How Does Mobile Banking Work? And What Is Its Importance?

The impact of technological advances on traditional banking has been immense. Mobile banking assists banks in modernizing their workflow, increasing efficiency, lowering costs and reaching a broader customer base. However, traditional banks are having trouble adjusting to the new reality where in-person interactions are no longer the norm as mobile banking becomes more popular. Making financial transactions using a mobile device is known as mobile banking. This can range from something as simple as checking your bank balance or transaction history to being as complicated as online check depositing or opening a new bank account. A report claims that there are about 57 million users of mobile banking. Another report claims that 86% of all transactions use mobile banking apps like Bhim UPI to pay for purchases and services.

Mobile banking has a long history, dating back to the late 1990s when the internet was gaining prominence. Mobile banking, which operates primarily through SMS or text messages, was also known as SMS banking before the availability of mobile web services in 1999. Before 2010, mobile web and SMS banking were the most widely used mobile banking services. As internet data became accessible, the rise of smartphones paved the way for the development of mobile banking apps like Yono, which forever transformed mobile banking.

What Services Do Mobile Banking Apps Provide?

You can count on the following features whenever you use mobile banking:

  • Checking account balance
  • Money Transfer
  • Checking your mini statement
  • Payment of bills
  • Mobile Recharge
  • Ordering cheque book
  • Changing ATM PIN and so on

Importance Of Mobile Banking

Thanks to mobile and internet banking, you can access banking services without constantly going to the banks. Instead, you can perform the tasks from any location at any time. All you require is a reliable internet connection and a mobile device.

Online and mobile banking services have replaced the need for bank visits in person. As a result, you can perform various banking tasks quicker, including requesting cheque books, applying for loans, transferring money, and making payments. Additionally, the tedious process of physical verifications and heavy documentation has been significantly reduced thanks to mobile banking’s specific services like one-time passwords (OTP) and minimal online paperwork.

Compared to the previous banking system, there were many complex and time-consuming steps that a customer had to go through to initiate a transfer of funds or to receive money into their bank account. In addition, there is always a chance that someone posing as you could use your signature to withdraw money in some circumstances. Mobile banking uses multiple levels of authentication to ensure security and protect customers’ money from fraudsters. This guarantees that only account owners make a financial transaction, blocking all scammers with various security measures.

Banking apps like the Bhim app offer one-click payment solutions for all bills. We have traditionally used various applications for shopping, paying utilities, credit card bills, fund transfers, recharging mobile phones for use with televisions, and other tasks. However, with the development of banking applications, everything is now done inside a single mobile banking app.