Mobile telephony in banking

Once upon a time people used pigeons in communicating with their near and dear ones. Later on, the arrival of postal service and then land phone changed the scenario. People became familiar with the services.
That time people mainly in rural areas, were largely dependent on postal services. They used to stand in queues often to receive letters or money orders from general post offices sent by their near and dear ones. The office was the major media of communication in the country then.
Till the year 2000, the post office and a peon were the integral part of people's daily life. Almost all the peons across the country had to use bicycles to ensure timely delivery of the huge number of letters and money orders to their recipients.
That time receiving a money order was a time consuming matter. Besides, there was no other ways of urgent communications or instant cash transfer. Bank to bank money transfer was also a time-consuming matter. No one could receive or send money instantly neither through post offices nor through banks. People had no other ways but to wait for long for any kind of communications and transactions with people at distant places.   
In the meantime, a good number of private companies emerged in the country to  provide comparatively faster services than Bangladesh Post Office (BPO) in all types of communications and transactions.
These companies received better response from affluent people mainly in urban areas as the services were limited to only urban areas.
But the scenario started changing after the arrival of mobile phone services in the country in 1999. Though the City Cell started its journey in the country in 1989, the use of its phones was merely limited to a very small segment of well-off people.
However, the use of mobile phone rapidly spread among the people mainly after the year 2000, following aggressive marketing by Grameenphone and six other mobile phone operators. Widespread use of mobile phones by the people drastically lessened their dependence on postal services. People's dependence on private parcel service providers also significantly decreased.
Annual income of BPO drastically fell by over ninety percent in 2012 from its regular activities compared to 2000 as a major segment of people of the country switched over to mobile phone services in their communications.
According to Bangladesh Telecommunication Regulatory Commission (BTRC), mobile phone users in the beginning of the new millennium were around 300 thousand (3 lakh) against 111 million until September 2013.
People across the country now maintain their daily contacts through mobile phones.
Thousands of BPO's officers and employees across the country have been passing idle time for long for want of sufficient flow of letters and money orders and the prospect of the state-owned organisation remained untapped. BPO's income from its various services was very insignificant within this time.
However, following the widespread acceptance of mobile phones in the country and its reasonable cost along with easy connectivity and peoples unwillingness to wait for a long for any kind of transactions, many financial institutions including banks, specially the private and foreign ones, have come forward to provide instant services to their clients using internet and mobile technologies. These banks have started establishing online connectivity to its branches. They have even brought their rural offices under the net with the help of mobile operators.
However, in course of time, the BPO has also realised the necessity of bringing changes in its services for survival. They first of all adopted mobile technology in electronic money transfer services (EMTS) in 2011 which got immense response from the people. In the first year of inception of the service, the BPO transacted over Tk 14.21 billion and earned Tk 201.7 million as commission fees from it.
But the irony of fate is that immediately after the start of EMTS, other financial sectors like private banks came forward to do the same business which left EMTS behind in the race.
BPO's income from EMTS fell to Tk 170.97 million which was gradually going down every day mainly because of bureaucratic tangles in making timely decisions and aggressive marketing by the private banks.
According to Bangladesh Bank (BB) data, 26 banks out of 50 have so far taken necessary clearance from them to start mobile banking business. Of which, 17 banks have started operation in the field. Total subscribers of mobile banking stood at around 10 million with at least 20 per cent of yearly growth.
Private banks in the meantime extended their services even to a small grocery shop. Hundreds of thousands of banked and unbanked people across the country have come under the umbrella of the mobile banking services of private banks.
The private banks are competitively introducing new packages in mobile banking to attract a large segment of unbanked people. They are trying to introduce innovative and user-friendly services every day.
Following the immense response, these banks are also offering mobile banking, internet banking and even SMS banking services at competitive charges. According to a high official at BB, each of the agents of mobile money transfer is acting like a mini bank.
Besides, thousands of shopkeepers and jobless young people have found a way of generating new income by rendering mobile banking services.
The central bank data shows that banks' transactions through mobile banking services stood at 450,000 per day, involving an amount of Tk 1.12 billion with an annual growth of more than 20 per cent.
Now people do not carry notes. They carry cash in his or her mobile phones. Any one can transfer or receive cash instantly through a phone call. They also can buy goods with the money they have in their handsets. Some companies have emerged in the country that have online outlets of goods and promotional messages through phones. In such cases customers are now clearing their bills from the cash in their handsets.
However, data available with the BPO has showed people still largely depend on EMTS for transfer of any large amount of mobile money because of reliability. Private banks could not yet make their agents reliable in transacting large amounts.
According to the data, though the number of transactions dropped drastically in the recent time transfer of big amounts of money through EMTS is still increasing only because of the trust factor. Over sixty per cent of total electronic money transfers through EMTS are large amounts because people does not rely on small shop owners for their big transactions.
However, money market experts expressed their fear about making money laundering business easier through mobile money transfer services.
According to former adviser to caretaker government, Dr. AB Mirza Azizul Islam, widespread use of mobile money transfer services may make money laundering business easier.
People who collect remittances from abroad had to face different types of obstacles to sending money to the recipients. But after introduction of the service, creation of businessman may get the opportunity to transfer money easily.
However, following creation of the possibility of easy money laundering through mobile banking, the BB recently tightened rules of mobile transaction.
Meanwhile, some contradictions between bankers and the mobile phone operators are hampering the expected growth of mobile banking in the country.
However, industry insiders expressed their hope that immediately after resolving the dispute between the mobile phone operators and the bankers about the model of mobile banking, it will revolutionalise financial transactions in the country.
The writer is Staff Reporter of the FE