The term mobile banking refers to the processing of banking transactions that takes place with the help of mobile devices such as mobile phones or PDAs. It is possible to carry out mobile banking via special applications/widgets (small installed programs) or to access banking applications on the Internet directly via a mobile browser.
Mobile banking differs from mobile payment, in which payment transactions can be processed directly at the point of sale via mobile devices. This could change with the introduction of instant payment. In order to make a payment, a QR code displayed on the POS terminal with all the information about the transfer to be made can be scanned with a mobile banking app. However, there are already providers who have integrated the function of a mobile payment app directly into their own mobile banking app. In conjunction with an upstream electronic request for payment, a payment template (possibly including an electronic invoice document) can also be transmitted beforehand, which serves as the basis for the subsequent real-time transfer. Mobile banking consists of three applications:
- Mobile Accounting
- Mobile Brokerage
- Mobile Financial Information Services
Since information services provide the necessary basis for decision-making for transactions, account or custody account management services can only be offered if a certain minimum number of information services is offered. Information services, on the other hand, can also be offered as an independent module, i.e. without enabling transaction services.
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From a sales point of view, mobile banking allows banks to have an additional distribution channel. This is the reason why mobile banking plays an important role in the multi-channel strategy of many banks.
Technical Requirements
In October 2010, ISO Technical Committee 68 “Financial Services” approved a New Work Item Proposal for the development of the ISO 12812 “Mobile Financial Services” series of standards. Within the framework of this series of standards, specifications for mobile banking are to be defined in a normative manner. When implementing applications for mobile banking, certain requirements must be met.
Compatibility
There are a large number of smartphones from different providers and when creating an app, it has to be adapted for all the different operating systems. Some devices have Java ME, while others support the SIM Application Toolkit. Still others only have WAP or SMS.
In 2009, the Mobile Marketing Association (MMA) published an overview of financial institutions’ mobile banking and the pros and cons associated with this development.
Security
Transactions carried out via mobile devices pose a huge security risk, as they have to pass through a number of potentially vulnerable interfaces and the data is sent and received via insecure wireless, and therefore interceptable, connections. In order to create a secure environment for financial transactions, several requirements must be met:
- It is necessary to ensure that the device supports the security measures used in the app
- At least a username and password should be required to make it more difficult to access the app in the event of theft of the device
- The endpoint must authenticate with the service provider before a transaction is made to ensure that no unauthorized person makes the transaction
- All data must be sent and received in encrypted form
- All data stored on the device must be encrypted.
- One-time passwords are often used as part of two-factor authentication to prevent theft by cybercriminals.
- In this case, the passwords are sent to the user for each transaction, who must transfer it to the app for confirmation. The password expires after use for the specific transaction or after a certain period of time.
