Merits and demerits of mobile banking in developing and/or developed countries
Introduction
Mobile phones are among the most widely used and may have the quickest rate of growth in emerging nations. Numerous millions of phone users have incorporated voice conversations and text messages into their daily lives, which are characterized by the usage of prepaid cards and affordable mobile phones (Donner and Tellez 2008). Many of these mobile phone users don't have access to formal financial services, such as credit or savings, and they mostly live in cash economies. According to studies, there are more people with mobile phones than bank accounts in emerging countries (Porteous 2006, EFInA 2012, Robert 2010, Nwangi and Njuguna 2009). Geographical distance, the bureaucratic structure of banking services, and the inability of the poor to repay their debts are some of the causes that have been linked to this tendency.
In poor nations, mobile phones prove to be a facilitator of accessible and affordable banking services. Mobile phone use is thought to significantly boost economic growth, and this effect may be twice as great in poor nations than in rich ones (Waverman et al. 2005). Small enterprises, particularly in low-income countries, now have options to access financial services thanks to the proliferation of mobile money systems and the adoption of mobile telephone (UNCTAD 2011). Although there are many prospects for growth, perhaps only those who are familiar with the dynamics of mobile payment systems and their particular difficulties will be able to fully realize their huge potential (Seymour Richard 2010). Several actions have been done to give financial support in order to achieve these potentials.
The development of mobile banking in underdeveloped nations may have wider ramifications than simply connecting unbanked people to financial networks. Its practicality might encourage entrepreneurship in these nations (Vatten 2011). Banks and other mobile money providers have been urged to significantly expand their investments in mobile money technology in numerous developing nations in order to increase customer base (ThisDAY 2014). Corporate entrepreneurs making sizeable upfront investments and then patiently waiting for the necessary scale to start seeing a return on their efforts may be crucial for the development of mobile money. Successful mobile-money providers in the past, such as Safaricom in Kenya, have invested more money than anticipated to make mobile money function.
Benefits of Mobile Banking
With mobile banking, you can move money from one bank account to another using just your smartphone and the internet, anywhere in the world.
For many Mobile users in rural locations, it provides an accessible, handy option that is available around-the-clock. Online Internet Banking is claimed to be less risky and more secure than mobile banking.
Banking users can transfer money, pay bills, check account balances, research recent transactions, block ATM cards, and more using their mobile devices. Mobile banking is economical, and banks charge customers less for this service.
Features of mobile banking
The ease of having banking services nearby is one of its key advantages. It's not necessary to visit a bank or ATM and wait for the bank to open in order to check your account balance, make a transfer, pay bills, or even view your statement. Your mobile device can be used for everything.
Although money transfer activities may halt when banks are open, you may always check your account balance or obtain an account statement. If you utilize mobile banking services, your bank account and personal information are totally secure.
You will receive a set of login credentials from the bank, which you may use to access your account and conduct transactions. Your account is always secure since only you know your username and password, which is how this connection information is sent to you securely.
Most banks let you activate two-step verification, which requires you to enter the one-time password (OTP) provided to your registered cell phone number before you can conduct a bank transaction.
Negative aspects of mobile banking
Not all mobile phones support mobile banking. The Mobile Banking feature, which is accessible on high-end smartphones, occasionally requires you to install apps on your phone. The use of Mobile Banking is restricted if the customer does not own a smartphone. Only high-end smartphones are capable of performing a transaction like a fund transfer. The bank may impose additional fees as a result of frequent usage of the mobile banking service. Users of mobile banking run the danger of receiving phony SMS messages and scams. Your mobile banking PIN and other critical information are frequently accessible to fraudsters when a mobile customer device is lost.
Risks of using mobile banking
In addition to this, there are the standard risks of mobile banking, such as hacking. However, just as you would apply the same idea to the desktop, one needs to be cautious and not disclose the password. The majority of financial scams are thought to be committed by known family. Therefore, use caution when sharing your mobile banking password. In fact, we fervently advise that you secure the screen of your phone so that no one may unlock it.
Improvements to mobile banking security
Make sure you don't click on an unfamiliar link in an email. You increase your susceptibility to mobile banking scams by doing this. Additionally, avoid using a wifi hotspot to access your mobile banking. This carries a high risk of harm. You should be fine if you have your own data card.
Another mobile banking safety advice you should follow is to avoid using simple passwords. That carries a lot of risk and the potential for great danger.
Somalia and mobile bank
In Somalia 73% of the population above the age of 16 use mobile money services, broken down as 83% in urban areas, 72% in rural areas and 55% in rural areas. The differences across zones are more significant in rural areas.
The penetration rate of mobile money in each zone is dominated by one mobile money service (Hormuud’s EVC Plus in South Central, Golis’ Sahal in Puntland and Telesom’s Zaad in Somaliland).
By comparison, overall penetration rates of banking services remain very low, at 15.5% for the entire population.
Overall, Somalis praise Mobile Network Operators for providing much needed services in the entire country. However, some do not trust them as the system remains unregulated. Mobile money is deemed fast and convenient by Somalis, with a 92% satisfaction rate.
However Somalis think that mobile money can be prone to technical issues and mistakes. Users also deplore some problems with e-float management/cash out and the lack of interconnectivity between the different mobile money services.
With five main Mobile Network Operators (MNOs) operating throughout the nation, some of which between the different zones and federal states, Somalia has a robust ICT sector and telecommunications infrastructure. Mobile money services in Somalia have grown in popularity and availability as a result of the proliferation of mobile phones. The 2014 Global Financial Inclusion Survey report confirms that Somalia is one of the most active mobile money markets2. 2.Partnerships between Mobile Network Operators, banks, and remittance companies now allow mobile money account-to-bank transfers and the transfer of international remittances directly to the mobile money accounts.
3.In Somalia, which has a robust formal banking infrastructure, switching to digital payments can increase the efficiency of making payments by speeding up transactions and by reducing transaction costs.
4.Leveraging the full potential of Somalia’s mobile money industry could a) increase the number of customers and b) spur greater use of accounts. This would offer impetus for providers to expand upon the services they offer and for the wider financial services to capitalize through offering associated services. For instance, as the country receives an estimated remittance inflow of over $1.3 billion each year3, there is space for the link between remittances and mobile money in Somalia to be further developed. In addition, the government and the private sector could play a pivotal role by shifting the payment of wages and government transfers from cash into mobile money accounts.
(1) Hormuud (South Central), Golis (Puntland), Telesom (Somaliland), Somtel (South Central, Puntland and Somaliland), Nationlink (South Central, Puntland.
Conclusion
1.Mobile Banking means the availability of banking 2.services on mobile devices.
3.Aprominent mobile banking advantage is that it is akin to carrying a bank in your pocket.
4.Mobile Banking reduces the need to visit banks for minuscule banking activities.
5.You can access mobile banking services from any place, at any time.
6.You cannot access mobile banking services without internet-enabled devices.
Banking on mobile devices is referred to as mobile banking. The majority of banks today provide mobile banking services, allowing you to carry out a number of simple procedures that typically require standing in line at the bank. For instance, mobile banking allows you to transfer money, check account balances, get account statements, and more. But just like everything else in life, mobile banking has its share of drawbacks. Here is a comparison of the benefits and drawbacks of mobile banking.