What Are the Key Features of Mobile Banking?
Enterprise banking software is responsible for handling a variety of tasks, from account management to transaction processing.
It’s commonly used in retail banking to connect customers to their accounts, but it can also be used by investment banks to facilitate trade with capital markets.
1. Core Banking Features
A core banking solution should, as a minimum, include the following features:
- Accounts management.
- Deposit and withdrawal management.
- Transactions management.
- Loan management.
- Payment processing.
- Calculation and management of interest.
- Design and introduction of new banking products.
- Customer service and relationship management.
What’s more, a criteria should be established for interest rates, minimum balances, withdrawal limits, etc.
What is Core Banking?
Core banking allows transactions between customers and their bank accounts, including managing loans and mortgages. According to Gartner, core banking applications provide the back-end systems responsible for processing transactions and updating accounts.
Core banking relies on an infrastructure that not only connects multiple branches, but that also connects customers with the bank through multiple interfaces such as mobile apps, ATMs, and websites. While core banking has existed for decades, the growth of high-speed Internet has made it possible to perform transactions almost instantaneously.
With core banking, users depend on fast, secure software to safely facilitate transactions. Not only do banks have to respond to these demands for faster performance and more features, but they also have to balance costs, existing (and upcoming) regulatory and compliance requirements, and an ever-changing economic landscape.
New, non-traditional competition is arriving in the form of alternative payment methods, digital currencies, and big data analysis. Meanwhile, banks have to ensure the integrity and security of user data, providing users with access to their accounts through multiple channels while keeping out attackers.
It’s a difficult environment to balance, which is why, in 2013, nearly 96% of the market share for core banking software was shared by only four companies.
2. Mobile Banking Features
Closely tied to the growth of core banking is the growth of mobile banking.
The widespread uptake of smartphones, tablets, wearable devices, and the idea of constant connectivity has led to a substantial increase in the demand for mobile banking app development.
According to a study by Juniper Research, “mobile banking users now represent 50% of the global banked population. Juniper expects that the number of global mobile banking users will now overtake online users in 2018, 2 years earlier than previously anticipated.”
Consumers are using their devices to send and receive money, manage loan payments, and even open and close accounts. This trend will continue to grow as consumers expect more features from their mobile banking services.
These features should include:
- 24-hour access to account balances, account history, and transactions
- Secure mobile check deposit, using the smartphone camera
- Bill payments
- Loan payments
- Money transfers
- Security and fraud alerts
- Travel services
The Challenges in Implementing These Features
For banks, managing a mobile solution can be more difficult than it first appears. Financial firms must adhere to GRC (governance, regulatory, compliance) mandates when integrating mobile services. And mobile opens up a much larger potential for data theft, fraud, and data validation difficulties.
So, not only do banks need to compete for services on smartphones and tablets, but they need to do so while:
- making the platform secure
- protecting the user’s privacy
- verifying the user’s input
- and keeping the service simple to use
This raises a number of challenges.
Take, for instance, the increasingly popular mobile check deposit feature. This allows customers to deposit checks by using their phone’s camera. However, such a service removes a great deal of control from the bank, while inherently placing it in the hands of the user.
Since the bank cannot prevent tampering with the hardware, it needs to implement additional validation steps on the back-end to prevent fraudulent checks from being processed successfully.
- Mobile introduces the potential for error not commonly found in desktop computers, such as data entry mistakes caused by smaller keyboards and other input methods.
- Mobile operating systems can be vulnerable to bugs, viruses, and malware not found on desktop machines.
- Mobile devices also generally have a much broader range of methods for connecting to the Web, from a vast selection of Web browsing apps to Web browsers built-in to various apps.
However, since mobile users spend only 14% of their time in the browser and 86% of their time in apps, banks that make use of mobile banking apps gain more control over how their data is transmitted to and from mobile devices.
The drawback is that it requires technical knowledge to implement a secure, reliable method of transmitting that data. Mobile banking application development in particular requires a development team knowledgeable in modern security practices.
3. Mobile Banking Security Features
Mobile banking services must be secure, but at the same time they need to allow for flexibility and future extensibility. As banks react to changes in customer expectations, regulations, and available technologies, their core services need to be able to expand and adapt.
Beyond traditional usernames and passwords, banks are keen to remain on the cutting edge when it comes to keeping their mobile apps safe. These security features include:
- PIN/TAN systems: The PIN is a password required to login to the app, and TANs (transaction authentication numbers) are a one-time password used to authenticate transactions. The TAN is often sent separately, via SMS, email, or postal services.
- Biometrics: Touch ID (fingerprint login); facial recognition; iris scanning – these have all been implemented by leading banks worldwide to enhance the security of their apps.
- Voice recognition: A number of banks now offer voice recognition as an alternative to passwords.
All of these requirements stress the core banking system while placing additional demands on top of the system’s existing requirements.
4. Investment Banking Features
Compared to retail banks, trading banks have very stringent requirements on the execution of their back-end software. Financial institutions rely on high-performance systems to facilitate the purchase and sale of financial assets.
Increasingly, these features should include:
- Artificial Intelligence (AI) for fraud detection and prevention, regulatory compliance, and marketing.
- Blockchain for the exchange of trade data (among other applications).
- Big Data Analysis, in order to make timely and accurate recommendations and trades.
- Cloud-enabled technologies to reduce costs, enhance user experience, and increase efficiency.
- APIs to improve mobile applications and user engagement.
Traders work closely with companies like Arista, Cisco, and Pluribus to continuously upgrade their infrastructure with faster servers, switches, and routers, but the hardware is only a part of the overall system.
The ability for investors and traders to make quick decisions is ultimately driven by the underlying software.
Exchange markets handle tens of billions of dollars regularly. In August 2018, the Nasdaq alone traded over $117 billion on a daily basis. Much of this consists of high volumes of small transactions, a technique otherwise known as high-frequency trading.
It’s difficult – if not impossible – for traders to compete without implementing their own high-frequency trading algorithms, but both traders and investors need a way to quickly track and respond to market volatility.
With enterprise banking software, banks have the means to generate transactions quickly and reliably.
Excerpt from https://igniteoutsourcing.com/fintech/mobile-banking-application-development/