Banking industry to boost m-commerce growth

by Sohini Bagchi    Jul 01, 2013

mobile commerce

Mobile commerce is likely to witness tremendous growth in the coming years. A report released by Juniper last week suggests that m-commerce transactions are set to exceed $3.2 trillion by 2017, driven by the banking industry. At present m-commerce transactions - including m-payments and m-banking - conducted via mobile handsets and tablets, are pegged at $1.5 trillion. Experts believe this increase in the transaction value will prompt bank CIOs to constantly focus on the mobile channel as an engagement, delivery and payment platform in the coming years.

“While on one hand, affordable smartphones and broadband plans would encourage the growth of mobile banking services, innovative applications that are hitting the market will also drive the growth,” says Rathin De, GM – IT, ADC and CMS at United bank of India. This is one area where bank CIOs should emphasize on, coming up with secured, customized and innovative banking applications for customers. For example, queries and answers in local language will provide customers with the ability to interact with a banking app similar to a conversation with a bank customer service representative.

However, lack of awareness among customers and security continue to remain key issues affecting the growth of m-commerce in the country and subsequently impacts mobile banking. As A. Krishna Kumar, Managing Director, State Bank of India, notes that although a huge section of the population owns mobile handsets, they are unaware of how to utilize their mobile handsets to avail of the banking services. He recommends operators along with respective banks to come forward to educate users about the services. Krishna also states that as users are wary of using their mobile phones for making payments due to security reasons, operators must pay importance to the reliability and security for mobile-based transactions.

Meanwhile, mobile solution providers are working on securing transactions through mobile phones, as per RBI’s guidelines that recommends telecom operators to provide banks and customers with the option of undertaking transactions using several modes – SMS, IVR, and USSD. eMudhra for example, offers a digital signature-based authentication solution to secure mobile and internet banking mediums. Ravi Jagannathan, Vice Chairman eMudhra believes that the current issues like awareness and security can be addressed by creating an ecosystem where all stakeholders including the government, telecom operators, solution providers, banks and customers can help revolutionize mobile payment system in India.

Likewise several banks have been partnering with service providers to offer m-banking services in rural and remote areas, including mobile wallet services and other user-friendly and simple applications to consumers. “If facilitated by regulation and right business model, mobile commerce has the potential to transform the banking transaction system,” says Jagannathan.

The global market for mobile banking is also slated for a phenomenal growth with Gartner estimating the number of users to reach $340 million and a total transaction value at $245 billion by 2014. The growth it predicts will come predominately from the emerging markets like India, Dubai and Philippines. As Juniper research also points out that a greater proliferation of mobile devices and a greater cooperative effort between operators and banks will drive the growth in the coming years.