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Secure Mobile Banking by SMS is starting up in Germany:
replacing WAP banking

By Roland Zeddies, Sales Director Banking, tecways AG

After a successful pilot run with 200 users, the Saving Bank of Munich will start end of this Year a secure SMS-Banking service for all it’s customers. The system supplier tecways AG designed in co-operation with the GSM network operator O2 Germany, the technology partner Informatik Zentrum der Sparkassenorganisation (SIZ), the system best suited to the requirements of the Saving Bank of Munich to ensure a promising market approach for mobile banking functions, ending the unsuccessful offerings based on WAP.

The Organisations
One of the critical success factors in such complex endeavours is to establish a smooth cooperation of all project partners. To introduce services historically offered at the bank counter on a mobile platform, needs an understanding both in the area of mobile technology and in the way how banking services are created and offered. tecways AG has longstanding experience in both areas. The major task was to get all relevant groups together and integrate ideas and business processes to build a new offering.

O2 Germany
O2 Germany operating a GSM1800 network in Germany and active since 1995. O2 Germany has earned a reputation of technology leadership from the early days. The introduction GENION, that allows customers to use their mobile phone to same price as a fixed line phone at home, underlines the leadership. Another innovation was the first and best GPRS network extension 2001. Today O2 Germany holds a UMTS Licence for Germany and has a customer base of nearly 5 Million subscribers.

The Mobile Banking project is important for O2 Germany to generate new customer through the cooperation with Saving Banks and to introduce Secure SMS traffic at a premium price. Furthermore the customer relationship is deepened, reducing churn.

Saving Bank of Munich (Stadtsparkasse München)
The Saving Bank of Munich is one of the top five savings banks in Germany and has a market share of more than 50% of the potential base in the City of Munich and it’s surroundings. The Saving Bank of Munich has adopted the technology oriented image of Munich and offers their customers besides traditional banking services, an award winning internet, telephone banking and brokerage services.

To further secure the innovative image, the Saving Bank of Munich decided to add a mobile product offering to it’s portfolio.

Informatik Zentrum der Sparkassenorganisation (SIZ)
The SIZ is the central coordination agent for IT systems for the saving banks organisation in Germany. New standards are created with the participation of SIZ. The focus of SIZ is the timely introduction of latest technologies and services into the group of saving banks. As an example, the SIZ ensures the interoperability of electronic payment and card systems between the different banking organisations in Germany. Within the Mobile Banking project, the SIZ cares for the security aspects.

tecways AG
tecways AG is a leading, international system integrator and provider of transaction oriented software solutions, with years of experience both in the telecommunication and banking industries. With the Mobile Banking project tecways created all system specifications, does the software implementation and provides overall project management.

The Technology
Secure Mobile Banking based on SMS is an extension to the established HBCI (Home Banking Computer Interface) concept for Internet banking via mobiles. All transactions and business cases, which are defined by banking institutions for HBCI, are supported on the mobile channel.

The system consists of an integrated environment where a Mobile Banking Platform server integrates mobile phones as clients, telecommunications network as bearer and banking network as a provider of banking information. Non-banking information can be added and transferred with ease.

The Solution

Mobile Banking System Architecture
The architecture of the Mobile Banking System is depicted in Figure 1, which shows the main functional components, their roles and contribution within the system.


Figure 1: System Architecture

Mobile Banking Equipment
The Mobile Banking Equipment is what is at the end–user’s hand to access the information and services provided by the system. The Mobile Banking Equipment holds the mobile banking card, displays the menu and performs secure short message creation and transmission based on the user’s selection. The Mobile Equipment may optionally hold a second card, which could be an electronic purse card for payment purposes.

Mobile Banking Platform
The Mobile Banking Platform is split into two functional blocks, which may be separated and operated by the Network Provider and the Service Provider respectively. The platform is laid out in a flexibly, it therefore can support multiple operators and multiple providers to supply services. The Mobile Banking Platform transfers the short message received from the Mobile Banking Equipment into conformant commands of a selected banking protocol. Interaction between User and Service Provider system is supported by multilevel dialogs. Responses are exchanged automatically to ensure the security and integrity of messaging.

Bank Account server
The Bank Account Server as part of the system provides the respective banking support. It receives the instructions to provide the necessary functions to be performed on the bank accounts and communicates the results and status back to the Mobile Banking Platform. For some business cases, which using different information sources, like brokerage, the platform acts as an information gateway.

Information Servers
The Mobile Banking System supports communication with other servers, such as Internet Information Servers. These participate in the environment and contribute other services and information to enhance the service offering to the user.

Loading New Services
The Mobile Banking Platform provides superb banking and brokerage functions. During usage several applications can be downloaded onto the SIM Card, and can be utilised by the user.

The services to be implemented can be grouped into service, which are loaded on request or services, which are broadcasted upon certain events (push service). Both type of services are either interactive or read-only. As soon as the services requested are on the SIM they are stored and added to the standard menu. Upon activation a number of menu items can be selected out of a list. The menu items represented applications to be activated.

Security
The communication between the Mobile Banking Platform and the Mobile Banking Equipment is based on the 3DES encryption and MAC for authenticity of the message. The Mobile Banking Platform handles the secure transfer of 3-DES encrypted data and dispatches them into the bank specific format.

The Pilot System
The Mobile Baking System was implemented in May 2002 in the operating centre of the Saving Bank of Munich. Several hundred Users participated in the first functional trial of the system. In the pilot phase the two services account balance and remittance were available on the mobile phone.

A survey among the users yielded a high score for acceptance, usefulness and usability. Nearly all participants would recommend this new Mobile Banking Service, reasons being an easy access to the applications in conjunction with small cost per transaction.

Together with the start of the pilot phase, the magazine “connect” tested the few mobile banking services available in the market. The Mobile Banking System was awarded as the winner of the test as written in the issue 05/2002: “Remarkable: the Mobile Banking Service using the popular SMS messages get more points then the WAP competition”.

Summary
The Mobile Banking System from tecways offers advantages to the user by easy access to banking information from anywhere at anytime, to the operator for additional usage of network services and to banks to attract and keep customers by offering specific contents using standard mobile devices.

For more information, please contact: Ria Dueber: rdueber@tecways.com



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