by K C Chakrabarty
(Address by Dr K. C. Chakrabarty, Deputy Governor, RBI at International Banking Summit on Regulation of Cross-Border Mobile Payments and Regional Financial Integration at Mumbai on March 29, 2012).
In this context, the question that often gets debated is: how and why is a mobile device the most appropriate delivery channel of financial services? Besides the technology capability to transmit financial information in an efficient, secure and cost-effective manner enabled by development of mobile based applications for banking, the most significant fact about this idea is the ubiquity of the mobile phones. The number of mobile phones in the country are said to be nearing a billion phones. Hence, banking and financial services, which have already come a long way from the branch level services to the customer’s home desktop and laptop, can now be reached to a much larger section of the society, including the financially excluded, through the medium of the mobile phones. Besides the reach of mobile, there is another reason why mobiles are the most appropriate medium. What is after all a banking transaction? What purpose does the traditional cheque serve? In India, if you forget to carry your cheque book for withdrawal of funds, they provide you with what is call a withdrawal slip. A cheque or a withdrawal slip is a personalized direction to your banker to put through banking transactions on your behalf. The authentication is achieved through your signature. But this traditional method is expensive. A mobile phone achieves the same purpose and enables you to send personalized secure instructions to your banker to undertake transactions on your behalf. If your bank has achieved seamless integration with the CBS, then the transaction gets automatically registered. But these transactions using mobile are far less expensive than its traditional alternatives. More importantly, you hold the key since mobile is in your pocket and you need not depend on bank timings or the rush there to undertake banking transactions. This is perhaps the most important advantage of the mobile over other alternate payment methods. The mobile phone can, therefore, empower the common man to conduct his payment transactions any time and from anywhere. It is, therefore, no wonder that mobile payments and mobile banking are being hotly debated in various forums, in India and abroad.