Since it is not feasible to open bank branches to cater to every individual and in order to reach the maximum number of people, Banks have adopted mobile based channels as delivery channels, because of their reach and low cost service delivery platform. The mobile phone market is growing at 20% p.a. with mobile connectivity in almost every part of India. Mobile phone penetration is set to reach 60% of India’s population in 2011. It is felt that mobile banking is going to be the next revolution in the telecom and banking sectors. To enable wide coverage of mobile banking services, major telecoms and banks are entering into deals and MOUs. The telecom companies will act as Business correspondents and provide a range of financial products and services offered by the bank through the mobile operator’s retail outlets.
A mobile account will have to be opened by every user for doing mobile banking transactions. The present focus of the banks and telecom companies will be on the unorganized sector like migrant labourers who need money remittance services. A remitter in one city of India can send money back to his home in another city or village either by account transfer or instant money transfer module. The account transfer method is where money is transferred from the account of the remitter to that of the beneficiary when they both have accounts with the same bank. The second method is by the instant money transfer module, whereby, the remitter with an account with a particular bank remits money to the beneficiary who has a registered mobile connection but does not have a bank account.
Advantages of Mobile Banking
Ø Providing banking service to unbanked areas and to those customers who otherwise would not have got the banking service.
Ø The wage earners staying away from their homes and finding it difficult and expensive to remit money to their families, can send money instantly through mobile banking
Ø The wage earners can do bank transactions without visiting the bank. The advantage being that they do not lose a day’s wages which they would otherwise lose by going to the branch for getting any banking service.
Ø All non cash banking requirements can be carried out using mobile phones.