Table of Contents
Mobile Banking Ecosystem of Oman. 3
Threats of Mobile Banking System. 7
Approaches towards Innovation in Mobile Banking. 8
Merits of incremental and radical innovation in mobile banking. 9
Demerits of incremental and radical innovation in mobile banking. 10
Disruptor tools suited for Oman. 11
Mobile Banking Ecosystem of Oman
Introduction
Mobile banking is a system or platform that enables clients of a financial system to carry out various financial transactions with mobile devices like mobile tablets and mobile phones. The first mobile banking services operated through the use of SMS offered through SMS banking, which was later advanced through the development of smartphones that supported the WAP system in 1999, allowing the use of the mobile web. Most banking institutions offer mobile banking by using the WAP system platform to their clients (Estelami, 2017). The paper covers the mobile banking ecosystem in the Sultanate of Oman, covering the various stakeholders involved, the early adopters to the system, and the leading development it has brought to the country.
Stakeholders
Mobile banking is becoming one of the latest banks’ latest trends to offer their financial services to their clients through portable telecommunications appliances. Stakeholders include the major players and the individuals who directly affect the economic outcomes of the business. Oman is one of the Arab countries whose telecommunications sector has been experiencing rapid growth over the past years. The two major players in the telecommunications sector are Omani Mobile Company and Nawras Company. The other sector’s other telecommunication industries include Renna Company, Friendi Company, and Mazoon Company (Iccomercentral.com, 2020). The mobile companies offer telecommunication services that play a significant role in the mobile banking sector.
Most banks in Oman use mobile operator companies to offer financial transfers and account information services to their clients. The leading players in the market include Bank Muscat, Oman International Bank, National Bank of Oman, Dhofar Bank, Abu Dabi Bank, Oman Arab Bank, Ahli Bank, and Sohar Bank (Albawaba.com, 2020). The government also plays a significant role in the mobile banking sector as it regulates the terms of service that the banks offer to its clients. The government also ensures that mobile banking services are safe and secure to be used by their citizens. 41.8% of Oman’s population uses mobile banking services to make financial transactions, as almost all the banks in Oman offer Mobile banking services.
Early Adapters
With the development of the telecommunication sector in Oman and the SMS services and call services offered by telecommunication companies. Omani Mobile and Nawras Company have created a platform used by Omani banks to provide mobile banking services to clients in Oman. Bank of Muscat is one of the earliest adaptors in providing mobile banking services, including SMS intimation services and call center services. National bank of Oman followed by offering a call center mobile banking service. Oman National bank is followed by providing phone bank services and SMS services for its clients. Sohar bank offers Mobile banking services and SMS banking services (Omanarabbank, 2020).
Main Developments
With the development of technology, mainly in the telecommunication sector, banks adapt to emerging trends to save on costs and offer efficient mobile banking services to their clients. Banks in Oman have adapted to the development of mobile banking applications. The mobile banking applications will enable mobile phone subscribers to download the applications quickly and easily use the applications to easily access their mobile banking services on the touch of their smartphones (Laurentowski, 2016). The applications will enable the customers to save the time used to visit the banks physically.
The mobile banking services are looking forward to bettering their services by introducing barcode payments, which will enable mobile phone users to scan barcodes and perform transactions directly from and to their banking institutions. The development of artificial intelligence chatbots is also significant as it will enable customers to assist AI machines during transactions. Mobile banking services are adopting the use of voice payments to facilitate payments and transactions. This is due to the emergence of powerful phone technologies’ voice command system (Bankingmobile.com, 2020). The mobile sector developments will enable banks and financial institutions to make a great stride in mobile banking.
Possibilities Offered By Mobile Banking System in Achieving Financial Inclusion and a Cashless Economy in Oman
Over the past years. Mobile phone operators, banking institutions, and payment system providers have come up with ways that enable clients and other stakeholders to make financial transactions. The system allows clients to register for new banking accounts, make client deposits, and issue financial withdrawals. Process financial transfers using mobile phone gadgets, which aid in transferring the transaction made to the respective bank or telecommunication provider. The development has enabled clients to make and receive payments through electronic money anytime they have a cell phone at their disposal. Mobile banking services include a collective set of applications that help clients use their mobile phones to transact funds, access credit services, store money in their accounts, and manipulate respective bank accounts linked to their phones by making payments (Estelami, 2017).
Potential benefits
Mobile banking services helps in lowering the financial burden experienced by banks through bank expenses. By adopting mobile banking services, financial institutions like banks can reduce their overall efficiency since the services enable the banks to: adapt to a paperless means of offering bank services that minimize environmental pollution. The paperless transaction system allows the bank to save on printing money and employ additional staff (Espejo, 2015). Mobile banking systems also offer transactions that are cheaper compared to ATM transactions. The use of mobile banking services enables the bank to reduce its branches since clients can perform transactions using their mobile phones; hence no need to visit the bank institutions. According to reports offered by Oman banking institutions, it stated that the cost of mobile transactions is set to reduce drastically compared to branch transactions and ATM transactions during the coming years. The reduction will help both the clients and banking institutions save on transaction costs.
According to a study on Oman’s mobile banking systems, it was discovered that the mobile banking system introduced in Oman affected the returns on investments and client engagement by 30% (Henderson, 2018). Banking institutions were able to generate additional revenue after increasing mobile banking services adoption rates. Clients who use mobile banking services are more engaged with the bank and use their services more. Customers who use mobile banking services also stay longer with the bank institution as they are loyal to mobile banking services compared to other payment services. The use of mobile banking services by clients keeps the client close to their financial information, which studies show that it increases the client’s financial transaction. Banks recorded 60% of transactions made by mobile banking services compared to branch made transactions.
The use of the mobile banking system leads to improved customer experience, advantageous to any financial institution. Mobile banking services improve clients by providing services around the clock (Nicoletti, 2014). This enables the client to access the services provided without any time limitations. Instant availability of the service at the customer’s fingertips makes the customer loyal to the service. Mobile banking services can provide customized services using the client’s personal information, building trust between the client and the company. Banks can create services that satisfy the customers’ needs by using the institution’s collected data. Mobile banking services assist clients in keeping their finances in check. This enables clients to monitor their account activities easily through their phones.
Compared to online banking, mobile banking offers its clients additional hardware security, which is a significant concern to the customer. Bank institutions have maximized extra protection on their banking services, making it hard for theft from the client’s account (Paulsen, 2017). The additional security features include two-factor verification and fingerprint verification. The financial institution also plays a significant role in protecting the client’s personal information and is key to privacy, enabling the client to worry about using mobile banking. Mobile banking keeps clients’ data safe from hackers and thieves.
The mobile banking system enables the bank or financial institution to collect relevant customer analytics. The use of mobile empowers the institution to sturdy the actionable metrics (Estelami, 2017). The sturdy enables the institution to monitor the performance of the services and improve where required. The data helps the bank to analyze and understand why and how the clients interact with the application. The data enables the bank to know the user experience and improve on that. The bank can also identify the marketing campaigns that are beneficial and successful through the use of acquisition metrics. Measuring the mobile banking system’s performance will enable the bank to determine why users can stick to or abandon the service, improving.
The use of the mobile banking system enables the bank to build on using and adopting artificial intelligence to enhance its services (Mbiti, 2017). AI enables applications to perform their activities without the use of human intervention. AI can help the banking institutions curt on cost since AI can: send personalized information about any development in the product, use chatbots when offering customer care service which is more reliable and cheap and help in fraud detection and detection of any fraudulent behavior that may lead to losses by the bank.
Threats of Mobile Banking System.
Security is the major challenge and threat faced by mobile banking services in Oman. Since mobile banking services use wireless technology for its operations, personal data and information can easily be stolen. The danger forces the service providers to adopt by employing technology that is highly encrypted to prevent losses caused by third party data intrusion. National bank of Oman stated that the use of mobile handset and its natures makes it hard for customer authenticity, which is a security threat to both the clients and the banking institution (Helpnetsecurity.com, 2020). The requirement for a personal identification number does not necessarily mean that the person making the transaction is the owner of the account being used. The increased use of mobile banking transactions increases the risk of threats and security issues, mainly from internet hackers.
The mobile banking system poses an economic threat to the Sultanate of Oman. The price of adopting and using a specific technology influences the performance of the technology. Mobile banking is associated with three costs; these costs include the regular fee related to the expense charged on mobile phone providers’ services, banks’ prices, and mobile phone costs. Purchasing a mobile phone makes mobile banking an expensive compared to other banking services as the cost of buying the phone is costly to other clients. If the prices of phones in the country are high, the clients will be discouraged from buying them, thus being a threat to mobile banking (Wisebread.com, 2020). The transaction cost charged by mobile banking for large amounts is higher compared to low quantities. This discourages clients from transacting large amounts via mobile banking services, which reduce its popularity on large sums of money transaction.
Social beliefs is a threat that is faced by clients using mobile banking services. This consists of how people majorly clients believe in and are comfortable using mobile banking transaction services. For first-time mobile banking users, it takes a hard time for the banks to educate and convince the client on how the device operates as a mobile wallet, which affects the implementation of mobile banking. People in Oman have misunderstandings, beliefs, and habits towards mobile banking that must be well addressed to adapt to mobile banking. The risk brought by the misconception makes it challenging to convince them of the dangers that they have perceived towards the innovation (Bankinfosecurity.com, 2020). The attitude possessed by residents towards change is another threat that affects mobile banking systems in Oman. The different perceptions of mobile banking by other individuals affect the decisions towards the adoption of mobile banking. Older people are perceived to be resistant to technological change, which may threaten them adopting the use of mobile banking systems in Oman.
Lack of adequate infrastructure is another threat that faces financial institutions and individuals who depend on mobile banking systems. Inadequate and unreliable mobile companies’ networks prove to be a significant threat to users who make their transactions via mobile banking. The use of mobile banking in rural areas is limited as the areas’ network is low compared to the developed regions. The poor and unreliable systems limit mobile banking services, which is a significant disadvantage to users who are used to making transactions via mobile banking (Techwalla.com, 2020). Together with mobile companies, the government should work together to ensure that the rural areas are well built with telecommunications infrastructures that will easily access mobile banking services.
Figure 1: Factors that Influence Users to Adopt Mobile Banking (Source: International Press Communication Council, 2020.)
Approaches towards Innovation in Mobile Banking.
The use of mobile devices in carrying out financial transactions in Oman has gradually evolved over the years from short message service in its earliest stages to now including other advanced systems and features such as mobile applications. The increasing and radical innovations being made in the industry allow more people and businesses to access a broader range of services from their banks and other financial institutions remotely. A larger population in Oman can now access information on their account, make a business or personal transaction, invest, be updated on news and current trends, or get support from their financial institution’s customer care, all from the comfort of their home or without physically accessing the bank. Banks and other financial institutions in Oman have adopted SMSs, emails, and mobile applications to communicate with their customers and keep them informed on the status of their accounts.
Merits of incremental and radical innovation in mobile banking
Clients can access account information on their account status through SMSs, making a call to their service provider’s help desk, or logging into their mobile application. They can remotely find out details on their account balance, download financial statements, and view the history of financial transactions made and the history of the account from the time of opening. They can also keep track of their deposits and withdrawals. Some financial companies allow their clients to make decisions or transactions involving loans, investment, or insurance policies through mobile banking. This has given their clients greater autonomy over their accounts and their money. The ease with which they have access to all their account information also gives the clients the impression of transparency and accountability, and thus they trust their service providers more (Anyasi, 2016). The greater the relationship between the bank or financial institution and its clients, the more clients it is likely to gain.
Banking clients have gradually gained greater autonomy over their accounts and money due to the improvements being made in the industry. One can deposit and withdraw funds into and out of the report at any time of the day or week with very few geographical restrictions. A client can also make fund transfers, pay for bills such as electricity, subscriptions or fuel, and other purchases. They can also pay for services from third-party service providers through phone applications. The majority of the banks in Oman also have partnerships and measures that allow their clients to make inter-bank financial transactions or link their accounts to other financial service providers at affordable rates (Ewe & Lee, 2015). To limit instances of fraud, banks in Oman have put measures in place, such as sending a client an SMS once a transaction has been made in their account, such as a withdrawal. They also limit the number of times one can withdraw or deposit money remotely, and the maximum amount one can transact within 24 hours.
The majority of Oman’s banks and financial institutions have made investment management services easily accessible to their clients via mobile phones. A client can make inquiries on a prospective investment through an email, SMS, or call to their service provider and discuss many aspects of the investment remotely. They can keep track of the investment and choose to manage their portfolio and make a variety of decisions without physically going to the financial service provider (Nicoletti, 2014). The safety of their investment and communication between all parties involved is also guaranteed through the use of features such as an end to end encryption.
In Oman, banks and financial institutions are investing heavily in creating customer service and support systems that are efficient and cantered on the needs of the customer. Some of the institutions contract the customer support services from trusted third parties, whereas most of them have their internal departments dedicated to that service (Boer, 2015). Support services include communicating with customers and responding to their needs, such as queries on the status of their accounts and other financial facilities such as loans, overdrafts, investments, and card requests.
The increasing efficiency in Oman’s mobile banking industry has made it possible for banking clients to quickly get information and the latest news concerning credit facilities, interest rates, and card requests. Prospective customers also have access to the information and can make financial decisions such as the bank to join and the type of account to open based on these news updates and information. Banks that have partnered with other third-party service providers also give their clients content, such as information and financial advice on how to take advantage of these partnerships (Jabri & Sohail, 2016). Banks and financial institutions benefit from mobile banking in that they have been to scale down their operational costs by a considerable margin without compromising on the quality of their services to their clients.
Figure 2: Benefits of Implementing Bank Applications (Source: Cap Gemini Financial Services Analysis, 2017)
Demerits of incremental and radical innovation in mobile banking
The demerits and challenges arising from the increase in the use and improvement of Oman’s mobile banking industry are relatively few compared to the benefits. The biggest challenge for bankers in Oman has been to deal with issues related to the safety and security of their clients’ account information, money, and investments, which is prone to hackers and fraudsters. The type of handset the client is using also affects how they will access mobile banking services. The more sophisticated the gadget, such as a high technology smartphone, the more the benefits one can access. Another challenge is that it is difficult to personalize mobile banking services to suit each client’s needs, which may harm customer satisfaction. Improving mobile apps’ synchronization ability, the SMSs, emails, and notifications between the client and the financial service provider is also a challenge (Ewe & Lee, 2015). A few of the banks in Oman also experience challenges in establishing their mobile banking services’ reliability to their clients.
Table 1: Statistic on Threats to Mobile Bankchallengingce: Journal of Internet Banking and Commerce)
Disruptor tools suited for Oman
The tools that are best suited to curb these challenges in Oman, in my opinion, include advancing technologies such as an end to end encryption of services and communication between all parties involved in any form of mobile banking transaction to deal with the issue of security concerns. Also, keeping in mind that a large population of Omanis still do not have access to sophisticated handsets, mobile applications and other mobile banking features should be customized to fit a wider variety of mobile phones and cater to more people in Oman (Iyer, 2014).
Mobile banking services can implement two-factor client authentication to reduce fraud and enhance customer identification. The use of two-factor client authentication requires clients to produce additional identification documents apart from the typical identification requirements during transactions. The adoption of isolation service can enable the mobile banking system to reduce fraud caused by hackers (Laukkanen & Lauronen, 2015). The design preserves the mobile banking system’s integrity as personal data and information is isolated, and third-party hackers cannot obtain their fore. The mobile banking applications can also adopt a permission-based system that allows the application to act on specific permissions granted by the application system. This will provide the mobile phone with warnings on applications that may obtain personal data on your mobile phone service.
[Total Words 3440]
References.
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