Risk Management of Mobile Financial Services (MFS)

This paper provides a brief analysis on risks associated with the Mobile Financial Services (MFS). In current context where the position of mobile phone has strengthened in the financial services value chain, MFS have become popular and convenient way of making payments. Risk management mechanism for mobile financial industry is critical compared to other financial services that may not widely connected to the advanced technologies and permit the financial institution to control most part of the services directly within the institution. This paper briefly analyzes the method of managing the risks such as operational risks, strategic risks, reputation and compliance risks associated with the MFS. It has been realized that financial institutions have introduced wide array of mobile financial services that consist of innovative products and state-of-the-art technologies to accomplish modern customer needs and convenience. Advanced technology and user-friendly mobile applications are more prone to risks and fraudulent activities. Therefore, implementing proper supervisory and regulatory measures are vital to safeguard both service providers and consumers and ultimately financial systems stability of the country. Accordingly, major recent regulatory measures that have been taken by the Central Bank of Sri Lanka on managing risks of MFS has also been discussed in this paper.