The emergence of online banking
The emergence of online banking brought change to the banking industry and made banking experience better for the customers since they can get access to the details of their bank accounts any time wherever they are through the website of the bank. Continuous advancement in the technology has even made banking services more flexible through the development of mobile banking. Although people when referring to the two services, online banking, and mobile banking think it is the same thing, this is not the case. Online banking is a system in which clients can make their bank transactions via the bank's website with the help of the internet. This new technology enables the customers to carry out bank transactions without having to go to the banks physically. The internet banking helps bank account holders to pay bills, make balance inquiries, transfer fund, stop payment as well as making other monetary transactions.
Mobile banking
Mobile banking, on the other hand, refers to banking services provided by banks to their clients where they can make financial transactions using their mobile phones. The mobile banking services take place via a mobile application, short message service and website anywhere and anytime. The technology of mobile banking has revolutionized the banking industry a great deal, a situation that has made payment of bills, checking of bank account balance, fund transfer, and m-commerce possible via the mobile phone (Velasco-Castillo, 2017). Companies like PayPal and Monzo offer mobile banking services, and through this customers are finding it easy to access bank services. The report will focus on the PayPal and Monzo mobile banking service providers and how they are different from the mainframe online banking system.
Literature review
Monzo Bank
Monzo is a UK online mobile-only bank that operates via debit MasterCard and mobile application. The Monzo bank also offers current account to its customers that enable them to make deposits, savings, and withdrawals. Monzo offers their customers free monthly ATM withdrawal of 200 pounds; however, subsequent withdrawals will attract a charge of 3%, and customers are also allowed to link their Monzo accounts with their smart devices and services like Amazon Alexa. The bank issues every new customer who signs up for the current account with a debit MasterCard, and it has limits for the top-up amount, ATM withdrawals, overall balance on the cards and single payment.
The bank offers mobile banking services via a mobile app installed on iOS and Android phones. This app allows the account holders to monitor activities and transactions taking place on their accounts. The application will make it possible for the customers to receive real-time notifications to their mobile phones whenever their Monzo cards make payments. Through this mobile application, account holders can freeze their accounts in the event of theft of the card or whenever it is lost, and they can monitor their spending habit, can categorize their transactions and mark company expenses.
Monzo's mission statement is to "build a financial control centre for one billion people" (Zhou, 2017). This mission reveals company's ambition of focusing on a market expansion that aims at billion clients and to achieve this, it is customer oriented and focuses on providing the best banking experience in the industry.
PayPal Online Payment System
PayPal INC is a US online money transmitter that provides a platform for its customers to use for online payments. The company offers PayPal cashback MasterCard services where it provides a cash return of 2% to those clients who shop using PayPal either via online or from physical stores. The company had in 2012 introduced 'PayPal here' that was a mobile payment system that was using a small card reader plugged in a Smartphone and a free mobile app. Later in 2013 PayPal introduced an updated mobile application for Android and iOS and this made it possible for users to access their PayPal credit accounts and search for a business that accepts PayPal payments in their regions and even make orders in advance (Balderas, 2011, p). Similarly, PayPal allows payment through SMS where customers use PayPal mobile on their cellular phones. PayPal is not a bank nor is it registered as one in the USA since it is just an online money transfer platform and for that matter, it does not offer a current account to its users.
Just like Monzo, PayPal is committed to becoming the ultimate customer champion in the online mobile banking industry in the world. This commitment is evident in their efforts to try and offer reliable and secure online payments and financial services that are consistent to help millions of customers around the world achieve their ambitions, hopes, and dreams.
Comparison between Monzo and PayPal
Monzo bank and PayPal online payment are both mobile banking service providers whose objective is primarily making banking experience in the 21st century better. The two services have a well-structured system that takes matters security into account, and they both have in place a fraud protection mechanism to safeguard their customers and the companies from cybercriminals. They also offer support for billing.
Although Monzo and PayPal have some similarities, they also have differences among them. The Monzo bank makes payment via Monzo, PayPal, apple pay, android pay, and googles pay while for the PayPal Inc it uses PayPal app to make payments. The Monzo banking services are present in 132 countries all over the world, and the transaction on current account and withdrawals from ATM in the UK is free. However, Monzo bank charges 3% on ATM withdrawals above 200 pounds overseas, but it has no monthly charges for its accounts. On the other hand, the PayPal online payment services are widespread all over the world, and so far it is currently in 203 countries (Zhou, 2017). Just like Monzo, PayPal has no monthly fee for regular payments although for pro payment clients have to pay a price of $ 30 monthly. Also, the company charges 2.9% and an additional 0.3 dollars as a transaction fee, 20 dollars per each chargeback and a currency conversion transaction fee ranging from 1% to 4%.
Monzo is a licensed bank and offers banking services that include offering its customers with current accounts while on the other hand, PayPal is an online money transmitter and it is not allowed to provide banking services in the US.
Difference between Mobile Banking and the Mainstream Online Banking
In the mobile banking, customers can carry out banking transactions using their mobile devices like cellular phones, smartphones, and tablets. Conversely, the online banking system is a banking transaction done online through the website of a bank by individuals under their profiles using computers or laptops. The mobile banking like PayPal and Monzo employs SMS, web or mobile applications in its operations whereas internet banking uses the websites of the respective financial institutions or banks.
Similarly, mobile banking uses both electronic fund transfer system (EFTS), "immediate payment service (IMPS) or real-time gross settlement (RTGS)" (Hernández-Murillo and Fuentes, 2010, p. 1657) in the process of fund transfer. On the contrary, online banking uses only RTGS and EFT in its funds' transfer process. In addition to this, the services that mobile banking can offer are limited whereas the internet banking provides so many services to customers.
Future of Mobile Banking
The mobile banking is a new technology in the banking industry, and continuous innovations are going to bring about new and unique customer experiences. These innovations are going to make mobile banking a strong challenger bank, and its ability to use artificial intelligence, cognitive messaging and predictive analysis will be vital in enabling their clients to make balance inquiries, make payments, pay debt and save money (Estelami and Laukkanen, 2017). For this reason, other banks will have to join them to survive the wave.
Another thing is that in future the technology of blockchain is going to go beyond cryptocurrency and bitcoin as companies struggle to overcome the challenge of insecurity in online transactions. With this technology of blockchain, mobile banking will be secure, instant and lead to a lower transaction cost. Similarly, there is a possibility that mobile banking companies may decide to adopt voice-enabled payments and this smart assistant technology will change the landscape of mobile banking.
Conclusion
The advancement in technology has led to innovations like mobile banking and emergence of companies like Monzo bank, and PayPal Inc limited that provide online banking services. The companies have provided platforms that allow customers to make banking transactions anytime anywhere whenever they want using their mobile devices. This technology has saved people a lot of time and money because transactions are real-time and transaction cost is low as compared to traditional banks, and also the system is secure. With this trend, the mainframe banks are on the verge of becoming obsolete and therefore need to join if they want to remain relevant in the market.
References
Balderas, M. (2011). PayPal APIs. Sebastopol: O'Reilly Media, Inc.
Estelami, H. and Laukkanen, T. (2017). Mobile banking. Bradford, West Yorkshire: Emerald Publishing Limited.
Hernández-Murillo, R., Llobet, G. and Fuentes, R. (2010). Strategic online banking adoption. Journal of Banking " Finance, 34(7), pp. 1650-1663.
Velasco-Castillo, E. (2017).Orange, Telefónica, and Telenor see opportunities in digital banking in Europe but face strong competition. [Online] (updated 2017) Available at: file:///C:/Users/Admin/Downloads/Analysys_Mason_operator_banking_initiatives_Jul2017_RDMY0.pdf. p 2. [Accessed June 22, 2018]
Zhou, T. (2017). Examining users' switch from online banking to mobile banking. International Journal of Networking and Virtual Organisations, 18(1), p.51.
