If data were to be believed, a lot of you would have graduated from using Internet banking to mobile banking already but a lot of us have still not made the leap.
Though the number of transactions through mobile banking increased by 64% in the April-December 2012 period, according to data from the Reserve Bank of India (RBI), 67% of overall banking transactions still happens through cash, according to a 2011 Deloitte-Assocham study.
So what’s holding us back from using this mode of convenience in a big way?
What do we use it for now?
Though there is no concrete data available, based on interactions with various bankers and overseers some trends can be identified. “What we learn from banks is that almost 90% of the mobile transactions are done for bill payments and mobile top-ups. A small fraction of the remaining 10% is for inter-bank fund transfer and rest for intra-bank bank fund transfers,” says A.P. Hota, managing director and chief executive officer, National Payments Corporation of India (NPCI). NPCI was set up in 2008 to build a nationwide payment platform and links up India’s automatic teller machines (ATMs).
Among other services, ticket booking is also prevalent among them who avail mobile banking facility. “A bulk of the mobile banking is used for enquiries such as balance status, or service products such as new cheque book issuance. Among the financial services, mobile top-ups is on top. Next would be movie ticket or air ticket booking,” says Shyamal Saxena, general manager-retail banking products, Standard Chartered Bank.
Among other services that are available on the mobile banking platform include paying utility bills such as cellphone, telephone, credit card and electricity among others.
According to Birendra Sahu, senior executive vice-president, direct banking channels and premier banking, HDFC Bank Ltd, mobile is usually used for urgent transactions such as fund transfers, bill payment and credit card payments. As per ICICI Bank Ltd’s spokesperson, prepaid mobile recharge, direct-to-home recharge, ticket bookings (movie/air/bus) are some of the rapidly growing transactions in mobile banking.
“There are other services as well such as fixed deposit booking, demat and mutual funds but these are picking up slowly,” says Sahu.
What’s holding us back?
Processes: One reason why mobile banking has not really taken off is because the process is still a bit cumbersome. “It is at a nascent stage and one obvious reason is the protocols. The services are not seamless across platforms such as ordinary phones or smartphones,” says Saxena.
Mobile banking can be done either through SMS, through browsing the Internet on the cellphone, or through apps. In the SMS format, the bank gives a particular code, which needs to be sent to a designated number and a response is received from the bank. These can be for balance enquiry, stop cheque, account statement and other such services. However, since the process is not standard across platforms, users face difficulty.
In the browsing method, a particular bank’s website can be accessed with the help of customer identification and net banking password which is the same used for Internet banking. However, the site for mobile banking at times is different from what is seen on the computer and users may take time to adjust. “The way forward will be to make these really simple,” says Hota.
Customer behaviour: It’s also about awareness and inspiring trust—at present, for a large section, it’s difficult to believe that mobiles can be a way of banking. “It is also about behaviour. For masses it is still hard to believe that mobile can be used for banking though they may be doing the same on the Internet, say, paying bills to a company,” says Saxena.
According to Internet and Mobile Association of India, the number of mobile Internet users increased to 87.1 million by December 2012 and is expected to hit 92.9 million by March 2013.
Security: Mobile phones are usually prone to same kind of threat as is a personal computer. However, these are portable and easy to use, which subjects them to greater threats.
“The very portability of mobile phones makes them easy to steal. A sophisticated attacker with enough time can defeat most security features of mobile phones and gain access to any information they store,” says Dominic K., cyber security expert and founder, Jarviz Mobile Security, a company focused on creating mobile security solutions.
Many seemingly legitimate software applications, or apps, are malicious. “Anyone can develop apps for some of the most popular mobile operating systems and mobile service providers may offer third-party apps with little or no evaluation of their safety,” adds Dominic.
So, while choosing a phone, security features should be kept in mind. Check if it has the file encryption facility, the ability for the provider to find and wipe the device remotely, the ability to delete known malicious apps remotely and authentication features such as device access passwords. “If you back up your phone data to a personal computer, look for an option to encrypt the back-up,” says Dominic.
So should you not be using mobile banking? “There are some safety concerns and that is why RBI has put a cap of Rs.5,000 for mobile transactions,” says Hota.
What to expect
“We have seen a 100% growth in the number of people using mobile banking in the past one year. Transactions are up by 300% during the period,” according to ICICI Bank’s spokesperson.
Innovations in mobile banking have transformed the mobile phone into a personal banking assistant. “Mobile SMS alerts help people believe that if any activity happens in my account I will be alerted,” says Saxena.
Also, a less complicated and uniform service may do the trick. Unstructured supplementary service data (USSD)-based services is one option. “Here you dial a two digit number prefixed with a star sign and followed by a hash tag. This throws up various service options. The department of telecommunication has asked all telecom companies to reserve *99# for USSD-based financial services,” says Hota.
However, one will have to wait and watch for USSD-based services. “The good thing is that it can be used on any phone, so a standard platform can be there. But it requires you to remember codes, which may be difficult. The question is who should promote USSD? All stakeholders will have to find a middle path in terms of revenue sharing for USSD for it to become operational,” says Saxena.
But experts are hopeful about its future. According to a 2012 report, Digital India – The Rush to Mobile Money: Madness or Masterstroke, by Boston Consulting Group, the total mobile banking transaction in India is expected to reach $350 billion by 2015. With more and more people joining the bandwagon, it should soon become a norm to use mobiles for banking services on the go.