Mobile banking is the new growth area?but security concerns and low 3G penetration limit its potential
The combination of a much lower transaction cost and the opportunity to greatly enhance banking reach has resulted in an increasing number of banks offering mobile banking services. This, in turn, coupled with the growing ubiquity of mobile phones has resulted in a very rapid growth in the number and value of mobile banking transactions taking place. According to RBI data released last week, the number of banking transactions doubled to 5.6 million between January 2012 and January 2013, while the value of these transactions more than trebled to R625 crore in January 2013 from R191 crore in January 2012. Now, the advantage of mobile banking for the banks is clear?a mobile transaction does away with the need for a nearby bank branch, a teller at the branch and several other infrastructural inputs need to complete a transaction. According to several banking experts, the transaction cost for mobile banking comes out to be only around 20% of the cost of a regular transaction. Further, with mobile phones and mobile internet use in India increasingly coming from Tier-2 and Tier-3 cities, mobile banking is going a long way towards providing banking services to the hinterland.
But there are impediments to the growth of mobile banking that need to be addressed soon. The first is the fear over security. Many users are still doubtful of the security of their online transactions via a computer, let alone one conducted over a smartphone app. The second is the spread of 3G. Mobile banking works only if the user has fast internet on her phone?policies like banning 3G intra-circle roaming hinders this.