Exploring the Critical Elements Shaping the Uptake of Mobile Banking and Its Role in Advancing Financial Inclusion in India

Exploring the Critical Elements Shaping the Uptake of Mobile Banking and Its Role in Advancing Financial Inclusion in India

Dharmendra Singh, Garima Malik
Copyright: © 2024 |Pages: 17
DOI: 10.4018/979-8-3693-0522-5.ch006
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Abstract

India, one of the most populous countries in the world, holds the potential to create sustainable growth in every sector including banking with optimum and efficient utilization of modern technology. Mobile phone is one such technology that holds the key to India's dream of financial inclusion. This study has been specifically designed to explore the bottlenecks for the implementation and usage promotion of mobile banking services. Scales utilized for this study provide enough rational support to findings that provide various insights to the bankers, marketers, and payments industry experts to develop better techniques and processes to make their services seamless and efficient with an exponential increase in the adoption of mobile banking.
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1. Introduction

Since the inception of banking in India in the year 1770 (Bank of Hindustan) the banking sector has seen rapid changes. Process & product innovation along with technology and globalization have led to increase in competition to provide more comforts to customer and to make banking easy for them. Over the years the banks have evolved in process from banking by manually maintain ledgers and balance sheets, then computers were introduced for streamlined functioning later solutions like Back Office and in 1987, Bank Master came into picture. Core banking solution, in the year 1994, was a major shift in banking which linked all the branches of bank and any service point like ATM or Credit/ Debit card swappers to a mainframe server. The Internet Banking phenomenon, in the year 1997, provided customers the freedom to operate their accounts from any point where internet was available. Now Indian Banking has, Mobile Banking where the users are free to operate their account using mobile. The process evolution diagram is as follows:

Figure 1.

Banking process evolution diagram

979-8-3693-0522-5.ch006.f01

1.1 Overview of Mobile Banking in India

As the phenomenon of personalized banking took over the gap in banking service was realized by bankers on day-to-day interactions with users. It was observed that customers were unable to avail banking services at the place where no internet or touch point was available. Extensive research highlighted that, the number of mobile customers & the reach of mobile network is increasing which can be utilized to provide banking on the move & thus emerged Mobile banking technology. Mobile banking service came in India in the year 2002. The Reserve Bank of India (RBI), the national regulatory bank of India, acknowledged the potential of mobile banking. In order to enhance the promotion of the service, a set of initial norms and regulations has been devised. The Reserve Bank of India (RBI) formulated the Operative Guidelines with the aim of incentivizing financial institutions to expand their operations to include mobile banking services.The number 10. According to the Reserve Bank of India (RBI), interoperability is identified as the overarching strategic objective for mobile banking. The Reserve Bank of India (RBI) acknowledges the necessity for individual banks to make advancements in their endeavours, in collaboration with telecom providers, mobile devices, and other payment technologies, right from the outset. According to a report by the Times of India on December 14, 2013, there are currently 1.72 crore users of mobile banking services in India, encompassing both public and private sector banks. It was found that HDFC Bank has the highest number of clients utilizing this service. The statistical data pertaining to mobile banking is presented in Table 1.

Table 1.
Mobile banking statistics
S.NoBank NameMobile Banking Users
1HDFC BANK88.88 Lakh
2STATE BANK OF INDIA50.92 Lakh
3CORPORATION BNAK6.75 Lakh
4ICICI BANK5.49 Lakh
5AXIS BANK3.51 Lakh
6BANK OF BARODA3.17 Lakh

(Source: Times of India report; dated 14-12-2012)

The basic requirements to have mobile banking include money in a bank account in any branch of any bank, a fully functional mobile with a service provider & a subscriber.

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