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It’s All About Convenience

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DQI Bureau
New Update

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

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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
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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%!

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.



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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 240,000  (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.

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M-Banking:

The Services Bouquet

  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."

"We

have 1.75 lakh registered users for mobile banking services today.

And we are already hitting 4,000 transactions per day"

CN

Ram, 






IT chief, HDFC Bank

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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.

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
While

47.7% of Indian


 



cellphone users are aware of mobile banking services, only 7.4% of them
actually use the facilities. The level of awareness was highest in Delhi

(72.8%), followed by 65% in Chennai and 63.4% in Chandigarh. Cellphone

users in Ahmedabad, Hyderabad and Pune were the least aware, with

awareness levels of 3.4%, 11% and 18.5%, respectively. Also, while none of

the respondents reported using the facility in Ahmedabad and Hyderabad,

Pune showed a much higher usage trend–5.3%. Interestingly, despite a #3

position in terms of awareness, Chandigarh was much below in the usage

table, with a hit ratio of only 0.6%.
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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."

Have you heard about mobile banking?

Base:

360 IT industry and corporate users of mobile phones and banks

offering M-banking
Source:

DATAQUEST
Given

the profile
of the

people surveyed, it’s no surprise that over 26% of the

sample had heard about mobile banking services. Dataquest did

a mix of 60:40 (non-IT: IT people) in the NCR region. As many

private/MNC bankers cater to the IT industry, awareness about

mobile banking services was higher among ‘IT people’. HDFC

Bank’s CN Ram agreed–"We have 1.75 lakh registered

users for mobile banking services. And we are hitting 4,000

transactions per day."

Would

you like to use mobile banking services?

Base:

265 respondents not aware of m-banking services Source:

DATAQUEST
While

awareness
remains at

26%, people are keen to try out mobile banking. 63% of the

respondents evinced interest in the services. Given the

convenience factor–the fact that mobile banking can be used

from anywhere in the world as long as one can send and receive

SMS’–most were interested. Since m-commerce is still about

the core virtues of mobile communication, issues like

mobility, any-time access and ease of usage emerged as the

driving factors in the ongoing year.

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.

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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?



Base:

95 (Those who said there are aware of mobile banking and/or

their bank provides the service)
Source:

DATAQUEST

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.

Base:

95 (Those who said there are aware of mobile banking and/or

their bank provides the service)
Source:

DATAQUEST

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.

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