Over the last two years, while the number of customers using the mobile for banking transactions have tripled, the cumulative value of the banking transactions by these customer have shot up over 11-folds during the period.
What this means is that the modest increase in mobile banking customer numbers is more than made up by the incremental banking transactions being done by those transacting through their mobiles, a reflection of the sharp increase in the smartphone penetration across the metros and tier-1 cities.
The potential for leveraging on the mobile banking technology for offering financial services is largely untapped despite a very high mobile density in the country, something evident from the fact that despite over 900 million mobile users in the country, there are only about 36 million mobile banking customers.
Finance ministry officials indicated that in the coming two years, there is likely to be an incremental push to the number and volumes of mobile banking customers in the wake of the government’s flagship Jan Dhan Yojana.
According to Reserve Bank of India estimates, there is an incentive for both banks and customers to convert to mobile banking, considering that mobile banking costs 2 per cent of branch banking, 10 per cent of ATM and 50 per cent of internet banking. Consumers mostly use the mobile phone to pay bills, recharge phones, book tickets and transfer funds.
According to Reserve Bank of India estimates, there is an incentive for both banks and customers to convert to mobile banking, considering that mobile banking costs 2 per cent of branch banking, 10 per cent of ATM and 50 per cent of internet banking.
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Among the major banks, the State Bank of India (SBI) has a big lead in terms of numbers in the mobile banking space, with the country’s largest commercial bank having seen a 45 per cent growth in the calendar year 2014.
In 2014, 12.5 million SBI customers transacted on mobile compared to 8.57 million customers in 2013.
More importantly, during the year 2014, SBI recorded about 70 per cent of the customer coming in from the non-metros. Arundhati Bhattacharya, chairperson, SBI said, “Mobile banking will also play a large part in the role of the yet-to-be-launched payment banks, with which SBI plans to have tie-ups.”
In terms of value of transactions, private banks such as ICICI Bank and HDFC Bank dominate the mobile banking space.
According to RBI data, HDFC Bank has logged Rs 3,540 crore at the end of the October quarter via its mobile application, compared to just Rs 795 crore through mobile banking at the end of June this year.
ICICI bank, the country’s largest private bank, clocked transactions worth Rs 1,416 crore through mobile banking in the October quarter, up from June’s Rs 1,021 crore.
According to report of Boston Consulting Group, in the last financial year about 6 per cent of the total transactions carried out by Indian banks were done through the digital platform.
The report added that at the end of the last financial year, the number of smartphone users was around 162 million, and is expected to grow to 625 million by 2019-20.