Mobile banking hits spotlight

With the mobile phone becoming effective in transferring money around the world, the stakeholders of the mobile banking eco-system need security and mutual trust to introduce the service in Bangladesh.
A recent study predicts the number of money transactions through the mobile banking (m-banking) system will increase to 37 billion by 2011 from only 2.7 billion in 2007.
In Bangladesh, Grameenphone customers (23.48 million) generate 5 million money transactions a day to load money on their cell accounts.
“So there is scope for m-banking in Bangladesh, which has 13 percent banking penetration,” said Oddvar Hesjedal, chief executive officer of Grameenphone.
The rate of mobile penetration is 33 percent in Bangladesh. “If banks and telecom stakeholders work together, there is a potential of introducing mobile commerce or mobile banking in Bangladesh,” said the Grameenphone CEO.
However, the security of money transactions and a lack of regulatory framework are still absent in Bangladesh, although the central bank permitted banks and some mobile operators to go for mobile banking.
Both national and international m-banking experts expressed these views at the second international conference — Bangladesh Banking 2010 — at Sonargaon Hotel in Dhaka yesterday.
Total Communication, in association with Bangladesh Association of Software and Information Services, organised the conference.
M-banking is rapidly growing in developing countries, said Sampath Paranavipane, general manager of hSenid Mobile, Sri Lanka. “To reach out to un-banked rural markets, m-baking could be a cost effective technology.”
Quoting a study, he said the number of money transactions through m-banking is expected to rise to 37 billion by 2011, which indicates increased control of mobile customers over financial matters.
Indicating to the rapidly growing mobile market, he said there is a bank in every customer handset.
However, regarding security concerns, GSM (Global System of Mobile Communication) is a comparatively less reliable technology to handle m-banking, said an expert.
Among the six mobile operators in Bangladesh, five are GSM based.
“GSM is not strong enough for m-banking,” said Amitpal Singh, ASEAN identity management and security specialist of Oracle Corporation. However, in response to queries at the conference, he refused to say which will be the best technology to run m-banking.
The Grameenphone CEO stressed the need to form a regulatory body to settle disputes in money transactions through m-banking.
From the customer’s perspective, he said: “Customer behaviour does not change overnight. We have to have patience.” He said Bangladesh Bank should permit mobile linkages to bank accounts and cards.
Bangladesh’s market of 160 million has become lucrative for the money transaction business with rapid growth of the mobile technology. As per a recent Bangladesh Bank directive, m-banking will be launched soon. However, all transactions will take place through banks channels.
Mobile operators will just provide SMS based transaction services and money delivery in some cases. Therefore, bankers are concerned whether mobile operators will go for complete banking services.
Tarique Afzal, head of consumer banking of Bank Alfalah Ltd, said: “A mobile outlet cannot be a bank outlet. It can be used as a money payment outlet to minimise customer hassles.”

Courtesy of The Daily Star