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This year has seen a gradual pick-up in mobile banking transactions, thanks to increased customer awareness and proliferation of smart phones.
M-banking services, such as mobile wallet and Interbank Mobile Payment Service (IMPS), are being used for instant inter-bank electronic fund transfer service through mobile phones in India.
These services are mainly used for balance checks, account transactions, payments, credit applications and other banking transactions.
The IMPS is also being extended to accept merchant payments, using the bank account and Aadhaar number.
According to NPCI (National Payments Corporation of India) data, the total number of mobile banking transactions has increased to 86,884 amounting to Rs 33.79 crore in November 2012 from 15,759 transactions amounting to Rs 5.30 crore in December 2011.
For the country’s largest bank State Bank of India, of its total customer base of 200 million, about 5.2 million have registered for its mobile banking services. Two of the country’s largest private sector banks — ICICI Bank and HDFC Bank — have also launched services on its mobile banking platform.
“Overall, the banking industry averages about 3 lakh transactions per day through mobile banking,” Lalit Sinha, General Manager (Alternate Channels and New Initiative Department), Union Bank of India.
The growing popularity of mobile banking, particularly for small-value transactions, prompted the RBI to raise the limit for end-to-end encryption from Rs 1,000 to Rs 5,000 and remove the transaction limit of Rs 50,000 per customer per day for funds transfer and for purchase of goods and services. According to a KPMG report, with mobile Internet usage is expected to exceed desktop Internet use by 2014, mobile banking services will become even more important.
“Many customer segments are clearly getting comfortable with using mobile banking. It is particularly true of the Generation-Y group (18-32-year olds) who are three times more likely to adopt mobile banking than older users, the report said.
Most big banks have seen a 100 per cent growth in mobile banking with more services waiting to be launched in the upcoming year.
Slow Penetration
The Reserve Bank of India said, “The growth in mobile banking that has taken place in the country till date, though at a rapid pace, is yet to reach the critical mass that will enable it to deliver on its promise of reaching banking, including payment services, at a cheaper, secure and seamless manner to the existing and potential customers.”
According to Sinha, most customers, despite using a smart phone, have a perception of “I do not need it” and hence are not encouraged to use it.
“Getting customers on board has been a major challenge for us. Once a person starts using mobile banking, they stick to the usage and get used to it,” Sinha said.
We believe that mobile banking will grow with a better focus on merchants than retail customers at this stage. Hence, there is a greater need to migrate to IMPS, Sinha said.
A. P. Hota, Managing Director and CEO, NPCI had recently said, “By 2020, about 22-24 per cent of the transactions will be under the mobile payments system.”
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