Sajjadur Rahman

Riding on fast-growing technologies, banks are working to identify new business niches; to develop customised services, to implement innovative strategies and to tap new market opportunities. Mobile phone banking is one of those technologies that have been changing the scenario across the globe -- from South Africa to Latin America and Asia.

With the number of mobile phone subscribers skyrocketing in Bangladesh, mobile banking is becoming a channel that no bank can ignore. Bankers and analysts predict, the service, if runs successfully, will have greater social impacts in terms of enhancing efficiency and transparency.

It is a banking process that provides financial services such as deposits, withdrawals, utility payments, salary disbursement and channelling foreign remittance, through any mobile phone set.

Limited personal computers and broadband internet penetration in the country have made data access on mobile the first online experience for many. This delivers key opportunities for meaningful and low-cost engagement with the customers.

The number of mobile phone subscribers and availability of the technology have encouraged both the bankers and mobile phone service providers to tie up with each other and deliver the fully technology-driven service that the country has never seen before.

“There are around 70 million mobile phone subscribers in the country. Of them, only 13 percent have bank accounts,” said Abul Kashem Mohammad Shirin, deputy managing director of Dutch-Bangla Bank, the bank that launched mobile banking last week.

“Many potential customers are still unbanked. Mobile phone banking can bring them into the services,” said Shirin. Any Banglalink or Citycell subscriber can enjoy the service of DBBL.

Trust Bank is the first one to introduce the service in December at all its 60 branches and nearly 40 pay-points.

BRAC Bank, which has tied up with Robi to launch the service soon, holds high hopes about the new technology-driven banking services.

“Money is not the driving factor. It is going to have a massive social impact,” said Kamal Quadir, chief executive officer of bKash that will handle the mobile phone banking of BRAC Bank. bKash is a joint venture company between BRAC Bank and Money in Motion LLC, USA.

The regulator, Bangladesh Bank, has allowed 10 banks to operate mobile banking in the country. Of them, Dutch-Bangla started the trial service last week, and BRAC is in the pipeline to launch the service in a few months.

But, still there are confusions and concerns on how the service will be delivered. Banking through phone, from deposits to withdrawals, sounds unclear to many. Although the bankers say it is as simple as operating a mobile phone, and cost effective and timesaving.

Though Bangladesh is a newcomer into this technology-driven banking, the world is familiar with the service. Nearly 150 countries including the neighbours have adopted mobile banking to reach people even in the remotest areas.

The bankers said if customers know how to use mobiles, they will face no problems in doing mobile banking.

A customer has to register by filling in a prescribed form and then he will be given a personal identification number (PIN) and a check digit added to his mobile number as a security measure. Every user will need his mobile set, check digit and PIN to make any transaction.

“If we can make it easier for them, if we can make them understand that this is reliable, I don't think that there will be any problem,” said Shirin.

He said DBBL has initially started mobile banking in Dhaka and its surrounding districts -- Gazipur, Narsingdi, Narayanganj, Munshiganj and Manikganj. Later, the bank will roll out the service in other districts.

“We have a plan to cover every upazila in five years. It will create 6,000 jobs,” said the banker. “The overall estimated costs will be Tk 235 crore a year.”

The banker said they will not be able to make any profit in at least five years, but the bank is not bothered about profit. “It is a work under the corporate social responsibility,” he said.

DBBL has a massive plan to go to the union level that will create 18,000 jobs. BRAC Bank will also spend nearly Tk 150 crore for the mobile banking project.

"bKash presents a compelling business plan which capitalises on a ripe economy to dramatically expand access to formal financial services, both as an extension of BRAC Bank and as a full-scale mobile phone-based payment switch, said Muhammad A (Rumee) Ali, chairman of BRAC Bank and bKash.

The new initiative will benefit the country as 83 percent of its population lives under $2 a day and access to finance can help in improving their economic situation, he added.

Quadir, however, sees adaptation of technology and converting digital money into cash as two major challenges. “Customers need sufficient access points to convert their digital money into cash,” he said.

According to him, it is a risky business and was not successful in many countries. Kenya, the Philippines and South Africa are the success stories of mobile phone banking.

“If a service is not easy to access or costs too much to use, then the use will naturally be low,” said Rabiul Alam, an official of Trust Bank.

He said part of the equation here has to do with the technology in the mobile handsets available to the end-user but the other part links to the deployment of technologies from the banks' side.

On the risks and security issues, the bankers said the entire risks belong to the banks not the mobile operators.

“Customer's money is safe as no one can withdraw money without taking possession of the mobile set, PIN and the check digit all together,” DBBL Managing Director KS Tabrez said during the launch of the service last week.

“No one will be able to deposit unwanted money in a mobile banking account without knowing the check digit, although the mobile number is publicly known,” he added.

sajjad@thedailystar.net

News: The Daily Star/ Bangladesh/ 13-Apr-2011