India disappointed over mobile banking takeup

Summary:Reserve Bank of India says mobile banking adoption has been encouraging, but "below expectation", due to key factors such as device incompatibility and lack of industry collaboration.

India's central bank says mobile banking adoption in the country has been encouraging, but below expectation, due to key factors such as device incompatibility and lack of industry collaboration. 

In its half-yearly financial stability report released this week, the Reserve Bank of India (RBI) said mobile could potentially be a key catalyst for expanding banking services across the country, including rural India . Over 50 percent of the population have no access to financial services .

india-mobilebank
(Source: Reserve Bank of India, December 2013)

"Helped by the rapid spread of use of mobile telephony , the growth in mobile banking has been encouraging over last three years," the central bank said. "However, the growth and acceptance of mobile banking as a channel of accessing banking service has been below expectation."

It cited several barriers to adoption, pointing to low levels of user awareness and acceptance, handsets that were not compatible with mobile banking apps, as well as the lack of collaboration and revenue-sharing models between banks and mobile operators.  

Over the past few years, the RBI had taken several steps to drive mobile banking including relaxing its regulations. For instance, in 2010, it allowed banks to undertake transactions valued at up to 1,000 rupees (US$16.23) without the need for end-to-end encryption, helping defray some of the costs of processing transactions. It also allowed the remittance of funds for disbursements in cash, which was targeted to enable rural users to send and receive money through their mobile phones.

India has the world's second-largest mobile user population with over 900 million subscribers, and  155 million across the country  are expected to access the Web via their mobile devices by the first quarter of 2014. 

Topics: Banking, India, Mobility

About

Eileen Yu began covering the IT industry when Asynchronous Transfer Mode was still hip and e-commerce was the new buzzword. Currently a freelance blogger and content specialist based in Singapore, she has over 15 years of industry experience with various publications including ZDNet, IDG, and Singapore Press Holdings. Eileen majored i... Full Bio

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