New Money, Research Paper Example

Advances in wireless technology and the influential penetration of mobile phones have created a ubiquitous availability of mobile phones. The advancement have made the move to mobile banking a more convenient option.More remarkably, “A glimpse of the short history of information technology suggests that the digital revolution during the last five decades were marked by extraordinary innovations or applications that significantly accelerate or altered the course or anticipated progress.” (Hu, Li, Hu 2) The banking industry has begun to explore the uncharted territories for not only the banking industry but also the mobile carriers, and the consumers. Mobile telecommunications has enabled the transformation of information and money a better alternative. The days of going to the bank to make deposits or withdrawals can now be done from through the easiness of the mobile phone. The technological advancements in mobile technology have transformed the way in which people and banks do business and banking activities. The purpose of the paper is to explore the new money phenomenon in the banking industry’s move to mobile banking. It has been going on for the past few years, but now most if not all banks have moved to the fast growing market.

The wireless and mobile market has grew in the past years, and it is still growing at a quick pace. The advancements in mobile telecommunications have opened up channels where applications can be developed from the matter of connecting to their respective banks. In today’s society with the infiltration of technology in people’s everyday lives, it has created internet and technology savvy individuals that use devices in their daily activities. Users today want the convenience of checking their account information on the fly and having the ability to perform transactions in a rapid and efficient manner. The internet has become more ubiquitous, and the invention of tablets and smart phones from the “dumb” phones has increased in the past few years. In an active and lucrative response to the people’s needs for information at an instance, financial institutions have moved towards increasing investment into developing mobile technology for their mobile banking efforts. This has created a challenge for traditional banks, but also an opportunity for up and coming banks that look to become a market leader in customer satisfaction and members. Financial institutions are turning to mobile banking applications in order to attract the younger consumers consumed with technology as a matter of convenience. According to Wall Street Journal in 2009, “Banks are investing more in mobile services despite being in dire financial straits themselves because they believe customers — particularly younger ones — are likely to consider mobile banking a requirement.” (Worthen) Most banks that open online allow for better rates on loans, and credit cards on accounts that are opened online. The applications allow for banks to offer members better deals and management of their online transactions, investment and financial portfolio, consolidation of their mortgages, and management of all their accounts.

The history of mobile banking started in 2008. However the ideal development of ubiquitous commerce through mobile telecommunications has been around for at least a decade ever since mobile phones were frequently adopted by consumers all around the world. (Hu, Li, Hu pg.1) Landline phone have essentially become extent as more users old and young has adopted mobile phones as their primary source of communication. According to research, “by 2002, the number of worldwide mobile phone connections reached 1 billion and exceeded that of the regular phone connections, and by 2005, this number has already doubled” (1)Mobile banking was first introduced in the early 2000s using text and short messaging in order to get a reply back from the bank. The financial industry was turned upside down as it dealt with the realities of multiple bank failures and scandals, rooted in risky bets, offering ridiculous interest rates to homebuyers, and making deals on the credit market. Major banks such as Bank of America, JP Morgan Chase, and others lost out on billions during these harsh economic times and scandals. The government had to respond by passing new regulations in order to control the excess in which the banks were spending. Some of the first banks to offer mobile banking through the form of mobile applications were in fact, Bank of America, JP Morgan Chase, and Wells Fargo. First through Apple mobile market, and through their software updated to their primary websites. (Worthen) This move has helped smaller banks such as BankPlus and others invest in mobile services as well, developing services that let users transfer funds and review their mobile history through their mobile phone. (Worthen) When banks began to seriously invest in technologies for mobile banking some of the first target markets were those consumers in the develop countries that would benefit from services regularly offered through their banking system. These included, “checkbooks, ATMs, voicemail/landline interfaces, smart cards, point-of sales networks, and internet resources, the mobile platform offer a convenient additional method for managing money without handling cash (Karjaluto 2002). (Donner, Tellez 3)

Both internet banking and mobile banking have been considered about of banking alternative to banking in person. Mobile banking can be defined as, “using mobile phones to pay for services (bus, train, movies, entertainments), goods (retails, stores, coffee shops, restaurants, vending machines, online stores), bills (electric, gas, credit cards, phone), and transfer funds (bank to mobile, bank to bank, mobile to mobile).” (Hu, Li, Hu 6) Mobile phone transactions have grown considerably since more and more e-commerce have developed platforms through mobile telecommunications. The adoption of mobile banking has not been as widespread, but it continues to rapidly grow. Internet banking has always been a viable option for banking users as it has allowed for banking users to be able to access account information and options without having to go to the bank. Mobile banking has provided users with the valuable features that have created the cheapest delivery and the potential to offer mobile services to those living in remote locations.

The mobile telecommunications ecosystem is derived from of mobile money platform providers, telecom operators, regulators, money transfer agents, financial institutions, and payment processors. The banking market has benefited from the exponential growth in the various features that include the considerable rate of people that have little to no access to banks in undeveloped regions, and availability and accessibility of mobile phones. The mobile phone operators are focusing on the opportunities, and institutions are focusing to aim for the financial inclusion needed to further growth in the banking market. The accessibility of mobile banking is aided by, “buoyed by prepay cards and inexpensive handsets, hundreds of millions of first-time telephone owners have made voice calls and text messages part of their daily lives.” (Donner, Tellez 2) The popularity of mobile banking is mainly used by users that live in cash economies with little access to the financial services that millions are able to relatively access on a walk up basis. Research has made it clear that the total consensus is that are relatively more mobile users in the developing world than there are those that have bank accounts. (2) The reach of mobile banking is not just central to users in North America, but users all around the world. Consumers in Norway, South Korea, Japan, Austria, as well as other countries around the world have provide mobile banking services to their users. The development of mobile banking has branched out to include purchasing tickets for events, cinema, trains, parking and transportation, and for other events. In European countries such as Austria, mobile banking has allowed users to use the services to pay for home shopping deliveries, vending machines, taxis, in-door purchase, retail outlets, and fuel stations. (Hu, Li, Hu 7) These are done by the advancements made to mobile devices by creating a smart chip that is able to be linked to credit or debit card accounts from their respective banks.The advancements have already developed in the United States as more retail stores, and convenience shops have moved to installing mobile payment systems where users can pay with the use of their mobile phone through their banking account.Essentially these advancements are transforming the digital world into a more cash-less society. Digital financial systems in countries across the world are able to create a friction-free global financial system that money can be transferred through the application of a few keys on their mobile phones.

The amount of users that utilize mobile banking services have grown exponentially in the past few years to reaching over 50 million in 2013. (Vaidya) This increase can mainly be attributed to the increase in mobile technology fronted by the growth in smartphones and the development of banking applications for the different banking companies. The move has provided banking industries with the abilities to cut costs by investing in technologies that have changed the landscape of banking to a do-it-yourself ability with teleconferencing with the users, eliminating the need for paper bills, and reducing the sizes of the bank branches.The advancements in mobile technology have moved towards the features of being able to deposit money (checks) into the users’ bank account. One of the first banks to do this was the USAA, a bank that usually caters to military personnel and their families. Banks like Chase have moved towards adding new features to their mobile banking applications such as, depositing their checks through the use of taking a picture. Other services include linking all accounts used throughout the bank in order for users to review all transaction history, transfer funds, pay utility bills, and other account services. Innovations that add on to mobile banking help merchants grow their services that depend on mobile banking to act as a digital wallet for consumers. Smartphones is the main devices utilized to help consumers make purchases and branch out to other services such as PayPal, Dwolla, Pioneer, and others that include the shopping capabilities of Zappos, Living Social, Amazon, EBay, and a host of other e-commerce sites that have helped transform mobile banking to making a point of sale purchases. Mobile banking is not only replacing the use of local branches, the elimination of paper bills, but also the need of plastic credit cards with smartphone payments. Over the next decade research has predicted that they will soon be closer in over 50 percent of banking infrastructures, and larger banks will continue to get smaller.

Mobile banking is not only a new development in money that helps out financial institutions but also mobile operators that benefit from the increase in customer data usage, the consistent with their mobile carriers, and the potential for consumer experimentation with other forms of mobile content. End users (customers) also benefit from mobile banking, it provides users with the control and management of their personal financial services, and saves them time on accessing their accounts without the need to go to their local branches, using the phone, going to the ATM, and other services. Bankers are able to provide customers with greater services, and increase their customer base without experiencingadded infrastructure costs.Mobile banking applications are continually developing to provide richer interfaces, and multiple mobile payment capabilities, while also being able to provide access to those in remote locations. This development would be useful to the economy because it has the ability to reach out to undeveloped countries that need financial access. Mobile banking provides users with the ability to keep an eye on their financial services.

Mobile banking is not without its limitations or without its challenges. Anything that deals with the internet and with money opens up the opportunities of criminals to steal and infiltrate. Criminals is able to find weak spots in applications and exploit them to the fullest potential as users that do not have a capable security application to protect their phones from cyber criminals. Hackers have the ability to track the changes of application changes, they can engineer phone viruses and malware, and when users have out of date applications they will be more vulnerable to attacks. According to Richard Burnett (2013), “According to a recent Federal Reserve survey, 87 percent of smartphone owners now use their devices for at least some banking transactions.” (Burnett) Millions of people using these features invites criminals to access to pertinent information and draining money from users’ accounts. Although therehas not been any attacks on the larger scale of mobile banking, it is still not without its possibility in the future that professionals hackers can take down a financial institution.

Mobile banking has created a revolution in providing users with the ability to do ordinary transactions over the convenience of their mobile phones. Banks that do not adopt the mobile technology will be obsolete, as they will be left behind. The banks will then have to implement this strategy to provide all users including those in remote locations with access to banking services. The challenges with security although major have yet to put a dent in the progress of the possibilities of mobile technology. The advancement in technology has created a global system in which the cash will be transferred to the use of the phone as payments, soon credit cards will not be needed and all transactions will be conducted through the use of mobile banking payments. The easiness of setting up mobile technology is beneficial to all involved.

References

Burnett, Richard. “Smartphone banking opens door to ill-doers.” Phys. Org. 08 Nov 2013. Web. 22 Nov 2013. http://phys.org/news/2013-11-smartphone-banking-door-ill-doers.html

Donner, Jonathan, Tellez, Camilo. “Mobile banking and economic development: Linking adoption, impact, and use”,Asian Journal of Communication, 18(4), 318-322. 2008. Print.

Hu, Xiangpei, Li Wenli, Hu, Qing. “Are Mobile Payment and Banking the Killer Apps for Mobile Commerce?” Proceedings of the 41st Hawaii International Conference on System Sciences. 2008. Web. 22 Nov. 2013. http://www.msit2005.mut.ac.th/msit_media/1_2551/NETE4630/Materials/20080519125658Ba.pdf

Vaidya, S.R. “Emerging trends on functional utilization of mobile banking in developed markets in next 3 – 4 years.” International Review of Business Research Papers, 7(1), 301-312. January 2011. Print.

Worthen, Ben. “Branching Out: Mobile Banking Finds New Users.” The Wall Street Journal. 3 Feb 2009. Web. 22 Nov 2013. http://online.wsj.com/news/articles/SB123362222507641723