PROSPECTS AND CHALLENGES OF MOBILE BANKING IN INDIA: KINSHUK THAMAN

 

INTRODUCTION

Mobile banking (m‐banking) has risen as a well-known model of banking in numerous developed and developing nations. In India, there are roughly 13 million mobile banking users and this figure is anticipated to grow quickly with mobile transactions surpassing credit card transactions by the end of the decade. By a few measures, there are more mobile phones in India than there are bank accounts. The combination of two factors—an expansive unbanked population and the ubiquity of cell phones—is a catalyst for high mobile banking adoption. Mobile banking is characterized as "the provision of banking services to customers on their mobile devices" specifically the operation of bank current and store or savings accounts. Mobile banking is an application of mobile computing that provides customers with the support required to be able to bank anywhere, anytime using a mobile handheld device and a portable service such as Short Message Service (SMS). Mobile banking facility expels the space and time restrictions from banking activities such as checking account balances or exchanging cash from one account to another and time sparing when we go to a bank and doing a few banking activities. Mobile banking addresses this crucial impediment of Internet Banking because it decreases the client prerequisite to just a mobile phone.

PROSPECTS OF MOBILE BANKING IN INDIA

1.     Cost Reduction: The greatest advantage of mobile banking offers to banks is that it radically cuts down the costs of giving service to customers. For service providers, Mobile banking offers the next surest way to attain growth. Countries like India where mobile penetration is nearing saturation, mobile banking is helping service providers increase incomes from the presently static subscriber base. 

2.      To Control Extortion: A successful way of progressing customer service can be to educate customers better. Credit card fraud is one such area. A bank could, through the use of mobile technology, illuminate owners each time purchases over a certain value have been made on their card. This way the owner is continuously informed when their card is used, and how much cash was taken for each transaction.

3.     Reminder Facility: Essentially, the bank could remind customers of outstanding loan repayment dates, dates for the payment of monthly installments, or tell them that a charge has been presented and is up for installment. The customers can then check they are adjusted on the phone and authorize the desired amounts for payment the customers can too request additional information.

4.      Easy to avail Mobile Services: A mobile is almost always with the customer. As such it can be utilized over a tremendous geographical area. The customer does not have to visit the bank ATM or a branch to avail of the bank's services. Research demonstrates that the number of footfalls at a bank's branch has fallen drastically after the establishment of ATMs. As such with mobile services, a bank will have to be hiring even fewer employees as people ought no longer to visit bank branches apart from certain occasions. The use of mobile technologies is thus a win-win proposition for both the banks and the bank's customers.

CHALLENGES OF MOBILE BANKING IN INDIA

1.     Economic Challenges: The rural population in India is spread over 600,000 towns, each with low transaction value. Profitability can only be accomplished by large volumes, requiring critical initiative from financial institutions. Unlike the exceptionally effective M-PESA of South Africa, whose model has been exceptionally fruitful due to the lack of alternative payments in South Africa, India does possess some infrastructure in the forms of postal payments, reasonable transport, and local governments. Hence, any mobile banking must be inexpensive enough to be appealing for the end-customer over existing methods.

2.      Regulatory Challenges: Although the RBI is supportive of mobile banking in India, many regulations are being put into place:

i.                Restricted to Financial Institutions: The guidelines state that only existing financial institutions and banks are allowed to offer mobile banking. Although the guidelines cover Microfinance Institutions (MFIs), significant existing large fixed costs. For a very inexpensive alternative, it would have been more effective to allow non-profit organizations or evangelical organizations to build their MFI without being encumbered by huge existing infrastructure.

ii.               Rupee Transactions: All transactions must be done only in India's national currency, the rupee. While this may not be a threat, in the beginning, this may pose a constraint for interoperability between Indian mobile payments and the world.

iii.            Existing Account Holders: The guidelines also state that only those having a valid bank account would be allowed mobile banking. This limits the full potential of mobile banking to extend micro-credit and bring banking to a large number of unbanked customers in India.

3.      Demographic Challenges: India has 18 official languages that are spoken over the country. The state governments too are dictated to correspond in their regional language for official purposes. Moreover, two-thirds of the population in India is uneducated, creating challenges within the arrangement of mobile banking solutions. For a pan Indian mobile banking solution, this will be lumbering to overcome.

 

CONCLUSION

It is well recognized that mobile phones have immense potential for conducting financial transactions hence leading the financial growth with a lot of conveniences and much-reduced cost. For comprehensive growth, the benefits of mobile banking ought to reach to the common man at the remotest areas within the nation. For this, all stakeholders like Regulators, Govt., telecom benefit providers, and mobile device manufacturers together with investors have to make efforts so that penetration of mobile banking reaches from high-end to low-end users and from metros to the middle towns and rural areas. There is moreover a need to create awareness around mobile banking so that more and more individuals utilize it for their advantage. Various solutions have been attempted and fizzled but the future is promising with potential new technology innovations.