Mobile Banking VS Cash In India: Only 13M Users, 49 Banks, 25.6M Transactions

| October 5, 2012 | 5 Comments

According to a Reserve Bank of India report in August for the year 2012, only 13 million users in 49 banks used mobile banking services for a total of 25.6 million transactions.

Way to beat a cash economy For a population with over 900 million mobile phone subscribers this statistic is quite surprising. India is a cash-run economy but using electronic payment systems makes a lot of sense, however, not a lot are taking advantage of the opportunity.

India is a country where 67% of all transactions are in cash. Mobile banking or m-banking can greatly reduce the costs to a tenth of what banks spend on the same transactions if carried out physically in the branch.

There are a few reasons for the slow growth of mobile banking in India. There are two models in adopting mobile payment services namely bank-led similar to India, South Africa and the Philippines and ‘non-bank’ led like the ones in Kenya and the Philippines.

Indian banking regulators are not at ease in giving licenses to mobile payment companies. Also there were concerns about security of the network but banks now are using protocols like SSL and HTTPs for encryption to keep the data safe.

To boost new mobile banking users in India new developments like the Inter-Bank Mobile Payment Service payments platform made by National Payments Corporation of India in partnership of about 50 banks is now being used.

Also, RBI has doubled the limit on daily transaction to Rs. 5,000 and Rs. 10,000 for goods and services. India has a young population that are interested in adopting such technologies. In July, mobile banking transactions have grown by 198% and transaction value by 174% against the same period last year.

Key Stats

  • India has 900 million mobile phone subscribers
  • India’s mobile banking has only 13 million users in 49 banks as of August 2012
  • Only 25.6 milllion transactions in mobile banking as of August 2012
  •  67% of transactions in India are made in cash
  • Mobile transactions have grown by 198% from July 2011 to July 2012
  • Mobile transaction value have grown by 174% from July 2011 to July 2012

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Covered by my Visible Banking Team

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In the last few months, we covered quite a few news and innovations in social media and mobile banking from the Indian banking industry with initiatives like ICICI’s online banking app on facebook or Muhoot Financial’s enabling gold purchasing via mobile phone.

I recently praised the largest indian banks vision for social media in banking.

But even though we all appreciate the importance of mobile banking for any country with a high proportion of unbanked people, it seems like adoption remains slow in India…

Was the RIB’s Deputy Governor too optimistic when he said that “India is moving towards a ‘less-cash’ industry“?

Join the conversation here or on our Facebook page.

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Category: Mobile

About the Author ()

Christophe is an experienced presenter, a published author, and a trusted advisor on the topics of social media and digital innovations. Since 2007, Christophe has contributed to over 140 events in 18 countries.