To meet customer expectations, electronic banking services have allowed financial transactions to simplifyand increasedtheir attractiveness to customers. Over the past year, in order to increasecustomer comfort and maintain pro?tability, banks around the world have adoptedinnovative banking technologies and modern e-banking services (internet and mobile).
Bankingover mobile phones is the newest e-banking service with several benefits for bothcustomers and banks. In this context, the paper aims to provide an overview of thelatest electronic financial channel underlining variousaspects of mobile banking as it represents a key distribution channel fora growing number of customers. Nowadays,the very nature of banking is changing as bank consumers require more personalised bankingproducts and services and have become less willing to visit traditional branches for routinetransactions.
In addition, they are demanding betterservice quality and are looking for simplicity in their day-to-daybanking. Thus, traditional banking is more and more threatenedas digital channels grow in popularity. Since customershave become more receptive to new electronic channels, the face-to-face salesand service interactions are declining. Today,as new technologies emerged, customers have more options in when and where theycan to do their banking. Electronic banking, usually referred as e-banking, is thenewest delivery channel for banking services including home banking, PC banking,internet banking, mobile banking. Electronic banking serviceshave been around for quite some time in the form of automatic teller machines andtelephone transactions. In more recent years, modern e-banking services (internetand mobile banking) that allow customers to be connected anywhere, anytime, hasrevolutionized banking services (Drig? & Isac, 2014).
The developmentof mobile banking has endowed the banking industry with new businessmodels able to provide appropriate self-servicebanking alternatives to their customers. Electronic banking is seen asone of the most successful business-to-consumer applications in electroniccommerce (Laukkanen, 2007). First the research focused on the customers’behaviour toward ATMs, phone banking and PC banking. Recent studies howeverhave investigated the development of internet banking and the most recent literature hasshown an interest in investigating the adoption of mobile banking. Mobilebanking, the evolutionary step after online banking, has developed as a wireless service distribution channel that allows bankcustomers to conduct transactions with their banks, obtainfinancial account information and make payments through a mobile device, beingthe newest distribution channel. Mobile banking is based on wireless application protocol technologies since a mobile device requires a WAP browser installed in orderto allow access to information. WAP (Barnes & Corbitt, 2003)isa universal standard for bringing internet-based content and advancedvalue-added services to wireless devices such as phones and personal digitalassistants. Theterm “mobile banking” had been defined in many ways by differentresearchers.
Thus, Barnes & Corbitt (2003) define mobile bankingas “a channel whereby the customer interacts with a bank via a mobile device,such as a mobile phone or personal digital assistant”. According to Pousttchi& Schurig (2004) it is a way of executing ?nancial services through the useof mobile communications technology. Mobilebanking is a subset of electronic banking, the type of execution of financialservices in the course of which – within an electronic procedure – the customeruses mobile communication techniques in conjunction with mobile devices (Pousttchi & Schurig, 2004).
Krugel (2007) describesmobile banking as “an extension of the existing payment infrastructure of abank to mobile phones as a channel for the leveraging of the mobile network andits reach, to deliver banking services to consumers”, being a more costefficient channel for banks and allowing customers to have instant access toinformation related to their bank accounts. Mobile banking, otherwiseknown as m-banking,m-payments, m-transfers and m-finance, refer to a set of applications that enableconsumers to use their mobile devices to access their bank accounts, store valuein an account, transfer funds or even access credit or insurance products (Donner & Tellez, 2008). M-banking can alsobe considered as the convergence of mobile technology and financial services(Chung & Kwon, 2009). Mobile banking is defined by Agwu et al. (2014) as theproviding of banking and all forms of financial services through mobiletelecommunication devices such as the smart phones, androids, etc. This new banking channel, with huge potential, developson the success of the other modern e-bankingservice (internet banking), being a natural evolution ofonline banking based on computer and a better digitalalternative to traditional bank channels, such as physical branches and toward automated tellermachines (Püschel et al., 2010). The simultaneous and growingexpansion of WAP-enabled devices has made the conversion of banking applicationsto mobile devices a subsequent progress in e-banking services (Al-Jabri & Sohail, 2012).
However, despite its many advantages, the use of m-banking is still at an earlystage, while internet banking maintains its leading position within the electronicbanking channels. Regarding thedifference between online bankingand mobile banking, customers consider mobilityas the most valuedfeature of mobilebanking (Yu, 2012). The crisishas put pressure on banks and costs have become the main issue for bank managers.In this context, the development of alternative channels has become a priority.
E-banking servicesover the internet and mobile devices involve lower costs compared to traditionalbranch banking. The growing importanceof mobile is undeniable, but branch and internet banking still remain the most favoured delivery channels. Both in developed and developingcountries, digital channels were generally preferred for mostbanking operations. Besides, according to a 2014 Bain& Company Surveyregarding customer loyalty in retail banking, mobile technologyhas overtaken online banking in several countries (see figure 1), (Drig?& Isac, 2014). Priorto mobile banking, internet banking services had an obvious impact on customersbut lately they have increasingly begun to use smartphones in interacting withtheir banks to the detriment of other channels. Although it is the newestdistribution channel with a short existence, mobile banking evolved andexpanded very rapidly.
The adoption of mobile banking services byusers is much faster than the adoption of internet banking since banks haveinvested heavily in the development of mobile technologies, security and smartphone applications (Drig? & Isac, 2014). Despiteseveral advantages and benefits, such as: ability to offer services anytime andanyplace; high rate of penetration and potential to grow even among the lesseducated; ability to provide mass marketing and serve as alternative to branchbanking; capacity to reduce customer reliance on branch infrastructure oraccess to the internet, the use of mobile banking services is lower thanexpected (seefigure 2) in both developed and developing economies (Agwu, et al., 2014). In comingyears, the use of mobile banking services is expected to increase.
After aperiod of limited functionality, banks have extended their offer, most banks providing at least one mobilebanking offering. According to the Global Mobile BankingReport, published in July 2015 by KPMG, this past growth to 0.8 billion mobile banking users worldwidein 2014 is just the beginning (KPMG, 2015b). The numberof mobile banking users globally is predicted to double in the next 5 yearsor so (exceeding 1.
6 billion mobile banking users), which means over 20% of theworld’s population. Worldwide mobilebanking is expected to be over 119% between 2014 and 2019 (see figure 3). The reporthighlights that mobile banking is one of the most preferred banking channelworldwide, especially within developed countries, being the most accustomedchannel for the majority of banks by volume of transactions, in some developing countries reaching 50-60% (China and India,see figure 4). Actually, the Global Mobile Banking Report 2015 claims that adoptionof mobile technologies for banking has reached higher values in India and Chinathan in the United States and Europe (KPMG, 2015b). According toresearch data, there is a powerful connection between efficient mobile bankingservices and higher percentage of consumer satisfaction and support (see table 1), but thecorrelation with the probability of mobile customers staying with the presentbank is negative, at least in some developed countries, since the first usersof mobile banking services are generally more economically active and more technologicallyclever and, thus, more demanding of their banking services providers (Marous, 2015).
Mobile technology is revolutionizingthe banking industry also in European, allowing banks to offer additionalopportunities and facilities to their customers. Although mobile bankingpenetration is high in certain European countries, this digital alternative isrelatively new in many markets and its usage is still low in most countries acrossEurope. Statistical data (see figure 5)shows that mobile banking penetration in European countries is relatively low withan average modest growth year on year (37% in 2013, 38% in 2014). Thereare some notable differences between specific European economies, Turkishconsumers showing the highest demand for mobile banking across Europe (penetrationrate 56% in 2014).
Mobile banking services are also popular inthe Netherlands, Poland and Spain where usage rates reached in 2014 figures near50% (50%, 48% and 48% respectively). If Turkey is theonly European country where more than half of the population uses mobilebanking services tointeract with their banks, at the opposite sidewe can find economies like Romania, France and Belgiumrecording penetrationrates under 30% (17%, 22% and 27% respectively). Even countries like the Czech Republic,Germany, Italy and the UK record a low number of mobilebanking services consumers, penetration rates donot even reach 40%. Moreover, according to statistics, Europe has arelatively higher average age of mobile banking users (39 years) in comparisonwith Asian and American countries where the average age is 37 years and 35years respectively, with India having the youngest population of mobile bankingusers across the world (30 years).
Due to the convenienceof digital channels, customers use online and mobile technology for their bankingneeds more often. Mobile banking, the newestdelivery channel that provides immediately and interactively bankingservices viamobile devices, is growing fast while theattractiveness of branch banking diminishesfast. Yet, internetand mobile does not completely replace other channels, branch banking being still favoured by customers when it comes to gettingbanking advice. However, there is no doubt that inthe near future electronic banking will undeniably overcome traditional banking as digitalchannels become latelythe dominant means for consumers to interact with their banks.
With theincreasing cell phone usage and evidence from growing user adoption statisticsacross all regions, further development of mobile banking globally is just a matter of time and depends on the ability of banksto convert smart phone users into banking users. While the future of banking is mobile,nevertheless keeping mobile banking users and attracting new ones may not be aneasy task for banks.