Kaustav Roy and Janaki Krishnan / Reuters
Mumbai: Banks in India are increasingly veering towards mobile phones for more active transactions to reach out to the masses at a much lower cost, officials said. Hitherto, banks have been using mobiles for sending alerts and promotions via text messages (SMS) but now payments and fund transfers would catch up as the nation’s mobile subscriber base grows at a scorching pace far outstripping internet users.
“I see it as a alternative new channel. Its opening up a completely new market,” said Ravishankar, country head (cash management and direct banking), Yes Bank.
Mobile payments would replace cash in many transactions two years from now, he said. It would gather steam once the central bank’s guidelines on mobile payments are put in place, he added.
Indian banks, which turned to technology to lower transaction costs as an alternative to branch banking, find mobile phones a better option due to the low broadband penetration.
“Only 8% of banking transactions in the country are done online,” said Syed Shahabuddin, executive director of The Clearing Corporation of India Ltd. “Mobile has more promise but when it will actually come, we cannot say anything,” he added.
In 2007, about 6.5 million personal computers were sold in India according to research firm IDC India, compared with the 8-9 million new mobile subscribers a month.
At March end, 300 million subscribers made India the second largest wireless network. Smart phones form about 40% of the domestic market, according to industry experts.
An average bank branch transaction costs about Rs50. In automated teller machines it is Rs15-20, Shankar said. “So, if we start at Rs10, we’ll halve the cost,” he said.
India has 32,342 ATMs as of December 31,2007, data from the central bank showed. “The issue is not technology, the issue is consumer awareness,” Sanjay Swamy, chief executive officer, mChek, a firm specialising in mobile financial transactions.
He also said his firm was currently working with a brokerage firm to enable clients to transfer funds to their trading account using mobile phones.
ICICI Bank, the top private sector lender, has started mobile banking and offers its customers services through several channels including messaging, or a downloadable menu, or through general packet radio service (GPRS).
Private sector lender Kotak Mahindra Bank too is widening its mobile services, chief operating officer Vikram Sud said.