Home / Money / Calculators /  Too many banking apps, too few users

Almost all banks have been building mobile banking apps for their customers, and upgrading them too. They are pitched as one of the most convenient channels for banking transactions. But are these really as useful as they are touted to be?

Before we answer that question, we need to take a step and see how many people in India use these apps.

The Reserve Bank of India (RBI) has given approval to 80 banks to start mobile banking services, which includes apps. Of these, 64 have commenced operations. As of October 2013, nearly 30 million people had subscribed to mobile banking services. The number of app users, however, is still small. For instance, only 0.12 million downloads have happened on Google’s Play Store, according to Kern Communication Pvt. Ltd, a user experience research consultancy firm. However, banks are optimistic and are betting on growth in usage. Says Rajiv Anand, president, retail banking, Axis Bank Ltd: “The (total) transaction value through the app has increased from 50 crore per month to 400 crore per month in the past 18 months." Axis Bank has a customer base of 13 million, of which 10% (around 1.3 million) use its banking app.

Other banks, too, have seen more customers moving to the app medium. Says Nitin Chugh, head, digital banking, HDFC Bank Ltd, which has a customer base of 28.5 million: “We have seen an increase of over 80% in our month-on-month usage, in the past six months. Over 2 million customers used the app in the current financial year."

Adding to this, Deepak Sharma, executive vice-president, Kotak Mahindra Bank Ltd, says, “In less than one year, we have seen 13% of our primary customer base moving to mobile banking."

What’s on offer

Even though a majority of bank customers still don’t use banking apps, it’s a convenient medium. You can download the app from mobile app stores such as Google’s Play Store, Apple’s App Store, BlackBerry’s App World and Windows’s Phone Apps. Mobile apps are offered on various platforms such as Java, Symbian, BlackBerry OS, Windows, Android, Apple iOS, etc.

Then you will have to key in you customer identification number and personal identification to get started. You can do non-financial transactions—such as balance enquiry and cheque book request—as well as financial transactions—such as funds transfer, mobile/direct-to-home (DTH) recharge and bill payments. There are no extra charges for using the app for any service. They work as an extension of Net banking.

Although a whole list of transactions are possible, the most used services are balance enquiry and funds transfer. Says Anand: “Customers usually do the regular transactions (on the app). We are just extending one more channel to bank with us."

According to Chugh, the top three services on the HDFC Bank app are checking account details, funds transfers (internal and external) and credit card account details and payment. According to Sharma, in addition to these, automated teller machine (ATM) or branch locator is another popular service.

But if you thought that banking apps are a rudimentary version of Net banking, you are wrong. Yes, you can do the usual balance checking and fund transfer, these apps go much further—you can do demat transactions; open fixed deposits and liquidate them; buy or redeem mutual fund units, or switch between schemes; it’s a long list.

What doesn’t work

The biggest reason behind very few banking app users is that the number of smartphone users is only 67 million—that’s less than 6% of the total telephone subscriber base of 900 million as of December 2013, according to the latest data from the Telecom Regulatory Authority of India.

The penetration of smartphone has a direct impact on app usage. Another reason for few banking app users is poor user experience post download. In fact, RBI also blames lack of publicity by banks for the poor uptake of apps.

Then there is the question of easy access: it’s easy enough to download the app and use it, but getting an okay from the bank may not be. Says Ripul Kumar, founder and chief research officer, Kern Communication: “Public sector banks and old private banks make it very difficult for users to access mobile banking the first time—they either require users to fill applications at a bank branch and then wait for some days to receive the m-PIN (personal identification number); some require a visit to the ATM to register for mobile banking. Such procedures in the name of security scare away mobile banking customers." Some new private banks, however, have made the process easy by allowing customers to login using their Net banking credentials or debit card information, adds Kumar.

Mint Money take

Mobile banking apps of Axis Bank, Kotak Mahindra Bank and HDFC Bank are the most user friendly apps right now, according to a report by Kern Communication based on data collected from 26 leading banks, including private, public, and foreign banks. State Bank of India’s app is the most downloaded.

The mobile user experience was benchmarked to regular tasks such as setting up the app for first use, finding account balance, transferring money, bill payment, finding the nearest ATM or branch, and others. For smartphone users, banking apps are a must-have. They save time and are a convenient way to bank. Once downloaded, they are easy to use considering that banks have made these applications compliant with most of the latest operating systems.

On the security front, no information—say, your customer identification number or PIN—is stored on your mobile phone. So even if your phone is lost or stolen, your account details won’t be compromised.

The security systems used for apps is the same as that for Net banking. It is as safe, or unsafe, as Net banking. Now with RBI recommending a standardized common application system for mobile banking, using apps may become even easier.

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