Mobile cash grows on rural customers

Mobile banking registered 57.81 percent year-on-year growth in cash transactions last month, bolstered by the rapid expansion of financial outlets in rural areas.

Mobile banking transactions worth Tk 10,483.04 crore were completed in December last year, up from Tk 6,642.61 crore in the same month of 2013, according to Bangladesh Bank data.

On average, Tk 349.43 crore is transacted through mobile banking a day.

Mobile banking customers grew 91.6 percent between January to December, taking the total number to 2.51 crore, with 48.25 percent of the accounts remaining active.

“The growth is a result of trust and confidence of the common people who need this kind of service and who do not have other regulated alternatives,” said Kamal S Quadir, chief executive of bKash that has 1.08 lakh agents across the country.

Bangladesh Bank’s consistent regulation and strict monitoring on compliance have helped the sector toward solid growth, he said.

More unbanked people, especially in the rural areas, are joining formal banking activities through mobile phones as it allows them affordable and hassle-free transactions, he said.

Dutch-Bangla Bank also registered more than 100 percent growth in mobile banking accounts last year. Currently, it has 38 lakh mobile banking customers as of December, said Abul Kashem Md Shirin, deputy managing director of DBBL that introduced MFS in 2011.

The bank has around 1.11 lakh agents across the country — even at the union parishad level, he said.

Shirin urged all financial service providers to get more people to open own mobile banking accounts to enjoy real benefits of the service. “Currently many people are getting mobile financial services without their personal accounts, relying on agents’ over-the-counter services.” “This needs to change, for real economic benefits to the user.”

Personal accounts have wider use, including interest on savings, security, option for receiving remittance and mobile top-up. The growth of cash transactions by mobile phone, however, was lower in 2014 compared to the previous year.

In 2013, mobile banking registered 186 percent growth in cash transactions and 262 percent in the number of subscribers.

“The growth has slowed down and plateaued due to strict regulation and the limiting factor of no ‘instant account’ opening practices,” said Quadir.

“We welcome such regulation and tell clients that it is better to activate their accounts after verification to ensure security.

bKash has now around 1.6 crore registered mobile wallet users, 30 percent of which are active, according to Quadir.

The growth of mobile financial service was a little slower last year due to stricter monitoring by the central bank, said Mahfuzur Rahman, executive director and spokesperson of Bangladesh Bank.

“We want to bring financial services to all people in the country, and are promoting mobile banking with assured risk-free transactions to that aim,” he said.

The central bank has recently strengthened its monitoring on mobile financial services as it observed some criminal activities in the recent past, Rahman said, adding that the BB also penalised a number of MFS providers for irregularities.

BB opted for the bank-led model to promote mobile banking as it minimises settlement risks arising from such transactions, he said.

Regulations on mobile financial services (MFS) make banks responsible for installing anti-money laundering and anti-terrorism financing tools into the system and monitor performance of their agents.

The central bank has set limits on daily transactions through mobile banking in term of size and frequency in a bid to minimise risks.  Person-to-person money transfer—’cash in’ and ‘cash out’—are the most popular types of transactions.

Of the 28 banks that got regulatory approval to provide mobile-banking services in 2010, 19 have launched MFS.