Banking on the move

The small two-by-five inch handheld device can do more than just deliver messages and voice data. And if the draft operative guidelines released last month gets the Reserve Bank of India’s final nod, mobile phones could become virtual banks for India’s 300 million subscribers. The advent of mobile banking also promises to speed up and improve the efficiency of banking transactions. The potential is huge. “Every mobile phone user in India is now a potential bank customer wherever he or she is located. It also means substantially reduced costs of banking and fantastic speed of financial transactions.

So, mobile banking should catch up as fast as ATMs, or faster,” says Vijay Shankar, Director (Transaction Banking, India & South Asia), Standard Chartered Bank. Though the RBI guidelines have spurred many banks into expediting the building of their mobile banking infrastructure, the action began sometime ago. ICICI Bank, for example, already offers iMobile, an Internet banking application that can be downloaded to one’s mobile phone. It allows not only routine activities like balance enquiry, but also funds transfers to other bank accounts.

What you can do with your mobile Check your bank account Send stop payment instructions Get records of last few transactions Get the location of the nearest ATM or bank branch Get your bank to transfer funds to a pre-registered beneficiary

“iMobile is an innovation that allows practically all Internet banking transactions to be conducted on mobiles phones. The bank does not charge customers for these services,” says an ICICI Bank official. HDFC Bank recently partnered Reliance Communications to launch a “virtual credit card” that allows customers (of both the bank and the mobile service provider) to turn their phones into a credit card and their mobile numbers into a credit card number. That’s a precursor to the concept of a full-fledged “mobile wallet”.

And Barclays Bank’s “Hello Money”, a menu-based service that is said to be user-friendly to the point of making Hindi as a language of choice for transactions, is creating quite a buzz.

Mobile meets money

Mobile users are already warming up to banking at their fingertips. And banks are ensuring that they are up to the challenge. “RBI guidelines are only for bank customers. One must have a bank or a credit card account to be able to enjoy mobile banking services.

The guidelines also favour a system of registration of subscribers, common standards of technology and security of standards,” says Ravi Shankar, Country Head (Cash Management & Direct Banking), YES Bank.

It’s easy to understand what the guidelines are seeking to achieve. As a user, you’d want your mobile banking transactions to be easy, uniform across different banks and mobile service providers and absolutely secure against theft.

And what you will be able to do Link your mobile phone to you credit or debit card Make all third-party payments Transfer money from your account to another account Access mutual funds and equity statements Access card statements

“I have three different bank accounts. Ideally, mobile banking should allow me to access all three accounts from a single technological platform,” says Naman Mishra, a project manager at a BPO firm in Gurgaon.

With seamless technology and a uniform platform, mobile banking can become easy. Says Vijay Shankar: “RBI has envisioned a system that will allow funds transfer from one bank account to another in the same or another bank on a real time basis across all mobile networks. So, the banks need to ensure that their mobile banking platforms converge into a seamless whole.”

Safe and secure

While it’s smart to bank on the mobile phone, it’s also easy to overlook security concerns, identity theft and fraud. Various channels of delivering mobile payment services, however, can have different levels of security. RBI guidelines, therefore, advise banks to offer “appropriate” services after assessing the security risk. Banks can provide additional security such as a customer PIN number, transaction limit (a limited number of transactions per day, week or month), and encryption of confidential information. For instance, a virtual credit card integrated with a mobile phone will have a PIN protection.

“Subscribers using mobile phones as credit cards are not required to reveal any card details (card number, expiry date, etc). Mobile phones will be PIN-protected, and payments are safer than actual credit cards,” says Shankar.

Transacting with your mobile Two prominent systems, which enable mobile payments, are based on either SMS or the internet. The former is perceived to be more user-friendly. In the latter, you will need to install an application on your mobile phone. How to make a third party SMS-based payment

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So, users will be required to enter a correct PIN number in their transactions, failing which an application can even lock itself up. This is particularly useful when you, for example, have lost your mobile.

Besides, RBI has advised banks to have a reliable system to verify mobile numbers to guard against fake phone numbers.

And versatile, too

For now, the one thing you can do with your mobile phone is to sign up for SMS alerts, which “ping” you every time there’s a transaction in your bank account. It’s a quick service for people who’d want to know what’s happening in their bank accounts, and most banks offer this service for free or for a small fee.

Even transactions such as balance enquiry through SMS are common these days, and can be done with a few messages.

But carrying out a financial transaction or a third-party payment requires sending several messages and is tedious. “That can be cumbersome and there’s also a substantial cost in sending those messages,” says Mishra. As of now, SMS is the most popular and convenient way of doing mobile banking in India, points out Ravi Shankar. But as mobile technology improves, banks are likely to add more secure platforms. “Banking will change as banks find more secure technological platforms for mobile banking,” says Ravi Shankar.

Internet banking is a more advanced application that allows you to do many things on your mobile phone. For instance, ICICI Bank’s iMobile offers 25 transactions on your mobile phone that includes not only saving accounts, but also demat and loan accounts.

Mobile banking also spells more business for banks, especially as they ride the wireless telephony boom in India’s rural hinterland, which has a large population of “the financially excluded”.

So, let your mobile phone take the pain out of banking. It’s time to let your fingers do your banking.