Mobile banking : an urban myth ?

Banks have come a long way from the days of smiling staff to ATM’s to internet and now on to the mobile. The furious mobile subscriber growth in last few years in India has meant that finally an electronic device other than television remote has found its way into the hands of Indians.  I mean hundreds of millions of Indians.

India also has one of the lowest penetration of bank accounts. I would guess less than 100 million individuals in India have bank accounts. Access to credit can be a big enabler for getting out of poverty as the experience of micro-finance  has shown in Bangladesh ( Mohammad Yunus and Grameen bank) and now in India. However, banking is not only about credit. It can dramatically increase the efficiency of government projects in rural areas . For example, NREGA can be much more successful if the workers have bank accounts. The government can transfer the money directly to their account with no middlemen keeping their cut.

So, marrying the two should mean that hundreds of millions of people can get access to banks, right? Wrong!

Here’s why.

1) Most of the phones where mobile banking can really be useful are owned by people who already have alternative channels to access banking like internet/ATM/bank branch. By all means , these alternative channels score much higher on user experience today.

2) Most of the people who *really* need mobile banking do not have phones which are capable enough. Also, we are talking about people who can barely read English. And can barely learn to open and read an SMS.  And they want to change their mobile phone and prepaid SIM every time there’s a new deal in the market. ( India may soon have the biggest mobile resale market).

*Result* : All mobile payment solutions ( paymate/mchek/banks) in India are only serving folks who already have bank accounts. There are only 25 million mobiles registered for any form of mobile banking. And only 7% ( about 1.5 million) are active users. No wonder, I have not heard anyone in my circle ever hear checking their bank statements on the mobile.