South & East India lead in internet & mobile banking
The trend is that overall shift towards adoption of digital channels has continued and transactions through digital channels have grown by 48% in FY18 whereas branch-based and ATM transactions have declined by 11% and 5% respectively. The growth in transactions at PoS terminals continued in financial year 2017-18, and these transactions have almost tripled in the last 2 years. These are some of the findings in the ‘Annual FIBAC Productivity Report on Indian Banking Industry, 2018’, authored by a team led by Yashraj Erande, partner and director at Boston Consulting Group. As many as 34 major banks in India participated in this year’s survey, which was presented at FIBAC conference, organized by IBA-FICCI.
The survey finds that southern and eastern states in the country are leading the way in the penetration of internet banking and mobile banking. More than 80% of the people still frequently use both branches as well as digital channels for transactions. Mobile banking activation is at 21% for private banks. It is seen that there is a shift in preference from internet banking to mobile banking for digital customers across bank categories.
After reaching a record high of card usage post-demonetization, ATM and PoS by private players saw a marginal drop; public sector banks continued to increase penetration.
Lower returns on term deposits and healthy growth shown by capital markets in recent times, have opened up opportunities for banks to earn higher income from sale of third party products like mutual funds. This income from distribution has reached almost Rs90 billion in FY18, having grown at an impressive rate of 19%, observes Arun Kejrival, partner, BCG.
The survey says India is finally on the cusp of achieving financial inclusion - 80% of India’s adult population is now financially included (with a bank account), compared to just 35% in FY11.