Banks see cells as next big growth pad

After branch banking and ATMs, banks are now planning to use mobile phone as a device to expand their reach. In fact, given the Reserve Bank of India’s directive to banks on financial inclusion, bankers feel that mobile banking could be a more feasible route to cater to the underbanked and unbanked sections of the population.

“There are more than 160 million mobile phone users in the country, compared to a little over 30 million internet users, this in itself represents a major opportunity,” said Rajeeb Chatterjee, HDFC Bank’s vice-president, ATM, net banking & mobile banking products. However, only a few private banks have so far adopted mobile phones as a medium to reach out to the customers.

Speaking at Banknet India CXO Summit on Thursday, Manoj Paul, vice-president and business head-BFSI Enterprise, Bharti Airtel, said, “mobile banking and internet banking should be complementary to each other.” The mobile phone is an extremely personal device and will help maintain the privacy of the customer and make it more real time, as one could perform transactions on a 24 x 7 basis.

Mr Paul also spoke of the possibilities of moving retail transactions to mobile phones, enabling a customer to send money from his bank account to another, or even make a purchase using the balance on the prepaid card. Such purchases, however, will be unviable under present tax regulations. “The SMS pipe in India is still unsecured,” pointed out Mr Chatterjee, adding that mobile banking transactions will bring up a host of security issues.

ATMs always carry the risk of leakage of passwords. In this context, banks and service providers are also looking at using mobile phones for security issues, pointed out Vijay Shukla, country head, Valuefirst, a wireless application company.

He said that they were looking at one-time PIN generation systems for ATM transactions, wherein the customer will be sent a PIN by SMS for each transaction he makes. Though it is a plausible concept abroad, it may not work out in India, considering the huge delays that occur in SMS deliveries, he added.

On the online banking front, risk is assuming greater weightage than the convenience of the customer, explained Mr Chatterjee, saying that security issues were of paramount importance to banks. Earlier in the conference, V Babu, DGM-IT, Bank of India emphasised the importance of data warehousing and data mining in PSU banks. “Core banking will not serve any purpose if banks don’t use the technology for data mining,” he said.

“Technological implementation worth Rs 6,500 crore has happened in the Indian financial sector in the last five years,” said Hanuman Tripathi, managing director, Infrasoft Technologies. He said that banks were waking up to the necessity of Anti-Money Laundering (AML) systems and that by 2009, most Indian banks would be AML-compliant. A good AML system for a bank would translate to a good customer-risk profile, which will bring with it added advantages like the possibility to deploy dynamic customer profiling, he added.

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