79 McKinsey, 1, 151, 187, 192, 195
208 Index
Mahindra Satyam, 170 179, 180, 182, 183, 186,

malware, 114, 115, 116, 117, 118, 189, 194, 202
120, 122, 178, 181, 191 Ngdata, 169
MIB, 116, 120 NLP, 152
MIM, 116, 120, 178 Novarica, 161, 193
phishing, 124, 184, 186 Oceania
marketing mix, 84, 155, 156, 157 Australia, 20, 26, 138, 147
m-Commerce, 33, 71, 170, 194, 195 New Zealand, 139
merchant, 128 OECD, 106
Auchan, 32 OEM, 179, 180
Barnes & Noble, 73 Office
Casino, 32 Back Office, 5, 48, 66, 166
Conad, 31 Front office, 166, 167
eBays, 44, 126 Middle Office, 5, 152, 166
Expert, 31 Omnichannel, 99, 187, 190
Marcopolo, 31 OTP, 113, 116, 138
Mediamarket, 31 OTT, 30, 69
Pick ‘n Pay, 72
Prenatal, 31 P2P, 4, 53, 83, 92, 106, 109, 127,
Rite Aid, 73 132, 134, 136, 139, 167,
SNCF, 64 180, 181
Starbucks, 29, 64 PayPal, 2, 69, 74, 126, 147, 179, 180
TotalErg, 31 PC, 25, 40, 128, 136, 150, 200
micro-SD, 67 PDA, 124, 172, 196
Microsoft, 15 PDCA, 181
MS Office, 181 PFM, 62
.Net, 15 Porter, Michael 16
Silverlight, 15 POS, 32, 40, 47, 66, 68, 69, 70, 92,
Windows, 11, 20, 36, 128, 137, 181, 183
100, 137 Project Entropia, 186
Mint, 76 Proof of Concept, 161
MNO, 35, 168, 175, 179, 180, 183, PSP, 185
185 public administration, 28, 32
Mobey Forum, 69, 70, 189
Monitise, 164 QQ, 186
Moven, 104 QR, 10, 67, 89, 134, 136, 182, 203
MPP, 63, 66, 67, 68 Quick Response, 134, 182
MRP, 63, 64, 65, 66
multi-channel, 197 Remote Deposit Capture, 196, 165
MyBank, 126 remote payments, 47, 64, 65, 70,
177, 182
Natural Language Processing, 13 RFC, 183
UTL, 132 RFID, 182
Netbiscuits, 26 Rizzi, Matteo, 167
NFC, 3, 26, 29, 30, 47, 63, 66, 67,
68, 69, 128, 137, 141, 142, S2S, 103, 152
165, 169, 173, 174, 175, SaaS, 146, 147, 173
Index 209
schema telecom operators,

American Express, 28, 128, 139 AT&T, 128, 139
Discover, 128, 139 Orange, 67, 140
Mastercard, 28, 63, 139, 176 T-Mobile, 128, 139
Visa, 28, 63, 128, 139, 176, 179, Verizon, 128, 139
180, 181, 186 Zidisha, 140
Secure Domain Manager, 179, 180, Temenos, 141
183 TLS, 121, 185, 192
SEPA, 3, 44, 67 token, 38, 113, 117, 138
SIM, 101, 115, 128, 137, 140, 183 Tower Group, 82, 83, 90, 92,
Simple, 104 190, 191, 197, 201, 203
Six Sigma, 21, 22, 183 TSM, 174, 185
SLA, 145, 161
Smartphonatics, 14, 20, 81, 184, UICC, 183, 185
187 unbanked, 7, 32, 34, 35, 95, 126,
SMEs, 55, 56 131, 201
SMS, 25, 30, 35, 36, 41, 82, 101, UNCITRAL, 107
112, 113, 114, 132, 135, underbanked, 32, 95, 97, 126,
136, 178, 182, 183, 184, 185, 195
185, 196, 199 United Nations, 106, 107
social network, 10, 87, 88, 136, 151, User Interface Guidelines, 45
176, 178
Facebook, 27, 73, 87, 136, 176 VoC, 25, 186
Foursquare, 73, 87, 88
LinkedIn, 178 WAP, 35, 101, 186, 194,
Twitter, 27, 50, 87, 185 201
Solvency, 2, 155 WiMAX Forum, 144
SWOT, 96, 97, 98, 190 WinZip, 181
WIPO, 106
TAM, 33, 34, 200 WTO, 106
TCO, 184
telco, 30, 66 Zopa, 167

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Mobile Banking

Also by Bernardo Nicoletti

L’IMPRESA MONDIALE: Nuove Strategie di Produzione (with Michael J. Baker,

All rights reserved. No reproduction, copy or transmission of this

List of Abbreviations and Acronyms xi

1 Innovation in Financial Services 4

3 Management of Mobile Banking 80

The economics of mobile banking 89

4 Opportunities, Challenges, and Remediation 96

5 Regulatory Framework for Mobile Commerce 105

6 Mobile Security 112

7 Mobile Banking throughout the World 126

8 The Future 142

Network technologies 143

1.1 Some functionalities in mobile banking 13

4.1 SWOT analysis for mobile banking 97

ABI Associazione Bancaria Italiana

ETFs Exchange-Traded Funds

PCI DSS Payment Card Industry Data Security Standard

• improve in a drastic way in terms of financial ratios;

Mobile banking is a service that operates outside the confines of

• Financial services must become more agile and flexible in the

different product. The design and specification changes over time

• A small financial institution in the Netherlands pushed for online

It is time for financial institutions to take the lead in innovation and

• New Product Innovation. Since financial institutions essentially

• Agility: for instance, in inquiries from the customer. Speed is the

Challenges for financial institutions

Today, financial institutions face several challenges. They can be

To overcome these challenges and ensure the future of the organiza-

A correct approach should be based on leaning and digitizing.1

Mobile banking for a new model for

Financial services need to change. The current economic and

welcome since it is finally forcing financial services to change after

• satisfying customers with enhanced functionality

• being effective and compliant

Although these dimensions are interrelated, each of them encom-

Satisfying customers with an enhanced experience

Protecting customers with better security

Effective and compliant financial institutions

evaluate more easily the benefits to the financial institution of the

• where they are;

All this is in addition to the other information the financial institu-

• reduces complexity and development costs;

• gives financial institutions more control over the process:

There are other technologies and business decisions for financial

• how to evaluate new and untried vendors

While financial institutions have a number of key advantages and

Financial institutions in the near future: evolution or

Mobile banking is a great opportunity that allows a multitude of

Figure 1.1 Some functionalities in mobile banking

This means a drastic reduction in the number of branches and their

A study by Aci Worldwide and Aite Group analyzed the mobile

• The current use of mobile payments across the countries ranged

New delivery channels

Mobile banking has great potential, but it should be part of a wider

• front-office applications, such as branches and promoters;

Nontraditional delivery channels open up new scenarios:

• Thanks to technology integration, the majority of the functional

to perform by themselves virtually almost all the banking oper-

In concluding this chapter, it is interesting to analyze the possible

Market segmentation is narrow in scope, while both cost leadership

• The cost leadership requires a basic product with no-frills. The

Uniqueness Low cost