The m-banking leader

Would you believe a public sector bank is the leader in mobile banking? FY12 saw 25 million mobile transactions valued at over Rs.1,820 crore. Of these, State Bank of India (SBI) accounted for 81% by volume and 50% by value, while private sector ICICI Bank was a distant second accounting for 8.4% by volume and 33% by value. The balance, however, is proof of the wide gulf between private and public sector banks. There’s Central Bank of India with just 42 m-banking transactions, Dena Bank’s 481 and Allahabad Bank’s 782. In contrast, Citibank, HDFC and Axis Bank all clocked over 220,000 transactions. 

Cash on the move

A big volume share also translates into more fee income for SBI

So, where did SBI get it right? Numbers and technolgy. Rather than sophistication, ease of operation worked in its favour. In 2010, SBI’s IT partner Spanco Systems created a software program that could be installed on even low-end/ entry-level mobile phones. Besides, when RBI allowed banks to appoint banking correspondents, SBI signed up with mobile solutions firm Eko to run a pilot for mobile-enabled money transfer in rural and poor areas. It then replicated this in other areas, giving it significant customer traction quickly. 

However, ICICI Bank is catching up. Says Rajiv Sabharwal, executive director, ICICI Bank, “Our financial transactions through mobile banking grew over 300% last year and we expect the trend to continue.” Others like Citibank have introduced mobile banking at an institutional level with the setting up of the Interbank Mobile Payment Service (IMPS) in November 2010. In December 2011, it signed up with Coca-Cola for mobile-based cash management services. Coke retailers now pay the company directly through their mobiles instead of handing cash to the deliveryman. 

After RBI removed the Rs.50,000-per-day cap on m-banking transactions, banks are trying to push this service to all corporate clients. What’s driving them? M-banking costs a tenth of what a bank spends at a branch for a similar transaction. Consulting firm PricewaterhouseCoopers sees m-banking transactions increasing to 340 million by 2015 as phones become smarter.

And SBI has bet big by introducing a pilot: “Mobicash”. This allows even a non-SBI customer to “load” a specific amount on a mobile that can be later spent at any outlet for cash payments or mobile top-up. “Mobile banking is going to be the future and a vehicle to achieve financial inclusion,” says SBI MD, A Krishna Kumar. Are the other banks listening?