Mobile banking


Bangladesh Telecommunication Regulatory Commission has been dictating the termination rate of international voice traffic. This foolish act has made bypass pervasive and unstoppable. Now BTRC has trespassed into the central bank’s domain to dictate the fees of mobile banking transactions. Even the central bank doesn’t dictate the costs of mobile banking transactions. The telecom regulator is, however, reluctant to recognize the market.
I am borrowing the title from a presentation by Chanuka Wattegama, from the Distance Learning Center and who is also a Research Fellow with LIRNEasia. The presentation in question was made at an industry workshop on mPayments and mBanking in South Asia in Colombo,  which I attended as well giving a presentation on the potential for mPayments in agriculture. I was actually quite impressed with the crowd that was assembled and found it quite informative. LIRNEasia hasn’t worked extensively on the topic since our 2008-20010 research cycle, when our Research Fellow, Eriwin Alampay explored mMoney applications in the Philippines as well as the overall issues with respect to regulation (Financial and Telco) of such services. We even did some rapid response work, when Sri Lanka’s Central Bank expressed  their intentions to come up with new rules regarding financial transactions using mobiles.
The UNP in Parliament on June 11, called for the expansion of mobile phone facilities in the rural areas where by the rural people can make use of their mobile phones for their banking requirements. UNP MP Dr. Harsha de Silva who was speaking during the private member’s motion moved by UNP MP Ravi Karunanayake to extend banking hours from 9 am to 4pm said expanded banking services should be made available to the rural people. “These people have banking too in their pockets in the form of the mobile phones and this should be made use of,” he said. Read the full article here.
Mobile banking services are on average 19% cheaper than services from traditional banks, according to a new research conducted by the Consultative Group to Assist the Poor (CGAP). It has found that the lower the transaction value, the cheaper mobile banking is in comparison with formal banks. At a transactional value of $23, branchless banking is on average 38% cheaper than commercial banks, the report found. Mobile banking is also 54% cheaper than informal options for money transfer, said the report. Many challenges face financial institutions looking to develop mobile money management capabilities.
An article by an Indian journalist who attended the recently concluded Expert Forum in Islamabad, summarizes various “Mobile 2.0” initatives deployed by emerging South and Southeast Asian countries in recent years. “Mobile 2.0” applications can be described as those which offer services which are more-than-voice, such as payments, money transfers, and mobile banking. Bus tickets: The use of mobile phone to buy tickets has shown promising results for the public transport system in Sri Lanka.
One of the greatest contributions that can be made to help people pull themselves out of poverty is to facilitate safe, secure, low-cost transactions. Mobile payments which are potentially accessible to almost the entire populations of emerging economies need to be encouraged in this regard. At the beginning of the year, the Central Bank of Sri Lanka indicated it will be making policies for mobile payments. Not having seen much activity on this front, we facilitated a contribution from Muhammed Aslam Hayat, a legal expert currently based in Bangladesh but with extensive regional experience. It was published in the Financial Times, 12 July 2009.
Sep 4th 2008 | From The Economist print edition Computing: In future, most new internet users will be in developing countries and will use mobile phones. Expect a wave of innovation THE World Wide Web Consortium (W3C), the body that leads the development of technical standards for the web, usually concerns itself with nerdy matters such as extensible mark-up languages and cascading style sheets. So the new interest group it launched in May is rather unusual. It will focus on the use of the mobile web for social development—the sort of vague concept that techie types tend to avoid, because it is more than simply a technical matter of codes and protocols. Why is the W3C interested in it?
Most Americans are still hesitant about banking with their cellphones and PDAs, but young people are increasingly accepting mobile banking, according to a survey. Serving the needs of tech-savvy customers will be crucial for banks to stay competitive as the collective income of baby boomers’ children is expected to surge over the next 10 years and exceed that of their parents. So far, though most major banks offer mobile banking, 89% of consumers don’t use their cellphones to conduct banking transactions, according to the study by IBM’s retail banking consulting practice. The study found that 21% of consumers ages 18-34 use their cellphones for banking transactions, compared with about 10% of the general population. These numbers, particularly for younger consumers, are expected to grow significantly.
Rohan Samarajiva participated in the Third Annual ‘Joint Roundtable on Communications Policy – The Future of Indian Mobile’ in Kovalam, India from 7-9 February. The Round table was organized by the Aspen Institute India in collaboration with the Aspen Institute, USA. The objective of the conference was to convene Indian and American business leaders, government policy-makers, leading academics, and other experts to discuss government and business approaches to mobile commerce, mobile banking and m-governance that will have a positive effect on India’s economic and social development.
Mobile phones are about to become the simplest and quickest way to transfer money across borders, under a deal announced yesterday by Western Union and GSM Association, the main mobile phone operators’ body. The agreement could have a big impact on global cross-border remittances, worth an estimated $500bn a year, and provide a springboard for mobile carriers and Western Union to offer other mobile banking services using “mobile wallet” technology. Cross-border money transfers valued at up to $100 in countries such as India, the Philippines, Mexico and China – which have large volumes of remittances from migrant workers – will be an early priority of the deal. Thirty-five mobile operators with 800m customers in more than 100 countries have signed up to take part in the GSMA Mobile Money Transfer pilot scheme led by Sunil Mittal, managing director of Bharti Airtel. Other participants include MTN, Orange, Orascom, Smart, Telenor and VimpelCom.
Cell phones double as electronic wallets in RP By Oliver Teves Associated Press Last updated 10:42am (Mla time) 09/30/2007 Philippine Daily Inquirer SAN MIGUEL, Philippines–It’s Thursday, so 18-year-old Dennis Tiangco is off to a bank to collect his weekly allowance, zapped by his mother–who’s working in Hong Kong–to his electronic wallet: his cell phone. Sauntering into a branch of GM Bank in the town of San Miguel, Dennis fills out a form, sends a text message via his phone to a bank line dedicated to the service. In a matter of seconds, the transaction is approved and the teller gives him P2,500 (US$54), minus a 1-percent fee. He doesn’t need a bank account to retrieve the money. More than 5.
Cell phones double as electronic wallets – Yahoo! News Mobile banking services, which are also catching on in Kenya and South Africa, enable people who don’t have bank accounts to transfer money easily, quickly and safely. It’s spreading in the developing world because mobile phones are much more common than bank accounts. The system is particularly useful for the 8 million Filipinos — 10 percent of the country’s citizens — who work overseas and send money home, like Dennis’ mother, Anna Tiangco. Previously, she sent money via a bank wire transfer, which costs $2.
Global telecoms heavyweights say microcredit may provide loan without collaterals but it does not meet the rural people’s total financial needs in the developing countries. Vodafone along with Nokia and Nokia Siemens Networks have urged for telecoms and banking regulatory reforms to encourage fund transfer by mobile phones instead. They believe it will transform access to financial services in countries lacking banking networks. Read more. 
A number of Indian mobile operators have been pilot-testing transferring money using mobile handsets. There are 160 million mobile subscribers in India far outnumbering the bank branches in the country (70,000). The service could potentially allow mobile users to transfer money electronically via the handset directly and instantaneously to another mobile subscriber in the country without having to use bank accounts. However, this service cannot be rolled out until the operators are given regulatory approval both from the banking regulators and telecom regulators. But a more restricted service which would still keep banks in the loop may have a higher chance of getting a quicker approval.