Mumbai: Your mobile phone may soon become an all-purpose banking gateway, enabling you to transfer funds, pay bills and buy movie and air tickets. Bankers see a huge opportunity for mobile banking as there are 400 million account holders in India and 300 million mobile phone subscribers.
Till recently, mobile phone banking was restricted to just two banking activities—checking account balances and ordering cheque books. If the scope of mobile banking is expanded and it takes off the way the banking community wants, operational costs of banks will come down dramatically.
A banking transaction in a branch costs anything between Rs35 and Rs40 and at an automated teller machine (ATM), between Rs15 and Rs30, depending on the location. In contrast, a mobile phone transaction, would cost about Rs2-5.
It is said to be the cheapest alternative source of banking, cheaper than an internet banking transaction that costs Rs10-15.
Last week, US-based payments and remittance service provider Obopay Inc. announced its tie-up with private sector lender Yes Bank Ltd to offer money transfer facilities to the bank’s customers.
Using the facility, Yes Bank customers can send money from mobile to mobile instantly by sending an SMS. They can transfer up to Rs25,000 by using the text messaging facility. The money goes directly to a bank account and the receipent can withdraw the cash immediately by using a debit card.
“The idea is to provide convenience to any customer with a bank account and a mobile phone 24x7, 365 days,” says Balachandran Unni, vice-president, alliances and business development at Obopay India. According to Unni, any bank can avail of Obopay’s servcies for a one-time cost of Rs2-3 lakh. A customer may have to pay a flat fee of Rs5 for transfering funds up to Rs1,000. If the money involved is more than this, the fee will be a percentage of the amount, decided by the banks. However, at the moment, banks are not charging customers as they want to first popularize the concept of mobile banking.
Foreign banks such as Standard Chartered Bank and Barclays Plc have also launched mobile banking initiatives in the recent past. Services such as “cardless cash withdrawal” allows Standard Chartered’s customers to transfer cash instantly to anybody anywhere in India.
Similarly, Barclays’ “hello money” offers the British bank’s customers a number of options that include tranfering funds and paying bills.
“Currently, a recepient of cash can withdraw the received amount from any Standard Chartered ATM in the country, but we are soon going to extend this facility across all ATMs,” says C.D.K. Sai Narain, head of consumer transaction banking and strategic initiatives at Standard Chartered.
The safety of mobile payment transactions is addressed through two personal identification numbers (PIN), key to such mobile phone transactions. Both the bank as well as the customer who is sending money will send a PIN each to the receiver of the fund who can withdraw the cash from any ATM after punching in the two PINs.
Other banks such as State Bank of India, ICICI Bank Ltd, HDFC Bank Ltd and Corporation Bank have also recently launched a series of mobile commerce initiatives such as buying air, rail and movie tickets, recharing mobile phone subscriptions, and making other utility payments in association with mobile commerce provider mChek India Payment Systems Pvt. Ltd, telecom service provider Bharti Airtel Ltd and Visa.
“Currently, mobile commerce is restricted to credit card holders, but we plan to target the entire debit card base in India as well,” says Navin Thangiah, director of market development at mChek.
According to him, the mobile revolution in banking has just about started and the viability of this route will ensure penetration in the days to come.
The Reserve Bank of India (RBI) is also actively involved in the evolution of mobile banking. The central bank-promoted Institute for Development and Research in Banking Technology in Hyderabad, in association with Rural Technology and Business Incubator (RTBI), a registered society of Indian Institute of Technology (IIT) Madras, have also joined hands to set up a mobile payments forum.
According to the forum, those banks who opt for the Obopay service should settle fund transfers among themselves and at a later stage, if too many banks sign up for this service, RBI can designate one bank for a centralized payment system.
While banks are targeting high-end and techno-savvy urban customers, RBI says mobile phones can be used as an effective tool for financial inclusion. An RBI pilot project at Uttam Nagar in Delhi is now testing waters with customers with a “no-frills account” or a basic savings bank account. Such customers of any bank at Uttam Nagar can use mobile phones to withdraw money by punching in a few numbers. The project is executed by Centurion Bank of Punjab Ltd, which is being merged with HDFC Bank.