'Visiting' your bank with your own cellular phone

Jonminofri Nazir, Contributor, Jakarta

Every bit of news on Bank Central Asia (BCA) always draws public attention. Not because of its political nuance, but more due to the fact that many people depend on this bank. Just imagine, no less than eight million Indonesians entrust this bank to manage their money, be it in the form of their savings or deposits, and almost all conduct their financial transactions through its widespread Automated Teller Machines (ATMs).

On top of that, most companies, from the giant-sized to the smallest, have accounts with this bank. So do their employees. At the end of every month the financial departments of these companies transfer employees' salaries through this bank. Transfers take place only at BCA's computers, but the actual money does not go anywhere, it remains in the bank's safe.

A BCA official said that according to a survey it was found that almost the entire country's employees with salaries of Rp 500,000 and above keep their money in the bank's Tahapan savings account.

Based on this fact, it is easy to understand why most cellular operators are racing to work with this bank in the coordinating mobile banking (M-banking) service.

"We will launch our mobile banking service by the end of the third quarter," said Gede Krishna Jaya, the Mobile Data Development Manager of PT Indosat-M3, who handles IM3's M-banking products.

Telkomsel, another major cellular operator, has also informed the media that it will soon start its joint venture with BCA for its mobile banking service, which is planned this year.

So far, among the GSM-based cellular operators, only Satelindo has not announced any similar plans, while PT Excelcomindo (proXL) pioneered it long before any others, which means that other operators can learn a lesson or two from this company's past experiences or failures, should there be any.

Not only is it important for BCA and cellular operators, the cooperation between both sides is actually major news for the bank's customers.

The reason is that cellular operators can use this new service to lure BCA's eight million customers to become their subscribers. For BCA, the profits lie in the fact that when its customers actively conduct transactions through M-banking it does not have to add to its number of branches or ATM sites. The prime convenience of M-Banking is that transactions can be conducted from almost anywhere, even when one is in the bathroom.

Obviously, this concept greatly benefits BCA's customers who happen to be GSM subscribers. Because a visit to the bank's premises, queuing at ATMs or Internet banking at internet cafes become unnecessary. This way customers can save their time, avoid the heat of the sun and the parking fees at the bank's branches or ATMs.

These are some of the reasons that make the cooperation of IM3 and Telkomsel with BCA welcome news for BCA's customers and GSM cellular subscribers, as both can enjoy the convenience of financial transactions conducted through m-banking.

What's next? The BCA mobile banking in partnership with proXL, which was launched over a year ago, has greatly assisted BCA's customers in their transfer of funds to others who also hold accounts in the bank. Compared to Internet banking, mobile banking is more secure. Though the proof of transfer is only a Short Message Service (SMS), there have not yet been any complaints of any loss of money from transactions conducted in this way.

What customers do complain about, as far as readers' letters in the media indicate, is that they still have to pay Rp 1,000 even if the transaction fails and Rp 2,000 for a successful transaction.

The secure feeling provided by mobile banking is because the entire network used for the transaction is a special network, which means that it cannot be used by anyone else. Only the cellular operator and the bank have access to the customer's personal data. This is unlike the Internet, where a hacker can slip into anyone's computer, wherever it is.

Albeit safe and secure, the use of mobile banking has not boomed, as compared to the use of debit cards, because, until now, mobile banking has not been able to be used for purchasing or, to use the more sophisticated terminology, m-commerce. Transactions on the cellular screen are limited to the services provided by the bank's ATM or even less than that, because, of course, one cannot make a cash withdrawal.

Viewing these current limitations, Novian Abdurahman, Gede Krishna's colleague at IM3's Mobile Data Development, said that this latest operator with the GSM 1800 system is planning further steps in the mobile banking services by providing m-commerce.

Actually m-commerce is very much like e-commerce, or as it is popularly called in Indonesia, "shopping on the Net". The difference is that an e-commerce transaction is conducted through the Internet network, which involves a bank, a credit card company, a merchant, an Internet service provider and the customer. In Indonesia this method of transaction is not very secure as many crimes using stolen credit cards are known to have frequently occurred.

M-commerce, on the other hand, has a shorter route as it involves fewer parties; a bank where a customer has his savings, a cellular operator, a merchant and the customer with his cellular phone along with the GSM card.

In theory at least, this type of transaction has a higher level of security, because only the owner of the cellular, who is also the owner of the savings account, can carry out the transaction. As long as the cellular is not lent to anyone and the PIN number is kept secret, along with the bank account number, an illegal transaction seems highly unlikely.

The cellular phone owner can use m-commerce for various purchases as far as the merchant has a business agreement with the bank. Dining in restaurants, buying a pair of shoes, a can of Coca Cola or anything else is no problem as no cash is required.

IM3 has tried this facility without involving any bank in the purchasing of soft drinks from vending machines. The method is simple. Just enter the purchase code into the machine and in a few seconds out comes the can of Coca Cola. The payment here is deducted from the units in the user's cellular phone account.

However, according to Novian, the expansion of m-commerce has become problematic as it does not involve a bank. The reason is that in Indonesia it is not legally permitted to conduct any financial transaction using units from cellular phone accounts. According to the current law, such purchases must be paid with cash in rupiah.

For IM3 providing m-commerce facilities is a must, because the company's vision is to form a multi-media mobile community as reflected in the company's name and one of the community's characteristics is the application of m-commerce.

Apparently m-commerce cannot function without the support of m-banking, because all financial transactions occur without the physical presence of money. Customers' money move to the merchants' pockets through a bank. This means that what really happens is that only the records of money change, while the actual money remains in the bank's safe.

With this reasoning it is understandable why IM3 not only puts BCA on its list as its m-banking partner, but also the names of several other large banks that can offer their large number of customers. By involving a greater number of banks along with their numerous merchants, IM3 ensures its subscribers more flexibility and a wider choice in conducting their financial transactions.

In line with IM3's aspirations to create a multi-media mobile community, the application of m-banking is a must, because only through this way can the cellular operator provide its subscribers with m-commerce facilities.

Indeed, not every feature of m-commerce facilities can be used immediately. As it is still at an early stage, IM3 can only provide basic m-banking facilities, which will be followed by the facilities for purchasing cellular account units. Only next year will other m-commerce conveniences be enjoyed by both its subscribers and the customers of the related banks.

By providing m-banking, IM3 will be able to fully realize its dream of creating a multi-media mobile community.