W

ith the sharp increase in the use of smartphones, mobile banking has become an important source of income for Indonesian banks that are now expanding fee-based services to boost their profits.

Mobile banking (m-banking) transactions among the country'€™s major banks have increased significantly in the past several years as people have turned to their phones to carry out transactions.

Bank Central Asia (BCA), for example, has recorded 30 percent to 40 percent annual growth based on user volume and transaction value.

'€œAs of the first quarter of the year, m-BCA had accumulated 4.3 million users who generated transactions worth Rp 90 trillion,'€ BCA spokesperson Inge Setiawati said. Next year, Inge continued, the plan was projected to maintain this year'€™s growth level.

Bank Permata (BNLI) head of retail reliability, wealth management and e-banking, Bianto Surodjo, similarly noted that the bank estimated up to 30 percent annual accretion in user and transaction volume via PermataMobile.

State-owned Bank Mandiri (BMRI) senior vice president for electronic banking, Rico Usthavia Frans, estimated an increase of between 50 percent and 60 percent in the bank'€™s mobile banking business.

'€œCurrently, about 700,000 people use our mobile banking services at least once a month, which is more than the 500,000-600,000 users of our Internet banking service,'€ he said, adding that 88 percent of all transactions at the bank were executed through e-banking channels.

On a similarly high note, spokesman for state-owned Bank Rakyat Indonesia (BRI), Muhammad Ali, said the bank expected '€œvery positive growth of 50 percent or more'€ for its mobile banking business next year.

BRI data shows that mobile banking has outpaced other forms of branchless banking. The bank'€™s Internet banking user volume surged 228.1 percent in the second quarter of the year, way above the 74.6 percent increase achieved by SMS banking.

However, SMS banking boasts a larger user base of 4.28 million people versus the roughly 640,000 Internet banking users. SMS-banking users drove the 81.5 percent year-on-year surge in mobile transaction volume, which reached 34.9 million transactions, and a 170.7 percent rise in transaction value, which hit Rp 7.7 trillion.

Internet banking, meanwhile, experienced lower growth in transaction volume and value of 73.6 percent and 112.7 percent, respectively.

'€œMobile-phone usage has become ubiquitous among Indonesians, from small entrepreneurs and farmers to housewives and students, who comprise our client base,'€ he noted, adding that clients utilized mobile banking as a tool to access services anytime, anywhere.

'€œBanks, on the other hand, also benefit from the fee-based income derived from mobile banking,'€ he continued, adding that overall, the contribution of fee-based income toward total income had risen by 6.6 percent in the first half of 2012 to 7.3 percent during the first half of this year.

He added that mobile banking, as with other forms of branchless banking, reduced the costs related to the provision of traditional banking channels, including tellers.

Hendra Godjali, Accenture Indonesia'€™s managing director for financial services, pointed out that in order to drive future growth, banks needed to enhance loop transactions, meaning to enable interbank mobile-banking services.

He added that in the longer term, mobile banking may also be used to replace cash.