MUMBAI: Mobile-based banking is the next frontier for banking in India. That's the one point everyone at The Economic Times Banking Technology Conclave 2008 presented by mChek agreed upon; whether they were bankers or technology providers.
Banks are not just relying on mobile based banking products to appeal to their urban clientele. They are increasingly looking at adopting the technology to reach out to the under-banked in the hinterland. "The unprecedented growth in mobile penetration in the country presents India with a unique opportunity," said Sanjay Swamy, CEO of mChek. In fact, there are almost 10 new mobile users added every second on any given working day, he added.
According to data released by the Telecom Regulatory Authority of India (TRAI) in June this year, the Indian population had reached 28.3% mobile phone penetration - supporting a whopping 287 million individuals. With that number rising at almost 9 million every month, the opportunity it presents banks is certainly huge.
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"While basic banking transactions can be carried out through encrypted SMS and GPRS, the SIM card can store all sorts of banking related data," said Dewang Neralla, director, atom technologies. atom, has in fact, developed a number of mobile-based banking products that work on even the cheapest of handsets.
Mobile-based payment is another issue that has gained prominence in the past year or so. Companies like mChek, ngpay and PayMate have tied up with multiple banks to provide mobile-payments solutions. A successful implementation across segments like utility bill-payment, movie and airline bookings have given banks the confidence that mobile based technology is certainly the way forward.
According to ngpay CEO Sourabh Jain, mobile-based payments has gained the momentum it requires to move forward as the preferred mode of payment. Banks are also looking at using mobile-banking as way to leapfrog the cash and cheque-based economy. A number of banks and microfinance institutions have tied up with mobile-payment solution providers to roll-out services aimed specifically for the purpose of financial inclusion.
Incidentally, both financial inclusion and mobile-technology, have been issues the Reserve Bank of India has stressed upon in the recent past. Now, with the central bank set to release its final guidelines on mobile-based banking and payments, all banks are revamping their mobile-based offerings.
Senior bankers like ICICI Bank joint MD and CFO Chanda Kochhar, HSBC Group general manager and country head Naina Lal Kidwai and ABN Amro Bank country executive Meera Sanyal, who were present at the Conclave, agreed that mobile-based banking was the most effective and low-cost option to improve their reach.
However, even if banks adopt mobile-banking in a big way, it wouldn't spare them from carrying out the same know-your-customer (KYC) procedures, which will continue to be a major hurdle in their path. "Mobile operators do carry out their own KYC procedures, but that is not robust enough for banks. Even if we do provide mobile-based services to the rural poor, a rigorous KYC procedure will have to be adhered to by us," warned Ms Kidwai.
Meanwhile, Ms Kochhar of ICICI Bank remarked, "we are only at the fringe of what can be done further. We are yet to realize the capabilities of the cellphone, and leverage low cost technology to become cost effective."
Bank of Baroda chairman and managing director, MD Mallya, added that his bank had started offering mobile-based banking products to a district in Rajasthan where it is the lead banker. "In circumstances where brick-and-mortar branches are financially unviable, mobile-based banking along with the service of banking correspondents is the only way forward," he explained.
The massive opportunity that the mobile-banking space in India presents attracted not just Indian companies and bankers to the conference but also representatives from four Australian banking technology providers. The companies - Heuristic Investment Systems, nMetrics, ActiveIdentity and SAI Global - offer a wide range of banking technology-based products. All four of the representatives confirmed that they are in talks with large banks in India to enter the market.
Source: The Economic Times (India).