Mobile banking on an upswing in India, finally
Mobile banking is finally gaining traction in India. With a sizeable unbanked population and the country having the second largest mobile subscriptions in the world, experts believe that there is no stopping India from being a prime market for mobile banking.
As per the latest RBI data, the volume of mobile banking transactions nearly doubled by the end of 2012 reaching 5.22 million from 2.67 million in 2011. Today, nearly 70 per cent banks in the country offer mobile banking services. Until now, the country is estimated to have around 25 million registered mobile banking customers and this number will grow manifold in the next 2-3 years, believe experts.
Banks upbeat on mobile
It is no wonder then that bank CIOs, telecom operators, device makers and service providers are banking on this technology to offer new and innovative experience to customers. As Rathin De, GM – IT, ADC and CMS at United bank of India says, “Mobile banking will transform the entire banking experience and enables customers to effortlessly do their transactions on mobile devices in the coming months, instead of visiting their physical branches.” According to him, mobile banking will soon make mobile payments, mobile check processing, SMS banking and mobile banking apps ubiquitous.
Likewise, Rajeeb Chatterjee, Senior VP of ATM and mobile banking at HDFC Bank says in a recent interview to The Banker that mobile banking volumes have picked up tremendously in India over the past two years. He states HDFC Bank is among the five banks that cumulatively account for more than 80 per cent of the country’s mobile banking volumes. Other banks include State Bank of India, ICICI Bank, Axis Bank and Citibank.
Several telecom providers are also gearing up to serve this space. For example, Vodafone has recently launched M-Pesa, a mobile banking solution in India to cater to the unbanked population. The bank has tied up with ICICI Bank and is rolling out the solution in phased manner starting with the eastern part of India where mobile banking usage is the lowest. “For millions of people in India, a mobile phone is a bank account, a front door to a micro-business or a lifeline to people in the remotest areas,” says Marten Pieters, managing director and CEO of Vodafone India.
Even smaller banks are harnessing the power of mobile. For example, recently Corporation Bank in Mangalore launched a mobile banking app on Android and iOS through which customers can access various facilities using net banking user ID and password. Moving forward, several banks are introducing policies across a range of mobile banking developments including P2P transfer through IMPS, mobile wallet and USSD among others to enable mobile banking environment.
Death bell for online banking?
While mobile banking is gaining traction, some in the industry are concerned whether this will send death signals to online banking, which took a while to mature. According to sources, the ratio of mobile banking to internet banking users at HDFC Bank has grown from 1:20 in 2008 to 1:6 in 2013. Chatterjee mentions in the interview that in the next 2 years, the number of mobile banking customers will equal online banking customers and will thereafter surpass the latter.
His prediction matches that of a recent IDC report that also forecasts that mobile banking will surpass the online banking channel in usage by the end of 2014 worldwide and especially in countries with a greater number of mobile subscriptions such as China, India and USA. As tablets continue to erode the PC and laptop market, it also will erode the preferred channel for interaction with financial institutions, said the report.
However, De believes the two can co-exist. Although there is lower broadband penetration in the smaller cities and towns that are restricting web access, it is also important to create awareness on mobile banking as well as the need for standardization of handsets. These developments are easier said than done and will take some time. Therefore mobile banking penetration is still in its early stages.
Experts believe it took eight to 10 years for online banking to take off and mature. Today several banks have 30-40 per cent of their customers using internet banking. Likewise, any technology will take some time to mature. As Marc DeCastro, Senior Researcher IDC points out, it is about tying in the entire customer experience, providing self-service tools outside of the branch network, and providing a high level of satisfaction to help cross-sell additional products and services – and all that is ideal in the mobile platform. “There will be financial activities that just do not work well today on a small screen format,” says DeCastro. However, going forward, successful institutions will recognize that mobile would mean a lot more than just getting balances and checking transactions. This means, transactions through mobile will not only logical but also inevitable in the days to come.
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