It was clear at the start itself—that this would be a battle focussed not on technology, but on the mindset of the target audience. Over

two years after the launch of mobile banking services in the country, that bridge has been reached… and many are beginning to walk those cautious steps across it. Yes, the usage of mobile banking services is increasing, and fast—against Dataquest’s estimated user base of under 10,000 for mobile banking services in 2000, there are over 120,000 today who SMS from their mobiles to do their banking.

But before you assume that things are hot and moving on this front, check out the catch—even this number of 120,000 represents only 1% of the overall mobile user base. Also, a majority of those who do use mobile banking services only do it to check account balance, with very few actually conducting transactions. Reasons for this—lack of awareness of services offered by banks, and equally important, a perceived issue of security and confidentiality. Clearly, banks have not done enough to push their bouquet of mobile banking services. Even our survey—despite targeting a respondent profile that would bring in more positive answers than negative (see Methodology), threw up very low usage numbers.

Which option would you prefer—Mobile or online Banking? Base: 360 Source: DATAQUEST

Also, e-commerce as a medium of purchasing and transacting has not really caught on, and the basket of mobile banking offerings is, in itself, very limited. The good news—the technology backbone is in place, and getting better. There’s CDMA, there’s GSM. Forget their battles on the mobile telephony front—from the consumer’s point of view, he never had it so good.

"The recent price cuts are also likely to help," say banking experts, adding that this will lead to "increasing willingness to move on to mobiles, and therefore, to the value-added services that most operators offer today". If you have a head that likes numbers, then get a load of this—Cellular Operators’ Association of India figures show a growth in subscriber base from 700,000 in December 1997 to over 1 crore in December 2002… that’s growth of over 1300%!

Base: 95 respondents aware of m-banking services CLEAR MISMATCH BETWEEN awareness and usage: On this base of 95 respondents who were aware of m-banking services, only 24% (or 23 respond-ents), were actual users of these services. And given the overall sample size of 360, this usage number amounted to around 6%. Among these users, "checking of account balance" scored high, followed by requests for chequebooks and mini-statements. While the 6% user rate may seem high, the sample selected for the survey was ‘A’ class—people with a higher awareness of (and access to) services available. If the spread of the survey were to be expanded to smaller towns, the rate would possibly drop to 1-2%. However, banks offering these services say numbers are growing, with the biggest draw being balance enquiries.

And bankers are punching away at their calculators and beginning to develop futuristic grins while driving daily to their banks—even if 1% of today’s mobile phone base were to use their services, that’s a total number of around 120,000. Factor in a similar number within the year for CDMA users (assuming policy changes allow service providers in this space to offer SMS, as Reliance Infocomm is already promising), and you have a total mobile banking user base of a very healthy 240,000  (our survey points to an awareness rate of 26%, a usage rate of 7% on the total respondent base of 360.

As mentioned, the sample was skewed toward upmarket, well-to-do people in the metros, and a move toward smaller towns and cities would bring that percentage down radically.

Given such increasing penetration in India and across the globe, it’s not hard to understand why m-commerce is a hot subject today. According to research firm Ovum, mobile commerce is currently pegged at a little over $5 billion worldwide and is expected to grow to over $35 billion by 2007. Others like Forrester Research estimate the same at $22 billion by 2005, while Frost & Sullivan expect this market to touch $24 billion in the same period. And banking is going to be a major benefactor of the same. According to studies by some global firms, one of the most used services for mobile commerce would be mobile banking—with services like transfers, balance and trading bringing in the revenues for mobile bankers.

So what is the scenario like in India? Barring a few private banks—ICICI Bank, HDFC Bank, IDBI Bank—and a few MNC entities—Citibank, ABN Amro, Stanchart and Hongkong Bank—few others offer a wide portfolio of mobile services. Public sector banks do not figure prominently in this picture yet. But the number of users is growing. Says CN Ram, HDFC Bank’s head of IT—"We have 1.75 lakh registered users for mobile banking services today. And we are hitting about 4,000 transactions per day."

IDBI’s CTO Neeraj Bhai echoes the sentiment, "Over 12% of our Internet banking users use our mobile banking services as well."

So much for the experts… how does the average man on the street react to the specter of mobile banking? A few netizens and a segment of the general public were posed this question in a recent report by Webscribes. Their answers were, to say the least, a mixed bag. "I have heard about mobile banking, but it sounds a little too far fetched for me at the moment," said one. An IT pro, a self-confessed Net banker, replied, "Waiting for it, I’m sure it will take the world by storm." There were others like this mechanical engineer, who had only this to say—"What do you mean you can transact on the mobile? I didn’t know something like that was even possible!" But there was a cool IT journalist who was a class unto himself—"Balance enquiries on my mobile? I progressed behind those primitive times over a year-and-a-half ago. I pay all my bills over my mobile today. And no, there are no security issues, it’s all watertight and safe. And those that are ignorant enough to think that their money will go away somewhere, well, you can’t transfer money yet across accounts—only pay bills. So where can your money go? At worst, you will end up pre-paying on your bills!" Since every single one of our readers has to fit in one of these categories, this article is for you.

Mobile devices and the cost of technology are also coming down fast, and this has been making will ownership and access both viable and affordable. Many banks now have a built-in delivery mechanism that offers services and 24x7 access. Unlike Internet banking that is PC-restricted, mobile banking provides banks with an unparalleled opportunity to reach customers in an unrestricted environment. Better-integrated customer relationship channel for better service is what these banks believe in. Says Neeraj Bhai, CTO of IDBI Bank: "We believe in "customer-managed relationships" rather than customer relationship management (CRM). The bottomline is to make all services available through all channels, so that the customer does not face any problems and manages his relationship with the Bank through the channel of this choice."

No wonder then, banks are making their infrastructure "mobile-enabled". While, some like HDFC Bank are riding on their existing infrastructure of Netbanking, others like the IDBI Bank are making considerable investments to provide wirefree banking experience. According to Bhai, IDBI Bank’s mobile banking infrastructure is based on the GSM Data Suite of products that makes its services accessible through any GSM operator across the world. The systems at IDBI Bank are also interfaced online with its banking, demat and payment systems. HDFC Bank, on the other hand, does not have any separate infrastructure for mobile banking service.  Rather, the bank uses the same server/database as used for Netbanking. "We have a Web Server and Application Server which runs on WebSphere 4.04 on Win2000 using SQL 2000 as the database for storing the profile information. Our transaction database is Sybase on Sun Entreprise 10K," explains HDFC’s Ram.

But there are bottlenecks that need to be circumnavigated. Says Ram, "Usage will increase once technology is available for  proper authentication on mobile devices." Globally too, this is a major concern. Today, the services are more information-based rather than transaction-based. According to Neeraj Bhai, "The big inhibitor in the adoption of mobile banking services is the absence of online transaction-based services." But to be remembered, of course, is that when transaction-based services are introduced, security concerns will jump.

The most frequent transactions performed by a customer includes personal financial management services, messaging, portfolio management, etc. Since many of these "on-demand" services are driven by customer mobility, this kind of  information is considered crucial and will accelerate a customer’s decision-making process, according to the Webscribes report.

Hence, we have seen the advantages and the potential mobile commerce has in paving the way for time-effective transactions and a whole new tilt towards better decision-making process. As a personal extension of the user, mobile phones will ultimately play a defining role in bringing the most affordable channel—for both consumers/businesses and financial institutions into mainstream usage. Riding the wave of convergence, banks will be ideally positioned to capture customer data and hence, provide the best of services.

Some of the trends that the future holds will be mobile delivery channel into an integrated multi-channel strategy, which will equip banks with ‘channel readiness’ that enables quick response to emerging consumer trends. If banks partner with the right tech players, it’ll give mobile banking channels more security—mobile banking will be a convenient, secure, portable, application-rich and flexible banking option in the days to come.

Rajeev Narayan and Yograj Varma in New Delhi With inputs from Shubhendu Parth and Easwardas Satyen

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