2. Mobile Banking is the hottest area of development in In India, new generation private banks and foreign
the banking sector and is expected to replace the
banks have been promoting Mobile banking . While
credit/debit card system in future. In past two years,
mobile banking users has increased three times if we capitalizing on the fact that mobile phones are in great
compare the use of either debit card or credit card.
demand for being available as low as at Rs.1500 and
Move over 85-90% mobile users do not own credit
cards. affordable to majority of people, these banks use this
1.2 Internet banking Vs Mobile banking channel to promote their retail banking activities.
In case of Internet banking , online banking activity is Mobile banking is the provision of banking service
carried out with the help of bank’s website and has which is provided through a mobile network and
simplified the transactions. A customer can know the accessed through a mobile phone ( No need of
balance amount in his account; easily transfer funds PC/Internet ) . It allows a customer to do banking
from one account to another and even can make online transactions without making a call through the use of
purchases while sitting in the comforts of his home. short message service facility. In fact, all the facilities
Internet banking facility is no doubt a big leap in the which one would be enjoying through Internet banking
banking sector, as the customer can conduct channel can be enjoyed now through mobile phone.
transactions, like transferring of funds from one One can obtain necessary information related to his
account to another without the intervention of bank account like balance details, enquire check status,
officials. share price, etc. through mobile phone banking
Internet banking needs personal computer or a laptop service. Not only this, a customer can also conduct
with an Internet connection. Majority of people cannot transactions through this service, like transfer of funds
afford to have a PC or a laptop. As far as connectivity from one account to another, applying for obtaining a
is concerned, the BSNL is the common Internet loan etc. Mobile banking service can also be beneficial
Service Provider (ISP) and it has been always at the for building personalized relationships between the
receiving end for poor quality of such services. With bank and its customers.
connectivity problems, it is not an easy job to get 3. Mobile banking infrastructure
connected to a bank’s website and conduct e-
Mobile banking uses the same infrastructure like the
transactions. It results in the wastage of time as well as
ATM solution. But it is extremely easy and
money for a customer here who takes a risk to bank on
inexpensive to implement. It reduces the cost of
Internet banking.
operation for bankers in comparison to the use of
Like in J&K and Uttarakhand state, this banking
ATMs.
channel is not so popular and acceptable to the people
Using compact HTML and WAP technologies, the
here owing to many factors like poor connectivity,
following operations can be conducted through
erratic power supply, low income level of people of
advanced mobile phones which can is further viewed
the state, etc. Since both the state are geographically in
on channels such as the Internet via the Channel
a remote location, which has restricted the use of
Manager.
internet banking facility in the region, it is the mobile
Bill payments
banking which can revolutionize banker-customer
Fund transfers
relationship. And banking transactions done at the
Check balances
click of a mobile phone button are affordable by all.
Any many more which is also available in
Even as this concept is already in place, but the fact
SMS Banking
remains that such channel of transactions is not being
In countries like Korea, two SIM Card is used
promoted and people are not aware of this kind of
in mobile phones. One for the telephonic
facility.
purpose and the other for banking. Bank
2. Prospects of mobile banking for Indian
account data is encrypted on a smart-card
banks
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3. chip. About 3.3 million transactions were Mobile Banking is one of the popular Mobile services
reported by Bank of Korea in 2004 .
that are utilized by Indians. While 47.7% of Indian
4. Mobile banking in India
cellphone users are aware of mobile banking services,
ICICI Bank has introduced iMobile, a mobile
application that allows customers to use it in a manner only 7.4% of them actually use the facilities. The level
similar to the Internet banking transactions, including of awareness was highest in Delhi (72.8%), followed
transferring funds to ICICI and non ICICI Bank
by 65% in Chennai and 63.4% in Chandigarh.
accounts, pay utility bills and apply for insurance
premiums. The facility is being offered free of charge, Cellphone users in Ahmedabad, Hyderabad and Pune
and covers Savings accounts, Demat, Credit Card and were the least aware, with awareness levels of 3.4%,
Loan accounts. This is a significant move, coming
11% and 18.5%, respectively. Also, while none of the
from India’s largest private sector bank (and second
largest, overall, after State Bank of India). ET adds respondents reported using the facility in Ahmedabad
that 22 percent of the bank’s transactions last year and Hyderabad, Pune showed a much higher usage
were via the Internet, up from 2 percent five years ago.
trend—5.3%. Interestingly, despite a #3 position in
The application can be downloaded by SMS.
According to a survey done by Sybase 365 ,a mobile terms of awareness, Chandigarh was much below in
technology Company, out of the total Indian mobile the usage table, with a hit ratio of only 0.6%. Have a
phone customers surveyed, 81% are aware of mobile
look on given table :
banking for checking their account balances and 49%
said they had used it.
Are you aware of mobile banking and do you use it?
All Delhi Bangalore Kolkata Mumbai Chennai Ahmedabad Trivandrum Hyderabad Pune Chandigarh
Aware? 48 73 45 58 36 65 3 58 11 19 63
Use? 7 12 15 8 3 13 0 4 0 5 1
All figures in percentage Source: Voice & Data
Sample Size: 754 mobile phone subscribers across 10 cities
Table 1
Followings are the outcome of a survey done by
Dataquest on Mobile banking awareness in India :
Have you heard about mobile banking?
Base: 360 IT industry and corporate users
Which option would you prefer—Mobile or of mobile phones and banks offering M-banking
online Banking
Base: 360 IT industry and corporate users of mobile
phones and banks offering M-banking
293
4. to adopt an innovation. Following resistance can
measured with five barriers namely usage barrier,
value barrier, risk barrier, tradition barrier and image
barrier. An Internet survey done on 1,540 responses
from the non-users of mobile banking ,the results of
the cluster analysis showed that different bank
customers do indeed have different reasons for
resisting mobile banking. The results indicate that
Would you like to use mobile banking services? older and less educated people and those who are
Base: 265 respondents not aware of m-banking
services Source: entrepreneurs, farmers or retired are significantly more
opposed to banking innovations than the other
5. Regulations
members of a social system. Moreover, younger
Concerned over the safety of transaction through
people who are working in a good, well-paid
cellular phones, the Reserve Bank proposed to come
profession do not perceive mobile banking to be as
out with a regulatory and oversight framework for
risky as do other online customers.
mobile banking. Stating that the use of mobile
Anxiety about sharing personal data is the biggest
communication for banking transaction would assume barrier to consumer acceptance of mobile
banking and commerce , Additional barriers to
greater importance in future, the RBI's draft 'Financial
adoption of mobile banking can be :
Sector Technology vision 2008-10' document said, More exposure to fraud and financial scams .
"efforts would be channelised to provide for standards
Worry about losing a device containing
for such systems and suitable regulatory/oversight
framework." The draft vision document on which RBI valuable information
has invited public comment within one month, further Concern about costs :
said large scale spread of mobile telephony has opened
o Some are “extremely concerned”
up new vistas for banking in the form of mobile
banking and the potential in this new sphere is about the current cost of non-
enormous. commercial transactions (e.g.,
The electronic funds transfers are only slowly gaining
sending an SMS, MMS, viewing a
ground and acceptance of electronic processing modes
is yet to make great in roads even in the government web page of banks ).
and mobile banking will help to fasten this . o Some are “very concerned” about
6. Barriers
such costs.
But there are bigger barriers. Interoperability, fraud
The issue of security is the most important factor that
and security are other major concerns. To secure
interoperability and enhanced usability, versatile chips motivated bank consumer adoption of online banking.
are a must, which can connect several banks and Main barriers to online banking were the perception of
carriers simultaneously. Mobile banking might take
risks, computer and technological skills and
off in India if banks initially offer some services for
free. traditional cash-carry banking culture in India . The
Today mobile communications technologies offer vast barriers to mobile banking adoption were lack of
additional value for consumers' banking transactions
awareness and understanding of the benefits provided
due to their always-on functionality and the option to
bank virtually any time and anywhere. However, by mobile banking.
before being adopted, all innovations face various
types of resistance that may paralyse customers' desire
294
5. 7. Conclusion http://www.bankofengland.co.uk/publications/quarterl
ybulletin/qb030403.pdf
Mobile banking is a tool that allows anywhere [2]Atkins, W “Will mobile get moving?” The Banker,
banking. Mobile banking facility allows a customer to 4 November 2004, available on
www.thebanker.com
use his mobile phone for carrying out banking [3] Claessens, S, Glaessner and Klingebiel et al (2003)
transactions while traveling, during duty hours, at “Electronic Finance: reshaping the financial
landscape around the world” World Bank, available on
home, during parties etc. Since mobile phones are http://www.worldbank.org/research/interest/confs/upc
cheaper than a PC or a laptop and affordable to oming/papersjuly11/E-finance.pdf
[4]CPSS (2004) Survey of e-money and internet and
majority of the people irrespective of their financial mobile payments, BIS, available on
position, this mode of banking channel can prove more www.bis.org
effective for a bank in state like Uttarakhand and J&K [5]Cracknell, D (2004) “E-Banking for the Poor:
to reach out to its customers. During the last three Panacea, Potential and Pitfalls”, available via
www.microsave.org
years, the popularity of mobile phones in India is [6]Gray, V (2005) “Evaluating the Cost of the handset
growing at a tremendous pace and the banks can take and mobile telephony as a barrier to uptake”,
Presentation 6 December 2005, available from
advantage by using this mode of selling their products http://www.itu.int/ITUD/ict/papers/2005/ITU_Gray_F
and services and at the same time make more and INAL_web.ppt
[7] Gray, V (2005) “The un-wired continent: Africa’s
more customers to conduct transactions electronically mobile success story”, available from
without coming to the bank branch. This will be a win- http://www.itu.int/ITU-D/ict/papers/index.html
[8]Lyman, T, G Ivatury and S Staschen (2006) “The
win situation for banks as well as the customers. Use of Agents in Branchless Distribution for
Precisely, in this era of high competition where the Poor”, CGAP Occasional Paper, forthcoming
[9] Millard, S & V. Saporta (2005) “Central Bank and
retention of customers is a huge task for the banks, payment systems: Past, present, future”,
this mode of innovative channel for conducting Background Paper to Bank of England Conference on
Future of Payments May 2005
banking transactions would also act as a marketing
tool for the banks to promote their products and
services.
However, we have seen that the use of mobile phone
for banking transactions in India has been limited
among the customers. This has been due to the
complexities arising in understanding the procedure.
So, it is the responsibility of banks in promoting this
service through education and awareness among the
people where its ease of use and security is
highlighted. Besides, they have to simplify the
procedures for using this mode of e-banking and make
it more user-friendly for its adoption in large numbers.
There is a huge opportunity for banks to bring the
middle and the lower middle class segment of
customers under the ambit of mobile banking. The
banks can drastically cut down their transaction cost
by offering mobile banking facility to its customers
and at the same time strengthen their relationship with
customers.
References
[1]Allen, H (2003) “Innovations in retail payments: e-
payments”, Bank of England Quarterly
Bulletin, Winter, available on
295