Can Mobile Banking be employed as a tool for Financial Inclusion in India

The ‘smartphones boom’ has seen the proliferation of mobile devices, across all walks of life in various countries, and India is not an exception. Its inclusion has become so evident that, where governments were unable to reach people through technology before, they are able to do it now. Thanks to smartphones, people can use all government services they need and can access any information regarding them. Banking sector in particular has achieved such enormous leap in employing smartphones to make it easier for both government and the people, in achieving financial inclusion.

Advantages of Mobile Banking

Enabling smartphones for banking has become a feasible and practical solution for banks to reach out to people from remote parts of the country. People can now use services like fund transfers, payments, loan statements, management of policies and many more without facing the hassles of physical access to the bank.  Mobile banking flairs far better than branch banking and BC model, when it comes to profitability and cost-effectiveness. For normal banking transaction through branch banking it charges an estimated amount between INR 70 to 75, however with mobile banking it costs only INR 1 or less.

Financial Inclusion in India- The Present and Future

India has more than 50% of unbanked and 66% of inactive account holders. According to World Bank’s Global Findex, India stands second (after China) in having the highest unbanked population of a whopping 190 million.  This can be mainly attributed to the following reason

  • Irregularity and uncertainty of income
  • Lack of job security
  • Illiteracy

Hence having a technology that aids in overcoming or working around the above causes would be the most effective solution, which mobile banking can easily offer. Having a tedious, time consuming and costly banking practices through formal banking, illiterates and low-income people get vary when it comes to formal banking. However, with mobile banking, a simple and affordable solution can be offered for the hurdles faced by these people.

On realising the above trends banks such as HDFC, ICICI and SBI are trying to expand the basket of financial products they own through mobile banking. A research clearly shows that in India, mobile banking enjoys greater customer satisfaction and nurtures more customer royalty. For a better financial inclusion, banks are trying to employ the USSD (Unstructured Supplementary Service Data), based mobile service to be available even on basic feature mobile that does not require internet.  This makes financial transaction possible even amongst those who can’t access internet. It allows almost all financial transactions like money transfer, monitoring etc making it a one-shop stop for financial services for informal-sector workers.

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