This research paper focuses on the continuous innovation category. Its main domain is the mobile phone banking which is an already existing venture thus this type of innovation is referred to as the extension of an existing line. E banking is also referred to as internet banking; it is where one gets connected to his/her banks website, via an internet browser to perform any virtual banking function. In such a case, the bank is said to a centralized database that is usually web enabled. All those online services that the bank has permitted are displayed in the menu. The traditional bank models are gradually giving way alternative delivery channels with ATM network. The bank branches are first interconnected through terrestrial or satellite links, leaving them with no physical identity for any branch; it thus becomes a borderless entity allowing anytime anyhow anywhere banking. This type of network which connects these various locations and connects them to the central branch is called the intranet, and an example of this is SWIFT. These networks are on applicable for organizations for which they have been set up.
According to the report issued in 2006 by the Internet and Mobile Association of India, E banking has quite a number of advantages, the greatest one being its convenience. This is so because it is not bound by operational timings and it’s not limited by geographical barriers and services and be afforded at a miniscule cost. One is able to check his/her balance at any time and as often as he wants, this is not comparable to the traditional system where one had to wait for quarterly bank statements from the bank. Online banking is also very risky when it comes to security, the clients have to be very careful not to share personal information like passwords or PIN numbers with anyone and that’s inclusive of the bank staff. They also have to ensure that they log off successfully after every session.
Innovation concept (product, service, process)
Innovations and alignment of business processes can help a business achieve higher levels of efficiency and productivity. Innovations are usually revolutionary. The good innovation strategy should allow for future modifications in case of technological advancements and should be efficient meaning, cost and time saving.
Mobile banking is very essential to today’s businesses and this is underlined by the fact that most companies have integrated mobile banking one way or another into their systems. The number of customers who have embraced mobile banking has kept on soaring since its inception. The number is expected to double in the next four years. In the UK the number of persons using the mobile banking technology rose from 9.7% in the year 2010 to 20% in 2011. The numbers are ever increasing in counties such as China, Brazil and Kenya where their growth has witnessed a more than 100% increase. In America currently there are 38 million users who use the smartphones to carry out their financial affairs and this is attributed to the fact that banking is made more easier when they travel overseas and when they want to access their account balances.
According to a research by TNS (news alert) customers are making purchases through their smartphones and current trends is that more and more people are turning to their BlackBerrys and Androids to access their financial services. In the developing countries, where many people do not have access to banks, mobile banking has provided financial services to millions of people. This helps them evade poor banking resources and infrastructures and also avoid banking restrictions for example high interest rates. Mobile banking is also essential in that it can be used when online and offline at the different point of sale. This increases security of finances as there is less handling of cash.
The adoption of any innovation depends on its simplicity, meaning the more complex it is the greater the possibility of its rejection. One should therefore ensure that it’s easy to understand and comprehend the procedure. The innovation should also be user friendly, in terms of its name, navigation tools available in the website is a good determinant for this, Cooper.
Company, product or service
This type of innovation focuses mainly on the financial institutions for example banks. An example is the allied bank whose mission is to be among the pillars if the banking industry, a strong and resilient institution that’s committed to lasting partnerships and provision of superior services to clients and the well-being of employees ; offer fair returns on equity to shareholders; boost national growth and development as a financial catalyst. Their mission as a company is to pursue strength in their balance sheet and profitability in their performance. Commit without reservation and to apply the highest standards probity, prudence and professionalism in their functions. And their vision is to continually create value to be the preferential bank globally. Their strategic objectives to their clients are to always seek and preserve their trust and confidence; offer a wide range of products that will meet the customer's life aspirations. And render excellent service to customers, treating them not only as customers but as people. These companies deal with the sale of services to clients. These services include the safe storage of client’s finances and provision of credit services.
E Banking has played a great role in promoting the technical transformation in the banking industry. It has led to increased innovation, competition and investment in high tech communications and Information Technology equipment and this has made the traditional banking obsolete. The worldwide technological revolution has impacted positively on the banking practices and thus the consumers are spoilt for choice since there are different electronic payment services available. The banking sector has become highly automated thus making them more efficient and granting the customers ultimate satisfaction. This advancement in E Banking resulted in the advent of both the e commerce and marketing on the internet. Goods can be purchased on the web using a credit card. This is also known as electronic cash. Evidently, e banking has opened up a new financial world in which money and opportunities have no boundaries. This is because savers are able to transfer their money globally and at their convenience. The global banking system has been transformed into a vast electronic web that knows no borders, Murthy.
In simple terms, we can define electronic banking as the use of plastic cards that are magnetically encoded at terminals outside a regular bank location for cashing checks money transfer and deposit functions. E banking has come with the introduction of card payment and is slowly leading to a cashless society where people prefer cards to tangible cash.
This innovation has its competitors. Their biggest competition is the ATMs and the online banking services. Some people prefer online banking to mobile banking. However this is not a big threat since this innovation targets the young clientele since there are more “tech-savvy”. Most clients will opt to us the mobile banking service for the basic functions such as account balance query and bill payment, this is mainly out of security concern but this will decline with increase in stability of the model.
The emergence and increased use of tablets and smartphones will play a major role in enhancing the functionality of the mobile banking. These devices will enable clients to connect more comprehensibly than before hence reducing costs and achieving better revenue streams thus enabling banks to set higher goals and targets.
Some improvements could be made to make mobile banking more efficient so as to ensure that it keeps up with the emerging technological trends. Some of this improvements include communication enrichment this could involve the use of video calls thus enhancing interactions between agents, clients and banks. Another one is client education on how to access and use mobile banking here they can be taught on its merits and demerits. There is also the personalization of banking services.
Features, functions and benefits
This service would offer even more convenience to e banking by using the wireless application protocol or the global packet radio services (GPRS) or the 3G phones. These applications will ensure that the mobile banking services are fast, efficient and available. The services provided by the mobile banking would include, banking transactions for example, balance enquiry, transaction history, statement request, fund transfer, check book request, and stop payment request, bill payments, increase in credit card limits among others. This would mean that any person who has an internet enabled phone would be able to check his bank balance and request for a bank statement or transfer his funds via phone. This would also enable him to trade his shares and pay his bills using cash in his bank account without any physical movement to the bank or any cash withdrawals. This would ease the clients trips to the back thus would be more convenient and more time saving since he/she carries out all transactions at his own comfort. This innovation would be quickly adopted since its simple user friendly and most people are familiar with internet applications on phones and they know how to access them, this would also be facilitated by the fact that most people own mobile phones and they are readily available and cheaper in comparison to computers or laptops. For these reasons many people would opt for mobile banking.
It’s cheaper to access the internet via phone as compared to going to cyber cafes or using internet sticks and it’s also more efficient to check ones balance via phone rather than going to queue in the banks or at the ATMs. It’s therefore very convenient for busy people. Another factor that would boost this innovation is the present technological advancement; there have been increased growth in the Information Technology sector thus the productions of high tech mobile that work more or less like computers. And there is also the increase in the rate of computer literacy more people know how to use computer related gadgets.
This service can also be performed via SMS and its success has been boosted by the recent innovation of the iPhone which uses the Google android operating system and this has contributed to the increased use of special client programs called apps, downloaded to the mobile device.
A good definition of mobile banking is the provision of banking and financial services with the aid of telecommunication devices. It’s said to have a three inter-related concepts which are, mobile accounting, mobile brokerage and mobile financial information services. The invention of the internet has played a great role in the improving the way banking business is conducted and this has resulted in the creation of new institutions. Over the recent years the wireless market has become one of the fastest growing markets globally and is still growing.
According to reports by the GSM Association and the Ovum, there has been an increase in the number of mobile subscribers and by the year 2009 it exceeded 2.5 billion of which 2b billion are GSM thus can access the internet. Mobile banking in the near future will allow its users to make payments at the physical pointof sale. According to research, the mobile contactless payments will make up to 10%. Most mobile phone users have just started to utilize their phones data capabilities. This innovation could be most successful in countries like India, China, Indonesia, Bangladesh, Indonesia and Philippines; these countries have well developed mobile infrastructure as compared to their fixed line structure and also in the European countries where at least 80% of the citizens own and use a mobile phone. To them, mobile banking would be even more appealing. These innovation would reduce a bank`s operational costs since they would have the advantage of hiring fewer employees and closing off some of its branches. It`s efficiency would result from the technological advancements and increased reliance on the internet which is quite fast and thus more reliable than humans. There is also the decreased rate of fraud and theft by employees since most transactions are done online meaning there less physical contact with money.
There is going to be an increase in the consumer base since this method targets the low income populations in the rural areas. This model of business depends highly on banking agents in the form of postal or retail outlets that will be responsible for processing financial transactions on behalf of the bank especially in the rural areas. The banking agents are a key asset in mobile banking model because the customer care, service quality and cash management will depended on the careful expertise. This model strives to provide the limited banking services to bank`s clients. It’s a distinct alternative to the normal branch based banking since the client conducts financial transactions through a mobile phone instead of through bank branches or employees. This model aims at increasing the potential outreach of bank services by using different delivery channels
Sustainable competitive advantage
Mobile banking will offer the following services: Account Information, Mini-statements and checking of account history, Access to loan statements, Access to card statements, Mutual funds / equity statements, Alerts on account activity or passing of set thresholds, Monitoring of term deposits, Insurance policy management, Pension plan management, Status on check, stop payment on check, Ordering check book, Balance checking in the account, Recent transactions, Due date of payment (functionality for stop, change and deleting of payments), PIN provision, Change of PIN and reminder over the Internet, Blocking of (lost, stolen) cards, Micro-payment handling ,Domestic and international fund transfer, Mobile phone recharging, Commercial payment processing, Bill payment processing, Withdrawal at banking agent, Deposit at banking agent, Payments, Deposits, Withdrawals, and Transfers. Others functions could include requests for credit, mortgage approval and insurance policy coverage, requests for check books and tracking ATM location and exchange of data messages and emails.
Innovation risks, challenges and solutions
This innovation is also likely to have challenges which are listed and explained below. Although mobile technology one of the most important technological innovations in the modern business environment, its adoption has not matched its importance. This is depicted by a research by Javelin which concluded that even though there is a 60% growth in smartphone users there has been no significant change in the number of people who do mobile banking including those who do simple tasks such as balance enquiry. This is because most smartphone users are fearful when using their mobile phones to conduct business. This fear is brought by the fact most people fear sharing their personal information on their phones. Many financial institutions which have adopted this technology have conducted public awareness campaigns in order to help customer’s secure important information which could be susceptible to hacking. Another challenge is the issue of handset operability in that there are several mobile handset devices from different companies and this leads to a big challenge for banks to offer mobile banking devices to specific handsets. The interoperability is further challenged by the fact there is no common technology standards for mobile banking and thus there is difficulty in the money movements between mobile banking service providers. The mobile security is also another sensitive issue in the mobile banking in that the customer should receive maximum protection through authentication, data encryption, and one time passwords.
Cyber frauds is one of the most challenging bit in the online banking and mobile banking services in that hackers have been able to access customer accounts and make various alterations which may amount to fraud. Scalability and reliability is also another challenge facing mobile banking. With soaring growth in the customer base, there is huge demand for mobile banking and this has led banks to scale up their infrastructure to accommodate this.