Munich Personal RePEc Archive Assessment of Today’s Mobile Banking Applications from the View of Customer Requirements Pousttchi, Key and Schurig, Martin University of Augsburg 2004 Online at https://mpra.ub.uni-muenchen.de/2913/ MPRA Paper No. 2913, posted 25 Apr 2007 UTC Pousttchi, K.; Schurig, M.: Assessment of Today’s Mobile Banking Applications from the View of Customer Requirements. Copyright 2004 IEEE. Published in the Proceedings of the Hawai'i International Conference on System Sciences, January 5 – 8, 2004, Big Island, Hawaii. (Preprint) Assessment of Today’s Mobile Banking Applications from the View of Customer Requirements Key Pousttchi Martin Schurig University of Augsburg, Chair of Business Tecways AG Informatics and Systems Engineering (WI2) e-mail: [email protected] e-mail: [email protected] Abstract restraint affects notebooks and sub notebooks, which are easily transportable, but whose use is typically stationary. The typical connection for these mobile devices up to Mobile banking is a subset of electronic banking which now is realized through mobile communication. Most underlies not only the determinants of the banking busi- relevant is GSM/GPRS, also typical are comparable 2G ness but also the special conditions of mobile commerce. standards (e.g. IS-136, IS-95) and soon will be evolving This paper analyzes customer needs and expectations 3G-technologies (EDGE, CDMA-2000, UMTS). We do from the mobile applications’ view and from the banking not focus on WLAN scenarios. The use of a banking view in order to derive a defined set of requirements. application on a laptop computer with a WLAN connec- Based on these results, existing mobile banking applica- tion underlies the rules of electronic banking, not the tions are assessed. Their major shortcomings are ex- special rules of mobile banking. plained, opportunities for their improvement are shown As its superset electronic banking, mobile banking (in and the impact of upcoming new technology is discussed. the broader sense) is divided into two main areas: The outcome of the paper is a defined set of customer mobile brokerage which covers securities transactions requirements to mobile banking applications, the identifi- - via mobile devices, especially stock trading, and cation and assessment of four standard types of current mobile banking (in the narrower sense) which covers mobile banking applications and an explanation of major - the account management via mobile devices. failure reasons along with opportunities for their im- For our purposes we use the term mobile banking – if not provement. otherwise indicated – in the second, the narrower sense. However, methodology and results of this contribution 1 Introduction are, mutatis mutandis, transferable to mobile brokerage. In this paper we analyze customer requirements to Electronic banking – the execution of financial services mobile banking. After examining general conditions of via the Internet – changed the business of retail banks mobile banking in section 2, we identify relevant mobile significantly, at the same time reducing costs and increas- banking use cases as well as special characteristics of the ing convenience for the customer. The ever-increasing mobile use of an application in order to derive a set of spread of Internet-enabled phones and personal digital requirements to mobile banking applications in section 3. assistants (PDA) made the transformation of banking In section 4 we work up the state-of-the-art of mobile applications to mobile devices a logical development of banking and identify four standard types of applications. electronic banking. This created a new subset of elec- In section 5, these are assessed according to the set of tronic banking, mobile banking. According to the sweep- requirements developed before. Based on these results ing enthusiasm that characterized much of the news re- major shortcomings of today’s mobile banking applica- porting in the years 1999 and 2000 mobile banking tions are identified and opportunities for their improve- should by now have been firmly established as the most ment are shown in section 6. The possible impact of up- important distribution and communication channel for coming new technology is discussed in section 7. Finally, retail banking. Reality today is a different matter though. section 8 provides conclusions and a brief outlook to the Mobile banking as an established channel still seems to future of mobile banking. be a distant prospect. The outcome of the paper is a defined set of require- We define mobile banking (in the broader sense) as ments to mobile banking applications, the identification that type of execution of financial services in the course and assessment of four standard types of current mobile of which - within an electronic procedure - the customer banking applications and an explanation of major failure uses mobile communication techniques in conjunction reasons along with opportunities for their improvement. with mobile devices. As mobile devices we refer only to those whose use is typically mobile. Most notably, this 2 General conditions of mobile banking also high (e.g. in a survey of 16,500 German Internet users, more than half were favorable to do this [2]). Electronic banking is one of the most successful busi- Despite all of this, more than four years after the start ness-to-consumer applications in electronic commerce of the first mobile banking applications customers simply (EC). Fulfilling customers’ needs through the employ- do not use them and utilization figures stay very far be- ment of EC’s special property of reduction of temporal hind all expectations (e.g. [1]). Mobile banking as an and certain spatial limitations (using the extension of the established channel still seems to be a distant prospect. theory of informational added values to EC, we refer to The reasons for this great disappointment are to be this as an electronic added value [14]), electronic banking analyzed. Doing so in the following sections, we do not significantly changed the way in which many customers intend to start with current applications (which could accessed their bank account. Figure 1 shows the rele- mean biased) but from scratch, with an analysis of the vance of electronic banking to the US market as an ex- customer requirements to such applications. ample (as from Forrester [11]). In a number of European countries 30-40% of the Internet users use electronic 3 Customer requirements for mobile bank- banking [11]. ing applications 2001 14,9 3.1 General considerations 2002 19,8 2003 24,7 A mobile banking application is, first of all, a mobile 2004 29,5 application. To conceptualize a mobile application, addi- 2005 33,8 tional informational added values have to be targeted, 2006 37,5 using mobile added values [14]. In other words, it is far 2007 40,5 from sufficiency to just porting an existing Internet appli- cation on a mobile device. Mobile applications have to be Figure 1. US households using electronic banking in mio. specifically made-to-measure on the one hand side to the needs and expectations of the mobile user, and on the Banks greatly support this not only because they could other hand side to the specific restrictions of mobile meet their customers’ need for convenience but also be- communication techniques and mobile devices. cause of the enormous economic impacts in replacing a In order to derive a set of requirements to mobile high-cost channel (bank clerks) through a low-cost chan- banking applications we pursue two steps: Firstly we nel (a central web server) for simple transactions, with identify general characteristics of the mobile use which the additional benefit of eliminating the necessity for a are relevant. Secondly we closely watch the user and his media conversion. context when wanting to use mobile banking. This coincidences with the extremely high penetration of mobile devices, especially phones. In the US, the pene- 3.2 Characteristics of the mobile use tration in 2002 reached 51 mobile phones per 100 inhabi- tants, in Japan 59 and in Western Europe even 78 (as The use of mobile applications underlies several specific from Bitcom [11]). restrictions. We consider five characteristics of the mo- Since users considered their mobile phone as a per- bile use to be particularly relevant as they greatly influ- sonal trusted device making it to an integral part of their ence the design of mobile banking applications and the lives and more and more of these devices became Inter- suitability of certain technical solutions. net-enabled, the regular conclusion was the transforma- A mobile application is used via a mobile device. For tion of banking applications to mobile devices as the next these devices (currently either a mobile phone or a PDA), step of electronic banking development. special limitations are valid [8]. For the mobile banking For mobile banking, the advantages even go much fur- context, above all, these are the limited input and display ther than for electronic banking: The high penetration of capabilities. mobile phones reaches all social levels, mobile applica- The connection is provided by a mobile network op- tions disband the limitations of electronic banking as they erator (MNO). This is especially important if applications allow for a use anytime-anywhere and the subjective and need to access certain parts of the infrastructure which are objective security of the device is higher than that of a under control of the MNO (e.g. the SIM card). In the case personal computer [8]. The profit and loss account was of negotiations, these have to be pursued with all MNO also favorable: Taking the example of a German bank, a on the designated market. bank transaction via a clerk generates overall costs of 2 The use of mobile data transmission is expensive. In US-$ while a mobile banking transaction gets along with the case of circuit-switched data transmission (e.g.