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“Mobile Banking could be the Future of Microfinance”
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Vikram Akula, founder and CEO of SKS Microfinance in a freewheeling interview with IndiaKnowlege@Wharton presented some insights with respect to the future of mobile banking in India and how it can be used to leverage Microfinance models.
Mobile banking (also known as M-Banking, mbanking, SMS Banking etc.) is a term used for performing balance checks, account 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 downloaded to the mobile device.
His company is doing a pilot project right now with mobile phones. They think, mobile banking is the future.
“It doesn’t make sense to try and build a retail brick-and-mortar infrastructure in rural India. From a cost perspective, it makes no sense at all. Mobile technology today is robust enough that you can actually very easily do banking. We actually have a very successful pilot that we’ve done.”
He continues, “The problem is the regulatory environment. The central bank in India has not understood mobile banking and its full potential, and therefore their regulations get prohibitive for us. If those regulations get changed, then clearly this is the investment that we’d make. Mobile banking could be the future of microfinance.”
That regulatory environment may soon change because the RBI has begun to realise that the ‘rapid expansion of this mode of communication has thrown up a new delivery channel for banks.’
On June 15, the RBI will release guidelines for a payment system using mobile phones. No idea yet as to how this will try and include mobile banking.
Currently Mobile Banking in India (I wouldn’t even call it banking) is limited only to enquiries, alerts, and certain kinds of bill payments. It has yet to become ‘transactional’.
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