Project Report On Mobile Banking 71k26
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State Bank of India
EXECUTIVE SUMMARY
Mobile phones as a delivery channel for extending banking services have off-late been attaining greater significance. The rapid growth in s and wider coverage of mobile phone networks have made this channel an important platform for extending banking services to customers. With the rapid growth in the number of mobile phone subscribers in India (about 261 million as at the end of March 2008 and growing at about 8 million a month), banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. State Bank of India has been able to realize the importance of Mobile Banking Services (MBS). It has tried to cater to needs of customers by offering “SBI FREEDOM”; offering a wide range of services through this platform. But the business we have been able to book; in respect of the potential available and the growth of trade and services, is not satisfactory. Lack of awareness of the applications among staff has not been able to cater to the needs of the prospective & potential customers because of which wet we are not able to make it popular among the business community. Through this project I have tried to find out, what is the state of awareness of MBS among SBI staff & customers in the area and the possible reasons for improving the same Customer service has been given prime importance in our vision and mission statement itself. We would examine the awareness among the staff & customers of. I have included around 100 SBI staff & 200 customers from various rural, urban & semi-Urban areas in the branches & locality of Pune. An analysis of their responses has been made and some recommendations are given to create popularity of SBI FREEDOM among staff & public.
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State Bank of India
ACKNOWLEDGEMENT
Life is nothing but a learning process
Whatever we do and whatever we achieve during the course of limited life is just not done by our own but there is always some amount of hard effort contributed by other people associated with it directly or indirectly, knowingly or unknowingly.
The compilation of a report not only requires time, effort and energy, but also valuable guidance from various people. Firstly I would like to thank the Branch Managers of the various branches for providing me the necessary guidance & opportunity to interact with the staff & customers of their branches which has been of immense importance for the completion of the project. My special thanks to all the staff of SBI to provide me with the necessary information & the required co-operation even during the peak timing of the banking hours.
I thank all of you once again for your and would always treasure the learning from the esteemed organization.
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State Bank of India
Tulika Agrawal
TABLE OF CONTENTS
SR. NO.
PARTICULARS
PAGE NO.
1)
Executive Summary
1
2)
Acknowledgement
2
3)
Introduction to Mobile Banking Services(MBS)
4
o
Mobile Banking Guidelines
transactions
in
o
Mobile Banking-A wallet for all pockets
o
Statistics
India-RBI
5 7 10
4)
SBI Freedom
16
5)
Research Methodology
18
6)
Data Analysis
29
7)
Findings & Conclusions
34
8)
Suggestions & Recommendation
36
9)
Bibliography
38
10)
Annexure
39
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State Bank of India
INTRODUCTION Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today is most often performed via SMS or the Mobile Internet but can also use special programs called clients ed to the mobile device. A mobile banking conceptual model Mobile banking is defined as: "Mobile Banking refers to provision and availment of banking- and financial services with the help of mobile telecommunication devices.The scope of offered services may include facilities to conduct bank and stock market transactions, to ister s and to access customised information." According to this model Mobile Banking can be said to consist of three interrelated concepts:
Mobile ing Mobile Brokerage
Mobile Financial Information Services
Most services in the categories designated ing and Brokerage are transaction-based. The non-transaction-based services of an informational nature are however essential for conducting transactions - for instance, balance inquiries might be needed before committing a money remittance. The ing and brokerage services are therefore offered invariably in combination with information services. Information services, on the other hand, may be offered as an independent module.
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State Bank of India
Mobile Banking transactions in India – RBI Operative Guidelines for Banks Mobile phones as a delivery channel for extending banking services have off-late been attaining greater significance. The rapid growth in s and wider coverage of mobile phone networks have made this channel an important platform for extending banking services to customers. With the rapid growth in the number of mobile phone subscribers in India (about 261 million as at the end of March 2008 and growing at about 8 million a month), banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. Some banks have started offering information based services like balance enquiry, stop payment instruction of cheques, transactions enquiry, and location of the nearest ATM/branch etc. Acceptance of transfer of funds instruction for credit to beneficiaries of same/or another bank in favor of preed beneficiaries have also commenced in a few banks. In order to ensure a level playing field and considering that the technology is relatively new, Reserve Bank has brought out a set of operating guidelines for adoption by banks. For the purpose of these Guidelines, “mobile banking transactions” is undertaking banking transactions using mobile phones by bank customers that involve credit/debit to their s. It also covers accessing the bank s by customers for non-monetary transactions like balance enquiry etc. Regulatory & Supervisory Issues 1 Only banks which are licensed and supervised in India and have a physical presence in India will be permitted to offer mobile banking services.
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State Bank of India 2 The services shall be restricted only to customers of banks and holders of debit/credit cards issued as per the extant Reserve Bank of India guidelines. 3 Only Indian Rupee based domestic services shall be provided. Use of mobile banking services for cross border transfers is strictly prohibited. 4 Banks may also use the services of Business Correspondent appointed in compliance with RBI guidelines, for extending this facility to their customers. 5 The guidelines issued by the Reserve Bank on ‘Risks and Controls in Computers and Telecommunications’ vide circular DBS.CO.ITC.BC. 10/ 31.09.001/ 97-98 dated 4th February 1998 will apply mutatis mutandis to mobile banking. 6 The guidelines issued by Reserve Bank on “Know Your Customer (KYC)”, “Anti Money Laundering (AML)” and Combating the Financing of Terrorism (CFT) from time to time would be applicable to mobile based banking services also. 7 Only banks who have implemented core banking solutions would be permitted to provide mobile banking services. 8 Banks shall file Suspected Transaction Report (STR) to Financial Intelligence Unit – India (FID-IND) for mobile banking transactions as in the case of normal banking transactions.
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State Bank of India
Mobile Banking: A Wallet for all Pockets Mobile Banking (also known as M-Banking, m-banking, SMS Banking, etc.) is a term used for performing balance checks, transactions, payments, etc., via a mobile device such as a mobile phone. It was Internet Banking, which ushered in a new era in banking convenience by bringing the entire operations to the computer, and now mobile banking promises to take it to the next level. Internet Banking helped give the customers anytime access to their banks. Customers could check out their details, perform transactions like transferring money to other s, and pay their bills, sitting in the comfort of their homes and offices. However, the biggest limitation of Internet Banking is the requirement of a PC with an Internet connection, not a big obstacle if we look at the US and the European countries, but definitely a big barrier if we consider most of the developing countries of Asia like India and China. Mobile Banking addresses this fundamental limitation of Internet Banking, as it reduces the customer requirement to just a mobile phone. Mobile usage has seen an explosive growth in most of the Asian economies like India, China and Korea. The main reason that Mobile Banking scores over Internet Banking is that it enables 'Anywhere Anytime Banking'. According to Cellular Operators Association of India (COAI), the mobile subscribers' base in India hit 40.6 Million in August 2004, and it will be almost 80 Million in 2008, i.e., nearly double. We all expect 2009 set to be a big year for Mobile Banking. After a slow start at the turn of the millennium, it would seem this time around, that the devices, the networks, and the s have finally started using "Mobile Banking". The majority of the Indian banks, whether nationalized bank or privatized, are already involved in offering mobile services to their customers. Several banks have even tied-up with mobile phone operators and service providers to carry out transactions on mobile phones. While some banks allow simple -related queries on mobile phones, some have gone a step further and stored the debit and credit cards on mobile phones as well to enable various transactions. Four banks - SBI, HDFC, ICICI and Corporation Bank - have partnered with India's largest operator - Bharti Airtel - to offer m-banking. RCOM has tied up with ICICI Bank, HDFC Bank, Axis Bank and IDBI Bank. Bharti Airtel has launched its mobile banking and plans to rope in about 100 major banks in India by end 2008. But despite the addition of around seven million mobile s every month, bank officials feel it is too early to gauge the success of mobile banking in India. "Mobile banking is still in its nascent stage, and we will have to wait and watch if 7
State Bank of India it really changes the way we bank," officials from various banks echo.
Mobile Banking in India India is marching towards m-commerce - a world where you can make all payments by keying in instructions on your mobile phone. In India, however, there is a limitation on the availability of functions that can be deployed by banking customers. Most m-banking transactions today are ‘information-based’ -- customers engage in m-banking services like balance enquiry, last three transactions, "alerts" for strange activities in bank s etc. Some banks like IDBI Bank are also offering billpayment services to customers through M Banking. However, actual cash transactions like fund-transfer, payment of bills at a restaurant among others have not yet been introduced in India. There are many reasons for this. Firstly, as m-banking is currently SMS-based, the transaction delivery time is not guaranteed since it is dependent on factors like SMSC (short message service centre) congestion and network strength in the area where the customer is located. Secondly, there is an issue of repudiation as till date there are no clear cut guidelines for wireless payments. In the very near future, one can see m-banking leaping into a new phase. With the advent of Java-enabled mobile devices, the shape of m-banking services is in for a change. One would also be ensured the same amount of security and comfort as one would be when using internet banking.
M-banking Implications Micropayments In the more affluent economies, a good infrastructure for a cashless environment is already prevalent and most people have bank s and access to both debit and credit facilities. These factors are incentives in the developing countries to move the population at large away from cash with introductions of low cost solutions such as micro-payments to further efficiency gains.
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State Bank of India Smart Money The service was launched in December 2000 in co-operation with First E-Bank, which has since been acquired by Banco de Oro, and MasterCard, one of the world’s leading payment services providers. According to SMART, SMART Money was the world’s first re-loadable electronic cash wallet, linked together by their cellular network. Once cash has been transferred to the SMART Money , it can be used in thousands of shops and restaurants. The cash value can also be used to load airtime, pay utility bills, or transfer money from one SMART Money card to another. G-Cash The service was launched in October 2004, with an initial set of three anchor services; international and domestic remittance, P2P (phone-to-phone or person-to-person) transfers and payments for retail purchases. With G-Cash, all of GLOBE’s subscribers are m-Commerce-enabled. As s do not need to have a card or bank to be part of the service, G-Cash is able to provide M-Commerce capability to a previously underserved segment of the market, including those who currently do not do banking. Unlike SMART’s approach whereby it operates the service tly with BDO, GLOBE on its own maintains records of all transactions and arranges settlement between the retailers and the G-Cash customers. G-Cash provides services through close to 4,900 retail outlets nationwide and more than 500 G-Cash partners. Mobile Remittance Migrant remittances, which are personal flows from migrants to their friends and families, have become a major source of external development finance, and in the process, play an effective role in reducing poverty. Capitalizing on the benefits of such a system, remittance services can become cheaper and more convenient, thus improving financial access of migrants, their beneficiaries and the financial intermediaries in the origin countries. Microfinance through Mobile Technology Currently, a major constraint to microfinance is the high cost of operating in remote areas. Many institutions are now working toward low-cost delivery options such as Internet banking and cashless transactions to help the rural poor. The mobile devices that could be a more efficient tool for such transactions. For people in such rural areas, using computers is often a problem due to faulty Internet connections and frequent power failures. Hence, providing micro credits through a mobile platform (SMS-based) could be the best way to reach out to the poor.
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State Bank of India
STATISTICS “For India, mobile banking - is not convenience; but access.” In 2009, India's nominal GDP stood at US$1.243 trillion, which makes it the eleventhlargest economy in the world. If PPP (purchasing power parity) is taken into , India's economy is the fourth largest in the world at US$3.561 trillion, corresponding to a per capita income of US$3,100. The country ranks 139th in nominal GDP per capita and 128th in GDP per capita at PPP. With an average annual GDP growth rate of 5.8% for the past two decades, India is one of the fastest growing economies in the world. The country’s demographic development is also playing a part in improving banking penetration and adoption of new channels. This is a country earning demographic dividend, with 65% of its population still below the age of 30. Urban middle class and rural folk make up a bulk of the working age population. With rapid urbanization, when migrants from rural areas start to adapt to city life, they create demand for goods such as TVs and mobile phones. They emerge potential mobile banking customers, a fact that banks have been quick to spot. Since alternate channels enable customers to transact on their own confidently and reliably, without the need to face a banking staffer, they break the barrier of hesitancy.
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State Bank of India The rates of Communication in India were one of the highest in the world, till a few years back. The rates could not be justified by the fact that rupee is cheaper. In fact the Indian sub continent had shown a calm tolerance towards the high rate in even in telecom. The rates were also justified as the government has to feel the high cost involved in the one-time developments like satellite and telephone tower related charges. But now owing to better technologies the telecom rates in India are on the verge of becoming cheaper. The time may not be far when India will have the cheapest communication. MOBILE PHONE PENETRATION: Telephony Subscribers (Wireless and Landline): 688.38 million (July 2010) Land Lines: 35.96 million (July 2010) Cell phones: 652.42 million (July 2010) Yearly Cell phone Addition: 178.25 million (Jan-Dec 2009) Monthly Cell phone Addition: 16.92 million (July 2010) Tele-density: 58.17 %% (July 2010) Projected Tele-density: 1.159 billion 75% of population - 2013. Despite the phenomenal growth in numbers, the telephone density in India hovers around the 58 % mark. This means that only one out of every two Indians has a telephone connection. At this moment, the density of mobile phone s in India is of 58 at every 100 people. By year 2013, it is expected to reach 75 percent of the population. Where the developed world has witnessed little more than a doubling of penetration, from 50 phones per 100 people in 2000 to 115 in 2009, developing countries have scored over a tenfold jump. The arrival of 3G and broadband wireless access (BWA) technologies will not only fuel further adoption but also widen acceptance of mobile gaming, transactions, banking and commerce. Clearly, Indian banks have much to look forward to. A comparison between banking and mobile phone penetration in emerging markets is an eye-opener. According to a McKinsey report in March 2010, in a country where more than 65% of the population has limited or no access to a bank, one out of two persons owns a mobile phone or a TV! Here, 10,000 people share one bank branch and ATM, but collectively own 5,100 mobile phones. The one billion numbers that today represents mobile phone owners in emerging markets without a bank will grow to 1.7 billion by 2012. Similarly, unbanked 11
State Bank of India s of mobile money will grow almost tenfold to 360 million from 45 million today. From the banks’ perspective, there’s an annual business worth $8 billion for the taking: $5 billion to be earned through direct fees for financial services rendered whenever someone uses the mobile phone to make a purchase or P2P payment, and another $3 billion in indirect revenues arising from the usage of voice, network and other services over mobile. With the expectation that the number of deposit holders will double from its current 400 million to 800 million by 2019, banks need to find innovative ways of on-boarding new customers and servicing existing ones
It was inevitable that channels would become the vehicle of growth in India, as elsewhere. In the US, for example, the 9.9% CAGR in banking transactions is ed for by a 27.2% growth in Internet transactions, 7.1% growth in call centre transactions and 1.4% and 0.5% growth from the branch and ATM networks respectively. US banking customers conduct 31 billion transactions over the Internet each year, 17.8 billion through call centres and about 14 billion each using branches and ATMs. It is obvious that a business of this scale can only be ed by automated channels and, thus, Indian banks, which also handle transactions of the order of billions, are faced with the decision of what and how much to push out of their physical branches. One possibility was to emulate a leading foreign bank’s approach of entertaining only those transactions in the branch that were not enabled by the ATM.
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State Bank of India
However, most opt to take a softer approach, choosing to incentivize alternate channel usage rather than penalize the branch banking habit. A comparison between ATM density in the two countries shows that the US, which has a third of India’s population, has 3,95,000 ATMs compared to India’s 44,000. But considering the Indian market’s need and growth potential, it is to be expected that the ATM number will multiply in the coming years.
Industry observers expect to see substantial market growth over the next years, with projections of almost $ 150billion in total transaction volume by 2012. That would translate into an impressive increase of more than 60% annually. Mobile less payments are expected to for one-third of the growth as adoption rates rise in America and Europe. Money transfers will contribute nearly 40% with emerging nations such as Africa, China, India and Southeast Asian countries grabbing a large market share. And 27% will come from mobile shopping, with Japanese consumers still dominating the segment in 2012
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State Bank of India
Market Report: Mobile Banking in India used by 40 Million Urban Indians Mobile banking in India is set to explode - approximately 43 million urban Indians used their mobile phones to access banking services during quarter ending August, 2009, a reach of 15% among urban Most Popular Banking Service on Mobile In countries like Korea, two SIM Card is used in mobile phones. One for the telephonic purpose and the other for banking. Bank data is encrypted on a smart-card chip. About 3.3 million transactions were reported by Bank of Korea in 2004 Checking balances is the most popular banking service used by urban Indians with almost 40 million s followed by checking last three transactions, 28 million and status of cheques with 21 million s. Usage
Unique millions)
Used mobile banking Checking balance
s
(In
43.70
39.97
View last transactions Status of cheques
three 28.15
21.06 14
State Bank of India Payment reminders
20.92
Request a cheque book 19.11
Mobile banking is popular among the Rs.1 to 5 lakhs per year income group with almost 60% of mobile banking s falling in the income bracket, an indicator of adoption of this service by younger generation. A. Cell phone teledensity is still very low in India at around 6%, In comparison, China’s cell phone density is at around 35%, while some of the European and Asia-Pacific countries have 100% teledensity or more in mobile telephony. B. In the past two years, the number of people using mobiles has increased three times C. Indian cellular services market is projected to reach $24 billion by the end of 2009, a CAGR of 35.6%, Gartner said. Indian cellular services market had recorded the highest growth in Asia Pacific and Japan region in 2004 with a CAGR of 67%. D. India is all set to be among the top four countries in mobile phone subscriber numbers by the end of year 2008, according to industry analysts E. As on August 31, 2008, There were 62.57 million mobile subscribers in India, according to data provided by the TRAI. Fixed Phone s already lag behind by 47.44 million
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State Bank of India
CLIENT BASE Transaction through branches :- 9.5*/month Transaction through Mobile-23*/month Transaction through Internet :- 26*/month (*Figures are in millions) Source :- Lokmat dated 24 th July,2008.Mumbai Edition COST ADVANTAGE
Through Branch Rs. 35-40 / Transaction ATM Transaction Rs. 15-30 / Transaction Internet Transaction Rs. 10-15 / Transaction Mobile Transaction Rs. 2-5 / Transaction
“SBI FREEDOM” MOBLE BANKING SERVICES BY STATE BANK OF INDIA Features: 16
State Bank of India Enquiry of balance in (s) Mini Statement – last five transactions Transfer of Funds to s with SBI & other Banks) Requests for issue of Cheque Book Enquiry regarding Demat Pay utility bills (Electricity bill, Telephone bill etc.,) Merchandise payments Mobile Top up Payment of SBI Life Insurance Additional services are expected in the future and include booking of air tickets, movie tickets, and others. Registration for MBS SBI has made available mobile banking services to holders with the bank. The initial restrictions due to JAVA enabled handsets requirement have been taken care of by providing the MBS through USSD platform. Now, even a lower end handset can be used for Mobile banking. This is a major step towards expanding the reach of the bank to the unbanked sections of the society, a step towards financial inclusion. An individual can the application through the internet directly on the phone, via a data-cable or a Bluetooth. Registration of MBS can be done at the ATM (for debit card holders) and at the home branch. State bank offers MBS free of charge and ensures utmost safety for the transactions taking place through this platform. Use of MPIN, 128 bit AES encryption, one time makes MBS a secure option. Reach of State Bank Freedom SBI has the biggest customer base in India and hence has a bigger role to play in attaining financial inclusion. As the largest bank in India, with a history of 200 years of excellent services it holds a favorable position to influence the masses to take up MBS as a means to bank. Though SBI can boast about its reach in far flung areas of the country, its share in the customer base actually using mobile banking is comparatively low. Private Banks like ICICI and HDFC have managed much better than us.
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State Bank of India SBI has taken many steps in ensuring wider usage of MBS like introduction of USSD, a bouquet of services for everyone, incentives to employees for mass enrolment, so on and so forth. However it needs to take an aggressive approach to train the employees regarding the new developments on MBS, undertaking programs to increase awareness about MBS amongst masses, and improving the MBS platform through continuous R&D to offer more facilities on it.
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State Bank of India
RESEARCH METHODOLY Research Objective: To find out the awareness of MBS & its facilities in SBI Staff & customers in the area. Ways to make this facility more popular and other services suggested that may be provided on this platform.
Research Design: Descriptive Research
Research Methodology Coverage
Location: Senapati Bapat Road Pune (Urban Branch) Daund Branch Pune (Semi Urban) Wai Branch, Distt. Satara(Rural)
Population: SBI Branches & customers in Pune & surrounding areas. Data Collection
Sources: Primary : Questionnaire filled by staff & customers Secondary: E circulars, Internet etc. Sample Size: Staff: 100 Customers: 200 Sampling: Random Sampling
DATA ANALYSIS 19
State Bank of India
SBI STAFF
Analysis: The respondents were mostly in the officer cadre & in the age group of 31-46 & above.
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State Bank of India
Analysis: The respondents population was distributed among Urban, semi-urban & rural areas considering the reach & awareness of MBS. Hence, 52 % of the staff comprised from urban areas where the demand for MBS in increasing rapidly. Rural areas were too focused adequately taking into the potential of customers that can be captured through MBS.
Analysis: The respondent staff had adequate knowledge about the steps invlolved in the registration of MBS. Out of 100, 38 were informed but mostly the staff was not aware of the stages & the ways to for M Banking.
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State Bank of India
Analysis: Mostly the staff had heard about SBI Freedom(M Banking Solution) but some have misinterpreted it as Sbi Freedom Home Loans.
Analysis: The respondent staff were not fully informed about the variety of the services & facilities provided by M banking. They were not aware of the enquiry
regarding Demat , merchandise payments & utility bill payments etc. They were mostly aware of some common facilities only specially in the rural & semi urban area.
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State Bank of India
Analysis: The respondent staff were not fully aware that now the MBS facilities are available on non java & non GPRS cell phones too. They were not updated regarding USSD & had little knowledge that M banking is now available on all cell phones including java & non java phones too.
Analysis: The respondent staff were of the knowledge that it can be provided to all types of customers specially in the rural & semi urban areas. Only few could tell that it is only for P segment customers (CASA) & not available for traders etc.
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State Bank of India
Analysis: The respondent staff were mostly had the knowledge that MBS are freely ed for the customers without any charges appliacble.But some had misconception that a nominal fee is charged by customers one time.
Analysis: The respondent staff were not aware of the daily limits for the transanctions for M banking. Some were not able to tell the difference between Java, Wap etc against USSD application for daily transfer amount limits. They were not aware about the differentiated limits for USSD applications.
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State Bank of India
Analysis: The respondent staff were not aware of the daily limits for the transanctions for M banking. Some were not able to tell the updated transaction limit of Rs 50000/ cutomers with daily calender month limit of Rs 250000/- They were not aware about the differentiated limits for USSD applications.
Analysis: The respondent staff were of the information that MBS cannot be provided with all the service providers.Though which is not the case as MBS is
25
State Bank of India carrier-agnostic i.e. all customers can avail the mobile banking service with the Bank irrespective of the service provider for their mobiles.
Analysis:
The respondent staff were adequately aware of the Grievance Redressal
System for MBS.
Analysis: It was observed that mostly in the urban area the staff had proper training for SBI Freedom. The problem was mainly in the semi-urban & rural areas where proper training was not provided. 26
State Bank of India
Analysis: The respondent customers were mostly of the age group of 25 & above.
27
State Bank of India Analysis: The respondent customers were mostly salaried customers,businessmen & studentsfor M banking.
Analysis: The respondent customers were mostly of the middle income group who were using Mbanking.
Analysis: The respondent customers were mostly banking with SBI particularly specially in rural & semi urban areas.
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State Bank of India
Analysis: The respondent customers were mostly visiting branches & ATMs for their regular banking transactions.Only 10% were using MBS because of the safety concerns of the customers.
Analysis: The respondent customers were mostly had awareness about M banking even in rural & semi urban areas. But they were not ready to go for MBS due to their security concerns regarding the transactions through mobiles.
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State Bank of India
Analysis: The respondent customers mostly were not using MBS as yet & the percentage of non usage was very high almost 68% as represented from the above data.
Analysis: The respondent customers who had ed for MBS were also not using M banking for their banking transactions. They preferred internet banking to M Banking. Most of them had ed for it but had not used it the services at all.
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State Bank of India
Analysis: The respondent customers found the transactions through Mbanking difficult to operate specially in semi urban areas.
Analysis: The respondent customers had knowledge about MBS through promotions of the banks in which they had their s. Other mode making it popular s through word of mouth from colleagues & friends.
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State Bank of India
Analysis: The respondent customers were mostly using MBS for Mobile Recharge & to check balance. The other facilities such as funds transfer & bill payments were leass frequently used.
Analysis: The respondent customers were mostly had preference for services of M banking through private banks like ICICI & HDFC as they found private banks offering technology oriented products.
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State Bank of India
Analysis: The respondent customers mostly preferred ICICI & HDFC over SBI for MBS.
Analysis: The respondent customers were mostly ranked the MBS & facilities of banks as ICICI & HDFC & other private banks on top as against SBI Freedom.
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State Bank of India
Analysis: The respondent customers who have been using or have used SBI Freeom found it easy to use & mostly agreed regarding its simplicity. But few found it difficult for the purpose of other banking transactions such as transfer, utility payments etc.
Analysis: The respondent customers who have been using or have used SBI Freedom had a good experience with it due to easy registration,simplicity of transactions & friendly. The overall experience had been good.
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State Bank of India
FINDINGS & CONCLUSIONS Mobile Banking Services provides a huge potential of growth for State Bank of India. Mobile banking is offering several benefits and added value to consumers for handling their financial matters. There lies a mammoth task ahead for both State Bank of India and the Government of India to enroll the masses, especially the unbanked ones to bring about a favorable change in both the economy and the lifestyle. There lies a huge untapped market for MBS which provides various scopes for bank to focus its efforts for increasing awareness among both the staff as well as the customers. The various findings of the above exercise are the following: STAFF: There lies lack of awareness among the staff in SBI itself regarding the MBS product SBI Freedom & doubt as relating it to freedom home loan product. The staff is not informed about the variety of applications that can be offered through MBS platform. There is also lack of knowledge regarding the registration process especially among the rural staff. The staff were not completely aware of the different transaction limits for USSD & java enabled cells & the MBS application available for P segment customers only. The average number of customers applying for MBS facility was very low mostly 2-5 customers per day & almost zero in rural & semi urban branches. CUSTOMERS: Mobile banking is popular among the Rs.1 to 5 lakhs per year income group with almost 60% of mobile banking s falling in the income bracket, an indicator of adoption of this service by younger generation . The MBS services are mostly used for the purpose of mobile recharge, funds transfer & cheque balance only amounting to 70%. Even though the customers have ed for MBS the frequency of usage of MBS for banking transactions is very low around 25%. 35
State Bank of India The frequency of usage is low as lack of flexibility & complexity of banking transactions through MB & one of the major reasons of lack of preference of M Banking is due to security reasons. The preference of banking transactions through MB is very less approx. 5% as compared to INB & ATMs. The customers mostly prefer private banks as Axis, HDFC & ICICI for M Banking transactions faculties. The customers of SBI Freedom find it easy to use & mostly the experience has been good.
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State Bank of India
SUGGESTIONS & RECOMMENDATIONS TO MAKE IT MORE POPULAR AMONG STAFF & CUSTOMERS & NEW FACILTIES THAT CAN BE PROVIDED THROUGH IT Mobile banking is not necessarily a panacea for all customer needs. Like any technology format it is a tool that can enhance existing services. Customers are keen to be kept abreast of any changes to the nano-economy and it appears that existing mobile provisioning could capitalize on this opportunity and better capture the imagination of mobile s. Innovation and cost management are critical tenets for commercial success in the financial sector and mobile banking services are capable of delivering against both of these objectives if appropriately executed. The usage & popularity of MBS & facilities that can be increased by adopting following measures: Build up a database with high-quality and detailed information about customers in their target group to focus on them for M banking. Aggressive & comprehensive training among the frond end staff for promotion & marketing of MBS. Launching of various marketing campaigns to create more & more awareness of M Banking & various facilities provided by it. Low value transactions are recommended (< Rs.1000) & low charges are recommended to encourage high volume usage especially for rural customers for purpose of Financial Inclusion Enhanced security measures to be in place such as authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions & encrption of the data being transmitted over the air. It would be expected from the mobile application to personalization such as preferred language date / time format, amount format default transactions, standard beneficiary list, alerts etc for standardized & ease of operations among M Banking s.
NEWER AVENUES
Mobile ticketing is the process whereby customers can order, pay for, obtain and validate tickets from any location and at any time using mobile phones or other mobile handsets. Mobile tickets reduce the production and 37
State Bank of India distribution costs connected with traditional paper-based ticketing channels and increase customer convenience by providing new and simple ways to purchase tickets. Mass transit. Airline check-in. Cinema ticketing. Concert/Event ticketing. Trade shows Consumer voucher distribution Mobile brokerage 1. Trading (Investments, quotes, statements, e.g. Info services) 2. Stock and Shares (Investments, quotes, statements, e.g. Stock market ) 3. Portfolio management. Mobile marketing o Advertising Campaigns (New products, Subscription Services) o Charity Campaigns o Politics (Voting Tool) o Status of requests for credit, including mortgage approval, and insurance coverage o Check (cheque) book and card requests o Exchange of data messages and email, including complaint submission and tracking o ATM Location Content Services o General information such as weather updates, news etc. o Loyalty-related offers o Location-based services
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State Bank of India
BIBLIOGRAPHY
www.sbi.co.in www.rbi.gov.in www.statebanktimes.com www.infogile.com www.academicjournals.org www.banktech.com www.spidercenter.org http://java.sun.com/products/midp www.gsmworld.com www.tutorial-reports.com
www.mobilemoneytransactions.com www.telecomindiaol.com The internet business review
Banknet India
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State Bank of India
ANNEXURES QUESTIONNAIRE FOR STAFF 1. Age Group 18-25 26-30 31-45 46 and above 2. Cadre Officer Clerical 3. Have you heard of SBI Freedom? Yes No 4. Are you aware of registration process for Mobile Banking Service for SBI Yes (Adequately) Not completely Not at all 5. Are you aware of the list of Services provided by SBI Freedom(Tick Mark the checklist) Yes No o o o o o o
Funds transfer Enquiry services (Balance enquiry/ Mini statement) Request services (cheque book request) Bill Payment (Utility bills, credit cards) M-Commerce (Mobile Top Up, Merchant payment, SBI life insurance etc) All of these 40
State Bank of India
6. The service is presently available through which kind of mobile application facilities. Java enabled phones with GPRS connectivity Non -java enabled phones with GPRS connectivity over WAP Non java non GPRS over USSD All of these 7. All the customers of SBI can avail Mobile Banking Services. Yes No 8. The service charges for enabling SBI Freedom. ` 100 ` 200 Free registration ` 50 9. Daily transaction limits for fund transfer and bill/ merchant payment in USSD (Unstructured Supplementary Service Data) based Service ` 1000 per customer with an overall calendar month limit of ` 5000 ` 500 per customer with an overall calendar month limit of ` 5000 ` 2000 per customer with an overall calendar month limit of `10000 ` 5000 per customer with no calendar month limit. 10. Daily transaction limits for fund transfer and bill/ merchant payment over application/WAP. ` 50000 per customer with an overall calendar month limit of ` 250000 ` 25000 per customer with an overall calendar month limit of ` 100000. ` 50000 per customer with no calendar month limit. 41
State Bank of India
11. Does Mobile Banking Service is available with all telecom service providers over USSD. Yes No Don’t Know 12.
Availability of proper Grievance Redressal system for MBS in SBI. Yes No
13.
Average no. of customers applying per day for SBI Freedom. Zero 2-5 5-10 Above 10
14.
Training provided to the staff for MBS at the branch. Yes No
15. Ways to make MOBILE BANKING SERVICE (MBS) popular among customers & Staff. (Suggestions & Recommendations) ___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
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State Bank of India
QUESTIONNAIRE FOR CUSTOMER 1. Age Group 18-25 26-30 31-45 46 and above 2. Occupation: Salaried Self Employed Student Homemaker 3. Do you have savings with State Bank of India? Yes No 4. How do you prefer to do banking transactions? Please rank & reasons for not using MBS. a) b) c) d)
Over Internet Through ATMs Over Mobile Banking Visiting Bank Reasons: ___________________________________________________________________ ___________________________________________________________________________
5. Have you heard of mobile banking? Yes No 6. Have you used mobile banking in the recent past? Yes No 43
State Bank of India 7. How frequently do you use mobile banking for banking transactions? Never Sometimes Most times Always 8. Do you feel that doing transactions on mobile banking is complicated? You bet, its difficult to understand. Its not that difficult It's easy to use It can't get easier 9. How did you come to know of mobile banking? Friends Colleagues at work Through internet Bank promotions Accidentally 10. What do you use the mobile banking for? Check Bank Balance Do Funds Transfer Bill Payments Trading Mobile Recharge Other 11. Do you use the mobile banking service of: Public Banks (SBI and SBI Group Banks) Private Banks
44
State Bank of India Public and Private Banks I do not use mobile banking 12 . Please check the bank(s) whose mobile banking service you use State Bank of India ICICI Bank CITI Bank Others
13. In your knowledge, how would you rank the mobile banking service of the fo a) b) c) d) e)
SBI ICICI BANK HDFC BANK CITI BANK OTHERS
14. I would rate the my overall experience with mobile banking as: Very good Good Neutral Poor Very Poor 15. If a of SBI Freedom, would you say mobile banking is easy to use? Strongly Agree Agree Disagree Strongly Disagree Not Applicable
45
EXECUTIVE SUMMARY
Mobile phones as a delivery channel for extending banking services have off-late been attaining greater significance. The rapid growth in s and wider coverage of mobile phone networks have made this channel an important platform for extending banking services to customers. With the rapid growth in the number of mobile phone subscribers in India (about 261 million as at the end of March 2008 and growing at about 8 million a month), banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. State Bank of India has been able to realize the importance of Mobile Banking Services (MBS). It has tried to cater to needs of customers by offering “SBI FREEDOM”; offering a wide range of services through this platform. But the business we have been able to book; in respect of the potential available and the growth of trade and services, is not satisfactory. Lack of awareness of the applications among staff has not been able to cater to the needs of the prospective & potential customers because of which wet we are not able to make it popular among the business community. Through this project I have tried to find out, what is the state of awareness of MBS among SBI staff & customers in the area and the possible reasons for improving the same Customer service has been given prime importance in our vision and mission statement itself. We would examine the awareness among the staff & customers of. I have included around 100 SBI staff & 200 customers from various rural, urban & semi-Urban areas in the branches & locality of Pune. An analysis of their responses has been made and some recommendations are given to create popularity of SBI FREEDOM among staff & public.
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State Bank of India
ACKNOWLEDGEMENT
Life is nothing but a learning process
Whatever we do and whatever we achieve during the course of limited life is just not done by our own but there is always some amount of hard effort contributed by other people associated with it directly or indirectly, knowingly or unknowingly.
The compilation of a report not only requires time, effort and energy, but also valuable guidance from various people. Firstly I would like to thank the Branch Managers of the various branches for providing me the necessary guidance & opportunity to interact with the staff & customers of their branches which has been of immense importance for the completion of the project. My special thanks to all the staff of SBI to provide me with the necessary information & the required co-operation even during the peak timing of the banking hours.
I thank all of you once again for your and would always treasure the learning from the esteemed organization.
2
State Bank of India
Tulika Agrawal
TABLE OF CONTENTS
SR. NO.
PARTICULARS
PAGE NO.
1)
Executive Summary
1
2)
Acknowledgement
2
3)
Introduction to Mobile Banking Services(MBS)
4
o
Mobile Banking Guidelines
transactions
in
o
Mobile Banking-A wallet for all pockets
o
Statistics
India-RBI
5 7 10
4)
SBI Freedom
16
5)
Research Methodology
18
6)
Data Analysis
29
7)
Findings & Conclusions
34
8)
Suggestions & Recommendation
36
9)
Bibliography
38
10)
Annexure
39
3
State Bank of India
INTRODUCTION Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, transactions, payments etc. via a mobile device such as a mobile phone. Mobile banking today is most often performed via SMS or the Mobile Internet but can also use special programs called clients ed to the mobile device. A mobile banking conceptual model Mobile banking is defined as: "Mobile Banking refers to provision and availment of banking- and financial services with the help of mobile telecommunication devices.The scope of offered services may include facilities to conduct bank and stock market transactions, to ister s and to access customised information." According to this model Mobile Banking can be said to consist of three interrelated concepts:
Mobile ing Mobile Brokerage
Mobile Financial Information Services
Most services in the categories designated ing and Brokerage are transaction-based. The non-transaction-based services of an informational nature are however essential for conducting transactions - for instance, balance inquiries might be needed before committing a money remittance. The ing and brokerage services are therefore offered invariably in combination with information services. Information services, on the other hand, may be offered as an independent module.
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State Bank of India
Mobile Banking transactions in India – RBI Operative Guidelines for Banks Mobile phones as a delivery channel for extending banking services have off-late been attaining greater significance. The rapid growth in s and wider coverage of mobile phone networks have made this channel an important platform for extending banking services to customers. With the rapid growth in the number of mobile phone subscribers in India (about 261 million as at the end of March 2008 and growing at about 8 million a month), banks have been exploring the feasibility of using mobile phones as an alternative channel of delivery of banking services. Some banks have started offering information based services like balance enquiry, stop payment instruction of cheques, transactions enquiry, and location of the nearest ATM/branch etc. Acceptance of transfer of funds instruction for credit to beneficiaries of same/or another bank in favor of preed beneficiaries have also commenced in a few banks. In order to ensure a level playing field and considering that the technology is relatively new, Reserve Bank has brought out a set of operating guidelines for adoption by banks. For the purpose of these Guidelines, “mobile banking transactions” is undertaking banking transactions using mobile phones by bank customers that involve credit/debit to their s. It also covers accessing the bank s by customers for non-monetary transactions like balance enquiry etc. Regulatory & Supervisory Issues 1 Only banks which are licensed and supervised in India and have a physical presence in India will be permitted to offer mobile banking services.
5
State Bank of India 2 The services shall be restricted only to customers of banks and holders of debit/credit cards issued as per the extant Reserve Bank of India guidelines. 3 Only Indian Rupee based domestic services shall be provided. Use of mobile banking services for cross border transfers is strictly prohibited. 4 Banks may also use the services of Business Correspondent appointed in compliance with RBI guidelines, for extending this facility to their customers. 5 The guidelines issued by the Reserve Bank on ‘Risks and Controls in Computers and Telecommunications’ vide circular DBS.CO.ITC.BC. 10/ 31.09.001/ 97-98 dated 4th February 1998 will apply mutatis mutandis to mobile banking. 6 The guidelines issued by Reserve Bank on “Know Your Customer (KYC)”, “Anti Money Laundering (AML)” and Combating the Financing of Terrorism (CFT) from time to time would be applicable to mobile based banking services also. 7 Only banks who have implemented core banking solutions would be permitted to provide mobile banking services. 8 Banks shall file Suspected Transaction Report (STR) to Financial Intelligence Unit – India (FID-IND) for mobile banking transactions as in the case of normal banking transactions.
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State Bank of India
Mobile Banking: A Wallet for all Pockets Mobile Banking (also known as M-Banking, m-banking, SMS Banking, etc.) is a term used for performing balance checks, transactions, payments, etc., via a mobile device such as a mobile phone. It was Internet Banking, which ushered in a new era in banking convenience by bringing the entire operations to the computer, and now mobile banking promises to take it to the next level. Internet Banking helped give the customers anytime access to their banks. Customers could check out their details, perform transactions like transferring money to other s, and pay their bills, sitting in the comfort of their homes and offices. However, the biggest limitation of Internet Banking is the requirement of a PC with an Internet connection, not a big obstacle if we look at the US and the European countries, but definitely a big barrier if we consider most of the developing countries of Asia like India and China. Mobile Banking addresses this fundamental limitation of Internet Banking, as it reduces the customer requirement to just a mobile phone. Mobile usage has seen an explosive growth in most of the Asian economies like India, China and Korea. The main reason that Mobile Banking scores over Internet Banking is that it enables 'Anywhere Anytime Banking'. According to Cellular Operators Association of India (COAI), the mobile subscribers' base in India hit 40.6 Million in August 2004, and it will be almost 80 Million in 2008, i.e., nearly double. We all expect 2009 set to be a big year for Mobile Banking. After a slow start at the turn of the millennium, it would seem this time around, that the devices, the networks, and the s have finally started using "Mobile Banking". The majority of the Indian banks, whether nationalized bank or privatized, are already involved in offering mobile services to their customers. Several banks have even tied-up with mobile phone operators and service providers to carry out transactions on mobile phones. While some banks allow simple -related queries on mobile phones, some have gone a step further and stored the debit and credit cards on mobile phones as well to enable various transactions. Four banks - SBI, HDFC, ICICI and Corporation Bank - have partnered with India's largest operator - Bharti Airtel - to offer m-banking. RCOM has tied up with ICICI Bank, HDFC Bank, Axis Bank and IDBI Bank. Bharti Airtel has launched its mobile banking and plans to rope in about 100 major banks in India by end 2008. But despite the addition of around seven million mobile s every month, bank officials feel it is too early to gauge the success of mobile banking in India. "Mobile banking is still in its nascent stage, and we will have to wait and watch if 7
State Bank of India it really changes the way we bank," officials from various banks echo.
Mobile Banking in India India is marching towards m-commerce - a world where you can make all payments by keying in instructions on your mobile phone. In India, however, there is a limitation on the availability of functions that can be deployed by banking customers. Most m-banking transactions today are ‘information-based’ -- customers engage in m-banking services like balance enquiry, last three transactions, "alerts" for strange activities in bank s etc. Some banks like IDBI Bank are also offering billpayment services to customers through M Banking. However, actual cash transactions like fund-transfer, payment of bills at a restaurant among others have not yet been introduced in India. There are many reasons for this. Firstly, as m-banking is currently SMS-based, the transaction delivery time is not guaranteed since it is dependent on factors like SMSC (short message service centre) congestion and network strength in the area where the customer is located. Secondly, there is an issue of repudiation as till date there are no clear cut guidelines for wireless payments. In the very near future, one can see m-banking leaping into a new phase. With the advent of Java-enabled mobile devices, the shape of m-banking services is in for a change. One would also be ensured the same amount of security and comfort as one would be when using internet banking.
M-banking Implications Micropayments In the more affluent economies, a good infrastructure for a cashless environment is already prevalent and most people have bank s and access to both debit and credit facilities. These factors are incentives in the developing countries to move the population at large away from cash with introductions of low cost solutions such as micro-payments to further efficiency gains.
8
State Bank of India Smart Money The service was launched in December 2000 in co-operation with First E-Bank, which has since been acquired by Banco de Oro, and MasterCard, one of the world’s leading payment services providers. According to SMART, SMART Money was the world’s first re-loadable electronic cash wallet, linked together by their cellular network. Once cash has been transferred to the SMART Money , it can be used in thousands of shops and restaurants. The cash value can also be used to load airtime, pay utility bills, or transfer money from one SMART Money card to another. G-Cash The service was launched in October 2004, with an initial set of three anchor services; international and domestic remittance, P2P (phone-to-phone or person-to-person) transfers and payments for retail purchases. With G-Cash, all of GLOBE’s subscribers are m-Commerce-enabled. As s do not need to have a card or bank to be part of the service, G-Cash is able to provide M-Commerce capability to a previously underserved segment of the market, including those who currently do not do banking. Unlike SMART’s approach whereby it operates the service tly with BDO, GLOBE on its own maintains records of all transactions and arranges settlement between the retailers and the G-Cash customers. G-Cash provides services through close to 4,900 retail outlets nationwide and more than 500 G-Cash partners. Mobile Remittance Migrant remittances, which are personal flows from migrants to their friends and families, have become a major source of external development finance, and in the process, play an effective role in reducing poverty. Capitalizing on the benefits of such a system, remittance services can become cheaper and more convenient, thus improving financial access of migrants, their beneficiaries and the financial intermediaries in the origin countries. Microfinance through Mobile Technology Currently, a major constraint to microfinance is the high cost of operating in remote areas. Many institutions are now working toward low-cost delivery options such as Internet banking and cashless transactions to help the rural poor. The mobile devices that could be a more efficient tool for such transactions. For people in such rural areas, using computers is often a problem due to faulty Internet connections and frequent power failures. Hence, providing micro credits through a mobile platform (SMS-based) could be the best way to reach out to the poor.
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State Bank of India
STATISTICS “For India, mobile banking - is not convenience; but access.” In 2009, India's nominal GDP stood at US$1.243 trillion, which makes it the eleventhlargest economy in the world. If PPP (purchasing power parity) is taken into , India's economy is the fourth largest in the world at US$3.561 trillion, corresponding to a per capita income of US$3,100. The country ranks 139th in nominal GDP per capita and 128th in GDP per capita at PPP. With an average annual GDP growth rate of 5.8% for the past two decades, India is one of the fastest growing economies in the world. The country’s demographic development is also playing a part in improving banking penetration and adoption of new channels. This is a country earning demographic dividend, with 65% of its population still below the age of 30. Urban middle class and rural folk make up a bulk of the working age population. With rapid urbanization, when migrants from rural areas start to adapt to city life, they create demand for goods such as TVs and mobile phones. They emerge potential mobile banking customers, a fact that banks have been quick to spot. Since alternate channels enable customers to transact on their own confidently and reliably, without the need to face a banking staffer, they break the barrier of hesitancy.
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State Bank of India The rates of Communication in India were one of the highest in the world, till a few years back. The rates could not be justified by the fact that rupee is cheaper. In fact the Indian sub continent had shown a calm tolerance towards the high rate in even in telecom. The rates were also justified as the government has to feel the high cost involved in the one-time developments like satellite and telephone tower related charges. But now owing to better technologies the telecom rates in India are on the verge of becoming cheaper. The time may not be far when India will have the cheapest communication. MOBILE PHONE PENETRATION: Telephony Subscribers (Wireless and Landline): 688.38 million (July 2010) Land Lines: 35.96 million (July 2010) Cell phones: 652.42 million (July 2010) Yearly Cell phone Addition: 178.25 million (Jan-Dec 2009) Monthly Cell phone Addition: 16.92 million (July 2010) Tele-density: 58.17 %% (July 2010) Projected Tele-density: 1.159 billion 75% of population - 2013. Despite the phenomenal growth in numbers, the telephone density in India hovers around the 58 % mark. This means that only one out of every two Indians has a telephone connection. At this moment, the density of mobile phone s in India is of 58 at every 100 people. By year 2013, it is expected to reach 75 percent of the population. Where the developed world has witnessed little more than a doubling of penetration, from 50 phones per 100 people in 2000 to 115 in 2009, developing countries have scored over a tenfold jump. The arrival of 3G and broadband wireless access (BWA) technologies will not only fuel further adoption but also widen acceptance of mobile gaming, transactions, banking and commerce. Clearly, Indian banks have much to look forward to. A comparison between banking and mobile phone penetration in emerging markets is an eye-opener. According to a McKinsey report in March 2010, in a country where more than 65% of the population has limited or no access to a bank, one out of two persons owns a mobile phone or a TV! Here, 10,000 people share one bank branch and ATM, but collectively own 5,100 mobile phones. The one billion numbers that today represents mobile phone owners in emerging markets without a bank will grow to 1.7 billion by 2012. Similarly, unbanked 11
State Bank of India s of mobile money will grow almost tenfold to 360 million from 45 million today. From the banks’ perspective, there’s an annual business worth $8 billion for the taking: $5 billion to be earned through direct fees for financial services rendered whenever someone uses the mobile phone to make a purchase or P2P payment, and another $3 billion in indirect revenues arising from the usage of voice, network and other services over mobile. With the expectation that the number of deposit holders will double from its current 400 million to 800 million by 2019, banks need to find innovative ways of on-boarding new customers and servicing existing ones
It was inevitable that channels would become the vehicle of growth in India, as elsewhere. In the US, for example, the 9.9% CAGR in banking transactions is ed for by a 27.2% growth in Internet transactions, 7.1% growth in call centre transactions and 1.4% and 0.5% growth from the branch and ATM networks respectively. US banking customers conduct 31 billion transactions over the Internet each year, 17.8 billion through call centres and about 14 billion each using branches and ATMs. It is obvious that a business of this scale can only be ed by automated channels and, thus, Indian banks, which also handle transactions of the order of billions, are faced with the decision of what and how much to push out of their physical branches. One possibility was to emulate a leading foreign bank’s approach of entertaining only those transactions in the branch that were not enabled by the ATM.
12
State Bank of India
However, most opt to take a softer approach, choosing to incentivize alternate channel usage rather than penalize the branch banking habit. A comparison between ATM density in the two countries shows that the US, which has a third of India’s population, has 3,95,000 ATMs compared to India’s 44,000. But considering the Indian market’s need and growth potential, it is to be expected that the ATM number will multiply in the coming years.
Industry observers expect to see substantial market growth over the next years, with projections of almost $ 150billion in total transaction volume by 2012. That would translate into an impressive increase of more than 60% annually. Mobile less payments are expected to for one-third of the growth as adoption rates rise in America and Europe. Money transfers will contribute nearly 40% with emerging nations such as Africa, China, India and Southeast Asian countries grabbing a large market share. And 27% will come from mobile shopping, with Japanese consumers still dominating the segment in 2012
13
State Bank of India
Market Report: Mobile Banking in India used by 40 Million Urban Indians Mobile banking in India is set to explode - approximately 43 million urban Indians used their mobile phones to access banking services during quarter ending August, 2009, a reach of 15% among urban Most Popular Banking Service on Mobile In countries like Korea, two SIM Card is used in mobile phones. One for the telephonic purpose and the other for banking. Bank data is encrypted on a smart-card chip. About 3.3 million transactions were reported by Bank of Korea in 2004 Checking balances is the most popular banking service used by urban Indians with almost 40 million s followed by checking last three transactions, 28 million and status of cheques with 21 million s. Usage
Unique millions)
Used mobile banking Checking balance
s
(In
43.70
39.97
View last transactions Status of cheques
three 28.15
21.06 14
State Bank of India Payment reminders
20.92
Request a cheque book 19.11
Mobile banking is popular among the Rs.1 to 5 lakhs per year income group with almost 60% of mobile banking s falling in the income bracket, an indicator of adoption of this service by younger generation. A. Cell phone teledensity is still very low in India at around 6%, In comparison, China’s cell phone density is at around 35%, while some of the European and Asia-Pacific countries have 100% teledensity or more in mobile telephony. B. In the past two years, the number of people using mobiles has increased three times C. Indian cellular services market is projected to reach $24 billion by the end of 2009, a CAGR of 35.6%, Gartner said. Indian cellular services market had recorded the highest growth in Asia Pacific and Japan region in 2004 with a CAGR of 67%. D. India is all set to be among the top four countries in mobile phone subscriber numbers by the end of year 2008, according to industry analysts E. As on August 31, 2008, There were 62.57 million mobile subscribers in India, according to data provided by the TRAI. Fixed Phone s already lag behind by 47.44 million
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State Bank of India
CLIENT BASE Transaction through branches :- 9.5*/month Transaction through Mobile-23*/month Transaction through Internet :- 26*/month (*Figures are in millions) Source :- Lokmat dated 24 th July,2008.Mumbai Edition COST ADVANTAGE
Through Branch Rs. 35-40 / Transaction ATM Transaction Rs. 15-30 / Transaction Internet Transaction Rs. 10-15 / Transaction Mobile Transaction Rs. 2-5 / Transaction
“SBI FREEDOM” MOBLE BANKING SERVICES BY STATE BANK OF INDIA Features: 16
State Bank of India Enquiry of balance in (s) Mini Statement – last five transactions Transfer of Funds to s with SBI & other Banks) Requests for issue of Cheque Book Enquiry regarding Demat Pay utility bills (Electricity bill, Telephone bill etc.,) Merchandise payments Mobile Top up Payment of SBI Life Insurance Additional services are expected in the future and include booking of air tickets, movie tickets, and others. Registration for MBS SBI has made available mobile banking services to holders with the bank. The initial restrictions due to JAVA enabled handsets requirement have been taken care of by providing the MBS through USSD platform. Now, even a lower end handset can be used for Mobile banking. This is a major step towards expanding the reach of the bank to the unbanked sections of the society, a step towards financial inclusion. An individual can the application through the internet directly on the phone, via a data-cable or a Bluetooth. Registration of MBS can be done at the ATM (for debit card holders) and at the home branch. State bank offers MBS free of charge and ensures utmost safety for the transactions taking place through this platform. Use of MPIN, 128 bit AES encryption, one time makes MBS a secure option. Reach of State Bank Freedom SBI has the biggest customer base in India and hence has a bigger role to play in attaining financial inclusion. As the largest bank in India, with a history of 200 years of excellent services it holds a favorable position to influence the masses to take up MBS as a means to bank. Though SBI can boast about its reach in far flung areas of the country, its share in the customer base actually using mobile banking is comparatively low. Private Banks like ICICI and HDFC have managed much better than us.
17
State Bank of India SBI has taken many steps in ensuring wider usage of MBS like introduction of USSD, a bouquet of services for everyone, incentives to employees for mass enrolment, so on and so forth. However it needs to take an aggressive approach to train the employees regarding the new developments on MBS, undertaking programs to increase awareness about MBS amongst masses, and improving the MBS platform through continuous R&D to offer more facilities on it.
18
State Bank of India
RESEARCH METHODOLY Research Objective: To find out the awareness of MBS & its facilities in SBI Staff & customers in the area. Ways to make this facility more popular and other services suggested that may be provided on this platform.
Research Design: Descriptive Research
Research Methodology Coverage
Location: Senapati Bapat Road Pune (Urban Branch) Daund Branch Pune (Semi Urban) Wai Branch, Distt. Satara(Rural)
Population: SBI Branches & customers in Pune & surrounding areas. Data Collection
Sources: Primary : Questionnaire filled by staff & customers Secondary: E circulars, Internet etc. Sample Size: Staff: 100 Customers: 200 Sampling: Random Sampling
DATA ANALYSIS 19
State Bank of India
SBI STAFF
Analysis: The respondents were mostly in the officer cadre & in the age group of 31-46 & above.
20
State Bank of India
Analysis: The respondents population was distributed among Urban, semi-urban & rural areas considering the reach & awareness of MBS. Hence, 52 % of the staff comprised from urban areas where the demand for MBS in increasing rapidly. Rural areas were too focused adequately taking into the potential of customers that can be captured through MBS.
Analysis: The respondent staff had adequate knowledge about the steps invlolved in the registration of MBS. Out of 100, 38 were informed but mostly the staff was not aware of the stages & the ways to for M Banking.
21
State Bank of India
Analysis: Mostly the staff had heard about SBI Freedom(M Banking Solution) but some have misinterpreted it as Sbi Freedom Home Loans.
Analysis: The respondent staff were not fully informed about the variety of the services & facilities provided by M banking. They were not aware of the enquiry
regarding Demat , merchandise payments & utility bill payments etc. They were mostly aware of some common facilities only specially in the rural & semi urban area.
22
State Bank of India
Analysis: The respondent staff were not fully aware that now the MBS facilities are available on non java & non GPRS cell phones too. They were not updated regarding USSD & had little knowledge that M banking is now available on all cell phones including java & non java phones too.
Analysis: The respondent staff were of the knowledge that it can be provided to all types of customers specially in the rural & semi urban areas. Only few could tell that it is only for P segment customers (CASA) & not available for traders etc.
23
State Bank of India
Analysis: The respondent staff were mostly had the knowledge that MBS are freely ed for the customers without any charges appliacble.But some had misconception that a nominal fee is charged by customers one time.
Analysis: The respondent staff were not aware of the daily limits for the transanctions for M banking. Some were not able to tell the difference between Java, Wap etc against USSD application for daily transfer amount limits. They were not aware about the differentiated limits for USSD applications.
24
State Bank of India
Analysis: The respondent staff were not aware of the daily limits for the transanctions for M banking. Some were not able to tell the updated transaction limit of Rs 50000/ cutomers with daily calender month limit of Rs 250000/- They were not aware about the differentiated limits for USSD applications.
Analysis: The respondent staff were of the information that MBS cannot be provided with all the service providers.Though which is not the case as MBS is
25
State Bank of India carrier-agnostic i.e. all customers can avail the mobile banking service with the Bank irrespective of the service provider for their mobiles.
Analysis:
The respondent staff were adequately aware of the Grievance Redressal
System for MBS.
Analysis: It was observed that mostly in the urban area the staff had proper training for SBI Freedom. The problem was mainly in the semi-urban & rural areas where proper training was not provided. 26
State Bank of India
Analysis: The respondent customers were mostly of the age group of 25 & above.
27
State Bank of India Analysis: The respondent customers were mostly salaried customers,businessmen & studentsfor M banking.
Analysis: The respondent customers were mostly of the middle income group who were using Mbanking.
Analysis: The respondent customers were mostly banking with SBI particularly specially in rural & semi urban areas.
28
State Bank of India
Analysis: The respondent customers were mostly visiting branches & ATMs for their regular banking transactions.Only 10% were using MBS because of the safety concerns of the customers.
Analysis: The respondent customers were mostly had awareness about M banking even in rural & semi urban areas. But they were not ready to go for MBS due to their security concerns regarding the transactions through mobiles.
29
State Bank of India
Analysis: The respondent customers mostly were not using MBS as yet & the percentage of non usage was very high almost 68% as represented from the above data.
Analysis: The respondent customers who had ed for MBS were also not using M banking for their banking transactions. They preferred internet banking to M Banking. Most of them had ed for it but had not used it the services at all.
30
State Bank of India
Analysis: The respondent customers found the transactions through Mbanking difficult to operate specially in semi urban areas.
Analysis: The respondent customers had knowledge about MBS through promotions of the banks in which they had their s. Other mode making it popular s through word of mouth from colleagues & friends.
31
State Bank of India
Analysis: The respondent customers were mostly using MBS for Mobile Recharge & to check balance. The other facilities such as funds transfer & bill payments were leass frequently used.
Analysis: The respondent customers were mostly had preference for services of M banking through private banks like ICICI & HDFC as they found private banks offering technology oriented products.
32
State Bank of India
Analysis: The respondent customers mostly preferred ICICI & HDFC over SBI for MBS.
Analysis: The respondent customers were mostly ranked the MBS & facilities of banks as ICICI & HDFC & other private banks on top as against SBI Freedom.
33
State Bank of India
Analysis: The respondent customers who have been using or have used SBI Freeom found it easy to use & mostly agreed regarding its simplicity. But few found it difficult for the purpose of other banking transactions such as transfer, utility payments etc.
Analysis: The respondent customers who have been using or have used SBI Freedom had a good experience with it due to easy registration,simplicity of transactions & friendly. The overall experience had been good.
34
State Bank of India
FINDINGS & CONCLUSIONS Mobile Banking Services provides a huge potential of growth for State Bank of India. Mobile banking is offering several benefits and added value to consumers for handling their financial matters. There lies a mammoth task ahead for both State Bank of India and the Government of India to enroll the masses, especially the unbanked ones to bring about a favorable change in both the economy and the lifestyle. There lies a huge untapped market for MBS which provides various scopes for bank to focus its efforts for increasing awareness among both the staff as well as the customers. The various findings of the above exercise are the following: STAFF: There lies lack of awareness among the staff in SBI itself regarding the MBS product SBI Freedom & doubt as relating it to freedom home loan product. The staff is not informed about the variety of applications that can be offered through MBS platform. There is also lack of knowledge regarding the registration process especially among the rural staff. The staff were not completely aware of the different transaction limits for USSD & java enabled cells & the MBS application available for P segment customers only. The average number of customers applying for MBS facility was very low mostly 2-5 customers per day & almost zero in rural & semi urban branches. CUSTOMERS: Mobile banking is popular among the Rs.1 to 5 lakhs per year income group with almost 60% of mobile banking s falling in the income bracket, an indicator of adoption of this service by younger generation . The MBS services are mostly used for the purpose of mobile recharge, funds transfer & cheque balance only amounting to 70%. Even though the customers have ed for MBS the frequency of usage of MBS for banking transactions is very low around 25%. 35
State Bank of India The frequency of usage is low as lack of flexibility & complexity of banking transactions through MB & one of the major reasons of lack of preference of M Banking is due to security reasons. The preference of banking transactions through MB is very less approx. 5% as compared to INB & ATMs. The customers mostly prefer private banks as Axis, HDFC & ICICI for M Banking transactions faculties. The customers of SBI Freedom find it easy to use & mostly the experience has been good.
36
State Bank of India
SUGGESTIONS & RECOMMENDATIONS TO MAKE IT MORE POPULAR AMONG STAFF & CUSTOMERS & NEW FACILTIES THAT CAN BE PROVIDED THROUGH IT Mobile banking is not necessarily a panacea for all customer needs. Like any technology format it is a tool that can enhance existing services. Customers are keen to be kept abreast of any changes to the nano-economy and it appears that existing mobile provisioning could capitalize on this opportunity and better capture the imagination of mobile s. Innovation and cost management are critical tenets for commercial success in the financial sector and mobile banking services are capable of delivering against both of these objectives if appropriately executed. The usage & popularity of MBS & facilities that can be increased by adopting following measures: Build up a database with high-quality and detailed information about customers in their target group to focus on them for M banking. Aggressive & comprehensive training among the frond end staff for promotion & marketing of MBS. Launching of various marketing campaigns to create more & more awareness of M Banking & various facilities provided by it. Low value transactions are recommended (< Rs.1000) & low charges are recommended to encourage high volume usage especially for rural customers for purpose of Financial Inclusion Enhanced security measures to be in place such as authentication of the device with service provider before initiating a transaction. This would ensure that unauthorized devices are not connected to perform financial transactions & encrption of the data being transmitted over the air. It would be expected from the mobile application to personalization such as preferred language date / time format, amount format default transactions, standard beneficiary list, alerts etc for standardized & ease of operations among M Banking s.
NEWER AVENUES
Mobile ticketing is the process whereby customers can order, pay for, obtain and validate tickets from any location and at any time using mobile phones or other mobile handsets. Mobile tickets reduce the production and 37
State Bank of India distribution costs connected with traditional paper-based ticketing channels and increase customer convenience by providing new and simple ways to purchase tickets. Mass transit. Airline check-in. Cinema ticketing. Concert/Event ticketing. Trade shows Consumer voucher distribution Mobile brokerage 1. Trading (Investments, quotes, statements, e.g. Info services) 2. Stock and Shares (Investments, quotes, statements, e.g. Stock market ) 3. Portfolio management. Mobile marketing o Advertising Campaigns (New products, Subscription Services) o Charity Campaigns o Politics (Voting Tool) o Status of requests for credit, including mortgage approval, and insurance coverage o Check (cheque) book and card requests o Exchange of data messages and email, including complaint submission and tracking o ATM Location Content Services o General information such as weather updates, news etc. o Loyalty-related offers o Location-based services
38
State Bank of India
BIBLIOGRAPHY
www.sbi.co.in www.rbi.gov.in www.statebanktimes.com www.infogile.com www.academicjournals.org www.banktech.com www.spidercenter.org http://java.sun.com/products/midp www.gsmworld.com www.tutorial-reports.com
www.mobilemoneytransactions.com www.telecomindiaol.com The internet business review
Banknet India
39
State Bank of India
ANNEXURES QUESTIONNAIRE FOR STAFF 1. Age Group 18-25 26-30 31-45 46 and above 2. Cadre Officer Clerical 3. Have you heard of SBI Freedom? Yes No 4. Are you aware of registration process for Mobile Banking Service for SBI Yes (Adequately) Not completely Not at all 5. Are you aware of the list of Services provided by SBI Freedom(Tick Mark the checklist) Yes No o o o o o o
Funds transfer Enquiry services (Balance enquiry/ Mini statement) Request services (cheque book request) Bill Payment (Utility bills, credit cards) M-Commerce (Mobile Top Up, Merchant payment, SBI life insurance etc) All of these 40
State Bank of India
6. The service is presently available through which kind of mobile application facilities. Java enabled phones with GPRS connectivity Non -java enabled phones with GPRS connectivity over WAP Non java non GPRS over USSD All of these 7. All the customers of SBI can avail Mobile Banking Services. Yes No 8. The service charges for enabling SBI Freedom. ` 100 ` 200 Free registration ` 50 9. Daily transaction limits for fund transfer and bill/ merchant payment in USSD (Unstructured Supplementary Service Data) based Service ` 1000 per customer with an overall calendar month limit of ` 5000 ` 500 per customer with an overall calendar month limit of ` 5000 ` 2000 per customer with an overall calendar month limit of `10000 ` 5000 per customer with no calendar month limit. 10. Daily transaction limits for fund transfer and bill/ merchant payment over application/WAP. ` 50000 per customer with an overall calendar month limit of ` 250000 ` 25000 per customer with an overall calendar month limit of ` 100000. ` 50000 per customer with no calendar month limit. 41
State Bank of India
11. Does Mobile Banking Service is available with all telecom service providers over USSD. Yes No Don’t Know 12.
Availability of proper Grievance Redressal system for MBS in SBI. Yes No
13.
Average no. of customers applying per day for SBI Freedom. Zero 2-5 5-10 Above 10
14.
Training provided to the staff for MBS at the branch. Yes No
15. Ways to make MOBILE BANKING SERVICE (MBS) popular among customers & Staff. (Suggestions & Recommendations) ___________________________________________________________________________
___________________________________________________________________________
___________________________________________________________________________
42
State Bank of India
QUESTIONNAIRE FOR CUSTOMER 1. Age Group 18-25 26-30 31-45 46 and above 2. Occupation: Salaried Self Employed Student Homemaker 3. Do you have savings with State Bank of India? Yes No 4. How do you prefer to do banking transactions? Please rank & reasons for not using MBS. a) b) c) d)
Over Internet Through ATMs Over Mobile Banking Visiting Bank Reasons: ___________________________________________________________________ ___________________________________________________________________________
5. Have you heard of mobile banking? Yes No 6. Have you used mobile banking in the recent past? Yes No 43
State Bank of India 7. How frequently do you use mobile banking for banking transactions? Never Sometimes Most times Always 8. Do you feel that doing transactions on mobile banking is complicated? You bet, its difficult to understand. Its not that difficult It's easy to use It can't get easier 9. How did you come to know of mobile banking? Friends Colleagues at work Through internet Bank promotions Accidentally 10. What do you use the mobile banking for? Check Bank Balance Do Funds Transfer Bill Payments Trading Mobile Recharge Other 11. Do you use the mobile banking service of: Public Banks (SBI and SBI Group Banks) Private Banks
44
State Bank of India Public and Private Banks I do not use mobile banking 12 . Please check the bank(s) whose mobile banking service you use State Bank of India ICICI Bank CITI Bank Others
13. In your knowledge, how would you rank the mobile banking service of the fo a) b) c) d) e)
SBI ICICI BANK HDFC BANK CITI BANK OTHERS
14. I would rate the my overall experience with mobile banking as: Very good Good Neutral Poor Very Poor 15. If a of SBI Freedom, would you say mobile banking is easy to use? Strongly Agree Agree Disagree Strongly Disagree Not Applicable
45
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