E-banking extending reach in a big way

Manoj, 45, working at a stock broking firm, hardly visits his bank as he has been carrying out his banking transactions online for two-three years now.

Like Manoj, many account holders are using alternative channels, thanks to banks innovating and aggressively promoting mobile and Internet banking.

According to the RBI, development of the payments and settlements system is evidenced by the increasing use of electronic modes for transactions.

In the retail segment, close to 90 per cent of the total settlement volumes was done through electronic mode (as of August 2014). The share of paper-based clearing declined marginally over the last year.

According to experts, the cost of a transaction at a bank branch is ₹40-50 on an average. But at an ATM the cost drops to ₹10-12, and on the digital medium, it drops further to ₹2-3 a transaction.

Leading the digitisation race are private banks, which have been aggressive on this front, especially in the last one year or so.

Most other banks, too, are now offering their respective mobile applications and promoting them.

ICICI Bank has launched about six mobile apps since July last, including video banking and mPassbook, which helps customers view their recent savings, credit card and PPF account transactions on their mobile phones even without having Internet service. It has also launched a pilot programme, titled Inter-operable Electronic Toll Collection on roads and highways.

According to RBI data, ICICI Bank recorded ₹1,021 crore worth transactions via mobile phones in June (the latest data available).

This is a three-fold jump over the year-ago period. The bank commands nearly a fourth of the Indian mobile banking market, which is pegged at ₹3,985 crore (in June 2014). Axis Bank too is boosting its digital platform.

Apart from recently launched digital branches, the bank has further personalised the mobile banking experience depending on the user segment (youth, premium and prime).

“The innovative, personalised multi-channel banking experience like self-service ATMs, Internet banking, mobile app and social media interface would henceforth be the driving force in our bank’s digital strategy,” Rajiv Anand, Group Executive – Retail Banking, Axis Bank, said recently.

IndusInd Bank has a special innovation team and was the first to launch video banking, whereby bank officials can see and talk to the customers over the phone.

In the wake of e-commerce transactions gaining traction, the RBI is looking to remove the two-factor authentication requirement for small-value transactions up to ₹3,000 in order to make transactions easier.

In 2014, public sector banks too moved beyond their stereotypical image to join the mobile and Internet banking channels.

State Bank of India, the country’s largest lender, has opened six fully digital branches and plans to increase the number, going ahead. In 2014, it launched the ‘SBI ka branch ab aapki jeb main hai ’ (SBI’s branch is now in your pocket) campaign to get more customers to go digital. At present, of the 370 million transactions originated by SBI customers a month, “about 65 per cent is through alternate channels, most of them through ATMs, and this we want to increase to 85 per cent in about a year,” said Arundhati Bhattacharya, SBI’s Chairperson and Managing Director.

Recently, SBI also launched a technology training centre to coach customers and bank staff on technology and e-banking.

Bhattacharya also said that though the younger generation is more tech savvy, it is wrong to believe that the older generation is not willing to learn technology. “We just need to give them more time.. But yes, we need to make it easier,” she added.

According to a PwC report, a 5 per cent growth in cashless transactions could help save more than ₹500 crore annually for the national economy through lower transaction and administrative costs.

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