Why mobile is King for banks

Why mobile is King for banks
The counting and handling of cash may soon become a thing of the past. From Net Banking to Mobile Banking and Social Banking, a new wave of technology transformation is taking place in the banking sector.

Be it Social Bank Account (where social media meets banking), smartphone payments, or offline funds transfer, banks are ready to embrace them all at breathtaking speed. And what is more, all these technologies are evolving around the mobile space. In future, all you might need is just a handset with or without internet connection!

ICICI Bank recently launched a new service, using which customers can make cashless payments from their smartphones using their debit cards by scanning an ‘mVisa’ Quick Response (QR) code at a merchant location without swiping the card at a POS (point of sale) machine.

In the last six months, Federal Bank launched a series of mobile-based products. A recent one is FedBook-Selfie, the first mobile app for account opening. “Using the app one can open a bank account by just taking a selfie, scanning the QR code on the Aadhaar card, and optionally taking the photograph of the PAN card. The customer will get the account number instantly and thereafter, the mobile app turns into her/his digital account passbook,” says KA Babu, head retail business, Federal Bank.

A week ago, Kotak Mahindra Bank launched the ‘Bharat App’ in five regional languages that help customers transfer funds without data connection. Deepak Sharma, Executive VP-Head-Digital Initiatives, Kotak Mahindra Bank, says: “During the last 18 months, we have launched several innovative banking solutions, including Hashtag Banking — the first time a bank anywhere in the world had launched a service using Twitter. We launched it after realising that there is a large urban social media user base in India of close to 120 million people,” he said. One of the features of Jifi, a new age digital account that connects social networks like Twitter and Facebook with mainstream banking, is Hashtag Banking. Using the same, prepaid mobile and DTH recharges can be done, apart from cheque book request and account updates.

Social media has now become the most sought-after space for banks. IndusInd Bank too has come up with ‘Onthego’ that offers banking services through multiple social networks. Digital banking is now getting extended to social media as customers can transfer money using Facebook and Twitter.

Do banks target only youngsters by all these products? Babu says a study on online banking reveals that younger generation is using digital services more. “Their adoption level is very high in online banking. The new generation prefers faster transactions and more professional relationships compared with the traditional customer. Our aim is to bring maximum number of young, tech savvy customers to our fold through our various innovative digital products and programmes,” he says. He hastened to add that the bank is equally taking care of the middle-aged as well as older generation.

The central role of mobile

Kotak Mahindra Bank claims to be among the top in terms of mobile adoption. “Close to 30 per cent of our customers use mobile banking, whereas the industry is growing only at 12–15 per cent. Even though we have the highest mobile adoption, there are still a large segment of consumers who are not using mobile banking. We found that banks use only English language, but outside of metros we need a language of the customers’ choice. That’s the reason we came up with the Bharat App,” Sharma says, adding that it complements the existing mobile banking app.

In September, Kotak Mahindra Bank’s transactions from mobile alone crossed Rs 1,700 crore, which was 300 per cent higher compared with the year-ago period. “We have been growing very fast, but the concern is the other 70 per cent who are not using mobile banking,” says Sharma.

Kotak Mahindra Bank makes at least four to five releases in a year. “Sometime ago, we realised that customers were going to third-party sites for mobile recharge as there was no recharge facility from banking apps. We were the first to introduce the recharge option. After introducing the option, recharge volumes went up phenomenally. We are seeing 20–30 per cent growth month-on-month on mobile recharge. Products are designed keeping customers in mind,” says Sharma.

Federal Bank has identified mobile as the next driver for banking. “Without considering mobile space, no bank can device a product or solution as the banking environment as a whole has changed. While addressing the needs of customers through mobile, the bank has also developed a mobile app for its staff members. By using the mobile app, employees will be able to handle a majority of their day-today tasks,” says Babu. According to him, the banking industry is entering a new phase in which it will face stepped up competition from non-banks not only at home, but also abroad.

Both Babu and Deepak Sharma feel that the operational structure of banking in India looks set to undergo  profound changes. These changes will require banks to also adapt to their new environment. “Close to 55 per cent of banking transactions are now happening on the digital route and mobile-based transactions alone contribute around five per cent. Our immediate target is to increase the digital share to 65 per cent, and the mobile contribution to 20 per cent,” said Babu.

Will bank branches be eliminated in future? “No. Another five years from now, what may change is the format of a branch. Banks are now becoming customer-centric. With digital, customers choose their time for banking. India has fewer banks and that is why payments banks and small finance banks are coming in. Though a lot of transactions can become digital in future, branches will be there for face-to-face customer interactions. We are far from a cashless society, but we are driving the adoption,” said Sharma.

In order to not miss out on any new technology, banks are releasing new products every now and then. Aren’t all these products complicating customers banking transactions? “That may be true. But if you take technology, you always find early adopters. We are going to launch many products,” said Sharma.

Banks tap the eCommerce boom

YES Bank recently announced its tie-up with Singapore-based mobile payment platform provider MatchMove Pay. The latter will launch its mobile wallet platform-as-a-service (PaaS) in India through the bank’s infrastructure. This provides an alternative online payment solution for customers who do not have cards.

“Millennials stray from the traditional bricks-and-mortar model. We are witnessing a great shift in terms of consumer behaviour towards eCommerce in India. With higher mobile use, online has become the best way for purchases. Though Mobile Banking and Net Banking have been there for years, it is only now gaining momentum. If you take the US, prepaid products were the first to hit the market, followed by debit and credit cards. But here in India, credit card was the first product that hit the market, followed by debit cards, and now prepaid,” said YES Bank Senior President and Country head (Digital Banking) Ritesh Pai. In his view, tie-ups with mobile wallet players will provide synergies.

Talking about mobile wallet, Sharma says when you have a bank app, there is no need for a mobile wallet. “We believe that for bank customers, their account itself is a wallet. If you have a bank app, and you want to book a flight ticket, there is no need for a card or a wallet. We have travel partners. All that a customer has to do is choose a destination,” he said.

Download app, tap and pay

At a time when digit wallets and mobile banking applications are vying for attention, Bengaluru-based Ultracash Technology Labs has come up with a payment app called Ultracash that uses ultra high frequency encrypted sound-based technology. According to its founders, all that you need for transactions at brick and mortar stores is a bank account and a phone!

Ultracash co-founders Vishal Lal and Umesh Singhal said, “Customers can pay directly from any of their bank accounts to the merchant account with just a tap. When one is ready to pay, he/she has to hold the phone close to the merchant’s phone.”

While this app works for customers even without an internet connection, merchants do need a data connection. “It is faster than credit cards. When merchants handle multiple customers, it takes only a few seconds,” said Lal. He claimed to have ensured complete safety and security of customer transactions and data.

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