Mobile banking users to almost double within 5 years

by Sohini Bagchi    Jan 11, 2013

Mobile banking

“To do” or “not to do” is no longer an option for the banking sector, especially when it comes to leveraging mobile technologies. Today, if a bank does not offer the desired mobile services to its customers, it runs the risk of losing clients and ultimately ceases to exist. The sector in fact was one of the forerunners when it comes to mobility adoption and innovations. The stupendous growth of mobile banking has been further validated by a recent report titled: “Mobile Banking: Handset and Tablet Market Strategies 2013-2017” by Juniper Research. The research firm notes that the number of mobile banking users will grow to over 1 billion by the end of 2017, from the predicted 590 million in 2013, which means it will almost double within five years .

“The potential 1 billion users will represent more than 15 percent of the world’s mobile subscriber base. And the numbers gain additional significance in light of the fact that half of mobile phone users are unbanked, with limited access to traditional financial services,” says Nitin Bhas, senior researcher and author of the report.

According to the report, at present most banks have at least one mobile banking offering, either through messaging, mobile browser, or an app-based service. Some larger banks are now rolling out two or more of these technologies together. Bhas in his report observes that while messaging remains highly popular and relevant in the financial sector, apps will be the dominant access mode in developed markets with banks reporting an increased number of visits per month on their mobile apps.

“We are already seeing a good demand for mobile text messaging. the bank is looking to provide a range of innovative mobile services to its customers to gain a competitive edge in the Indian banking sector in the next 12 months,” says Rathin De, General Manager – IT, ADC and CMS at United bank of India. The bank’s number of branches stands at 1,700 at present.

Mobile payment is also seen as an area that can make a lot of difference to the consumers as well as banks in the coming days. “The number of people using mobile for banking and making other financial transactions globally has gone up drastically in the recent past. In India, however factors such as non-standardization of handsets and security risks, alongside awareness need to be addressed for large scale adoption,” says De.

Experts believe that mobile banking will continue to grow across multiple areas. Bhas points out that from the banks’ perspective, triple play platform is advantageous as it avoids them to switch suppliers for different approaches. It also helps them maximize client reach. More number of banks will not only adopt mobility with optimized sites and application, but will also build their existing mobile programs with a variety of new services, believes Bhas.

Many of the big banks currently give customers the ability to deposit checks into their bank accounts using their mobile phones. However, in the coming days, more banks are likely to offer this service to meet consumer demand. Also, banks introducing a rewards program will increasingly opt for mobile to drive interactivity and get feedback. For example, City Bank Texas offers a rewards account that allows customers to earn higher interest rates based on their level of usage of the bank’s services.

The other key area where mobile can make a huge difference to the banking sector is mobile marketing. “Banks providing local offers through their mobile banking apps can be a huge value addition and in the next two years banks are expected to leverage on this trend,” says A Krishna Kumar, Managing Director, Group Executive - National Banking, State Bank of India.

At present many banks have one mobile app for the entire customer community. But in the near future, there will be a growing number of customized banking apps that will be tailored to meet the requirement of specific customer group. For instance, the banking requirement of a college student will be different from an office executive, and hence the set of services will also differ “This would be a great way how mobile banking will deliver a better mobile experience,” says Kumar.

Customer experience is indeed the crux as most of the interest in mobile banking is being driven by consumers, who tend to interact more with a mobile banking solution than with other banking practices such as internet banking. With mobile banking coming of age, banks can offer information-driven services for enhanced customer loyalty and value.