Mobile Banking - From Just an App to Your Financial Companion

By Kishan Sundar

In Circa early 2000s, 35 years old Shiv Pandit from Bangalore receives a message from his bank that mentions the current balance in his savings account. Fascinated with the technology, it is a respite for Shiv as it saves him a trip to the bank, and he now has access to his bank information at the tip of a button.

Cut to today’s times, wherein, right from overseas transactions to availing a gold loan to investing in mutual funds - mobile banking is no longer an alien concept for Indians and the power is right in our hands. While it was marred by its own share of struggles, the journey of mobile banking in our country has truly been a glorious one. What started as SMS banking is now a part of 31% of Indian households with mobile banking apps present on their smartphones.

Today, almost every leading bank has a mobile application that encompasses services such as mini-statements, account history, alerts, monitoring of term deposits, checking loan statements, credit card statements, bill payments, insurance premium, portfolio management, checkbook & card requests, and more. Since demonetization, the COVID-19 pandemic is the second-largest situation that has propelled a 5% growth in mobile banking and is further expected to grow even more.

But how did it all come into the picture? Let’s trace back our steps.

The emergence of The Traveling Bank

In our country, banking, and financial services, which had already come a long way from branch level services to the customer’s home desktop, had the potential to be accessible to a much larger audience, including the financially excluded, through the medium of the mobile phones. In October 2008, the Reserve Bank of India published the first set of guidelines, recognizing this very potential.

The rules described mobile banking as "doing transactions using a mobile device’’, this definition in some ways, gave a broader canvas for mobile payments, which in turn created a larger canvas for mobile banking. Over the past decade, courtesy of the increased mobility provided by smartphones, mobile banking as a financial instrument has gained immense popularity. The very nature of cell phones to effectively combine the functionality of a computer into a single communication device is one of the key drivers to this growth. This propelled the capital investment by banks in networks, systems, and infrastructure to deliver traditional banking services within a 6-inch screen.

To add to this, India’s digital journey is one story to tell! The country with the world’s second-largest internet population at over 749mn users in 2020, of which, 744mn users accessed the internet via their mobile phones. Estimates suggest that this figure would reach over 1.5 billion by 2040<3>- which speaks volumes about the opportunity present for banks to bring in diverse mobile banking services.

The indispensable financial companion!

With mobile banking, banks are able to offer an end-to-end client experience within the channel of mobile banking services. Not only do users have the option of customized notifications but are also alerted with timely updates for payments. Furthermore, mobile banking's paperless features serve to safeguard the environment while also lowering costs for banks.

Another key facet of mobile banking is security - the foremost factor that shapes customers’ confidence in digital platforms and has become increasingly non-negotiable during the pandemic. Banks have become increasingly cognizant of this need and have brought in advanced technologies such as biometric authentication, facial recognition, and voice recognition under their fold.

As fraudsters exploit pandemic-driven surges in digital channel usage and online banking, it is imperative for banks to shore up their mobile security offerings to empower customers against the threats. Right from access to a host of functionalities to intuitive banking and round-the-clock accessibility, mobile banking has truly become an indispensable part of a customer’s financial experience.

What’s in store?

We truly have come a long way from archaic financial processes, today all we carry with us is our mobile phones to make payments. The technological advancements across financial institutions have eradicated the need to carry cash, cheque, or even our debit/credit cards. But is it enough?

As Gen Z is poised to be the most significant demographic and economic force of our times, banks have to shift their strategies accordingly to ensure the former does not jump ship for a better financial experience. Digital banking applications will need to go from being only a window for transactional services to offering a comprehensive picture of financial health.

An app designed for millennials and Gen Z must embrace autonomous finance, predictive personalization, and serve as their personal financial advisor. Thus, banks will have to do everything from continuously improving mobile banking apps to providing higher integration with all other aspects of their customers’ lives.

As the banking sector takes strides with new technologies such as artificial intelligence and machine learning, new features such as Robo-advisors for consumers, voice payments, and card control are the future. As we innovate in every sphere of our lives, courtesy of technology breakthroughs, the way we bank too will never be the same again.

Sundar is the Senior Vice President, Digital Business Unit, Maveric Systems