South & East In­dia lead in in­ter­net & mo­bile bank­ing

Banking Frontiers - - Research Notes - Tech Initiatives -

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.

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