Q&A: Sudeep Yadav, Citi, South Asia

'Online transactions are more secure than those on paper'

Online and mobile banking is changing the way in which basic transactions happen. Sudeep Yadav, Citi's managing director and head of global transaction services for South Asia, talks to Arijit Barman and Somasroy Chakraborty on the changing landscape in basic banking transactions. Edited excerpts:

A study claims payments and banking transactions through mobile phones in India will touch $350 billion by 2015. Do you think people, especially in rural centres, will find it convenient to do banking transactions through mobile phones?
A significant part of flows in India, like in any developing nation, has been historically conducted through a combination of paper instruments like cash, cheques and drafts. Today, the number of people owning mobile phones is far greater than those with bank accounts. More than half of Indian households do not have a bank account; yet, of these households, research indicates 42 per cent have at least one mobile phone. While they currently transact in cash, mobile phones could be the platform through which they do formal banking transactions for the first time in their lives. The transformation from paper to electronic mode is now a distinct reality, with the rapid growth of electronic transactions. Under these circumstances, I believe some of these predictions on transaction flows through mobile phones are more likely to happen, sooner than later.

Banks have formed partnerships with mobile operators to offer banking services. Most of these ventures have failed to take off. Why?
As a part of the government's inclusiveness agenda, Indian banks need to fulfill certain conditions that support the economically weaker sections of society. Many of these partnerships were formed since a significant portion of mobile users fall within this target segment. These tie-ups are expected to assist banks in offering financial services via mobile phones to people currently not part of the banking system, both in rural and urban India. However, the success of these partnerships will be based on how banks do on-boarding of customers while adhering to KYC (know-your-customer) regulations. These processes have to be worked out before we can see some traction on these partnerships.

Is the mobile banking infrastructure secured and capable of handling such huge flows?
Risks always exist in any banking transaction. There is a whole new approach and thinking on controlling risks in mobile banking by the regulator. One of the measures implemented is defining the value limit for transactions done through mobiles. For instance, if you are doing a simple plain text transfer, then the value limit will be much lower than if done through secure connectivity. Encryption standards ensure a transaction is secured. I personally believe that transactions done through properly secured electronic means are more secure than those done via paper.

What is Citi's market share in the transaction services business in India?
A third of Citi's business in India comes from transaction banking and we are among the top five contributors globally. In cash management, we manage approximately seven per cent of the country's total payment flows. In trade finance, we handle seven per cent of the gross cross-border trade flows per annum. In the securities and fund service business, we handle roughly a third of the foreign institutional investors’ flows in the Indian market and a fourth of the domestic mutual fund business.