Mobile banking transactions rise five-fold in Jan-May

Arvind Jayaram BL Research Bureau | Updated on July 16, 2012

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Average value of transactions through private sector banks higher than public sector ones

The value of mobile banking transactions witnessed a sharp jump in the first five months of 2012.

The steep increase can be attributed to initiatives taken by banks such as SBI and ICICI Bank and mobile service providers such as Airtel to promote mobiles as medium for bill payments and fund transfers.

According to the RBI, banking through mobiles increased five-fold to Rs 1,140.6 crore between January and May compared with the same period a year ago. Such transactions were valued at Rs 209 crore in January-May 2011. This was almost double the value of Rs 113.1 crore recorded in the corresponding period a year ago.

The volume of transactions also rose significantly in January-May 2012.

A total of 1.5 crore mobile transactions took place during the five-month period compared with around 0.5 crore transactions in the year-ago period, a clear sign that the payment medium has gained traction. The transactions were conducted through 49 banks in the public and private sector.

SBI and ICICI Bank lead

In terms of transaction volume and value, State Bank of India was the most popular mobile payments services provider. The public sector lender accounted for about two-thirds of all transactions in volume terms, though its share in value terms was around 45.8 per cent. ICICI Bank was the next largest player, accounting for just 8 per cent of transaction volumes, though its share of the value was 34.1 per cent.

This indicates that the average value of mobile transactions executed through the private sector bank was far higher than its public sector counterpart. The other significant player was Citibank (10.5 per cent of value and 1.3 per cent of volume).

Spike in May

Monthly mobile transactions witnessed a record high of Rs 286.5 crore in May, rising three-fold in comparison to the same month a year ago. The volume was also a record 0.33 crore transactions for a single month.

The RBI has identified mobile banking as a key tool to achieve the goal of financial inclusion. With a large unbanked population spread across the country, a brick-and-mortar approach to providing banking services is not feasible.

In this regard, offering banking services through mobiles — with 929 million subscribers — is seen as a viable option for coverage of the entire population under the banking system.

Published on July 15, 2012

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