Ashish Kumar, 26 works as an insurance sales agent in Delhi, sends Rs.3,000 every month to his parents who stay in his hometown, Saharanpur in Uttar Pradesh.
He is among the millions who remit money back to their native small towns. But unlike many, he uses a smartphone to transfer funds from his bank account and has talked some of his migrant friends to do it as well.
“I do not send money orders anymore. Mobile banking enables that my parents receive the money the same day and it is convenient for me as well,” says Kumar, proudly displaying his inexpensive smartphone.
The rapid proliferation of Internet-enabled phones is steadily changing the way banking transactions are done in India. The convenience story shows up in numbers. M-banking is certainly catching on in India.
For instance, mobile banking transactions in terms of value grew by a whopping 227% in January this year over the same month of the previous year, according to Reserve Bank of India data. The transaction numbers increased by 95% during this same period.
Mobile-based banking transactions stood at Rs.624 crore in January against Rs.190 crore a year earlier.
Banks gain as well as they cut back on staff costs to use technology as a low-cost alternative to the old, cumbersome money transfer.
Every transaction costs a mere Rs.4 through a phone, against Rs.50-150 at the branch.
Apart from transfer of money, mobile banking customers also use Internet banking to recharge mobile phone or direct-to-home (DTH) broadcast bills, book tickets and pay utility bills.
“I expect mobile banking transactions to further grow by around 400% over the next twelve months,” says TM Bhasin, chairman and managing director of Indian Bank. “Mobile banking is actually the future of banking,” he said.
Boston Consulting Group recently estimated that half of Indian households — 110 million do not have a bank account but 42% have at least one mobile phone and 90% of the handsets are capable of handling basic financial transactions. With more than 800 million mobile phone connections in India, the potential looks huge.
“After the roll-out of our mobile banking apps, the number of users has increased by 300%,” said a senior executive at HDFC Bank, which also recently launched a Hindi banking app for Android phones.
Banking industry officials say measures to boost security in M-banking have instilled confidence among customers. “Today, mobile banking provides the same high-level of security as Internet banking,” the HDFC executive said.