Mobile banking a key to grab rural markets for banks
By siliconindia   |   Monday, 27 July 2009, 16:30 IST   |    3 Comments
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Mobile banking a key to grab rural markets for banks
Bangalore: The increasing cell phone penetration in the country is coming out as a key factor for the banks to reach out the rural population. The banks can target the market by offering mobile commerce services like banking services, which can help in expanding the reach. "Mobile banking offers an opportunity for banks to reach out to the rural population and doing business in rural areas has become more viable," said Divakar Goswami, Executive Manager, global consultancy firm Deloitte Research. According to Goswami, the mobile penetration is much higher as compared to the banks, which makes the concept of mobile banking easily workable. The industry estimates suggests that the global market for mobile based transactions in India will be more than $500 billion by 2011, which is still at an early stage. The other reasons for banks tapping on the rural market are the possibilities of expansion of bank's business activities and cutting down the various costs. As the number of mobile subscribers is on the rise in the country, a majority of the subscribers are expected from rural areas in the coming years. Mobile banking is also a lucrative business venture to banks and mobile carriers. "Cell phone providers, faced with falling revenues from voice-based services, could find new streams of revenues from banks, advertisers, merchants and customers," according to a Deloitte research paper. Even as the sector is attractive and lucrative, Goswami states that there are many challenges ahead which include partnerships between banks and mobile carriers. The research co-authored by Goswami says that mobile banking would require "smart business and sound partnership between the banking and mobile industries". The nationwide platform for mobile commerce is expected to emerge by 2012. The research paper suggests an open federation model, which defines a collaboration of large number of banks and mobile carriers coming together to provide a common platform for mobile banking services would be a good idea. "By developing a common platform and infrastructure, open federation models reduce the cost that banks and carriers would incur from investing in proprietary software and infrastructure," defines the research paper. As the mobile banking transactions are not secure, Goswami said that there should be awareness among the customers.

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