Banking on Mobile

Probir RoyYour 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.