Title: Distance Banking Services (DBS)
1- Distance Banking Services (DBS)
- Maria Gorchakova (BSUEL, Russia)
- Introduction of Distance Banking Services
- 1. Definition of Distance Banking Services
- 2. Forms of Distance Banking Services
- Internet Banking
- 1. Main principles of Internet Banking
- 2. Internet Banking for legal entities
- 3. Internet Banking for individuals
- Telephone Banking
- Mobile Banking
- 1. A mobile banking conceptual models
- 2. Mobile banking business models
- 3. Mobile Banking Services
- 4. SMS-Banking
2- There are many remote distribution channels banks
have been deploying for more than 20 years, to
complement branch and call centers to interact
with their customers, as illustrated in Fig. 1.
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4E-banking is defined as the automated delivery of
new and traditionalbanking products and services
directly to customers through electronic,
interactivecommunication channels. E-banking
includes the systems that enable
financialinstitution customers, individuals or
businesses, to access accounts, transact
business, orobtain information on financial
products and services through a public or
privatenetwork, including the Internet.
Customers access e-banking services using an
intelligentelectronic device, such as a personal
computer (PC), personal digital assistant
(PDA),automated teller machine (ATM), kiosk, or
Touch Tone telephone.
5The functions provided by banks on the Internet
have evolved from simple consultation of account
to a full range of banking services. In the most
developed applications, one can access on the
Internet nearly all services accessible at the
branch or by phone. In addition to offering all
branch-based services, technology allows
banks to offer new added value services only
available online such as personalised financial
information menus, e-mail alerts, electronic
commerce, real-time brokerage and third party
services (management of electricity bills, tax
payment or portals) which increase the benefits
and interest of the service. Fig. 2 below shows
a possible classification of Internet banking
services.
6 7- Telephone banking is a service provided by a
financial institution which allows its customers
to perform transactions over the telephone. - Most telephone banking use an automated phone
answering system with phone keypad response or
voice recognition capability. To guarantee
security, the customer must first authenticate
through a numeric or verbal password or through
security questions asked by a live representative
(see below). With the obvious exception of cash
withdrawals and deposits, it offers virtually all
the features of an automated teller machine
account balance information and list of latest
transactions, electronic bill payments, funds
transfers between a customer's accounts, etc. - Usually, there is also the possibility to speak
to a live representative located in a call centre
or a branch, although this feature is not
guaranteed to be offered 24/7. In addition to the
self-service transactions listed earlier,
telephone banking representatives are usually
trained to do what was traditionally available
only at the branch loan applications, investment
purchases and redemptions, chequebook orders,
debit card replacements, change of address, etc.
8The main components of the solution are
9- Mobile Banking (also known as M-Banking,
mbanking, etc.) is a term used for performing
balance checks, account transactions, payments
etc. via a mobile device such as a mobile phone.
Mobile banking today (2008) is most often
performed via SMS or the Mobile Internet but can
also use special programs downloaded to the
mobile device. - A mobile banking conceptual model. In one
academic model, mobile banking can be said to
consist of three inter-related concepts - Mobile Accounting
- Mobile Brokerage
- Mobile Financial Information Services
- Most services in the categories designated
Accounting and Brokerage are transaction-based.
The non-transaction-based services of an
informational nature are however essential for
conducting transactions - for instance, balance
enquiries might be needed before committing a
money remittance. The accounting and brokerage
services are therefore offered invariably in
combination with information services.
Information services, on the other hand, may be
offered as an independent module.
10- Trends in mobile banking
- The advant of the Internet has revolutionized the
way the financial services industry conducts
business, empowering organizations with new
business models and new ways to offer 24x7
accessibility to their customers. - The ability to offer financial transactions
online has also created new players in the
financial services industry, such as online
banks, online brokers and wealth managers who
offer personalized services, although such
players still account for a tiny percentage of
the industry. - Over the last few years, the mobile and wireless
market has been one of the fastest growing
markets in the world and it is still growing at a
rapid pace. According to the GSM Association and
Ovum, the number of mobile subscribers exceeded 2
billion in September 2005, and now exceeds 2.5
billion (of which more than 2 billion are GSM). - According to a study by financial consultancy
Celent, 35 of online banking households will be
using mobile banking by 2010, up from less than
1 today. Upwards of 70 of bank center call
volume is projected to come from mobile phones.
Mobile banking will eventually allow users to
make payments at the physical point of sale.
"Mobile contactless payments will make up 10 of
the contactless market by 2010.
11- Mobile banking business models
- A wide spectrum of Mobile / branchless banking
models is evolving. These models differ primarily
on the question that who will establish the
relationship (account opening, deposit taking,
lending etc.) to the end customer, the Bank or
the Non-Bank / Telecommunication Company (Telco).
Another difference lies in the nature of agency
agreement between bank and the Non-Bank. Models
of branchless banking can be classified into
three broad categories - Bank Focused, Bank-Led
and Nonbank-Led.
12- Bank-focused model
- The bank-focused model emerges when a traditional
bank uses non-traditional low-cost delivery
channels to provide banking services to its
existing customers. Examples range from use of
automatic teller machines (ATMs) to internet
banking or mobile phone banking to provide
certain limited banking services to banks
customers. This model is additive in nature and
may be seen as a modest extension of conventional
branch-based banking.
13- Bank-led model
- The bank-led model offers a distinct alternative
to conventional branch-based banking in that
customer conducts financial transactions at a
whole range of retail agents (or through mobile
phone) instead of at bank branches or through
bank employees. This model promises the potential
to substantially increase the financial services
outreach by using a different delivery channel
(retailers/ mobile phones), a different trade
partner (telco / chain store) having experience
and target market distinct from traditional
banks, and may be significantly cheaper than the
bank-based alternatives. The bank-led model may
be implemented by either using correspondent
arrangements or by creating a JV between Bank and
Telco/non-bank. In this model customer account
relationship rests with the bank
14- SMS banking is a technology-enabled service
offering from banks to its customers, permitting
them to operate selected banking services over
their mobile phones using SMS messaging. - SMS banking services are operated using both push
and pull messages. Push messages are those that
the bank chooses to send out to a customer's
mobile phone, without the customer initiating a
request for the information. Typically push
messages could be either Mobile marketing
messages or messages alerting an event which
happens in the customer's bank account, such as a
large withdrawal of funds from the ATM or a large
payment using the customer's credit card, etc.
15- Another type of push message is One-time password
(OTPs). OTPs are the latest tool used by
financial and banking service providers in the
fight against cyber fraud. Instead of relying on
traditional memorized passwords, OTPs are
requested by consumers each time they want to
perform transactions using the online or mobile
banking interface. When the request is received
the password is sent to the consumers phone via
SMS. The password is expired once it has been
used or once its scheduled life-cycle has
expired. - Pull messages are those that are initiated by the
customer, using a mobile phone, for obtaining
information or performing a transaction in the
bank account. Examples of pull messages for
information include an account balance enquiry,
or requests for current information like currency
exchange rates and deposit interest rates, as
published and updated by the bank.