Here is a report from the Business Standard on the move. Excerpt:

The wait for rolling out mobile banking seems to be over, with the Reserve Bank of India’s (RBI) issuing draft operative norms for such payment system. Now, RBI said, it will be easier and safer to use mobile phones for carrying out a gamut of banking transactions.

Banks can offer mobile-based services only to their own customers. Banks should have a system of registration before commencing mobile-based payment service to a customer, RBI said.

This topic is only getting more interesting. Last week I had the opportunity to speak via videolink to a conference in Brazil on how the web could revolutionize - or is revolutionizing - life in developing countries - via cell phones. That was a great conversation, organized by our friends at the World Bank and linked up to the Workshop on the Role of Mobile Technologies in Fostering Social Development, organized by the people who brought you those three w’s in your web browser, W3C.

That conversation touched on issues beyond mobile banking - including health, agriculture, public safety. And there were some fascinating parallels between the different fields. For example, Mark Landry, Office of the U.S. Global AIDS Coordinator talked about a program that his group is working on in Africa that uses mobile phones to reach out to patients to remind them of treatment visits, or send vital information to providers. Mark said something that resonated with me - he said that “mobile heath needs to build on the existing health infrastructure - it’s about getting on the grid.” The same is true for mobile banking. We don’t want to see a bunch of not-connected financial subsystems that leave people out of the formal financial system. That isn’t good for anybody. You can watch the discussion here.

Another comment that was striking came from Brazil - that we all need to be careful to not fall in love with the technology. That we shouldn’t be doing things just because we can. That issues of culture, levels of education, and tradition all have much to do with the speed and efficacy of adoption of new services over technologies such as mobile phones. This is not a new idea - this is something we have been saying at CGAP for awhile, and most recently in Focus Note 46, “The Early Experience with Branchless Banking.” And it’s not specifically about developing economies, either. If you and I trade mobile handsets in a coffee shop, we’re both going to need a few minutes to figure out how to use the unfamiliar device. And if you have an application on that handset for a particular service - that is even more true.

All this has me wondering where mobile banking is on Gartner’s famous (or infamous) hype cycle. If you don’t know it, I’ll let them explain:

Since 1995, Gartner has used Hype Cycles to characterize the over-enthusiasm or “hype” and subsequent disappointment that typically happens with the introduction of new technologies (see Understanding Gartner’s Hype Cycles) for an introduction to the Hype Cycle concepts). Hype Cycles also show how and when technologies move beyond the hype, offer practical benefits and become widely accepted. Read More.

Market momentum is certainly accelerating. There are signs of activity in Latin America, as well as a deepening of the mobile banking work already underway in parts of Asia and Africa. But where are we at in this cycle (hype cycles can be applied to any technology, I’m not just picking on mobile banking). Given the blog buzz, media focus, and parade of conference announcements and press releases, I think we’re somewhere between numbers one or two here (source again, Gartner):

1. “Technology Trigger”
The first phase of a Hype Cycle is the “technology trigger” or breakthrough, product launch or other event that generates significant press and interest.

2. “Peak of Inflated Expectations”
In the next phase, a frenzy of publicity typically generates over-enthusiasm and unrealistic expectations. There may be some successful applications of a technology, but there are typically more failures.

3. “Trough of Disillusionment”
Technologies enter the “trough of disillusionment” because they fail to meet expectations and quickly become unfashionable. Consequently, the press usually abandons the topic and the technology.

4. “Slope of Enlightenment”
Although the press may have stopped covering the technology, some businesses continue through the “slope of enlightenment” and experiment to understand the benefits and practical application of the technology.

5. “Plateau of Productivity”
A technology reaches the “plateau of productivity” as the benefits of it become widely demonstrated and accepted. The technology becomes increasingly stable and evolves in second and third generations. The final height of the plateau varies according to whether the technology is broadly applicable or benefits only a niche market.

So again, I think we’re somewhere between “Technology Trigger” and “Peak of Inflated Expectations” here. Gartner did look at consumer mobile applications about a year ago. The key is to think about getting to numbers four and five, right? To see this through to when it can actually become widespread. Something to remember if we get to the “trough of disillusionment.”

• shaped 11 projects with microfinance institutions, banks, mobile network operators and payment system providers that we expect will serve millions of poor, unbanked people in Colombia, Ecuador, India, Kenya, Maldives, Mongolia, Pakistan, Philippines and South Africa.
• consulted with more than 600 central bankers, regulators, bankers, mobile operators and others as we assessed the regulatory environment for branchless banking in 10 countries: Brazil, Colombia, India, Kenya, Malawi, Mexico, Pakistan, Philippines, Russia and South Africa.
• published 4 papers on branchless banking. In the next two months 4 more will be published: on government payments helping to expand financial services delivery; on mobile operators, not banks, as drivers of mobile banking; a practical analysis of connectivity options for MFIs; and a review of related outsourcing IT options and challenges.

Want to know more? Download the CGAP Technology Program Update. Or write to us at technology@cgap.org.

A new report from the global microfinance body CGAP predicts that, with the right market conditions, mobile banking could reach large numbers of poor people who are outside the formal financial system. The Early Experience with Branchless Banking calls for the development of interoperable payments platforms, practical and risk-based approaches to regulation, as well as shared networks of cash-handling agents. There is also a need for product development that overcomes the lack of human interaction and reliability concerns that may hinder customer adoption today.

“Market forces are driving down costs. In the Philippines, we see that a transaction on a cell phone or at an ATM costs one fifth that of a traditional visit to a bank branch,” said Gautam Ivatury, manager of CGAP’s Technology Program and co-author of the report. “Yet globally, we estimate that fewer than one in ten mobile phone banking customers are poor, new to banking, or doing anything more than payments and transfers.”

Payments and funds transfers dominate mobile financial services for many reasons, the report finds. Mobile operators in particular prefer to market payments services as this is more aligned with traditional revenue models. These services are also less likely to cause operators to run afoul of banking regulation.

“When it comes to reaching poor people who live outside the formal financial sector, the reality of mobile phone banking doesn’t match the potential, much less the hype, at least not yet, said Ignacio Mas, CGAP advisor and co-author of the report. ”We see opportunities for service providers who move quickly to create new products, especially if they can establish shared networks of cash-handling agents to cover that ‘last mile’ of service delivery.”

The report finds that challenges to the growth of branchless banking include a reluctance on the part of banks to get involved, as well as outdated or inadequate regulations. This is true despite the benefits of branchless banking: convenience, better security, and lower costs for customers. In cases where market conditions are not driving broader banking services such as credit and savings, there may be a role to play for policymakers and those who advocate for increased financial access.

The Early Experience with Branchless Banking will be presented at the GSMA Mobile Money Summit in Cairo on May 14.