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What Is Mobile Banking And Liquidity

Mobile Banking

Mobile Banking is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device such as a mobile phone or personal digital assistant (PDA).Mobile banking and mobile payments are often incorrectly used interchangeably. The two terms are differentiated by their service provider to consumer relationship; financial institution to consumer versus commercial institutions to consumer for mobile banking and payments respectively.

 

Banking With Mobile

Banking With Mobile

Mobile banking involves using mobile devices gain to access financial services. Mobile payment on the other hand may be defined as the use of mobile device to pay for goods or services either at the point of purchase or remotely. Bill payment is not considered a form of mobile payment because it does not occur in real time. The earliest mobile banking services were offered over SMS, a services known as SMS banking. With the introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers.

Liquidity

Liquidity is one’s ability to meet all payment obligations. A financial institution’s liquidity is measured by its accessibility to sufficient immediately spendable funds at reasonable cost exactly when needed. For a Bank, liquidity is its instant ability to serve deposit withdrawal requests from the depositors and loan requests from the customers in time fashion.

Liquidity

Liquidity

The liquidity of a commercial bank relates to its ability to meet its obligation as they fall due.Banks require adequate liquidity, relative to their commitment in order to maintain the confidence of their customers (particularly their depositors) and their shareholders

The need to be able to cover withdrawal of funds by customers.

*To meet inter-bank indebtedness, which may arise on day-to-day basis following the payment clearing process;

*To be able to meet unforeseen borrowing requests from customers.

*To be able to cope with interruptions to their normal cash flow.

Liquidity Is Vital Issue For A Bank

Liquidity is considered to be the lifeblood for a bank. A financial institution is most vulnerable in liquidity crisis. Depositors are always worried about their cash assets that are deposited to the commercial banks and a depository bank is bound to return the deposit amount with agreed interest on demand. If a bank fails to meet the obligation, worried depositors may launch an old-fashioned ‘run’ on the bank. When the crisis becomes major, all the depositors may lose confidence, call back their money at a time and subsequently a bank may fall. Therefore, liquidity is undoubtedly the prime concern for the bank managers.

A bank may also suffer when it fails to continue its commitment for continuous credit facility for its existing borrowers or unable to respond to the new credit applicants due to liquidity crisis. It may hamper the customer’s confidence; the bank may lose long-term relationship with the good customers and the prospective customers as well, which may affect the income severely.

Financial institutions are to meet huge operating and other expenses like tax. Most of the expenses are subject to meet immediately. These require liquid assets in a sufficient stock. If a financial institution fails to meet these expenses due to liquidity shortage, may hamper the bank’s image; market may receive a wrong message and it may lose public confidence and regulatory protection.

A FI’s must work for strengthen the stock value of the firm as well to meet expected dividend demand of the stockholders even sometimes in cash. If it fails to hold sufficient liquidity, it cannot fulfill the expectations of the stakeholders.

There is a trade-off between liquidity and profitability. The more resources are tide for meeting liquidity demand, the lower the bank’s expected profitability; if all other factors remain constant. Thus, ensuring adequate liquidity is a never-ending problem for management that will always have significant implications for profitability.

Finally, successful liquidity management is a prudential managerial quality. Maintaining liquid assets in asking level without keeping much of them in idle may best accelerate a financial institution to its target. Therefore, liquidity is the most vital issue for the financial institutions, specially for the banks.

So These are some Brief discussion about what is mobile banking and liquidity.It is some basic idea about it and helps to increase the skills of the related field.

 

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