Issues in Mobile Banking 2: Regulatory and Technical Issues

This MicroSave Briefing Note discusses the manner by which organizations step over the hurdles to mobile phone banking.

The note lists the following barriers to mobile phone banking:

• Some countries allow only banks to participate in the national payments system, and require a nonbanking operator to obtain their own banking license or form an alliance with a bank;
• Anti-money laundering laws increasingly require greater face-to-face interaction between the financial institution and the customer in terms of customer identification;
• The selection of agents is restricted to those who can meet the specific regulatory requirements.

The note offers the following solutions to these problems:

• Using "electronic purses" that can be differentiated from bank accounts as the source of transactions;
• Using legislation governing electronic money that does not call for a separate license;
• Using agencies for accessibility to training, physical information materials, etc., and as customer service and information centers.

The paper states that the implementation of mobile banking system requires a choice about the suitability of various technical aspects of the system and the following factors drive this choice:

• The regulatory environment;
• The availability of secure technological infrastructure;
• Sophistication of the market;
• Affordability for the customer, etc.

The paper concludes that technology-based applications always contain some amount of risk and each business needs to decide whether it will manage this risk through its business practices or through the technology itself.