Electronic Mobile Payment: Implementation challenges hll By Muntasir B. Shahariar Managing Director MobeePay Bangladesh Limited 1
Potential of Electronic Mobile Payment/Banking in Bangladesh Financial i transactions ti conducted d through h cell phones and other wireless equipment are the future of banking. Recent studies forecast 612 million mobile banking users globally by 2011 and close to 1 billion users by 2013. Latest statistics issued by BTRC, there were 68.65 million mobile subscribers at the end of December 2010. This point towards the huge potentials for Mobile Banking in Bangladesh where we can bring enormous number of Un-banked people under banking and govt can trail each and every financial transaction happening in the country. Mobile banking has been a revelation around the growing countries. The most successful case was the Kenya where Orange money was extremely successful. Mobile Banking can be the most effective apparatus to construct and achieve Digital Bangladesh. 2
Some Basic Services of Mobile Banking Person 2 Person Transfers Mobile Wallet Utility Bill Payments Mobile Top Ups Merchant ec Based Banking Mobile Remittance Service Distribution of Government Funds such as Agricultural Aid, Grants. Cash Withdrawal from ATM using Mobile 3
Most Popular Channels of Mobile Banking USSD Channel SMS Channel GPRS Channel WAP Channel IVR Channel STK Channel 4
Mobile Banking : Challenges There is a saying Opportunity exists in challenges, for the Mobile Banking in Bangladesh, ld there is no difference. dff To implement Mobile Banking in Bangladesh and make it popular the entire Industry stake tk holder has to face some initial iti challenges. hll Challenges For the Users Challenges hll For the Banks Challenges For the Mobile Operators Challenges For the Solution Providers Challenges For the Agents Challenges For the Government 5
Challenges: for Users The most important stake holder of the Mobile Banking is its Users. The main aim of the Banking theme of the Mobile Banking is to cater swift, convenient, trusted service to its Users, Users can be existing account holders or targeted un Banked mass, endorse them towards Banking. Some of the preliminary difficulties can mobile banking brings to them are: Challenges: Lack of knowledge about mobile phone use. Mistrust on virtual Transaction fear of losing money Miss handling or stolen of Mobile device Low English literacy level Suggestions: Requires to educate them and explaining the Necessity of mobile banking. Creating awareness trough media by Government, Bank and Telecom operators and ensure Providing Short Tutorials at the time of registration Developing multi lingual solutions and upgrading g the Telco Channels to support the same Creating new laws to secure the user right in mobile Banking 6
Challenges: for Banks At present Central Bank is promoting Bank Led Model in Mobile Banking which is very encouraging and can the eliminate risk of mishandling peoples money by any third party.bank s are the nucleolus and main running force in Bank Led mobile Banking. Towards this quest, the challenges Bank may face are: Challenges: Difficulty of selecting the right software Difficulty in filling up the KYC for new users Huge Investment in purchasing the Software, License Expensive AMC charges by the Software Provider Inability to do Inter bank transaction as the national py payment switch is not in place. Handling huge agent network to deliver and receive cash over the counter Suggestions: Going for a trial run before purchasing the Software. Keeping at least 2 provider in place and not going exclusive with one. Requesting central Bank to approve a special, easy to fill KYC for the Mobile Banking account holder. Offering Revenue sharing model to Software provider and start with 0 investment in software. Asking Software provider to take care of the AMC, including AMC with the revenue sharing model. Requesting Central Bank to expedite the National Payment Switch and E Payment Gateway Project. Appointing third party to maintain the total agent network and taking adequate security deposit from each agent to mitigate the financial risk. 7
Challenges: for Mobile Operators Mobile Operators have a huge role to play in expanding access to finance by Mobile banking; it can carry the Banking services to our door steps using there network. Challenges: Sharing Network with multiple Banks Providing USSD gateway to Multiple Banks and technical limitation to generate USSD session to other Operator. Breaches in data privacy, accounting errors, or fraudulent transactions could expose an operator to large liabilities and serious reputation damage. The complex delivery of financial services could distract management from its core communications business, perhaps stretching the abilities of smaller mobile operators. Additional Investment in Solutions Suggestions: Can create a Mobile Banking service Platform With Solution provider where all the Bank joins and Solution Provider take care of the of the Banks demand, Telco provides only the channels to carry the instructions hence share part of the revenue with SP on top of there regular charges. Common Mobile Banking service platform will eliminate this risk Work with Bank led solution where Telco or MBSP does not have any control over the financial transaction, they will work as carrier. Revenue Sharing Model with MBSP will save this investment. 8
Challenges: for Solution Providers solution provider is the key to success of a Mobile Banking Solution in Bank Led Model, the solution must be tested in various Bank before entering into Bangladesh market because we don t have best of the IT Infrastructure, experiment may cause serious financial messes : Challenges: Difficulty faced in Banks as their client as most of the solution are Telco Led Difficulty faced in Telecom for getting channels,mainly USSD, Its completely under Telco's jurisdiction Huge Investment from there part as most of the Bank wants to share revenue. Still BTRC regulations are not proper for electronic mobile payment/banking service providers Some of the Banks are also not ready in terms of core banking orinfrastructure for mobile baking solution Suggestions: Requesting banks to trust solution providers and cooperate them to implement it Requesting central Bank to issue a blanket approval for all the banks to implement mobile banking. Requesting BTRC to provide policy for mobile banking and ask Telco's to share USSD. Establish a strategic partnership with Telco's and promote joint Branding 9
Challenges: for Agents In Mobile Banking Agent's responsibility to serve the large number of un banked Population and motivates them towards banking. Challenges: Difficulty to invest for security deposit/ agency fee Security issues to keep cash amount in there outlets No particular guidelines for the agents from the Regulatory authority. Suggestions: Working under some Master agent, can be NGO, Insurance or Telecom Outlets, Master agent will take care about the security Deposit Give proper training to run their agency business (client support, bank support etc) Give agency ship to reputed NGOs, Insurance etc at beginning 10
Challenges: for Government Above all the other Industry stake holder, Government is the ultimate authority and in this case Bangladesh central Bank. With the guidance of Bangladesh Bank the Mobile Banking in Bangladesh can really flourish, and the country will be the ultimate beneficiary Challenges: Prepare a proper p guideline for the Mobile Banking system. Prepare a proper easy to fill KYC for the Mobile Banking Users Maintaining track of all the financial transaction Set up a list of services and there charges for all the mobile Banking service. Ensuring the compatibility of the software in Bank Led Model. Allow Inter Bank transaction Suggestions: Create a separate body to monitor the total Mobile Banking in Bangladesh keeping an access to the main Mobile Banking system of Banks to track the transaction. Setting up a daily limit for Mobile Banking transaction for regular users and higher limit for corporate user. Making it mandatory to get a certificate from Bangladesh bank before going Live and depute one observer during the test and trial period. Expedite the National Payment Switch and E Payment Gateway Project. Develop Online clearing house. 11
Working Together: Banks, Telcos & Solution Provider, Agent Bank, Telco's, Solution Provider, Agent Needs to work together for the success of The whole concept, MobileBanking Banking. The 4 segmentsmentionedmentioned above can successfully work together as the license issued by the central bank is to the Banks and the Telco's would have the access to the end users. The solution provider can act as a' manager' as neither of the otherpartiesarefocused are onsuchbusiness, whereas Agent will take it to the Unbanked to bring them under Banks Umbrella. All the 4 parties would require to follow a synergistic model where all parties have a win win roadmap. 12
THANK YOU 13