JOURNAL OF TELECOMMUNICATIONS, VOLUME 3, ISSUE 1, JUNE 2010 90

A Multi-Platform Mobile Banking Framework for Bangladesh Sheikh Shanawaz Mostafa, Khondker Jahid Reza, and Asif Ahmed Tanvir Abstract—The use of information and communication technology has been playing a vital role in the 21st century due to globalization. The democratic government of Bangladesh has declared the “Vision 2021” which targets establishment of a resourceful and modern country by 2021 through effective use of information and communication technology-a "Digital Bangladesh". “Digital Bangladesh” does not only mean the broad use of computers, perhaps it means the modern philosophy of effective and useful use of technology in terms of implementing the promises in commerce, banking, education, health, job placement, poverty reduction etc. But the government has no technical platform to make this vision come true. Mobile phones have already opened up a new horizon for commerce, business and communication. In this paper, we proposed mobile banking system for Bangladesh, which can be effective to increase the economic growth. Index Terms— Electronic transactions, Mobile banking, Mobile network, Mobile services, Multi-platform protocol.

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1 INTRODUCTION

B

RANCHLESS banking has for several decades now been a new promise of the innovative fast evolving information technologies that financial service providers have been eagerly embracing. Technology is yielding them high benefits in terms of scale efficiencies and cost savings. However, most of the financial services are based on mutual trust between providers and clients, thriving best in familiarity from face to face-personal contacts in Bangladesh. Bangladesh government looks forward to branchless banking not as an alternative, but as a key supplement enabling traditional branch banking to reach out to new client segments in dispersed rural or otherwise remoter locations. In the present world, Internet banking is the most popular form of Branchless banking. Internet banking has given the customer's the ability to access their banks anytime. Customer's could check out their account details, get their banking statements, perform transactions like transferring money to other accounts and pay their utility bills so easily like sitting in the comfort of their homes and offices. However the biggest limitation of Internet banking is that, it requires a PC with an Internet connection, which is not a big obstacle for the developed countries, but it is definitely a big barrier if we consider most of the developing countries of Asia, like Bangladesh. Hence Mobile banking (m-banking) overcomes this fundamental limitation of Internet Banking, as it reduces the customer‖s re-

quirements to just a mobile phone. Mobile usage has a geometric growth in Bangladesh. Therefore, it is the high time to divert to the m-banking system to ensure flexibility of banking and the economic growth.

2 MOBILE BANKING Mobile Banking is a form of branchless banking refers to the connection between a mobile phone and a personnel or business bank account. Mobile banking allows customers to use their mobile phone as another channel for their banking services, such as deposits, withdrawals, account transfer, bill payment, and balance inquiry. Most mobile banking applications are additive in that they provide a new delivery channel to existing bank customers. Transformative models integrate unbanked populations into the formal financial sector. [1]

2.1 M-Banking Models M-banking models can be classified in the following three categories [2] Bank-Focused model signify use of ADCs by banks as a cheap and convenient way to provide banking services to their existing customers. This model can be used within existing regulatory framework and many banks have already started using it in varied extent. Bank-Led (including JV based) Model is prone to agent-related risks. These risks can be mitigated by making banks fully liable for actions of their agents and by ———————————————— giving regulators power to review agents‖ record of bankSheikh Shanawaz Mostafa is with the Electronics and Communication Engineering Discipline in Khulna University, Khulna-9208, Bangladesh. related transactions. Khondker Jahid Reza is with the Electronics and Communication EngineerNonbank-Led Model, the non-banks are subject to less ing Discipline in Khulna University, Khulna-9208, Bangldesh. stringent regulations that may lead to significant risks Asif Ahmed Tanvir Department of Computer Science and Engineering, with respect to transaction security, documentation and Dhaka City College, National University, Dhaka-1217, Bangladesh. AML/CFT beside m-money related risks. For these reasons, Nonbank-Led model may only be allowed at a later stage after have sufficient experience in © 2010 JOT http://sites.google.com/site/journaloftelecommunications/

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mitigating agent related risks using bank led model and need to think about mitigating mobile money related risks only. There are some regulatory problems in Bangladesh. Inter bank online transactions are not allowed by central government bank “Bangladesh Bank” of Bangladesh. This is problem is discussed and solved by [3]. A careful, systematic approach, starting from basic bank led models and gradually adding more activities as experience matures is the best approach for Bangladesh.

2.2 Mobile Banking Services Depending on the originator of the service, it can be classified into two categories: push and pull. ―Push' is when the bank sends out information based on an agreement or set of rules. ―Pull' is when the customer requests a service or information from the bank. Mobile Banking offers a plenty of bank related services like [2] Account Information includes recent transactions, balance checking information, checking of account history, alerts on account activity or passing of set thresholds, monitoring of term deposits, access to loan and card statements, insurance policy, pension plan and other management, cheque status, controlling payment on cheque, ordering check books, personal identification number (PIN) provision, change of PIN and reminder over the internet, blocking of (lost, stolen) cards. Payments, Deposits, Withdrawals, and Transfers includes domestic and international fund transfers, micropayment handling, mobile recharging, commercial payment processing. Bill payment processing includes peer-to-peer payments, withdrawal at banking agent, deposit at banking agent. Investments includes portfolio management services, real-time stock quotes, personalized alerts and notifications on security prices, mobile banking Support includes status of requests for credit, including mortgage approval, and insurance coverage, enquiry of cheque book and card requests, exchange of data messages and email, including complaint submission and tracking, ATM Location. Content Services includes general information such as weather updates, news, loyalty-related offers, and location-based services.

3 POSSIBILITIES OF M-BANKING IN BANGLADESH About 87 per cent of the total population having no connection with the banking system despite the increase of the private sector banks over the last two decades [4]. These banks are mostly acting in city areas and prefer business only with 'rich clients'. For the rickshaw puller, or other types of day laborers, both away from their home villages, working in the big cities, sending money home has been a nightmare, as banks have not concentrated their efforts in helping these communities to achieve this simple task.

Fig. 1 Number of mobile user in Bangladesh.

Number of Mobile users reached 56.36 million at the end of April 2010. [5]Maximum number of people whatever rich or poor, have a cellular phone. This rapid growth of mobile users brings a new hope in Bangladesh. The m-banking system can free up the considerable time needed to make a payment. So banks could perform more efficiently and effectively to transact money and provide services all over the country.

4 SUCCESSFUL STORIES OF MOBILE BANKING In recent past, only one in five people of Kenya had access to banking facilities, mainly due to the scarcity of bank branches. After launching, the m-banking system named as M-PESA by leading operator Safaricom. MPESA is so popular that more than 10% of Kenya‖s GDP passes through it. It has become so widely accepted and used that it is now possible for even low-income consumers to make payments. [6] In 2005, the largest mobile operator in South Africa, MTN and Standard Bank jointly introduce m-banking system, which bring a large number of the previously unbanked population into the formal banking sector in a low cost and easily accessible way. MTN MobileMoney, a model in its MTN Banking service, allows users to perform a range of basic financial transactions using their handsets without the need to open or have a bank account. Currently commercially available in African, Uganda, and its West and Central African operations, MTN plans to launch MobileMoney across all of its 21 markets. [7] The Asian countries are no more backward in mbanking system. Japan‖s NTT DoCoMo launched a mobile wallet service known as Osaifu-Keitai in 2004, and introduced i-mode FeliCa chip and contactless payment services in 2005. [8] South Korea is another nation with an encouraging take-up of mobile money services. They use T-money transit cards for m-banking purpose. [9] Taiwan launched a trial on over 5000 Visa payWave stores, in mid-2008. Operator Maxis in Malaysia has already launched a mobile payment service called M-money. It trialed a NFC service in October 2007 in cooperation with Maybank. [10] Philippines shift in mobile banking based on the ex-

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change of simple text messages. As of December 2007, around 5.5 million Filipinos had used their mobile phones as virtual wallets, making the country a leader among developing countries in mobile transactions. [11] Rural India, which comprises more than 70% of the population, is primarily a cash economy because many people do not have bank accounts or access to other payment methods. They solve this problem by using mbanking service in 2007. Now a day, 50% of Indian respondents checked their bank balance on their mobile phone. [12] Recently state bank of Pakistan published a policy paper and framework for m-banking. [13]

5 PROPOSED FRAMEWORK OF M-BANKING SYSTEM FOR BANGLADESH We proposed a multi-platform protocol of m-banking for Bangladesh. It can support four mobile channels for communication. They are: Short Message Service (SMS), Wireless Access Protocol (WAP), Interactive Voice Response (IVR), and Standalone Mobile Application Clients. Mobile Devices

Mobile Multiple Access Method Mobile Banking Service

Multiple protocols Connection

Mobile Banks SerDevices vice system

SMS, WAP, J2ME, IVR

devices are connected multiple service access point. Using multiple protocol connection mobile user could connect to bank server. The proposed system having four individual subsystems are described below.

5.1 SMS System In SMS system, user uses the text-messaging service to enable mobile application based banking. Customer requests for information by sending an SMS containing a service command to a pre-specified number. The bank responds with a reply SMS containing the specific information. MSC

BSC BTS

SS7

SMSC Server

STP

SMS Broadcast application server

HLR

Internet

Bank server

SMS, WAP, Internet and other Gateways

Management System and Connectivity platform

TCP socket, HTTP etc

Service

Fig. 2 Layers of multi-platform m-banking

Above four systems, have their own facilities and weakness. For example, SMS is cheap but not secured. On the other hand standalone mobile application client system is most secured but costly. Therefore, we want to use a multiple platform protocol (Fig. 2). User can choice his or her system according to service and amount of money exchanged through the system. In this system, mobile

Fig. 3 SMS system

In SMS system (Fig. 3), when a subscriber requests for a service or transaction, then text message containing information goes to the nearest Base Transceiver Station (BTS). BTS then routed it to its corresponding Master Switching Centre (MSC) via Base Switching Centre (BSC). After verifying legality by the Home Location Register (HLR), messages are passed to STP using SS7 protocol. Bank server receives message after passing the message through SMSC server, SMS Broadcast application server and internet. Responses are sent by the bank server following reverse process to reach the mobile users.

5.2 WAP System Banks maintain WAP sites which customer's access using a WAP compatible browser on their mobile phones. WAP sites offer the familiar form based interface and can implement security quite effectively. WAP (Fig. 4) uses a concept similar to that used in Internet banking. Like SMS system when a subscriber requests for a service or transaction, then WAP request goes to the nearest BTS. BTS then routed it to its corresponding MSC via BSC. After verifying legality by the HLR, messages are passed to WAP gateway using WML protocol. WAP gateway sends it to the WAP server of bank through Internet. Responses are sent by the bank server following reverse process to reach the mobile users.

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MSC

BSC BTS

WML HLR

WAP Gateway

Internet

Bank server

Fig. 4 WAP system

5.3 IVR System In IVR system (Fig. 5), Customer's make a call at the IVR number that is pre-specified by banks and are usually greeted by a stored electronic message followed by a menu of different options. Customers can choose options by pressing the corresponding number in their keypads. Then the system read out the corresponding information, mostly using a text to speech program.

7

SECURITY FEATURES AND SECRECY

Fraud and money laundering are of great concern with the growth of mobile banking. As mobile banking emerges spam, malware and outright theft of personal financial information will also increase, which is a threat and that must be prevented. Security remains an important issue that needs to be addressed and enriched for mobile banking services. While mobile networks already have encryption on the messages transmitted across the network, mobile transfers require additional tracking and logging for regulatory demand. Mobile money services are currently being deployed around proprietary point solutions and this leads to a one-bank one-solution problem.

MSC

BSC

8

BTS

IVR Service

Internet

tional banking system. A mobile phone can make banking experience friendlier and enjoyable than ever by allowing users to stay connected with their banking system at any time & anywhere. All the users have to register for enjoying these facilities. These services can be provided anywhere to user & the only requirement is that particular user must have a mobile phone. There is no need of physical appearance in bank for banking service. Other types of services like ticket booking, mobile recharge, product sale and buy can also be possible by using m-banking.

HLR

Bank server

Fig. 5 IVR system

Mobile service provider serves the user by connecting to the Bank‖s information server. Sometimes operator confirms service by sending an SMS to mobile user.

5.4 Standalone Mobile Application Clients Standalone mobile applications are the ones that hold out the most promise, as they are most suitable to implement complex banking transactions like trading in securities. They can be easily customized according to the user interface complexity supported by the mobile. In addition, mobile applications enable the implementation of a very secure and reliable channel of communication.

CONCLUSION

Many countries in Asia are taking advantage through opening of m-banking, which is essential for prompting new commerce era with diffusion of technology. Our proposed m-banking topology helps to integrate with commerce and technology to build digital Bangladesh. There will no more discrimination between rich client and poor people in banking. The rural people will beneficiary by the m-banking system along with the city dweller. In addition, it creates balance between the reach-poor, urban-rural people and the banking system will be more flexible. Though m-banking has some security issue, its efficiency cover its weakness.

REFERENCES [1]

[2]

[3]

6 FACILITIES OF M-BANKING

[4]

M-banking has many useful facilities over the conven-

[5]

Janine Firpo, ‖‖ E-Money – Mobile Money – Mobile Banking – What‖s the Difference,” http://psdblog.worldbank.org/psdblog/2009/01/emoney-mobilemoney-mobile-banking-whats-the-difference.html. 2010 “Mobile banking,” http://en.wikipedia.org/wiki/Mobile_banking#Mobile_banking_busi ness_models. 2010. Ijaj Md. Laisuzzaman, et al., “The Framework for Implementing ECommerce: The Role of Bank and Telecom in Bangladesh,” Journal of Telecommunication, vol. 1 issue 1, pp. 57-62, Feb. 2010. “Issue of banking coverage,” http://nation.ittefaq.com/issues/2008/08/18/news0063.htm. 2010. BTRC, “Mobile phone subscribers in Bangladesh,”

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[6] [7] [8]

[9] [10]

[11] [12]

[13]

http://www.btrc.gov.bd/newsandevents/mobile_phone_subscribers. php. 2010. Joyce Fan, ―‖Safaricom taking Kenyans on a pleasant Safari, ”WinWin, Huawei publication, lssue-2, 2009. “MTN, Standard Bank face $136 million claim over MTN Banking,” http://mobilemoneyafrica.com/archives/category/news/south-africa Peter White,” NTT DoCoMo hits 10m mobile wallet accounts,” http://www.telecomasia.net/content/ntt-docomo-hits-10m-mobilewallet-accounts “T-money,”.http://www.tmoney.co.kr/jsp/newpub/oversea/english/eng_index.jsp. 2010 “Cell phone money transfer service unveiled ,” http://www.msnbc.msn.com/id/18955865/ns/technology_and_scie nce-wireless/ Oliver Teves, “Filipinos turn cell phones into virtual wallets,” http://www.msnbc.msn.com/id/21069796/ “Mobile Banking: Most widely used Indian cell phone service,” http://trak.in/tags/business/2007/08/22/indian-mobile-bankingtelecom-services/ Banking Policy & Regulations Department State Bank of Pakistan, “Draft: Policy paper on regulatory frame work for mobile banking in Pakistan,” http://www.sbp.org.pk/bprd/2007/Policy_Paper_RF_Mobile_Banki ng_07-Jun-07.pdf. 2010

Sheikh Shanawaz Mostafa is currently pursuing B.Sc. in Electronics and Communication Engineering Discipline in Khulna University, Khulna, Bangladesh. His current research interest is wireless communication, modulation and biomedical signal processing. His numbers of published papers are three, published in the conference on Engineering Research, Innovation and Education, 2010, SUST, Sylhet, Bangladesh. Khondker Jahid Reza is currently pursuing B.Sc. in Electronics and Communication Engineering Discipline in Khulna University, Khulna, Bangladesh. His current research interest is wireless communication, modulation and sensor networks. Asif Ahmed Tanvir is currently pursuing B.Sc. in Department of Computer Science and Engineering, Dhaka City College, National University, Dhaka, Bangladesh. His current research interest is wireless commutation and artificial intelligence. He is a Student member of ACM.

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