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View Poll Results: SMS Banking may prove greater productivity for customers in Pakistan.
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Old Tuesday, May 01, 2012
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Post Sms banking concepts

SMS banking is a technology-enabled service offering from banks to its customers, permitting them to operate selected banking services over their mobile phones using SMS messaging.
SMS Banking is a Mobile technology that allows you to request and receive banking information
from your bank on your mobile phone via Short message service (SMS). Individuals or corporate
bodies can manage their bank accounts, check their account balances, perform check requests,
money transfers, pay some bills, and perform other banking transactions using their mobile
phones. There are two methods of SMS widely used in applications; they are the PUSH & PULL.
Push SMS is sending a message from an application (i.e. SMS Server in this case) to the Mobile
Phone. It is a one way message. In other words, it’s the mobile application (in this case, the SMS
banking application) that initiates a message. An example could be a deposit alert, which alerts
the user when a deposit is made to his/her account.
Pull SMS is sending a request and obtaining a reply. This is a full duplex scenario where a user
sends a request to the SMS banking application and the application replies with the information
requested. An Example is when a user requests his bank account balance.
The telecommunications industry worldwide has scrambled to bring what is available to networked computers to mobile devices. Presently, the use of electronic banking is considerably high and as more and more users sign up for electronic- banking, the maturity as regards remote banking (i.e. banking outside the bank) is on the increase. With electronic banking, users can now conveniently carry out banking transactions, but this convenience cannot be achieved if the user does not have access to the internet, hence, in other words, the user cannot carry out a banking transaction while waiting for a bus, or perhaps while having lunch in a restaurant.
With SMS banking, convenience can be achieved 24hrs a day. This is because a user has access
to his mobile phone all day, at all times. So, to effectively achieve a truly convenient banking
mode, a truly mobile mode of banking has to be explored, hence the need for SMS Banking.

How SMS Works
SMS stands for Short Message Service; it’s a mobile technology that allows for sending and receiving
text or even binary messages to and from a mobile phone. The relative ease of use of SMS makes it possible for a user to learn how to send SMS easily. SMS use the GSM special signaling channel instead of the voice channel and is therefore a very reliable media channel. MAVRAKIS, 2004 identifies two types of SMS which can be classified by the origin of the message:
Mobile Originated (MO): SMS-MOs’ are sent from a mobile phone and could be sent either to another mobile phone (such when a mobile subscriber sends a personal message to another subscriber) or to a computer application that will process the message.
Mobile Terminated (MT): SMS-MTs’ are transmitted to a mobile phone. They also could be sent by another mobile phone or generated by a computer application.

The SMS processing computer applications usually runs on corporate servers that are connected to the SMS network through specialized connectors and gateways connected to the SMS Centers\ of mobile operators. These servers are assigned short numbers instead of the traditional 10-digits mobile numbers. These numbers, also known as short codes are usually 4 to 6 digits long. These numbers are operator specific. Also, a premium fee (a fee other than the fixed rates for SMS) can be charges on these short codes; in other words, users would pay more for sending SMS to short codes.
Depending on the selected extent of SMS banking transactions offered by the bank, a customer can be authorized to carry out either non-financial transactions, or both and financial and non-financial transactions. SMS banking solutions offer customers a range of functionality, classified by push and pull services as outlined below.
Typical push services would include:
• Periodic account balance reporting (say at the end of month);
• Reporting of salary and other credits to the bank account;
• Successful or un-successful execution of a standing order;
• Successful payment of a cheque issued on the account;
• Insufficient funds;
• Large value withdrawals on an account;
• Large value withdrawals on the ATM or EFTPOS on a debit card;
• Large value payment on a credit card or out of country activity on a credit card.
• One-time password and authentication

Typical pull services would include:
• Account balance enquiry;
• Mini statement request;
• Electronic bill payment;
• Transfers between customer's own accounts, like moving money from a savings account to a current account to fund a cheque;
• Stop payment instruction on a cheque;
• Requesting for an ATM card or credit card to be suspended;
• De-activating a credit or debit card when it is lost or the PIN is known to be compromised;
• Foreign currency exchange rates enquiry;
• Fixed deposit interest rates enquiry.

Advantages and Limitations of SMS Banking
1. Convenience – SMS banking offers a whole lot of convenience to its users, it enables users to perform most banking transactions at their own time, in SMS Banking, there is no such thing as standing in a queue.
2. Accessibility – The user, can access his banking information, from anywhere, as long as he has network coverage on his mobile phone. In essence, SMS banking brings the information to the customer by bringing the customer to the information.
3. Portability – Unlike a lot of software applications SMS Banking can be done from any GSM phone as all GSM phones support SMS.
4. Saves time – SMS banking reduces the time required performing an average banking transaction; this is due to the automation of everything and the fact that there is no human intervention.
5. Reduced Costs – Relatively, SMS Banking reduces the costs of performing a banking transaction, Relatively Lower Cost of accessing information.
6. Less human resources required - Automatic processing of clients request.

Technologies Employed for SMS Banking
Most SMS banking solutions are add-on products and work with the bank’s existing host systems deployed in its computer and communications environment. As most banks have multiple backend hosts, the more advanced SMS banking systems are built to be able to work in a multi-host banking environment; and to have open interfaces which allow for messaging between existing banking host systems using industry or de-facto standards.
Well developed and mature SMS banking software solutions normally provide a robust control environment and a flexible and scalable operating environment. These solutions are able to connect seamlessly to multiple SMSC operators in the country of operation. Depending on the volume of messages that are require to be pushed, means to connect to the SMSC could be different, such as using simple modems or connecting over leased line using low level communication protocols (like SMPP, UCP etc.). Advanced SMS banking solutions also cater to providing failover mechanisms and least-cost routing options.
Most online banking platforms are owned and developed by the banks using them. There is only one open source online banking platform supporting mobile banking and sms payments called Cyclos, which is developed to stimulate and empower local banks in development countries.
1. As a rule, length of a SMS message is 160 characters. This is a limitation in SMS technology. Therefore the messages are abbreviated depending on the availability of the space.
2. SMS technology (like email) does not guarantee set transmission times or guaranteed delivery of the message, therefore some messages may be delayed, blocked or lost
3. The cost of the message is transferred to the sender, is based on the number of messages being sent and is network dependent, although possibilities exist in reimbursing such cost and operating volume based tariffs
4. Not all networks have full coverage and some locations may be protected for electromagnetic radiation, therefore not all users may be capable of getting a signal
5. Not all users may have a mobile phone, therefore alternative back-up needs to be sought
6. Delay of transmission of SMS by the GSM operators and intra and inter connection delays and traffics between GSM operators
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