Mobile Financial Services: Taking time to take off

Dhaka,  Tue,  19 September 2017
Published : 11 Aug 2017, 20:05:58

Mobile Financial Services: Taking time to take off

Despite phenomenal growth, there are areas of concern. Initial hopes for international remittances through mobile financial services have not yet materialsed. Similarly, efforts to allow cash-out via mobile phones have not assumed healthy proportions, writes Saleh Akram
Mobile financial service (or mobile banking as it is commonly know) has consolidated its position in the country. All this happened in less than four years since it was first launched in 2011. Since then, it registered an unprecedented growth with at least 10 providers offering services on the market that represent more than 8.0 per cent of the total registered mobile money accounts globally. It has been a major growth story with 60 per cent rise in all major metrics, according to data released by the Bangladesh Bank. In terms of total and active users of mobile banking, this sector has grown 77 per cent and 83 per cent respectively on year to year basis. As of December 2016, there were 41.08 million registered and 15.87 million active mobile banking users compared with 31.85 million (total user) and 13.22 million (active user) of December 2015. 

It is a matter of great relief for the non-banking population. People are no longer crowding post offices to send money and low income people do not have to visit banks for sending and receiving money. The advent of mobile banking has made things easier for them and both the number of account holders as well as volume of transactions rose phenomenally in a short span of time.    

At present the number of customers of mobile banking is about 55 million which was 13 million in 2013. Amount transacted daily is Tk10 billion on an average. The growth is about 500 per cent in 5 years. The current year witnessed the highest growth on both counts. 

Despite phenomenal growth, there are areas of concern. International remittances through mobile financial services have not yet materialised. Efforts to allow cash-out via mobile phones have not been successful. It seems that Bangladesh is like many other markets where international remittances are more likely to follow rather than lead.  

As a step towards financial inclusion, mobile banking has impressed many, many again are skeptic about its effectiveness due to lack of control. The rapid uptake by customers still needs to be established. Bangladesh is also home to one of the most deeply penetrated microfinance markets. Most banks, mobile operators and microfinance institutions agree that mobile financial services are likely to focus initially on interpersonal transfers that are otherwise very scarce among formal service providers.

Despite rapid growth of mobile banking, uptake among development organizations in Bangladesh remains low. The Bangladesh Bank's aim is to ensure that the market develops with multiple providers, and diverse technologies are tested and used, different kinds of agent networks are deployed, and a range of products are made available so that the customer of mobile banking is empowered with a full range of choices. 

Sadly, mobile banking facilities are allegedly being used in money laundering, extortion and cheating. These are unforgivable deviations from the main objectives of mobile financial services and unless abated completely it may turn out to be a deterrent to economic growth. A coordinated effort of the service providers, controlling organizations and international agencies is necessary to prevent abuse of mobile financial services. Further growth of mobile financial services would not only ensure higher penetration at the Bottom of the Pyramid (BOP) market, but will also help boost the economy further by facilitating fund flow across the economy, propping up online e-commerce transactions and providing higher financial inclusion of the BOP population. It must be borne in mind that further expansion of mobile financial services will be a game changer for the country's growth story.

Editor : A.H.M Moazzem Hossain
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