The mobile banking revolution
The best ideas, one may argue, are the ones that are most simple. Their simplicity is so contagious that they run rampant, spreading much like wildfire, which rapidly engulfs everything it touches. Digital financial services, or mobile financial services (MFS) or more popularly known as mobile banking, is one such idea.
Not that we are underestimating the complexity of the technology or role of different stakeholders (banks, distributors, agents, merchants, telecommunications company, etc) that team up to provide the service - we are not. But the idea, to the end-users - illiterate, educated; urban dweller, villager, expatriate; student, professional, businessperson, home-maker - is a very plain and uncomplicated one, providing trouble-free solution to the age-old challenge of dealing with money.
MFS really hit off first in Kenya. Bangladesh had adopted the concept (although with a different model). In our country one of the pioneers is bKash Limited. It is a joint venture between BRAC Bank and US-based Money in Motion, which started in 2011. Bill & Melinda Gates Foundation and International Finance Corporation (IFC), which is a wing of The World Bank Group, also hold stakes.
The sector may rightfully be said to be quite a new one, but in this short span of time, it has been seeing phenomenal growth. When bKash first came into being, it took everyone by storm, successfully gaining mass acceptance.
Bangladesh Bank has so far given license to 28 banks to open MFS, out of which 19 have started operation. Examples include Dutch-Bangla Bank's mobile banking, United Commercial Bank's UCash, etc.
Meanwhile, bKash, the market leader, is a witness of how the concept became popular among people of different strata. Rezaul Hossain, the Chief Commercial Officer of the company, has observed the market very closely. "Mobile banking in Bangladesh is a success story. Other countries will follow us and use us as a case study and a role model," he commented when discussing the status of MFS in our country.
The first step for a user is to open an account through any agent. Agents of mobile banking organisations are more or less everywhere - at the turn of every corner of the street, the local departmental store, etc. The huge number of agents makes things very convenient: to go to an agent does not take more than a short walk. Such is the coverage. MFS thrives on a dense network of agents.
Now, let's say you want to transfer money to a friend in another city. If you have a MFS account on your phone, and if it has the sufficient amount, you can send the money following some quick steps on your mobile -- provided that he also has an account in the same organisation. Now, if he wishes to cash it out, he can do so by going to any agent. He may choose to retain some of the money in his account, for which he may earn interest. He may also use the money to pay various bills.
This is, put in very simple terms, what mobile banking does.
"The agents are like mini-branches of banks. It may be impractical for a bank to have branches in every corner of the country, but the job can be done through these agents," Hossain explained. "They therefore work as the agents of a bank, and the virtual account on your phone is your account, with which you can transact or do other similar things."
One enormous benefit mobile financial services provide is the inclusion of the population who are not a part of the formal banking sector. Many people do not have bank accounts, but most of the population own or at least have access to mobile phones.
Money transfer made easy
Sending and receiving money has never been more convenient. But how can people trust agents? Is there an issue of insecurity?
Hossain believes that the answer lies in the nature of community the general people of Bangladesh live in and the human relations we nurture. To exemplify, a villager who goes to an agent is his fellow villager, possibly someone whom he has known for many years or is even related to. Or, in the city, you can entrust your money to the 'parar mudir dokan' which also happens to be an agent. "There is usually no lack of trust in these cases," Hossain informed. The agents are part of the people, embedded in the communities themselves.
Money can also be received from abroad.
Helping businesses
Sadad owns a small tailoring shop at Badda. To help him in his business, he has two girls and a boy working under him. Sadad is one of the numerous entrepreneurs who pay his employees through his virtual mobile account. "It is convenient both for me and the staff," he said.
Meanwhile, bKash even has corporate agreements with many clients in regard of various disbursements.
Transfer of money between businesses is also becoming popular. You can send money to the suppliers for the goods you received, by using MFS.
Bills of sorts
As a consumer, you can clear a wide plethora of bills with your mobile phone, if you have enhanced it with a virtual account, that is. "From hospitals to superstores to taxi cabs to internet, we have got you covered," says Hossain, explaining the widespread use of bKash in making payments. "You can even refill your mobile phone's balance with our service," he informed.
The future starts here
Are we slowly doing away with cash? Will physical money become extinct one day? Perhaps, or maybe not. Either ways, it is apparent that virtual money is taking over. You transfer money from one end of the country to another in no time, you provide or receive salaries using your virtual purse and you use that electronic purse when you shop.
And the digital world has its benefits. Mobile financial services, for example, have made our lives easier. And they have also begun to influence on how organisations handle money.
A powerful tool to bring change for the better.
Special thanks to Rezaul Hossain, Chief Commercial Officer, bKash Limited.
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