Despite the combined efforts of various industry bodies, mobile banking (m-banking) in India is yet to gather momentum. Since 2005, the Reserve Bank of India (RBI) has made efforts to encourage this service through no-frills accounts, cheaper agricultural loans, etc. However, these efforts have met with only partial success.
Thereafter, in September 2010, RBI expanded the banking correspondent model to include for-profit companies as well as to provide banking facilities in rural areas. This was in addition to regular banking correspondents like non-governmental organisations, cooperative societies and post offices.
More recently, RBI removed the Rs 50,000 per customer per day cap it had placed on mobile payments and directed banks to determine their own transaction limits. Also, the Telecom Regulatory Authority of India released its guidelines on m-banking, specifically related to security and customer service.
Following these developments, the segment began to witness increased activity. Several operators joined hands with leading banks to offer m-banking services ? for example, Bharti Airtel and the State Bank of India (SBI), Vodafone India and ICICI Bank, and Idea Cellular and Axis Bank.
M-banking was launched in India in early 2010 by Nokia in collaboration with Obopay and Yes Bank. It provided a fast and convenient channel for conducting financial transactions through handsets. The facility allowed users to access account details, credit/debit card and cheque status, mini bank statements, and loan and equity statements. It also provided payment reminders and enabled insurance policy management.
Industry analysts are optimistic about the potential of m-banking in the country. According to Jaideep Ghosh, partner, KPMG India, the mobile can be an important tool in covering the large unbanked population in the country. ?Handsets offer convenience by providing the ability to transact any time, anywhere. For banks, it serves as a cost-efficient mechanism, with the transaction cost on a mobile estimated to be one-tenth that at a bank branch and one-sixth that at an ATM.? Therefore,
m-banking has significant potential as compared to conventional banking and is likely to witness strong growth.
However, a number of issues and concerns need to be addressed in this regard. According to Benoy C.S., director, ICT Practice, Frost & Sullivan, South Asia and the Middle East, security concerns of the end-user, an uncertain regulatory environment and lack of awareness of such services are the main impediments to the growth and uptake of m-banking services. ?The security concerns of end-users relate to frauds in this mode of payment as well as to data privacy. Lack of awareness about services and security protocols, and low penetration of smartphones are other impeding factors that may prevent the large-scale adoption of sophisticated m-banking applications.?
He adds that though reforms have been initiated in the form of RBI instituting regulatory protocols for m-banking, the regulator still needs to create a facilitative mobile ecosystem for integrated growth of these services.
Other impediments include low comfort level of users due to poor literacy levels, limited ability of the existing distribution channels to be leveraged for banking transactions and lack of local language support.
Nevertheless, going forward, more than 60 per cent of the total banked population in the world is likely to use m-banking by 2015, according to the World Retail Banking Report 2010 released by Capgemini and Efma. As per the report, while m-banking is still in a relatively nascent state, it is the channel with the most potential and will warrant more investment by banks to improve the customer experience.
Industry experts add that the launch of 3G and broadband wireless services, with high data transfer rates, and the entry of smart handsets will drive m-banking services in the future. This is because 3G will be able to accommodate increased security protocols and more bandwidth for secure mobile-based transactions. It is also expected to drive the uptake of smartphones, which will enable more secure interfaces for m-banking applications as well as reduce fraud incidences.
tele.net takes a look at various operator initiatives in this space?
BSNL
Bharat Sanchar Nigam Limited (BSNL) was the first operator to introduce a simplified form of m-banking in India in early 2010. The PSU launched an SMS-based money transfer service in association with the Indian Postal Service. To transfer any amount or send a money order through the BSNL Money Transfer Service, the customer has to go to a post office and send an SMS containing a unique code to the receiver. The receiver is then required to collect the money by showing the code at the nearest post office.
Bharti Airtel
In 2011, the telecom major formed a 51:49 joint venture (JV) with SBI to promote m-banking. Bharti Airtel held a 49 per cent stake in the JV.
The two companies jointly invested Rs 1 billion in the new company, which functions as an independent entity, with SBI overseeing the core banking functions and Bharti Airtel bringing in customers.
The JV leveraged the operator?s retail network with customer service points all over India, enabling users to open new SBI bank accounts and avail of other banking products and facilities. Existing SBI customers could also avail of these services.
According to company officials, the JV would help SBI expand its reach in rural areas, whereas Bharti Airtel would benefit from customer stickiness as they can avail of more services on mobile phones.
More recently, the operator?s wholly owned subsidiary Airtel mCommerce Services Limited, in association with Axis Bank, has launched the Airtel Money Super Account.
With this, Bharti Airtel?s customers can open a no-frills savings account with Axis Bank, leveraging the operator?s mobile wallet (Airtel Money) platform. This service will enable users to perform banking transactions like cash deposits as well as money transfers and withdrawals.
Initially, the savings and remittance fa-cility will be available in Delhi, Mumbai, Bihar and Uttar Pradesh (East). Also, money can be sent only from Delhi and Mumbai while Bihar and Uttar Pradesh (East) will have only the facility to receive it.
Other banking products and services such as micro-recurring deposits, micro fixed deposits, small loans and microinsurance products will also be available at a later stage.
Vodafone India
In early 2011, Vodafone India announced a tie-up with ICICI Bank to offer facilities such as savings accounts, prepaid instruments and credit products through a mobile-based platform.
The partnership was aimed at bringing the unbanked and underbanked population into the organised financial services framework and assist in expanding the electronic payments market in India.
Through the tie-up, ICICI Bank intends to leverage the operator?s distribution strength (it has over 1.5 million retail points) for acquiring customers and servicing them.
In the latter half of 2011-12, the operator joined hands with HDFC Bank to launch an m-banking solution for the unbanked. This platform combined HDFC?s MobileBank Account facility with Vodafone?s m-paisa service. The bank appointed Vodafone India as a corporate business correspondent, permitting select retailers of the operator to represent the bank as subagents. The service enables users to perform basic banking transactions through their handsets.
Idea Cellular
In December 2010, Idea Cellular signed an MoU with Axis Bank for providing m-banking facilities.
Idea Cellular functioned as the bank?s business correspondent to provide an entire range of financial products and services through its retail outlets.
Thereafter, the operator launched the Idea MyCash service, which offered basic banking services such as cash deposits, withdrawals and balance enquiries. It also enabled money transfer by migrant populations in urban areas to their beneficiaries back home.
RCOM
Reliance Communications (RCOM) launched its m-banking services in 2011. It tied up with SBI to offer services such as balance enquiries, mini statements, fund transfers, cheque book issuance, mobile recharges and bill payments on customers? handsets.
Aircel
Aircel was amongst the last few operators to launch these services. In February 2011, it announced a joint initiative with ICICI Bank to drive financial inclusion in the country. The initiative offers various financial products including savings accounts, prepaid instruments and credit products. ICICI Bank leverages the operator?s distribution strength.
Net, net, with over 950 million mobile connections and almost 200 million debit and credit card holders, m-banking is bound to gather steam, especially since it offers a far wider reach than other forms of banking.
