Mobile phone-banking is failing to meet its potential
SV Divvaakar
India’s 840 million mobile phone connections are emerging as knights in armour in the financial inclusion challenge—they hold the promise of providing banking access to the large swathe of India’s unbanked population. Yet, today, less than 20 million people in India are using mobile banking services offered by some 50-odd banks, even though the National Payments Consortium of India (NPCI) has rolled out a gateway for inter-bank mobile payment services (IMPS).
M-banking at present includes: a mini-statement (recent transactions), balance confirmation, cheque book requests, change of m-PIN and money transfers between customers of signatory banks, within prescribed daily limits. M-banking access can be enabled through: interactive voice responses, mobile applications (apps), SMS, and of late, the Unstructured Supplementary Services Data (USSD). Of these, the USSD has been proposed as a game-changer in financial inclusion, able to accelerate the penetration and adoption of mobile banking, especially in interior unbanked areas. A standard short code—*99#—and a seven digit mobile-banking identity is all it will take.
The premise is indeed powerful: the USSD uses the internal signalling bandwidth of the mobile networks, does not require GPRS connectivity or downloading any software and can be used on the most basic GSM handsets--which have more than 60% market share. This makes USSD highly attractive for financial inclusion. Also, it is also more secure than SMS and does not store session data anywhere.
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