FOR Marketing Perspective - Mobile Banking -- May 4

M-banking to go beyond balance check

Rudijanto Contributor Jakarta

Using a credit card when you are shopping is very common today, but what if the transaction was conducted by merely clicking some buttons on your cellular phone, showing the phone's screen to the cashier who immediately approved the transaction upon seeing the screen?

That idea still sounds far off, particularly for banking or IT laypeople, but Bank Danamon cash management consumer head Edy Tuhirman entertains the idea when asked about possible future features of mobile banking.

Whether such an idea will be applicable or not in the near future, at the least it shows the power of newly adopted banking services called mobile banking. With this powerful banking system, customers can break the barriers of time and space.

Mobile banking is certainly still a new service by major banks operating in Indonesia. Banks such as Bank Danamon and Citibank just began offering mobile banking last year. Other banks are still preparing to launch their mobile banking services.

Citibank's mobile banking still does not offer transaction services due to the highly risky nature of mobile banking. Started in July last year, the bank's mobile banking only provides three features, namely payment of cellular vouchers, SMS credit card inquiries about one's balance and an alert service to warn customers about certain transactions.

"We have not provided transaction services via our mobile banking because we want the transactions to be really secure. We are working on it and, hopefully, within this year we can provide such services," Citibank's vice president of e-Business, Rico Usthavia Frans, said.

Rico believes the current mobile banking system using ordinary SMS is not secure enough for banking transactions. The reason is that data passed through normal SMS is not encrypted. That is why Citibank is preparing another system.

"We will use the SIM Tool Kit (STK), which is a menu-based system. With such a menu-based system, customers can easily remember rather than input data by themselves. One more thing, this menu-based mobile banking is secure," Rico said.

The bank expects to be able to provide transaction features using STIK by the end of this year.

Just like Citibank, the only major transaction available through mobile banking at Bank Danamon is that of cellular vouchers. Other features of the bank's mobile banking are account balance inquiries and fund transfers to other Bank Danamon accounts.

Customer response to mobile banking is growing gradually though not drastically. This gradual growth is understandable since people need time to learn and accept any new facilities. The ATM took years before gaining wide public acceptance.

But seeing the growth in the number of cellular phone users, banks simply cannot avoid the potential of this particular sector. Data from the Indonesia Cellular Telecommunications Association reveals that the number of cellular phone users reached 18.5 million in 2003. The association predicts this number could increase to 25 million or 27 million within this year.

Such rapid growth is very promising. That is why in an interview early this year, the consumer banking general manager at Bank Central Asia, Stephen Liestyo, said the bank expected its mobile banking M-BCA to grow by 50 percent this year.

BCA was among the first banks in the country to provide mobile banking services. Starting with only 304,719 users in 2001, the bank's mobile banking users leapt to more than 2.2 million in 2002. By the end of last year, that number had increased significantly to 3.6 million.

The bank's mobile banking features already exceed that of account balance checks and payment of cellular phone vouchers. For instance, with ProXl, as one of the bank's cellular operator partners, BCA offers M-Commerce, which enables customers to buy stocks.

The bank's M-Payment also enables customers to make many other kinds of payments such as credit card, home phone and insurance. These varied features have played an important role in bringing m-BCA monthly's transaction value to Rp 272.58 million last year.

The promise of mobile banking is too attractive for Bank Rakyat Indonesia (BRI). In preparation for Internet and mobile banking services, the bank is not hesitant about investing in new equipment to support the introduction of online and mobile banking facilities. Last month the bank announced the purchase of 4,670 PCs using Pentium 4 with hyper-threading technology.

BRI's general manager for information system technology, Mohammad Irfan, said the new equipment would support, among other things, the introduction and operation of the bank's online and mobile banking.

"We will launch our mobile banking within the year. As of right now, we are still preparing it with one telecommunications operator. Our mobile banking will offer services such as balance checks, electronic fund transfers to other BRI branches, bill payment and cellular voucher purchases, airline ticket purchases and also notification services, for instance on the maturity of credit," said Abing Rabini, BRI's deputy to the general manager for information system technology.

"I believe that mobile banking will grow faster than Internet banking because Internet banking is more expensive. People have to own PCs and have to pay ISP to be able to access the Internet, while for mobile banking all they need is a cellular phone," Rabini said.