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Could mobiles revolutionize banking sector?

Money Control India
September 22, 2006

While Internet banking has made inroads into India, it still faces stiff challenges such as low Internet usage and broadband penetration. Meanwhile, mobile banking, considered to be the next evolution in the banking space, looks all set to revolutionize the banking sector.

At the Banknet Indiaís second international Bank Tech summit held in Mumbai on Thursday, Chief Technology Officer at Atom Technologies (a mobile and Internet connectivity solution provider), Sharad Aggarwal said, "There are about 68,000 bank branches in this country and 23,000 ATMs. But what's astounding is that the number of mobile subscribers in India, which is 85 million, is growing by 5 million each month. So while today mobile banking is still not as widely used, the possibilities are limitless."

He added that micropayments for meals, air tickets, movie tickets, etc, are some of the options mobile banking is looking to turn into a reality.

Deputy MD at SBI, Syed Shahabuddin told moneycontrol that mobile banking should gain more visibility in the next 2-3 years.

"Mobile banking should be very visible in the next 2-3 years. In the next 5 years it should rule a large segment of the micro payment industry. However, right now the major challenge it faces is regulatory, so it needs to deal with that before it goes forward," said Shahabuddin.

Unlike online banking, mobile banking has certain advantages on its side. It would not attract much investment from the bank and would not need a change in the existing infrastructure of the bank. However, for now; security, transaction time and interoperability are some of the major challenges that mobile banking would need to overcome.

Head- Product Management at Reliance Communications, Heramb Ranade feels that while net and mobile banking have challenges like reach and literacy, companies like Reliance are betting big on their Broadband Banking Kiosk pilot project.

"This is a project, which is still at the concept stage, we are getting the building blocks together. After that it will be largely the work of the banks, who will have to collaborate and get the necessary approvals from the regulators," he says.

Such Banking Kiosks will typically look like ATMs, but will offer facilities such as account details, instant photos to be attached to application forms related to insurance, IPO information, instant acknowledgement slips, etc. "A phone will also be intergrated with such banking kiosks to allow phone banking, along with the other services. Customers could also have a video conference with a bank executive," added Ranade.

But walking into a Kiosk might still seem more tedious than punching few numbers on your laptop or mobile. Ranade believes these banking Kiosks will compliment other banking services and will work in tandem with services offered on mobile phones and the Internet.

"I donít see any drawback in such a service. In the absence of a mobile banking channel, something like this works. Even though mobile usage is extensive, we still have a lot of PCOs in the country. So every thing has its space. These are not conflicting channels but are complimenting channels," opines Ranade.

The company is not yet in talks with banks, and since the concept itself is at a preliminary level, Ranade believes it is a part of the evolving ecosystem.

Despite all the challenges, it appears that the Indian banking industry is all set to introduce more banking channels in its relentless drive towards customer satisfaction, provided the customer is willing to accept the change.

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