m-banking gains momentum this year, says RBI

by CXOtoday News Desk    Nov 11, 2013

mobile banking

Mobile banking is gaining momentum in India. According to a recent Reserve Bank of India (RBI) report, banking transactions by customers grew by 150% to Rs. 1,566 Crore in September from Rs. 625 Crore in January this year. the Total number of people using mobile phones have exceeded the bank accounts in India, said the report. Likewise, the total number of transactions grew by 29% to 7,169,429 in September from 5,554,327 in January 2013.

According to experts, the increased adoption of smartphones and tablets has made mobile a preferred channel when it comes to banking transactions. Moreover, the introduction of various banking apps (software applications) have made mobile banking simpler for customers.

Mobile banking, a relatively nascent concept, even 5 years back, was launched in 2000 when HDFC Bank launch this initiative for the first time. Initially, banks did not see much gains in mobile transactions, but a major transition happened with the coming of smartphones. In recent times, transactions can be done even on some basic phones. Today, banks are coming up with apps that are more aligned towards the social aspect of mobile banking. for example, ICICI Bank tied with Facebook for an app is known as Pockets allows a customer to pay a friend without having to know the recipient’s bank account details. Additionally, there is also a prepaid mobile recharge feature and another feature to book movie tickets.

“Prices of smartphones have fallen significantly in the last few years and interned data charges have also declined, which has prompted customers to use mobile for banking transactions,” said Rajeeb Chatterjee, head mobile banking and ATM, HDFC Bank to HT Media.

At present, customers in the urban areas are the major users of mobile banking. at the same time, it is the private banks that are showing maximum adoption in mobile banking. However, Rathin De, IT Head at United Bank of India said that public sector banks are not far behind. “Mobile is the future of banking and it will witness a rapid growth in future with rise in the use of smartphones,” he said.

At present, private banks are major players in the mobile banking space. ICICI Bank saw Rs. 389 crore mobile transactions during September while HDFC Bank saw Rs. 347 crore transactions in the same month, said the RBI report.

RBI also sees a lot of security issues pertaining to the growing popularity of mobile phones that are used for transactions. It has announced the constitution of a Technical Committee on Mobile Banking, to examine the options including the feasibility of using encrypted SMS based funds transfer using an application that can run on any type of handset for expansion of mobile banking in the country.