This is the last post in a series of four about best practices in mobile banking. You can read the previous parts at the following links:
- External factors (including economic and legal conditions) favorable for mobile banking
- Marketing best practices in mobile banking, and
- Supply chain best practices in mobile banking.
Financial Risk
Although instances of fraud are rare in mobile banking, two preventative steps can be taken to ensure all cash-in/cash-out transactions are free from financial risk:
The first is that the customer’s transaction is settled against the bank account of the store (agent) itself. The second is that there is real-time authorization to ensure that all transactions are properly funded from either the customer’s account or the store’s account, depending on whether they are doing a deposit or a withdrawal.
Ignacio Mas, to the CGAP Blog
Consumer Protection and Technological Risk
Adequate disclosure must be exercised to make customers aware of the risks they face and monetary charges associated with mobile banking.
Text messages are not thoroughly encrypted, which means they can be read by people other than the person using the mobile banking service. Furthermore, if a client’s cell phone is stolen, hackers may be able to recover valuable private information and use it to carry out transactions without the owner’s knowledge. Thirdly, basic mobile handsets are rarely equipped with anti-virus software, and it is only a matter of time before criminals and hackers infiltrate the market with malware.
Banks and mobile network operators (telecom firms) must develop effective redress procedures to manage fraud and warn clients them about these risks, while advising them to:
- Never leave their phone unattended
- Select a complicated PIN code and change it regularly
- Set a password for their phone
Transaction Based Risk
Considering the novelty of the mobile banking service and the low literacy levels of the target market, customers and agents may be confused about the exact process and security measures that need to be taken. As a result, transaction based errors may be common and clients may be unsure of who to approach, since telecom operators and banks only operate in the background, i.e. in bigger towns and cities, away from villages.
The solution is simply to educate clients and agents through below the line marketing (which is one of the best practices of marketing in mobile banking) and training them, where possible.
This concludes the series of posts about best practices in mobile banking, and I’d love to hear your reactions to it.
Further Reading:
Mobile Banking at the CGAP Blog
What Makes a Successful Mobile Money Implementation?
Quite interesting & informative series. The biggest challenge faced by Mobile banking is the evolutionary phase it is going through, often there is abscence of clarity & lack of consensus on regulatory & operational issues which not only creates bottlenecks in processing but also retards the process to set industry benchmarks. Since mobile banking services are heavily dependent upon technology therfore one can see an unending battle between the hackers & proponents of this business line.
Keep it up
Please list those regulatory and operational issues briefly, if possible. Thank you for the comment