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E-Banking: ‘a New Era of Customer Satisfaction Through Sms Banking’

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E-Banking: ‘A new era of customer satisfaction through SMS Banking’

Abdullah Hassan, BBA(Hon’s), Fourth Year, Department of Management Studies, University of Chittagong, Abstract According to the Euronet mobile Banking Guide, there are currently close to 400 mobile operators in over 133 countries who are signing up 4 to 6 new customers every second. That means people are now much more interested in cell phone than before. Users always seek multi-dimensional use of their cell phones. The main purpose of this paper is to find out customer satisfaction through SMS Banking. Mobile phone operators provide various value added services (VAS) to their users including banking service and other utility services with the legal agreement with respective organizations. As mobile operators are trying heart and soul to retain existing customers and enhance new customers by adding VAS, hence a mobile banking solution called SMS Banking that allows people to bank with their mobile phones and its overview are presented in paper.

Introduction There are various types of E-banking that are used in the field of IT and Banking. SMS Banking is one of them. SMS stands for ‘Short Message Service’. SMS Banking allows you to check account balance, transfer amount to other account, payment of utility bills like electricity bill, gas bill and water bill etc. Short Message Service is particularly adapted to 2G networks because they require low capabilities for data exchange (160 characters for 7 bit by message). For example, SMS make possible to answer quickly a customer request to consult the account balance. The sensitivity of this information requires that the bank lodges and manages its own SMS server since the telecom operators are not authorized to treat them. In the United Kingdom, First Direct attracted 138.000 subscribers with its "SMS alerts" which represented 25% of its online customers (Sangani, 2002). “The main problem with this kind of transmission is the missing encryption of the data during the on-the-air transmission between the service center and the mobile phone” (Pousttchi, et al.2004). Thus, banks are just satisfied to deliver a limited information service to customers. A developing country like Bangladesh, the process of SMS Banking is very effective for users. There are two methods of SMS widely used in applications; they are the PUSH & PULL (Seylan Bank, n.d).
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. An example could be a deposit alert, which alerts the user when a deposit is made to his/her account, (Rotimi, et al. 2007)
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
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. (Rotimi, et al. 2007). An example is when a user requests his bank account balance. In Bangladesh, there is a great scope of spreading banking services through GSM mobile networks.
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.
Function of SMS SMS (Short Message Service) is one kind of text-based features of cell phone operators that allows user to send and receive text message to other cell number, (Rotimi, et al. 2007). More than 160 billion SMS are exchanged each month in European countries (Mavrakis, 2004). SMS use the GSM special signaling channel instead of the voice channel and is therefore a very reliable media channel. MARVRAKIS, 2004 identifies two types of SMS which can be classified by the origin of the message.
Mobile Originated SMS: Mobile originated SMS’ are sent from a mobile phone and could be sent either to another mobile phone or to a computer application that will process the message. For example, when a mobile phone subscriber send an SMS to other subscriber’s number or a computer based server etc.
Mobile Terminated SMS: Mobile terminated SMS’ are transmitted to a mobile phone. They also could be sent by another mobile phone or generated by a computer based server to the users. 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 (Mavrakis, 2004)
The computer controlled servers are assigned short codes of 4 to 6 digits instead of 10 digits. Whenever a request received by the servers from the users at specific number (code), it identifies and process’ the request according to instructions. After processing it sends the requested data in text format to the users. Everything is processed in an self-processed way. The following figure shows how SMS processed, (Tanakinjal, et al., 2007)
Figure: Elements in the Communication Process

Traditional Banking System In traditional banking system, clients of the bank suffer a lot in the nationalized banks. Though some private banks think for the clients and understand the value of time. People are now more interested in private bank rather than nationalized bank. Effectiveness and efficiency in the private bank are increasing rapidly by the adaptation of IT in the banking sectors. To know account balance, information regarding transactions, amount to be credited and debited are very much important to the bank clients. But in country like Bangladesh it is totally tough to get information instantly. As a result, the clients waste both money and time. The clients want to speed up their life getting quick access to required information. To get information about his/her account, s/he has to go to Automated Teller Machines (ATM) booth or to the bank.
The use of Automated Teller Machines and electronic home banking systems has increasingly allowed customers to bank outside of traditional bank facilities, for most of their usual transactions. This was consistent with the cost-savings strategy of most banks, which discovered that electronic transactions were about seven times less costly compared to the manual handling of these transactions by a bank teller, (Bloch, et al. 1996). For this sense the need of SMS Banking arises. In Bangladesh Dutch Bangla Bank, Primier Bank, Islami Bank, Exim Bank, Standard Chattered Bank, Brack Bank, City Bank and One Bank are now following SMS Banking to provide better services to the clients. According to a working paper based on Economic and Policy analysis working paper shows the participations of users through SMS Banking in the form of E-Banking, (Furst, et al. 2000).
System and Software Design The system is separated into hardware and software. Hardware includes the following, (Rotimi, et al. 2007) 1. Inbuilt Modem Phone, 2. Connectivity cable and 3. Personal computer.
[pic] Figure: Hardware Architecture Design
Software Design Process In software design process there are two designs such as Input Design and Database Design, (Rotimi, et al. 2007)
Input Design: The inputs are sent as syntax to the server as a text message. Once the server receives the message, it processes it and the output is also sent as a text message back to the client. 1. Creating an account: To create an account the user has to send a text message from his/her cell phone. Here the server will identify the cell number from which number the SMS came. For this the client has to send a text message in this way. “CREATE ACCOUNT Accountname” to the GSM number The message will go to the server which is connected with software. The senders GSM phone number and the account name, which s/he wishes to use, is saved into the database. This module generates an account number and also a pin code and are both saved into the same database. The account name, account number and pin code are sent back to the user’s number that requested for creation of the account. The sender receives the message in this format.
“Account creation successful: Account name: [Accountname] Account number: [Accountnumber] Pin: [Pincode] 2. Checking for account balances: If a client successfully create his account then s/he easily checks his/her balance by following this steps. The user has send a text message in this way. “CHECK Accountnumber pin code” If the account number is 445165400 and pin code is 45450 then s/he has to send in this way. “CHECK 445165400 45450” But in our country it is a little difference basing on software design and feedback alerts. For example to check for account balance in Dutch Bangla Bank, a use has to send SMS in this way. [pic] Immediately server base software will send a feedback SMS to the clients in this way. “Account Balance as at [Date] is =N= [Amount] If the account number or the pin code or the format or the unregistered users are invalid then the server based software immediate send a message informing that what is wrong and why it happened. 3. Statement inquiry: If the users want to know about the last five transactions of his or her account, then he can also know that through SMS Banking. The users just have send a simple text message in this way. “STATEMENT [accountnumber] [pincode]” to the server number Then immediately the server based software will send the last five or more transactions through SMS to the client. In Dutch Bangla Bank the user has to send the SMS in this way.
4. Payment Bills: Here the bank account holder pays their various bills through using SMS Banking facilities offered by jointly mobile operators and bank. Utility bills like ‘Electricity Bills’, ‘Gas Bills’ ‘Water Bills’, ‘Telephone Bills’ and ‘Mobile Bills’ can be paid through SMS Banking process. But in our country this process is not yet applied wholly. But payment of own-mobile bills and other bills is used in various banks through just an SMS. In Dutch Bangla Bank this process is done in this way. For payment of own mobile bills, the user has to send SMS in this way. [pic] For payment of other mobile bills, the user has to send the SMS in this way. [pic] The process of transactions will automatically generated by the server based software. 5. Change Pin Code: The user can change his/her pin code easily through SMS in case of security pin code is very important. The server will send a new pin code as soon as it receives the request from users. For doing this normal SMS charges is applicable. In Dutch Bangla Bank the process is in this way. [pic]
Procedures of SMS Banking in Different Banks in Bangladesh
Bank Asia |Send SMS to 2929 |
|Type of service |SMS format |
|Account balance inquiry | full a/c no. or the last 4 digit of the a/c no.> |
| | |
| |Example: Acc1234#2365 |
|Pre-Paid refill or Post-Paid bill to own |amount |
|number | |
| |Example: Pay1234#300 |
|Pre-Paid refill or Post-Paid bill other mobile| |
| | |
| |Example: Pay1234#300#018XXXXXXX |

BRAC Bank |Send SMS to 3939 |
|Type of service |SMS format |
|To know account balance |Type : a and send to 3939 |
|To know last few transaction |Type : t and send to 3939 |

Standard Chartered Bank |Send SMS to 2727 |
|Type of service |SMS format |
|To access Credit Card’s previous day’s |Type : CARDPIN No |
|outstanding amount | |
| |Example: CARD 2365 |
|To access Account’s previous day’s balance |Type : ACCPIN No |
| | |
| |Example: ACC 2365 |

Database Design: Database design is very important and design of database will process all kinds of processing. This can be clear in this way, (Rotimi, et al. 2007)
Figure: Tables for SMS Banking

It uses three tables for SMS Banking. The tables are:
Bank Account: This stores the customer information such as account name, account number, phone number and pin code.
Bank Credits: This is used to manage credits for a customer, it is related to the bank account table by the account number field, and hence the foreign key is the account number.
Bank Debits: This stores information about debits for a customer; it is also related to the bank account table by the account number field.

Forms of SMS Banking There two types of service offered by mobile operators and other respective organizations. We point out the short comings of each in relation to the others. These banking services may include any of the following, (Emmanuel, 2007). ➢ Credit/Debit Alerts. ➢ Minimum Balance Alerts. ➢ Bill Payment Alerts. ➢ Bill Payment. ➢ Recent Transaction History Requests. ➢ Information Requests like Interest Rates/Exchange Rates. ➢ Account Balance Enquiry ➢ Account Statement Enquiries. ➢ Cheque Status Enquiry. ➢ Cheque Book Requests. ➢ Fund Transfer between Accounts. ➢ Payment of Electricity Bills. ➢ Payment of Gas Bills. ➢ Payment of Water Bills.

Advantages that lead to ‘Customer Satisfactions’ Customer satisfactions depends on how much utility s/he enjoy from using a particular products. Satisfaction is a difficult term to make equal to every body. Satisfaction means different views to different users and clients. As a result, satisfying factor varies person to person and client to client. So there must be something universal accepted by all kinds of customers. This satisfaction must come from his/her intentions to use mobile services. There is a figure that shows the intentions to use mobile services as a key factor of satisfactions, (Nysveen, et al, 2005). The figure is shown below.
Figure: Intentions to Use Mobile Services
There some attractive advantages which satisfy both clients of mobile operators and bank account holders, (Rotimi, et al. 2007 and Lustsik, 2003) ❖ Convenience: SMS Banking is very much convenience to those who want to save times and energy. It’s easy to access latest information within a minute regarding financial transactions. ❖ 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. ❖ Portability: Unlike a lot of software application such as J2ME Midlets which are platform dependant. SMS Banking can be done from any GSM phone as all GSM phones support SMS. ❖ 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. ❖ Reduced Costs: Relatively, SMS Banking reduces the costs of performing a banking transaction, Relatively Lower Cost of accessing information. ❖ Increasing efficiency and effectiveness: SMS Banking speeds up the daily life of people, hence all kinds of work relating to financial transaction will be speed up. Now a day people always want to be effective in all perspective with the blessings of IT.
The following figures different kinds of satisfaction factors by which a consumer can enjoy satisfaction through services, (Lee, et al. 2002)

Limitations of SMS Banking SMS Banking bears some limitations regarding performances, (Rotimi, et al. 2007) ❖ 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 (Seylan Bank, n.d.). ❖ the 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 ❖ 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 ❖ not all users may have a mobile phone, therefore alternative back-up needs to be sought ❖ delay of transmission of SMS by the GSM operators and intra and inter connection delays and traffics between GSM operators

Future Prospects and Possibilities It plays a vital role in customer retention and by offering customer oriented VAS (Value added services). A study on mobile telecommunications and market innovation shows that Chinese economy was booming, the mobile services became an important part of the social life for the normal Chinese people. There was a significant, ever-increasing demand for the mobile services. These factors together enabled GSM network and market to soar in China, (Gao, et al. 2007). Study concludes that majority of customers are accepting online banking culture because of many favorable factors, (Quereshi, et al. 2008). It has a greater opportunity in developing country like Bangladesh. As people always try to save time and money in getting quick access to information, all kinds of bureaucratic hazards will be solved by the help of SMS Banking. It can help the client to perform all kinds of financial transactions through SMS Banking especially for money transfer. Either the mobile operator can take the process of money transfer in it own duty or it can make legal agreement with the respective organizations. This process will reduce time and energy of clients as well as an extra source of revenue and as a part of VAS. It prospects and possibilities in near future are beyond descriptions.
A recent study on US-Hispanic shows that there is an increasing tendency of people towards on line banking approximately 50% of traditional banking system converted to online banking, (Singh, et al. 2008). A working paper of Bankable Frontier Associates shows some reasons about focusing on Mobile Banking. There are several reasons for focusing on m-banking specifically at this time, (DFIF & Infodev. 2006) 1. • In low income countries, m-banking may enable leapfrogging in the sense of reducing the need for the rollout of higher cost financial infrastructure, such as dedicated POS devices; 2. • M-banking potentially brings new players, telcos, to the table; in many LICs, these may be stronger than retail banks and better placed to reach out to unbanked customers; 3. • M-banking is still very new, whereas other forms of e-banking are quite well established; the potential to influence the models adopted towards being transformational (i.e. targeting new markets) may be higher.
SMS Banking plays a vital role to a bank account holder undoubtly. Developing country like Bangladesh the innovative features of both mobile operators and financial institutions can bring revolutionary changes in the customer value added service (VAS). This not only satisfy the clients but also a useful tool to control every transactions in the Data Mining Process of Bank server. As people of Bangladesh live below poverty line and education rate is very low to use and enjoy this features wholly. But further research will lead to obtain a remarkable solution for this shortage. In a word we can say that there is a greater opportunity in Bangladesh and other developing countries to retain and sustain existing clients by providing attractive features like SMS Banking.

References 1. Abunyang Emmanuel, “Mobile Banking in Developing Countries: Secure Framework for Delivery of SMS-banking Services”, Working Paper 13-14, RUN, 2007. 2. Achraf Ayadi, “Value Creation in Mobile Banking”, Issues in Institut National des Telecommunications, 2006. 3. Aktel ATM company website. Available at, Retrieved August 18, 2008. 4. Bloch, M., Pigneur, Y. and Segev, A, “A Business Value Framework, Gaining Competitive Advantage and Some Research Issues”, On the road of Electronic Commerce, March, 1996. 5. Dutch Bangla Bank Limited website. Available at Retrieved August 18, 2008. 6. DFIF and Infodev “Mobile Banking: Knowledge Map and Donor Support Strategies” Working paper under Bankable Frontiers Associates, July, 2006. 7. Euronet Mobile Banking Guide. 8. Furst, K., William, W. L and Nolle, D. E, “Internet Banking: Developments and Prospects”, Economic and Policy Analysis Working Paper 2000-9, September, 2000. 9. Gao, P. and Damsgaard, J “A Framework For Understanding Mobile Telecommunications Market Innovations: A Case of China”, Journal of Electronic Commerce Research, Vol-8, No-2, 2007. 10. Lee, Y., Kim, J., Lee, I. and Kim, H., “A Cross-Cultural Study on the Value Structure of the Mobile Internet Usages: Comparison Between Korea and Japan”, Journal of Electronic Commerce Research, Vol-3, No-4, 2002. 11. Mavrkis, D., ‘The Monaco Telematque mobile SMS white paper’, 2004 12. Nysveen, H., Pedersen, P.E., and Thorbjornsen, H., “Intentions to Use Mobile Services: Antecendents and Cross-Service Comparisons”. Academy of Marketing Science Journal, Summer 2005; 33, 3;ABI/INFORM Global. 13. Lustsik, Olga, “E-Banking in Estonia: Reasons and Benefits of Rapid Growth”, Tartu University Journal, 2003. 14. Qureshi, T. M., Zafar, M. K. and Khan, M. B., “Customer Acceptance of Online Banking in Developing Economies”, Journal of Internet Banking and Commerce, Vol-13, No-1, April, 2008. 15. Rotimi, E., Awodele, O. and Bamidele, O. “SMS Banking Services: A 21st Century Innovation in Banking Technology” Issues in Informing Science and Information Technology, Vol-4, 2007. 16. Singh, N., Baack, D.W and Kundu, S.K, “U.S. Hispanic Consume E-Commerce Preference: Expectations and Attitudes Toward Web Content”, Journal of Electronic Commerce Research, Vol-9, No-2, 2008. 17. Sangani K. “Mobile banking”, Financial World, March, 2002 18. Seyland Bank. (n.d), SMS Banking Users Guide. 19. Pousttchi K. and Schurig M., “Assessment of today’SMS Banking Mobile Banking application from the view of customer requirements” Proceedings 37th Hawaii ICSS, 2004 20. Tanakinjal, G. H., Amin, H, Lajuni, N and Bolongkikit, J., “Mobile Devices and Communication: An Analysis”, Journal of Internet Banking and Commerce, Vol-12, No-3, December, 2007. 21. Wikipedia website. Available at, Retrieved August 19, 2008.

Term Paper


E-Banking: ‘A new era of customer satisfaction through SMS Banking’

Submitted to,

Mohammad Abu Jahed, Assistant Professor, Department of Management Studies, University Of Chittagong.

Submitted by,

Abdullah Hassan, Exam Roll: 2004/09, Class Roll: 4706, BBA (Hon’s), 4th year, Department of Management Studies, University Of Chittagong, E-mail:

Date of Submission: 27th August, 2008

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