Your cell phone has the attention of the Indian banking and financial services community. That is not surprising since 300 million people own mobiles today. And in four years, 700 million will! All bank customers will boast of one.

However, not all mobile owners will have a bank account- or even want one! What they will want are financial services beyond the traditional banking offering, e.g. a savings account. The mobile provides the best ever delivery channel for such inclusive banking. If 'No Indian Left Behind' is to be the vision statement for financial sector reforms, a mobile provides the best way to achieve it in the next decade.

Banks were savvy about using mobile for extending banking alerts, information, query-based activities for some time. A few pushed ahead using the mobile (linked to their account) for financial transactions viz, bills, premia, tickets, gifts, top up, shopping, etc, with the active partnership of specialised home-grown technology providers. Most banks who ventured into mobile banking have realized that while plain vanilla mobile banking is another cost effective delivery channel for basic banking services, the real benefits, convenience and revenue stream comes from enabling mobile payments for their customer base.

One can argue that you and I have been doing mobile commerce all along without knowing it! Pre-paid mobile recharge for cardholders is quite pervasive. Today, the bank customer can recharge his mobile using any secure channel - ATM, Internet or mobile. The value of this market is about Rs4000 crore. It is not only a business proposition with its own revenue profile but also a tipping point for penetration of mobile banking services. The real-time, painkiller, distance-independence and anytime-anywhere features persuade the sceptics to try out the service because it solves a problem - instant top up remotely without having to go across the counter.

Regulation is necessary and inevitable as new technologies and methods emerge. The European Union (EU) has well-defined e-commerce guidelines worked out for its 150-million-user base, to safeguard consumer interest as well as ensure e-commerce growth of 45 per cent annual growth for the next five years! The Reserve Bank of India (RBI) has also come out with its final guidelines on this category of financial services after several iterations (presumably trying not to stifle the take-off of m-banking services). However, RBI is not a technology regulator; with the fast pace of innovations in this sector, it will never be able to drive forward by looking at the rear-view window of what has gone before. To be effective, the regulatory framework for m-banking will continue to need to accommodate its special features.

These are some key factors will that determine successful adoption of m-banking in the country for banked and unbanked customers, business correspondents, independent technology providers, businesses, regulators, etc.

 (1) The registration process needs to be made simpler and on par with other channels. While one can initiate registration by ATM, Mobile or Telephone its fulfilment can be by the very means that other secure channels employ currently rather than physical presence. The absence of a simple registration process will grossly handicap adoption of mobile banking without adding to safety and security.

(2) The ticket size of Rs10,000 per day is somewhat better than the original cap of Rs2500 and transaction frequency limits. Individual banks can now set their own limits as per their risk appetite. This is important, as it is important for customers to see perceived benefit in using this new channel. Most expenses like air and rail tickets, post paid mobile bills, premia, card bills etc, which are high volume day-to-day needs, just do not just come for under Rs2500 anymore. Credit card usage or Internet commerce has had no such restrictions. This has helped the growth of card and e-commerce transactions respectively. Therefore, it is hoped that these caps will also be raised in due course (like for the ATM service).

(3) Having to remember multiple PIN numbers for each delivery channel (product) is an obstacle to the adoption of mobile banking. As it is, everyone has to remember a plethora of numbers, be they phone, PIN, PAN short codes, passwords, user ids for mobile, credit & debit cards, Internet and telephone banking, Internet mail, commerce and social networking, ATM, etc. Some banks do have the same PIN for Internet and telephone banking. This is a good start. It is therefore imperative to have the minimum number of PIN numbers (if not just one) for an account holder without prejudicing security.

(4) Finally, the use of the mobile phone for bringing about much needed (and talked about) Financial Inclusion is a critical social need with good economics for all stakeholders. Nearly half of the rural and farmer households have no formal access to credit or financial services. It is these missing markets that banks want to bring under their fold. It is clear that banks by themselves cannot roll out such services across the country. Therefore, NGOs - microfinance institutions, in particular - have taken on a key role as business correspondents - which allows for branchless banking. Therein lie the opportunities.

In many countries, e.g., Kenya, Tanzania, Philippines, South Africa, Japan and South Korea etc., the cell phone has reached the level of an instrument of payment / transfer of money. A cell phone can today facilitate welfare transfers such as the NREGS, disbursements/remittances, micro-credit, insurance, repayment/collection, all in real time through simple, easy-to-use instructions and in a cost effective way. Dr Raghuram Rajan's 2008 CFSR report states that using technology, ''…transactions as small Rs100 can be done at a reasonable transaction cost...'' The mobile serves as an effective medium for electronic transfers and the accompanying transaction authorisation system.

In summary, banking today is a consumer financial service. It has to have elegance and simplicity woven around its user interfaces and touch points for it to become less daunting to the illiterate, uninitiated, and veteran alike. Without this, the goal of boosting integration into the formal financial system, rather than continued dependence on the unaccounted informal financial system, will remain an elusive goal.

The next challenge is for the RBI to set the broad guidelines for addressing Financial Inclusion via use of the mobile phone.

Within a few months of usage experience under its belt the RBI will have useful customer data to refine its thinking further to continue to give a fillip to the industry, while safeguarding customer interests and mitigating systemic risk.

Probir Roy has founded three companies - all of which have won the prestigious Red Herring Top 100 Asian technology start up companies' award. Subhash Ghai's Mukta Arts recently acquired Coruscant Tec. Roy is director at PayMate, Ampelion Networks and Coruscant Tec.