Source: Economic Times
Cash is king, but the future is digital payments, we all know that. It's been more than a decade that the RBI has been working towards setting up, improving and encouraging electronic banking, yet when it comes to the retail world, we remain an economy caught up with paper money with around 90% of our daily transactions in cash. Cash won't go away easily; getting people to overcome the digital divide will take a long time and needs considerable push. People can of course access the systems through the internet but given that the mobile phone is with almost everyone now, especially in the cities, it makes for an easy access channel, and mobile banking through dedicated apps has only just recently picked up some speed.
Yet the RBI Committee on Mobile Banking whose report was released early this month emphasized that the advantage we have of large mobile penetration has hardly been leveraged, putting together the following estimates for the current status.
While the numbers show that Indians are still getting used to net banking, most of these would be urban net-savvy customers, but seeing the success it has had in so many developing countries, it isn't difficult to imagine the potential of using the mobile to tap the unbanked. We have a long way to go on using the mobile for inclusion, though with the Aadhaar-enabled eKYC allowed some enterprising banks have started quick and fast account opening.
The mobile is of course just a channel, and adoption of this new way of making payments or even checking your account balance is easy, but only once people have learnt to trust and use the app. While trust will spread by word-of-mouth of satisfied customers, we still don't see massive ad campaigns on using the phone as a quick and easy way to do basic transactions. RBI tells us that 80 banks have been allowed to give mobile banking services, of which 64 have started, but not many banks have ad campaigns out.
Apart from customer outreach, there is also changing the mindset within the banks - how many banks really see the advantage that mobile banking will give them, are ready to invest and understand what is needed by the customer? In fact, the RBI Committee has a string of suggestions covering many points from training bank staff to a standardized app across all banks to measures like allowing customers to begin the service through the phone rather than at the branch, and so on.
The aim has to be to simplify, simplify, simplify and get more people onto using the phone. The sooner all banks understand this, the faster we will move on the digital highway.
Of course, if we are to ever get anywhere close to a less-cash society, we have to get both banks and telcos working together. This has proved to be quite a stumbling block in the past, but with the RBI Governor's latest assurance that in the next few months "we will try to accelerate the dialogue between key players', we can hope that the RBI and TRAI manage to get both banks and telcos on the same wavelength soon. But that is a separate story altogether.