A recent KPMG survey highlights the huge potential for banks to grow their market with the rise in mobile phone subscribers in India.
Anika Sahani, a PR professional, has been using the mobile banking or m-banking application offered by HDFC, but she is reluctant to move beyond checking her balance on the mobile screen. Sahani reasons, “I have an ATM card to withdraw cash so why would I want to use my mobile phone.” Also, she is apprehensive about how secure her mobile phone is, to conduct transactions like transferring funds or using the m-banking services for shopping.
At the same time, there are users like Rahul Gehlaut, a Mumbai-based businessman who often purchases air-tickets and transfers money to his family members using his mobile phone. He says, “I began using IDBI bank’s m-banking platform last year and realised that it is much more comfortable than searching for an ATM every time I needed cash.”
Sahani and Gehlaut are among the 5 million users, who use mobile commerce (m-commerce) applications in India but they are clearly a small fish when compared with the internet banking population of about 10 million users in the country.
A recent KPMG’s Consumers and Convergence III survey highlights the huge potential that exists for banks to grow their market on the back of rising Indian mobile phone subscribers. The survey revealed that 64 per cent Indians were ‘at least somewhat likely’ to conduct banking through a mobile device in the next 12 months. The growth in the mobile channel is global, as research firm Gartner recently reported the number of people around the world using mobile phones to make payments is expected to rise from 43.1 million in 2008 to more than 73 million this year, with that number approaching 200 million by 2012.
The most profound impact of mobile banking and payment services is that they provide the non-banking population with access to modern financial services, giving them tools to improve their living standards. Innovative m-banking services are fast arriving in the market.
For example, ICICI Bank along with mChek, another mobile payment solutions provider, has issued electronic cards on its customer’s mobile phone that will facilitate mChek services to bank’s debit and credit card customers. Sanjay Swamy, CEO of mChek elaborates, “The customer can use the mChek Visa credit or debit card to perform various transactions like bill payments, money transfers, pay insurance premiums, buy air tickets, movie tickets or perform any other merchant transactions using their ICICI bank debit card or credit card account.” The card data is stored in a fully encrypted form on the phone which ensures full security and reduced risk of fraud for card based transactions, he adds.
Last year, IDBI Bank too had launched a strategic partnership with PayMate, a leading mobile commerce company, to enable mobile payments facility for its over 3.5 million customers. Paymate has tie-up with LIC & Corporation Bank too, enabling SMS-based insurance premium payments for almost 2 million Corporation Bank customers.
Ajay Adiseshann, managing director and founder of Paymate claims that his company has seen a rise in its consumers from tier 1 cities, mostly amongst males aged between 21 and 30. “However, we do expect the trend to percolate down to tier 2, smaller towns as m-banking becomes a very convenient tool for users.” He strongly advocates that at a time when every customer counts, m-banking is an avenue for banks to reach new audiences and grow their business. Paymate has partnerships with around 25 banks, including HDFC, State Bank of India and Standard Chartered to name a few.
A spokesperson from Obopay, another mobile commerce company feels, “The biggest hurdle to mobile banking is lack of trust and technology restraints due to various mobile phone platforms.” Obopay’s concerns are well-matched by KPMG’s findings. Nearly 20 per cent of respondents cited security and privacy to be the reason for not conducting banking through a mobile device while 30 per cent cite inconvenience as a reason. KPMG’s report concludes that these numbers suggests m-commerce players face unique challenges for gaining wider acceptance among Indian masses.
Also, the Reserve Bank of India (RBI) has insisted on “document based registration with mandatory physical presence of their customers, before commencing mobile banking service.” Add to that the daily cap of Rs 5000 per customer for funds transfer and Rs 10,000 per customer for transactions involving purchase of goods or services, and it’s easy to see why banks have been struggling to convert a substantial number of their present customers to mobile banking.
