One of the most important implications of technological advancement in banking is that it has made distant customers come closer. Majority of banks are planning to introduce information communication technology (ICT) for integration of banking service and new financial service, which will play a vital role in bringing efficiency to the financial sector. Technology enables the bankers to create and recreate innovative services at lowest cost possible to ensure convenience to their customers.
Technology maintains a lower cost by covering huge population of a certain area at a time, which is virtually impossible through manual branch networking. But new technologies are not easy to implement. For that, consumers must be aware of the new brand before adoption. Therefore, it is an important factor that the banks have to create awareness on technology-based banking to the consumers that depict a new trend in the development of banking industry.
During the last several years, banking services have undergone several changes. There has been excellent gain in capital base, income and return on equity, encouraging upward trend of foreign exchange reserve, inward remittance flow is nothing but appreciable in comparison to the earlier record as per a Bangladesh Bank (BB) report. Monetary policy highlights 7.2 per cent growth target while inflation would be within a range of 5.3 to 5.6 per cent in June 2017.
Bangladesh is listed in the lower middle-income group and hopefully will be among the middle-income countries within the next couple of years. Nevertheless, we have to go a long way as a large segment of our population still remains out of the reach of banking services. A large number of mobile phone users and Bangladesh Bank-led unique payment and developed IT systems have opened up opportunities of mobile banking in the country.
The BB has issued regulatory guidelines for mobile financial service so that the nation can avail this innovative service right way. The guidelines provide enabling environment for innovations in cost efficiency of this off-branch financial service delivery for the benefit of the people. These have promoted access to formal financial services for the poor and unbanked population segments along with putting system as per anti-money laundering and combating financing of terrorism laws and regulations.
Mobile banking is a process through mobile technology device for banking and financial transaction like cash in and cash out. Ot also covers utility payment such as water bill, telephone bill, deposits into savings account or deposit schemes with banks, loan repayment to banks, non-bank financial institutions, insurance premium to insurance companies, merchant payment, salary disbursement, ATM service, salary disbursement where banking facilities are not available or it is costly to serve through formal banking process.
Allowances for freedom fighters and elderly people can be sent quickly through mobile banking. Corporate office can disburse salary to their employees through mobile financial service. Government payments like tax, fee, levy etc. can also be made. It is simple for opening account. This new technology of banking started in Bangladesh from 31st March 2011 and does not require a cheque for transaction.
Bangladesh has registered significant growth in mobile banking. This sector posted an average 60 per cent+ growth, recent data released by Bangladesh Bank shows.
In terms of total and active mobile banking users, this sector has grown 77 per cent and 83 per cent respectively in 2015 and 2016 in year-on-year basis. As of March 2017, there were 49.85 million registered and 23.90 million active mobile banking users against 41.08 million (total user) and 15.87 million (active user) of December 2016.
There are at least 19 service providers operating in market. bKash is the market leader while DBBL (Rocket) is in the next position but many licensed providers are yet to make any impression on the matter. bKash holds 91 per cent of total mobile money account holders as of 2015. The active mobile money account holds by bKash increased to 91 per cent in 2015 from 86 per cent in 2013 when DBBL (Rocket) lost such account holders to 17 per cent from 28 period during the same period. The remaining 17 providers account for around a quarter of the total market share.
Safety has been one of the major critical points for mobile banking. But a report shows a different picture. While 8 per cent of total respondents doubted about the safety of transaction, some 82 per cent of the respondents in the survey certified mobile transactions to be safe. A new research report says, Smartphone and mobile financial services are risky financial transactions and channels that are posing growing concerns to the banking industry. ATM fraud is on the rise and mobile banking is increasingly becoming the top target for hackers.
Transaction fee has also been another concern for many users. Although Bangladesh Bank has decided to reduce service charges on mobile banking, after deciding that clients are paying a disproportionate amount of money under the current rate. Mobile bank operators currently charge 1.86 per cent for mobile banking transactions, which amounts to Tk 18.60 from every transaction of Tk 1,000. This is judged to be disproportionately high when compared to standard transactions.
Bangladesh could make further growth in mobile banking by adding new services with it like credit, savings, and insurance. Target customers for mobile financial services are mainly people with limited to no-access to banking services. It means the current market size is only a part of the whole. Given the population size in the bottom-of-the-pyramid market in Bangladesh, mobile banking market will be doubled soon.
Bangladesh Bank's aim is to ensure that the market develops with several providers, and diverse technologies are tested and used, different kinds of agent networks deployed, and a range of products available so that the consumer is empowered with a full range of choices. It is an exciting time in Bangladesh for mobile financial services and much will be learned in the coming months.
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