Leapfrogging from e-banking to m-banking

Written by Mukesh Bhargava | Updated: Sep 18 2011, 07:35am hrs
Mobile banking in India is still at its nascent stage, the countrys 800-plus mobile subscriber base combined with lack of proper banking infrastructure and low penetration of computers and broadband offers big scope for the service in the country.

Though e-banking using mobile phones is a convenient utility service for users, it is used by only about 1.96 million or 12% of the 16.4 million active mobile Internet consumers in the top eight metros of the country, according to a recent report by Internet and Mobile Association of India or IAMAI.

For banks, mobile banking has become the most promising medium of reaching out to their customers because of the ability to provide services at any time or place in the world. Mobile banking provides exceptional convenience to all cell phone users, says Ranjit Yadav, country head, Mobile and IT, Samsung India.

According to TowerGroup, an IT advisory consultancy, estimates that mobile banking usage in India will grow from 10 million active users in 2009 to over 53 million active users in 2013, representing a compound annual growth rate of 51.8%.

Besides, smartphones and tablets hold the key to the growth of mobile banking in the country, says experts.

Smartphones are helping and adding impetus to the whole process of m-commerce being rolled out. They provide an adequate platform, from an operating system and infrastructure to security. The encryption standards adopted for mobiles are more or less similar to what we get on a PC. So, it is helping the cause to a great extent, adds Sandeep Gupta, managing director, Protiviti Consulting.

Yadav adds, Operating systems like Android and Bada allow banks and other financial institutions to take the advantage of the rich user interface to provide elaborate banking applications on the move. Unlike feature phones that have a limited app infrastructure, these platforms also provide dedicated app stores to make it easier for users to install these applications on their smartphones.

And as experts claim, the Internet is all set to touch new heights with the growth of smartphones and tablets, which will further push mobile banking. Gartner estimates show that three million smartphones were sold during the first three months of 2011.

Further, a recent report by Boston Consultancy says, Mobile phones, propelled by 3G and the smartphone technology, will emerge as an undisputed winner by 2020 (compared to alternative modes of transactions like cheques and ATMs), potentially accounting for 20-30% of the total transaction."

In some sections of the society, these services are already gaining traction, And as experts claim, the Internet is all set to touch new heights with the growth of smartphones and tablets, which will further push mobile banking. Gartner estimates show that three million smartphones were sold during the first three months of 2011, Gupta commented.

There are three ways through which mobile banking can be assessedSMS, browser-based and application based. The first, which is largely seen in usage nowadays is banking via SMSes. This medium, which comes with universal handset support, is limited mainly to alerts. Transaction possibilities are limited to mobile top-up or DTH recharge, and have to be done using a slew of short codes.

Then there is browser-based banking, wherein users can access the banks website designed for mobiles through these smartphones or tablets. Finally, there is application-based banking, which requires downloading of a bank app on to mobile phones. This is more convenient and user-friendly than the other two methods. Applications, however, usually run well on smartphones and tablets.

Almost all the banks have launched custom-designed applications, for specific smartphones, such as iPhones, BlackBerrys and devices running on Android. For instance, SBI offers State Bank FreedoM mobile banking application, HDFC has NGPAY and ICICI has its iMobile.

These applications offer a more comprehensive banking experience. They not only allow people to transact money but also offer services like bill payment, ticket booking, cheque book request, access to loan accounts, demat enquiry service and ATM locator. The best part is that these applications are free to download from the banks site or an application store.

In the coming years, it is the applications-based services that will drive mobile banking. Quoting Gartners latest research, Yadav adds, money transfers and payments over mobile phones will be among the top 10 most important mobile applications by 2012.

Gupta adds, From an operating system perspective, if you compare Android, Bada, iOS and Symbian, they are as good as an operating system on your PCs or laptops. It is more about the acceptance of a particular operating system and the applications being hoisted on it. Almost all operating systems have matured to a point of providing adequate security features and system strengths are almost equal. If you ask me I think m-commerce activities will be operating system neutral. If a bank is launching an app in the market, it would do so for a popular operating system.

Going forward, the scope is immense. The functions and features that a smartphone offers open the door to a whole new world of possibilities. Mobile banking has the potential to emerge as a game changer in terms of costs, convenience and speed of reach. Nevertheless, for this to happen, banks, telecom operators, technology providers and other stake holders need to work together to offer enhanced user experience.

Srinivas Nidugondi, vice-president, Mobile Financial Solutions, Comviva says, In India for mobile financial services to succeed, all stakeholders must remain focused on the needs of customers to develop new and innovative applications and services based on a clear understanding of the customer requirements particularly those belonging to underserved demographics. In fact as mobile finance is the most cost-effective, secure and fast alternative to informal mechanisms of money transfer, the services should be empowering and handset agnostic for which partners like VAS developers mobile service providers and the banks should come together.

Echoing similar views, Robin Roy, an associate director at PwC adds, Banks can coax users to try an application once but consistent usage depends on cost and ease of the transaction. Even today 100% connectivity is not guaranteed, we still face call drops. All this needs to be put in place to expedite adoption of m-banking.