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With subscriber base on the rise, mobile is the next big thing in banking...
T ring... Tring...! Remember the latest Airtel ad featuring Vidya Balan and R. Madhavan? Of course, how can you miss out on the sizzling Vidya Balan? However, the way this cool dude Madhavan impresses her by transferring money and paying bills just by using his mobile phone, is what we are more concerned about. In fact, that actually explains the latest buzz in the Indian banking environment – mobile banking!
Till some time back, mobile banking was referred to ‘pull and push’ based SMS banking, wherein alerts were sent to customers for specified transactions and customers could only request for information (and in some cases transactions) through simple SMS. “There were inherent disadvantages of such pull-based services as the customer needed to remember the exact syntax and security was very lax as the PIN would travel in plain text as also the information was readable by others very easily,” recollects Nitin Chittal, AVP - Alternate Channels, Axis Bank. But it’s passé now. Banks have started offering java application based and USSD based mobile banking services, where high level of security is maintained over the transaction. “Customers can now bank from their mobile phones at the click of a button. Seamless information, convenience and anytime & anywhere banking is now possible with no need to visit a branch as services are now readily available on your mobile,” says an ICICI Bank spokesperson.
In the modern competitive world where time is money and travelling is cumbersome, the mobile phone is now becoming the bank at your disposal. To add to it, rapid addition of new mobile users in India, changing demography, strengthening wireless connectivity and cutting edge payment and fund transfer solutions on the mobile, are giving more than enough positive indicators to the banks to adopt this alternate as well as exciting banking channel. In fact, PSB like Corporation Bank have already joined the bandwagon.
Apart from normal banking transactions, one can also pay bills, book tickets, purchase merchandise using his mobile phone at a minimal cost. And that too fully secured! From the banks’ perspective too, it’s highly cost effective. Looking at this, Nitin of Axis Bank says, “We expect it to grow at a fast pace considering the fact that the cost barrier in providing the banking functionality has collapsed vis-à-vis other forms of banking like branches, ATMs and Internet.” All the earlier forms of banking required a sizeable level of investment by banks that included setting up of branches or ATMs. “This potential, however real service has to be balanced with pragmatism,” feels Praveen Kutty, Executive Vice President and Head, Consumer Banking, Development Credit Bank. As per him, “Low awareness of mobile banking services, customers comfort level with technology, perception about online password security, availability of mobile banking services across banks are pauses in the near term.”
Meanwhile, the market regulator Reserve Bank of India has also issued guidelines for mobile payments, which is expected to add another thrust to the mobile banking growth story in India as it aims at dealing with the security concerns that keeps all users anxious. So, no more standing long in front of ATMs or shouting on service provider for internet failure, just pick up your mobile and be a cool dude like Madhavan.
Sunanda Roy
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Source : IIPM Editorial, 2008
An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).
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