New Delhi (PTI): With increasing cell phone penetration in the country, the mobile commerce space — comprising both banking services and payments — offers more opportunities for banks to reach out to the rural population.

"Mobile banking offers an opportunity for banks to reach out to the rural population and doing business in rural areas has become more viable," Divakar Goswami, who is an executive manager at global consultancy firm Deloitte Research told PTI.

According to him, in India, the penetration of mobiles is much higher as compared to that of banks, which makes the concept of mobile banking more viable.

Going by industry estimates, the global market for mobile-based transactions, still in its nascent stage in India, is projected to be worth more than $500 billion by 2011.

He said that many banks are exploring the idea of mobile banking especially to cater to the rural areas. The implementation of the idea would not only foster the expansion of the banks' business activities but could also help in cutting down on various costs, he added.

With the number of mobile subscribers on the rise in the country, a major chunk of them are expected to come from rural areas in the coming years.

Mobile banking also presents a lucrative business avenue to banks and mobile carriers.

"Cell phone providers, faced with falling revenues from voice-based services, could find new streams of revenues from banks, advertisers, merchants and customers," according to a Deloitte research paper, 'Mobile-banking: can elephants and hippos tango?'.

Even as the concept of mobile banking sounds an attractive preposition, Goswami noted that there are challenges ahead including partnerships between banks and mobile carriers.

The research co-authored by Mr. Goswami said that mobile banking would require "smart business and sound partnership between the banking and mobile industries".

He pointed out that contours of a nationwide platform for mobile commerce is expected to emerge by 2012.

As per the research paper, an open federation model — where a large number of banks and mobile carriers come together to provide a common platform for mobile banking services — would be a good idea.

"By developing a common platform and infrastructure, open federation models reduce the cost that banks and carriers would incur from investing in proprietary software and infrastructure," the research paper noted.

Regarding security concerns related to mobile banking, Mr. Goswami said there should be awareness among the customers and added that these transactions are one of the most secure

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