Pluses of mobile banking
Friday, 19 December 2008
Dewan Jahidul Hassan
GLOBAL mobile usage has reached more than 3.6 billion users, with 15 new connections established every second, more than 1.3 million per day, many of these in most remote areas and underprivileged corners of the world. More than 30% people of Bangladesh have mobile phones whereas only 13% have bank accounts. Mobile phones customer penetration is three times higher than bank's customer penetration.
We need mobile banking for mainly two reasons -- it will promote international remittances and support financial inclusion. M-banking and M-payments through mobile phones can lower the transaction cost of international remittances through competition, increase the flow of remittances by making it viable to send small amounts home, introduce the unbanked to a means of financial management, increasing their likelihood to access banking services and strengthen economies by encouraging trade and markets.
We have a misconception about introduction of M-banking in Bangladesh, we think we are going to transform each mobile number into a bank account. Although that would be our desirable target, it's a real far cry! Right now the mobile operators are working on low scale money transfer system. Although mobile money transfer is a relatively new option for sending money, it is one of the most convenient ways to do that.
Money is transferred via a text message to the instant money transfer service that includes the recipient's information and the amount being sent. Transfers are instant, and recipients typically have several options for accessing the money. Which is not exactly taking business from the banks. M-banking may have variety of products. Bills Pay is one such product of M-banking. It takes hours in the line to pay our bills for electricity, gas, even school and college fees. It's a real hard job for the mothers to wait in the line and pay the fees for their kids. If that school or college had a bank account and there were some transferring facility from the mobile phone account, it would take minutes! It would have saved money and time both. Grameenphone has started Bills Pay and we welcomed it.
There are only a few private bank branches in Barisal division. And these are only in Barisal city. Banks do not think it's a profitable area of business. There are people all over this country, deprived of banking facilities. The percentage of women bank account holders is frustrating. It will take years for the banks to open branches in the remote areas. So, how we are going to satisfy the need of money transfer to this areas? There are a lot of migrant prone areas that remains far from banking facilities. When 'hundis' serve better, they don't come to remote bank branches. And our banks are undoubtedly not doing a good job of advertising their products. Mostly people don't know about most banks' remittance or money transferring facilities that well.
The people need these services and don't think about bank-led or telecom operator-led system; they want a fast, low cost, safe and convenient channel. Airtel in India recently introduced money transfer and bills pay services. An Airtel subscriber is hardly worrying about the bank involved in this system. In the USA mobile banking is the third choice of banking methods because there existing banking facility is good enough with internet banking. In country like ours we have no other option but to accept that we can't reach internet facilities to our remote areas. We can not have internet banking that serves our purpose. So, we must find an alternative real soon. Banks here don't even have interconnectivity among their branches in many cases. So, expansion to serve rural areas remains a far stretched ambition.
Approaches to the regulation of mobile money transfer vary widely. The regulation can waiver a conditional approval to the telecom operators as long as the maximum payment or balance size is low (e.g. the Philippines), or even restrict the issuance of e-money to banks only (South Africa) to the creation of an enabling framework whereby specialist e-money issuing entities can register under an appropriate supervisory framework.
Mobile operators have been fined for VOIP business. That didn't stop mobile subscribers to stop using mobile phones. Because they need a service that TNT can't provide. One of the private banks was fined for their dealing in the share market through their foundation and another bank's Managing Director (MD) was fined for not respecting Bangladesh Bank order in their advertising campaign where they used Bangladeshi currency note disrespectfully. Individual management keeps making mistakes that should never create hindrance in policy making and policy makers must oblige the need of the mass people first and help emergence of Mobile banking.
(The writer may be reached at e-mail: jahid789@yahoo.com)
GLOBAL mobile usage has reached more than 3.6 billion users, with 15 new connections established every second, more than 1.3 million per day, many of these in most remote areas and underprivileged corners of the world. More than 30% people of Bangladesh have mobile phones whereas only 13% have bank accounts. Mobile phones customer penetration is three times higher than bank's customer penetration.
We need mobile banking for mainly two reasons -- it will promote international remittances and support financial inclusion. M-banking and M-payments through mobile phones can lower the transaction cost of international remittances through competition, increase the flow of remittances by making it viable to send small amounts home, introduce the unbanked to a means of financial management, increasing their likelihood to access banking services and strengthen economies by encouraging trade and markets.
We have a misconception about introduction of M-banking in Bangladesh, we think we are going to transform each mobile number into a bank account. Although that would be our desirable target, it's a real far cry! Right now the mobile operators are working on low scale money transfer system. Although mobile money transfer is a relatively new option for sending money, it is one of the most convenient ways to do that.
Money is transferred via a text message to the instant money transfer service that includes the recipient's information and the amount being sent. Transfers are instant, and recipients typically have several options for accessing the money. Which is not exactly taking business from the banks. M-banking may have variety of products. Bills Pay is one such product of M-banking. It takes hours in the line to pay our bills for electricity, gas, even school and college fees. It's a real hard job for the mothers to wait in the line and pay the fees for their kids. If that school or college had a bank account and there were some transferring facility from the mobile phone account, it would take minutes! It would have saved money and time both. Grameenphone has started Bills Pay and we welcomed it.
There are only a few private bank branches in Barisal division. And these are only in Barisal city. Banks do not think it's a profitable area of business. There are people all over this country, deprived of banking facilities. The percentage of women bank account holders is frustrating. It will take years for the banks to open branches in the remote areas. So, how we are going to satisfy the need of money transfer to this areas? There are a lot of migrant prone areas that remains far from banking facilities. When 'hundis' serve better, they don't come to remote bank branches. And our banks are undoubtedly not doing a good job of advertising their products. Mostly people don't know about most banks' remittance or money transferring facilities that well.
The people need these services and don't think about bank-led or telecom operator-led system; they want a fast, low cost, safe and convenient channel. Airtel in India recently introduced money transfer and bills pay services. An Airtel subscriber is hardly worrying about the bank involved in this system. In the USA mobile banking is the third choice of banking methods because there existing banking facility is good enough with internet banking. In country like ours we have no other option but to accept that we can't reach internet facilities to our remote areas. We can not have internet banking that serves our purpose. So, we must find an alternative real soon. Banks here don't even have interconnectivity among their branches in many cases. So, expansion to serve rural areas remains a far stretched ambition.
Approaches to the regulation of mobile money transfer vary widely. The regulation can waiver a conditional approval to the telecom operators as long as the maximum payment or balance size is low (e.g. the Philippines), or even restrict the issuance of e-money to banks only (South Africa) to the creation of an enabling framework whereby specialist e-money issuing entities can register under an appropriate supervisory framework.
Mobile operators have been fined for VOIP business. That didn't stop mobile subscribers to stop using mobile phones. Because they need a service that TNT can't provide. One of the private banks was fined for their dealing in the share market through their foundation and another bank's Managing Director (MD) was fined for not respecting Bangladesh Bank order in their advertising campaign where they used Bangladeshi currency note disrespectfully. Individual management keeps making mistakes that should never create hindrance in policy making and policy makers must oblige the need of the mass people first and help emergence of Mobile banking.
(The writer may be reached at e-mail: jahid789@yahoo.com)