M-Banking: Forget "Cool", it's about Cost and Convenience

Last June, I wrote on this page that India's big IT success story was the bank. Driven by the RBI, it set the standards in enterprise tech deployment, and later, in delivery channels…through extensive ATM networks. The bank customer has tasted real benefits from IT. 

The next frontier for the Indian bank is mobile, rather than Internet, banking.

India isn't Internet country. Usage remains low, and cumbersome processes don't help. I'm a heavy Internet user who signed on for online banking with HDFC and ICICI years ago, yet haven't ever accessed my accounts online.

What I do use is my cellphone. Checking my bank balance and recent transactions, paying a phone bill, requesting a chequebook-these have cut down my ATM visits by over half. I happily spend Rs 1.50 on an SMS for that privilege. It also saves the bank money. Should I care? Sure--if the bank can charge me less in service fees by getting more efficient.

India is going mobile. The mobile user base-already 10 million--should double by March 2003 with WLL and cellular players.

That's a huge base of potential m-banking customers. 

Just 1 percent of them are m-banking today. Most don't know about it, or don't know how easy it is.

How do you get them to m-bank? Step up awareness. Convey that it's simple, convenient, safe. Start with messages. Citibank sends auto SMS alerts on card payment dues and receipts, which is a good preview of m-convenience. And so, Citi ramped up m-usage quicker than the others, despite starting later. 

Should banks bother? Yes. It really is more convenient, and that is a competitive edge. A Gartner Group report says a customer using mobile banking is more likely to stay with the bank. Once he gets used to the convenience of viewing accounts and making transactions anytime, he's less inclined to switch. 

More importantly for the bank, m-banking is cheaper than ATM banking, and more likely to happen than
Netbanking.

A bank source reports these costs per transaction: Rs 150 at a branch, Rs 30 at an ATM, Rs 15 with phone-banking, and Rs 10 for Internet- and m-banking. Clearly, banks should try to shift common transactions to online modes (where, further, cost drops as usage goes up). Especially when banks in India don't share ATMs--they pass on the costs of dedicated, branded ATMs in low-density areas with 20 footfalls a day…to the customer. 

Will banks go the m-way? Of course they will. They appreciate "costs" and "savings" better than most. But those who learn the m-lesson early will gain the edge-and customers.