Mobile banking zooms as India gets smarter

Transactions see 4-fold jump in a year; ICICI Bank tops Rs 1,000 crore in one month

A sharp increase in use of smartphones has led to a sudden surge in mobile banking transactions — almost four times in a year in value terms. Leading the pack is ICICI Bank, the country’s largest private-sector lender, which has reported a three-fold rise to clock more than Rs 1,000 crore worth of transactions in a month, the first time by a bank in India.

ICICI Bank’s share in the country’s mobile banking payments is the largest. Abonty Banerjee, general manager and head of digital channels, ICICI Bank, says financial transactions on mobile devices is rising steadily. “In the first quarter of this financial year, we have already logged Rs 2,635.37 crore worth of mobile banking transactions, close to half the Rs 5,741 crore seen in full 2013-14. Also, compared with the June quarter of last year, we have almost tripled our value of mobile transactions — from Rs 941 crore to Rs 2,635.37 crore. Similarly, the value for June alone was Rs 1,000 crore, compared with Rs 333.23 crore in the month last year.”

Even other banks have seen significant jump in transactions on the mobile platform. HDFC Bank, India’s second-largest private lender, has also seen its transactions growing about three times — to Rs 795.6 crore in June this year from Rs 266.3 crore in the month last year. Axis Bank witnessed a five-fold increase during the same period — from Rs 115.8 in June 2013 to Rs 586.1 crore. In the month, the total value of mobile transactions across banks grew to Rs 3,985 crore from Rs 1,147 crore a year ago.

Jairam Sridharan, head of consumer lending & payments at Axis Bank, explains mobile banking has now become a core strategy for his bank, which is also investing to grow the overall digital medium base. “To stay relevant among consumers, banks need to focus on the digital medium. It helps works for banks, as they are able to save a lot of transaction cost. It is a win-win for both banks and their consumers.”

While private-sector banks have led the charge in tapping the digital opportunity with better technology, State Bank of India (SBI) is one of the few state-run lenders that have seen meaningful traction.

Consumers mostly use the mobile medium to pay bills, recharge mobile phones, book tickets and transfer funds.

Experts believe a rise in smartphone usage and improved applications by banks have helped mobile banking gain popularity among users. ICICI Bank’s Banerjee sees the momentum continuing. “The overall transaction value is at least doubling every year. This year, the value has tripled compared to last year. That might not happen on a larger base of the previous year but I am sure it will grow very fast.”

For ICICI Bank, the average value of these transactions is Rs 3,000 per user per month. To grow the mobile banking channel, the lender is planning to offer on mobile phones all services that are currently offered on the web. “At present, there are a few peripheral services that are not on mobile. For instance, services like closing a fixed deposit option is not available on mobile phones. The few services that are left might be offered on mobile in the next six months, we will be able to have all the available services even via mobile phones,” added Banerjee.