Mobile Banking
1. Citizen’s right and the Government
• People of a remote village has the right to get a nearby school where they can send their children for education
• They have the right to have a road and bridge for their movement
• They have the right to have a nearby Hospital, Post Office etc.
• Similarly they have the right to have banking facility in their nearby village:
• So they do not need to keep the money in house
• where money is at risk to be theft
• unnecessary expense may happen
• Government of each country has the obligation to provide all the basic facilities to its citizens
2. Why the Mobile Banking?
• Mainly to bring the rural unbanked into banking channel (financial inclusion)
• There are 160 m people in Bangladesh whereas 13% of them have bank account and 55% uses Mobile phone
• There is a very few bank branch in the remote rural area of Bangladesh
• Setup of Bank Branch in Rural area is not profitable
• Amount of deposit and loans in the rural area does not generate sufficient income to meet the expenses of a rural branch
• Setup of ATM in rural area is not feasible
• ATM requires regular cash feeding from a nearby branch
• There is no branch in the rural area
• Only the Mobile Banking is the solution to financial inclusion
3. Specific benefits (other than financial inclusions) of Mobile Banking:
• To customers:
i) Safe deposit of their money and also interest income on deposit
ii) Transactions in the account on 7 X 24 basis
iii) Truly on-line banking (anywhere, anytime)
iv) Sending and receiving local remittance instantly
v) Receiving foreign remittance from a walking distance
vi). Hassle free payment for buying goods and services.
• To the bank:
i) Coverage of whole country with minimum cost
ii) Increased number of customers
iii) New source of deposit
iv) New source of income
• To the country:
i) Delivery of banking services to the rural people
ii) Increase in money circulation
iii) New employment
iv) New source of income for the agents
v) New source of income for the Mobile Operators
vi)
Quick and easy delivery of Government allowances like freedom fighters
allowance, elderly allowance, salary of primary school teachers etc.
4. Mobile Financial Services that Banks can offer through Mobile Banking
i. Disbursement of inward foreign remittances
ii. Cash-in (deposit) / cash-out (withdrawal)
iii. Person to Business Payments - e.g. utility bill & merchant payments
iv. B2P e.g. salary disbursement, dividend and refund warrant payments,
v. G2P e.g. elderly & Freedom-fighter allowances
vi. P2B e.g. tax, levy payments
vii. P2P Payments.
viii. Other payments like microfinance, OD facility, insurance premium, Deposit Pension Scheme, etc
5. Mobile Banking Business Models
Two Types of Mobile Financial Services:
A. Bank-led model
i) Bank is the custodian of each individual deposits
ii) Bank is the custodian of customer’s financial and personal information
iii) Bank is responsible for KYC of each of the account holder
B. Non Bank-led model
The
non-bank-led model is where a bank does not come into the picture
(except possibly as a safe-keeper of aggregated funds) and the non-bank
(e.g. Telco) performs all the functions.
Only Bank-led mobile banking model is allowed to operate in Bangladesh
6. Bank-led mobile banking model is getting popular day by day
- Mobile Banking initiated by Banks is getting popularity due to confidence of the customers for banking with banks.
-
Some of the non-bank-led mobile banking systems were used to “Send
Money” and “Pay Bills” which are not core banking activities. These
models are failed. DBBL starts with Banking activities such as opening
account with proper KYC and making transactions (Cash-in and Cash-out)
and developing deposit habits among the customers. ‘Send Money’ and ‘Pay
Bills’ will be the secondary product for the banks.
7. Making a mobile banking project successful
i. Selection of right Technology Partner
A strong, reliable, experienced and accommodative technology partner can
only help you to go through an extensive trial and error method of
designing process flow for a particular market segment as behavior of
market segment vary from country to country.
ii. Handling Security issues to prevent frauds
- PIN with account access blocking facility after consecutive n-numbers of unsuccessful attempts
- Check digit to handle typography error
- Proper Know Your Customer (KYC)
- Enforcing maximum transaction limits for each type of products – daily and monthly limits
- USSD and sms/IVR for PIN transmission
iii. Keeping the operation simple
- Customers of the rural area do not use a transaction which is complex to be processed.
Example: For P2P
fund transfer, initially there was a need of recipient’s registration
in the senders mobile. Then he can only send money to a pre-registered
customer. Registration required typing alphabets while the illiterate
customers can hardly recognize the numeric digits. This was a barrier
for the customers to use P2P. However after discontinuing the
registration process, the P2P has become very popular method of sending
money to others.
- A simple operation
process is required for the mobile banking in which training and
education on the system is only required for the agent, not for the
customers. Such a system will require that most of the transactions for
the initially rolled-out products will be initiated by the agents, not
by the customers. Educating relatively small number of agents is
manageable than of a huge number of customers.
iv. Pricing for the service – making both agents and customers happy
Decision on pricing policy affects the success of the mobile banking.
Poor rural people are very much price sensitive. However Banks need to
pay the agents as they work on behalf of the banks, and Telcos as they
are the communication partner. Pricing for the service to be charged to
the customers may be fixed at per transaction-basis (fixed or percentage
of volume) or may be fixed as a service charge realizable on
periodic-basis from the account. Keeping both the agents and customers
is a challenging decision.
v. Proper roll out plan – Products and Regions
-
Product roll-out may be started with registration, cash-in and cash-out
products. After attaining a good number of customers, other products
like foreign remittance and salary disbursement, send money, bills pay,
air-time top-up, merchant payment, ATM withdrawal, fund transfer between
bank account and mobile account, microfinance may be introduced
gradually.
- Regional roll-out planning is very
important. Better to start with the capital city and nearby rural areas
within 50 Km radius where bank employees have quick access for
conducting educational & promotion activities, and dispute
management.
vi. Promotional activities
-
Marketing promotion is a weapon in attracting mass customers. Budget
should be allocated for airing regular TVC, publishing advertisements in
newspaper, conducting campaigns, providing Posters and Bill Board, and
conducting one-2-one meetings.
vii. Mobile Banking project is an investment.
-
The associated cost for setting up mobile banking such as price of
software, hardware and network, and expenses on manpower, promotional
& educational activities versus earnings from the customers and
interest spread on deposit may not justify the mobile banking project
for the first 3 years. However as the customers will gradually become
aware of the service and feel secure and confident, the use will be
significant to make the project economically viable in future.
8. DBBL perspective
i. Achievements as on 25 June, 2012
No of Agents = 9171
No of accounts= 2,75,043
Deposit (Taka)= 18.42 Crore
Cash-in / day (Taka)= 1.76 Crore / 5,466 Numbers
Cash-out / day (Taka)= 1.49 Crore / 3,469 Numbers
P2P transfer / day (Taka)= 18.03 Lac / 1,432 Numbers
Top Up / day (Taka)= 0.27 Lac / 1,231 Numbers
Foreign Remittance (Taka)= 1.31 Lac / 11 Numbers
ii. Awards
1. Digital Innovation Award-2011
2. Mobile Money Transfer (MMT-Dubai) Award – 2011
3. eASIA Driving Economy Award - 2011
4. The Asian Bankers Award (Bangkok) – 2012
5. The Computer World (USA) Laureate – 2012
9. National Perspective
2009
Bangladesh Payment and Settlement System Regulations, 2009 was
circulated by Bangladesh Bank allowing only Bank-led Mobile Financial
Services in Bangladesh
2010-11 Bangladesh bank licensed 23 Banks to start mobile financial services
31 March, 2011 DBBL, for the first time, started mobile banking in Bangladesh
July, 2011 bKash started mobile banking
Sept, 2011 Bangladesh Bank circulated ‘Guideline on mobile financial services for the Banks’
2011-2012 13 Banks started mobile banking in Bangladesh
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