RBI Report Outlines Technology for Banks, Telcos to Develop Mobile Banking (Feb. 18, 2014)
The Reserve Bank of India (RBI) continues to encourage development of mobile banking across its nation, where 870 million consumers have a mobile handset but only about half of those have bank accounts. The central bank previously identified a lack of cooperation between banks and telcos as a major obstacle to expanding financial inclusion among the unbanked and underbanked. To help bridge the gap, the RBI this month issued a detailed, six-chapter committee report with specific, technical recommendations for banks and telcos to begin collaborating on a standardized method for on-boarding consumers and developing a universally accessible mobile banking system. “Mobile banking can increase revenue to MNOs and reduce costs to banks,” according to the RBI.
Because so much of India’s population is spread out across rural areas with no access to formal bank branches, the RBI advocates using ATMs and agent networks to extend financial services to consumers. Key goals of the initiative include developing multilingual options to register handset users for mobile banking without visiting a bank branch and harnessing interoperable ATM networks and biometric technology for consumer authentication. Applications should work across any type of handset and allow for both versatility and security for PIN management, the RBI said.
In addition to the challenge of finding a common technical approach to extending mobile banking to telco customers, observers say the biggest challenge the RBI sets out for banks and telcos is finding a business model that works for both sides. The central bank urged banks and MNOs to begin working on pilots to explore various solutions, and invites public comment on its proposals. Comments may be sent via email by March 7, 2014 to: email@example.com.