Managing the Risk of Mobile Banking Technologies

This report identifies specific technology risks of the mobile channel. It focuses on models which target unbanked customers and developing markets. It states that use of mobile phones for mobile Financial Services (m-FS) is relatively new and, therefore, providers’ knowledge of risks and their risk experience is still limited.

Rapid take-up and potential scale of new offerings has led to increased interest from mobile Financial Services Providers (mFSP) and government regulators in understanding additional risks. The mobile handset and the mobile network contribute to a different risk environment for mobile banking (m-banking). Findings include:

• Mobile technology options available today allow for a variety of choices when implementing m-FS that range from technologically secure implementations to less secure options;
• Increase in risk caused by using less secure mobile technologies can be offset by introducing operational controls;
• Feasibility to offset these risks makes it possible to extend financial services to all mobile subscribers;
• Transformational m-banking can be accomplished by careful appraisal, introduction and management of operational controls necessary to offset risks;
• Moving to prudent and adjusted security models requires a proportionate regulatory framework which will ensure active supervision of risk management.