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.
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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%!
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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 240,000Â (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.
M-Banking: |
|||||||
 | ICICI Bank |
HDFC Bank |
IDBI Bank |
HSBC | Bank of America |
Citibank | ABN Amro |
Balance enquiry |
ü | ü | ü | ü | ü | ü | ü |
Last few transactions |
ü | ü | ü | ü | ü | ü | ü |
Cheque payment status |
 |  | ü | ü | ü | ü | ü |
Stop payment of cheques |
 | ü |  |  |  |  |  |
Statement request |
ü | ü | ü | ü | ü | ü |  |
Cheque book request |
ü |  | ü |  |  |  | ü |
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."
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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.
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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."
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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 forÂ
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
Are you uncomfortable with m-BANKING transactions? IF YES, WHY?
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Security Tops: Of the people who are both aware of and use m-banking
services, most say "security" is a key concern. While there’s hardly
any security risk in sending SMS’, a perception about it is there–banks,
therefore, need to educate consumers on this front. The next reason is that
people generally feel more comfortable making physical transactions. This may
seem technology-unsavvy, but this is borne out by the global IDC survey too.
According to that survey, "inertia" was significant across the board.
In the case of mobile payments, willingness to pay bills "the old-fashioned
way" was cited by 15% of respondents, indicating that mobile payments must
show a clear value-add over cheque-writing. One important factor to be addressed
by banks in the future would be that of trust. Today, lack of service
availability is the concern for potential users, but that should be addressed in
coming times. Banks may face a slowdown in the takeoff of their mobile service
offerings if they fail to address the user’s top concern–can the bank
maintain confidentiality or do messages get intercepted? In the IDC survey,
nearly 18% cited it as a concern for alerts, with respondents concerned over
information being intercepted. Interestingly, even in a price-conscious country
like India, not many were worried about any add-on costs that they would have to
pay.
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As mentioned in the story, savings on time is the key factor pushing mobile banking. Forget about going to the nearest ATM or even logging on to the Internet via the PC, or using the landline for phone banking and waiting... Get clicking on the mobile keys, send an SMS, and voila–you have your answer. Saving time and ease of usage will be the key enablers for mobile banking services.
Using M-Banking
How do you do mobile baking? Well, you could use WAP. WAP hasn’t worked in
India, nor in most of the world, even though there are a few good examples of
WAP-based banking–such as Deutsche Bank and DBS.
SMS
is the quicker way to do it: send an SMS, get a reply. You have to remember some
SMS commands, so another option is the special "services" menu common
on today’s 32k SIM cards. Here, you can select menu options, and the phone
sends out the SMS for you. Somehow, it does it five times slower, so no one
bothers to use it.
In most cases, plain old SMS is best. For instance, I’d SMS HDFCBAL to 300
(for Airtel Delhi), and get back my bank balance. TXN will list my last three
transactions, a sort of mini-statement, STP 003462 will stop cheque number
003462, CHQ will request a chequebook, and so on.
Here’s how it works. I have to pay my phone bill, so I send PAY AIRT 8700
by SMS to the number 300. The SMS server routes the request to HDFC’s server,
with my phone number. HDFC looks up the phone number, sees it registered to my
name, finds that AIRT is my preset code for Airtel, and credits Rs 8,700 to
Airtel, mentioning my phone number. I don’t specify an account number or other
ID; caller ID is all that’s used.
Is this secure? Well, someone else could send commands from my phone…but it
doesn’t really matter. He’d check my bank balance, or at worst make payments
to my phone account. He can’t steal.
Most of the time, I use it to check my bank balance, or recent transa-ctions,
or pay my phone bill, so it’s sharply cut down my visits to the ATM over the
last couple of years.
Prasanto K Roy
Methodology
There were two objectives behind conducting the Dataquest Mobile Banking
Survey,2003–one, to ascertain the level of awareness about mobile
banking, about the services offered, and about the banks that
offered them; and two, to find out what services were used, and with
what frequency. The first question was asked of the entire sample
size of 360 respondents, while the second was posed only to those
respondents who were aware of m-banking services.
Since only a few private and MNC banks offer m-banking services in India, and because
only people in ‘Class A’ cities would be able to use these
services, a few filters were put in place. One, all respondents had
to be mobile phone users. Two, they had to have accounts in banks
that offer m-banking services. And three, they would either belong
to the IT industry or be from prominent corporates. Finally, the
survey was conducted in upmarket locations and IT campuses across
the three cities of Bangalore, Mumbai and Delhi (NCR).
The percetange of respondents using M-banking services would have been significantly
lower if random respondents, without our set filters, had been
picked, or if the geographical scope of the survey was extended
beyond the metros that were finally chosen.