When freebies fail to fulfill?

Certainly, growth in the mobile subscriber base (since 2002 India has evidenced 94% CAGR in mobile telephony and has reached a subscriber base of 347 million) is definitely a reason to offer this service, but it’s not the only reason. Factors like ubiquitous reach, convenience, time saving, and low costs are some other key advantages influencing mobile subscribers to become mobile banking users. “From the bank point of view, mobile banking helps cut down costs as it is even more economical than branch banking or any other mode of electronic banking like ATMs and online banking. If accepted by consumers, mobile banking will cost one-fifth what ATMs cost and only 40% what Internet banking costs per transaction,” reasons Rajan.

Apart from this, mobile banking can also act as an effective tool to bring unbanked rural customers into the banking umbrella. In regions where accessibility, infrastructure, illiteracy, and foolproof identity are still issues, banks and service providers are considering mobile banking as an effective and robust tool to carry on banking activities. For banks, it is nearly impossible to build a retail brick-and-mortar infrastructure in rural India, thus making mobile banking the best available alternative with a relatively low investment.

Though the numbers that these banks are quoting (as far as mobile banking is concerned) are still relatively low, what is impressive is the pace with which these numbers are growing. In fact at the end of 2008, private banks like ICICI, IDBI, HDFC and Kotak had close to 12.5 million registered users for mobile banking. Even public sector banks are not behind when it comes to the use of mobile as an interface to interact with their huge customer base. While India’s largest lender, State Bank of India (SBI), has reported adding more than 20,000 customers in the last two months – just in mobile banking, the Union Bank of India (UBI) has seen it’s mobile banking customer base increase from 1,700 in June to over 11,000 in August. In fact, banks are leaving no stone unturned when it comes to testing the efficacy of their mobile banking initiative before launching it on a pan India basis.

HDFC Bank, for instance, has tied up with Bharti Airtel (the telecom service provider) and Eko (the technology provider) to launch the ‘Abhilasha’ savings account. This is a pilot-project that has enabled over 2,000 low-income individuals in Uttam Nagar, West Delhi, to access banking facilities without having to visit bank branches. In this pilot phase, chemist shops, general stores, residents, NGOs, or individuals can register to become an authorised outlet. These authorised outlets will then help mobile banking customers conduct banking transactions which include facilities like money transfer, cash deposit and withdrawal, wage and salary disbursements, micro-insurance, microcredit, and payments on behalf of the bank. To make it happen the mobile banking services are powered to the customers on all mobile phones including the most basic models, without WAP or GPRS applications.

Even the public sector behemoth SBI is not far behind when it comes to offer mobile banking. Lately, SBI has introduced a new facility in mobile banking wherein central government employees receiving payments through SBI will receive the details of their transactions through mobile phones.

So, while HDFC and SBI are banking on Eko, banks like Dena Bank, Andhra Pradesh Grameena Vikas Bank, Punjab National Bank, Axis Bank, Punjab and Sind Bank, Oriental Bank of Commerce, United Bank of India, et al are banking on A Little World’s (another technology provider) “ZERO” platform to reach to the customers.

Increasing competition has even prompted telecom service providers to move ahead of telecommunication services. In fact, now they are aiming at partnering with banks to provide mobile banking services to bank customers. Bharti Airtel, for instance, has entered into agreements with ICICI, HDFC, SBI, and VISA to offer mobile money transfer (MMT), postpaid bill payment, and prepaid recharge services in addition to ticketing services for air, rail, and movies. Likewise, Reliance allows ICICI Bank account holders with Reliance handsets (even on low-end handsets of Rs.1,000, with or without Internet connectivity) to make intrabank money transfers. Apart from this, it has also tied up with HDFC to offer Reliance mPay, a virtual credit card.

No doubt, mobile banking happens to be the buzz word with every single banker in India at present, but whether it will emerge as a clear successor of e-banking will depend on how customers across the country accept and acclimatise to this new banking channel. “Increasing mobile penetration cannot be the only indicator that mobile banking will slowly and steadily increase acceptance. However, factors like technological advancement in terms of software applications and service offerings, user-friendly products and services, security concerns, and last but not least, regulatory norms will play a pivotal role in the growth of mobile banking in any country,” states Rajan.

But who knows, with banks looking adamant on developing a more user friendly interface for their customers, mobile might soon become a popular tool for conducting financial transactions. And Pathak, who is today furiously clicking the keyboard of his laptop for transferring funds from his one account to another, might tomorrow be happily doing it through his cell phone!

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Uncle Sam has no philosophical disagreement with global partnerships

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Uncle Sam, however, is having none of this. While he says that he has no philosophical disagreement with global partnerships, he’s willing to wait for a “win-win partnership” offer before he can be swayed. For now, he is busy chalking out Madison World’s future roadmap, which is littered with 50% perspiration and 50% inspiration to serve clients. “A lot of people may think we are stupid, but I almost feel apologetic if we have too many internal review meetings to clock Madison’s growth. I feel that my people are better off thinking about how to solve our client’s problems and benefit them,” points out Sam, adding that this one statement sums up the DNA of Madison. A reason perhaps, that in an industry plagued by attrition and regular client calls for pitches, most of Madison’s clients have been with them for years together. With new specialisations, Sam feels that Madison will be able to provide more cost-effective solutions to clients. “Following this credo, if we have survived for 22 years, guess we have a viable business model,” he gesticulates, with a flourish.

It is this viable business model that Sam now intends to take global. And Lara is again leading from the front by identifying new markets to tap for global expansion. Incidentally, Madison has already spread its wings into Sri Lanka (via a JV with Media Factory, the island nation’s largest media buying agency) and Thailand (Madison has invested in Penada, a Bangkok-based event management company). “It’s got to be the neighbouring countries first and the best way for that is acquisitions and alliances,” avers Lara. While she refuses to give details, she says that a couple of discussions are already on, in other neighbouring countries, for other similar tie-ups.

But even as Lara is stitching up international alliances for Madison, her exuberance and glowing optimism for Madison’s new domestic vision is unfettered. “Each of our specialist unit is raring and firing to go. We are confident of achieving our vision of being seen as a comprehensive communication service provider within the next two years,” she explains, There’s more specialist expansion for Madison World on the cards. Sources within the company say that the next specialist unit to spring from their stable will be focused on Customer Relationship Management – a crying vacuum in the industry so far. Adds Lara, “The world is familiar with those deals, which we have successfully been able to conclude but there are so many that we have not been able to conclude.”

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2010.

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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