The Reserve Bank of India?s proposal to examine SMS-based mobile banking on all handsets could provide a further fillip to the mobile banking transactions in the country, said bankers in response RBI?s decision to set up a technical committee to look into the matter.
The committee was formed in the wake of a sharp increase in the value of transactions conducted over the mobile, which have surged in the past one year. Annual RBI data showed that as on March 2013, total value of transactions through mobile devices stood at about R9.92 lakh crore, higher than R2.32 lakh crore as of March 2012. The volume of transactions on mobile also doubled to more than 64 lakh from 31 lakh a year ago.
Data showed ICICI Bank had the highest value of money transacted at about R2.87 lakh crore and HDFC Bank coming second with transactions of R2.3 lakh crore. Meanwhile, State Bank of India saw the highest volume of transactions on mobiles at about 40 lakh. The surge in mobile banking transactions along with expectations of more regulatory leeway being given for such business in the near future has led banks to step up their investments in the area.
Kotak Mahindra Bank, for instance, recently invested R2.5 crore on developing their smartphone app, which was launched in April. The application gets a traffic of 1 lakh monthly transactions with an average transaction size of about R16,000.
?About 75% of the volume is constituted by fund transfer, while bill payments, recharges and term deposit booking constitute the remaining 25%. The value of these transactions is R161 crore per month,? said Manish Shah, vice president, ebanking at Kotak Mahindra Bank.
One of the big incentives for banks to push for digital avenues is a significant reduction of costs associated with transactions. Industry estimates suggest the cost of doing a transaction at a teller counter ranges from R40 to R50 per transaction, while data of average cost of transaction on the mobile was not available, banks suggest it?s far lower. Axis Bank said mobile transactions cost 10% of its branch transaction and HDFC Bank said it saves about 97% of transactions costs on mobile banking.
Earlier in 2011, RBI had removed R50,000-per-customer-per-day transaction limit on mobile banking. The limit was imposed in 2009, but now banks get to decide transaction limits based on risk perception. RBI had also raised some concerns that mobile banking could be used for laundering and terror financing in 2010.
While mobile banking transactions have picked up, bankers say there is a long way to go. ?The penetration of mobile phones has crossed 70%, but the penetration of mobile internet is still at a nascent stage, therefore, we need to look at alternate technologies using the mobile phone to promote transactions and reach a large customer base,? said Manisha Nath Gupta, executive vice-president of retail liabilities and electronic banking at Axis Bank. Axis Bank had recently relaunched mobile application to reach out to 15 lakh customers.
