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An Overview and future scope of Mobile Banking

Introduction

Indias telecom mobile subscriberbase crossed another milestone to top 560 million connections by the end

of 2009 with a record 19.10 million new users being added during the month of December, according

to latest figures released by the sector's watchdog. The total number of mobile phone users in the

country now stands at 525.15 million. According to the sector's regulator, Telecom RegulatoryAuthority of India (TRAI), 19.1million new mobile connections were added in December to

take the country's tele-density ton impressive 47.89%. Indians mobile phone subscriber base in larger

than the number of bank accounts or internet users. Given the mobile tale density of approximately

50%, banks are well-positioned bridge the digital divide and introduce the unbanked sector to the

financial mainstream. In this respect, the Reserve Bank of India had set up the Mobile Payments

Forum of India (MPFI), a Working Group on Mobile Banking to examine different aspects of Mobile

Banking (M- banking). The Group had focused on three major areas of M-banking, i.e., (i) technology and

security issues, (ii) business issues and (iii) regulatory and supervisory issues.

After examining the detailed report of MPFI and accepting the recommendations of the

group, thereby has finally decided to implement it in a phased manner. Accordingly, the

following guidelines are issued for implementation by banks. Banks are also advised thatthey may beguile by the original report, for a detailed guidance on different issues.What is Mobile banking?Mobile banking(Also known as M-Banking, m - banking, SMS banking etc.) is a term used for performing balance

checks, account transactions, payments etc. via a mobile device such as a mobile phone or

Personal Digital Assistant (PDA). Mobile banking is most often performed via SMS or the

Mobile Internet but can also use special programs, called clients, downloaded to the mobile

device.Mobile Banking refers to provision and availability of banking- and financial services

with the help of mobile telecommunication devices. The scope of offered services may

include

facilities to conduct bank and stock market transactions, to administer accounts and to

accesscustomised information."According to this model Mobile Banking can be said to

consist of three inter-relatedconcepts:

Mobile Accounting

Mobile BrokerageMobile Financial Information ServicesMost services in the categories designated Accounting

and Brokerage are transaction-based.The non-transaction-based services of an informational

nature are however essential for conducting transactions - for instance, balance inquiries might be

needed before committing amoney remittance. The accounting and brokerage services are

therefore offered invariably incombination with information services. Information

services, on the other hand, may beoffered as an independent module.Mobile phone banking may

also be used to help in business situations.Market Size and growth Trends

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The mobile banking market has grown significantly over the past several years, particularlyin

the US, where many financial institutions now offer some form of mobile services for

their customers.According to the January 2008, e marketer article, More flip phones and clamshells

will become portable ATMs in coming years .According to a study by financial consultancy Celent, 35% of

online banking households will be using mobile banking by 2010, up from less than 1% today. Upwards of

70% of bank centre call volume is projected to come from mobile phones. Mobile banking willeventuallyallow users to make payments at the physical point of sale. "Mobile contactless payments will

make up 10% of the contactless market by 2010.Many believe that mobile users have just started to

fully utilize the data capabilities intheir mobile phones.In Asian countries like India, China,

Bangladesh, Indonesia and Philippines, where mobileinfrastructure is comparatively better than the

fixed-line infrastructure, and