Mobile Banking

Mobile banking, or m-banking for short, enables banking services like balance checks, domestic and international fund transfers, credit applications, bill payments, mobile top-ups and so on through mobile devices.

The earliest mobile banking services were offered over SMS, a service also known as SMS Banking. With the introduction of the first primitive smart phones with WAP support enabling the use of the mobile web in 1999, the first European banks started to offer mobile banking on this platform to their customers.

Mobile banking has until recently (2010) most often been performed via SMS or the mobile web. Apple's initial success with iPhone and the rapid growth of phones based on Google's Android (operating system) have led to increasing use of special client programs, called apps, downloaded to the mobile device. Along with that, advancements in web technologies such as HTML5, CSS3 and JavaScript have seen more banks launching mobile web based services to compliment native applications.

Mobile banking conceptual model According to this model Mobile Banking can be said to consist of three inter-related concepts:  Mobile Accounting  Mobile Brokerage  Mobile Financial Information Services

Mobile Accounting is characterized as transaction-based banking services that revolve around a bank account and are availed using mobile devices. Mobile Brokerage can be thus defined as transaction based, mobile financial services of informational nature that revolve around a securities account.

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Mobile Financial Information services include subsets from both banking and financial services and are meant to provide the customer with anytime, anywhere access to information. The information may either concern the bank and securities accounts of the customer. The accounting and brokerage services are therefore offered invariably in combination with information services. Information services, on the other hand, may be offered as an independent module. Mobile banking business models A wide spectrum of Mobile/branchless banking models is evolving. However, no matter what business model, if mobile banking is being used to attract low-income populations in often rural locations, the business model will depend on banking agents, i.e., retail or postal outlets that process financial transactions on behalf telcos or banks. The banking agent is an important part of the mobile banking business model since customer care, service quality, and cash management will depend on them. Many telcos will work through their local airtime resellers. However, banks in Colombia, Brazil, Peru, and other markets use pharmacies, bakeries, etc. These models differ primarily on the question that who will establish the relationship (account opening, deposit taking, lending etc.) to the end customer, the Bank or the NonBank/Telecommunication Company (Telco). Another difference lies in the nature of agency agreement between bank and the Non-Bank. Models of branchless banking can be classified into three broad categories - Bank Focused, Bank-Led and Nonbank-Led. Bank-focused model The bank-focused model emerges when a traditional bank uses non-traditional low-cost delivery channels to provide banking services to its existing customers. Examples range from use of automatic teller machines (ATMs) to internet banking or mobile phone banking to provide certain limited banking services to banks’ customers. This model is additive in nature and may be seen as a modest extension of conventional branch-based banking. Bank-led model The bank-led model offers a distinct alternative to conventional branch-based banking in that customer conducts financial transactions at a whole range of retail agents (or through mobile
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phone) instead of at bank branches or through bank employees. This model promises the potential to substantially increase the financial services outreach by using a different delivery channel (retailers/ mobile phones), a different trade partner (telco / chain store) having experience and target market distinct from traditional banks, and may be significantly cheaper than the bank-based alternatives. The bank-led model may be implemented by either using correspondent arrangements or by creating a JV between Bank and Telco/non-bank. In this model customer account relationship rests with the bank Non-bank-led model The non-bank-led model is where a bank has a limited role in the day-to-day account management. Typically its role in this model is limited to safe-keeping of funds. Account management functions are conducted by a non-bank (e.g. telco) who has direct contact with individual customers.

Mobile Banking: A New Era of Banking in Bangladesh
Our life is becoming more frequent day by day in touch of Technology. Mobile banking is one of the tremendous touches of technology in banking sector. Though this technology has been populated in developed country earlier, in Bangladesh it was a dream for this opportunity in banking. But through the progress of Digital Bangladesh the dream has come true. The new era of banking in Bangladesh 'Mobile Banking' was inaugurated at 31st March 2011. Bangladesh Bank Governor AtiurRahman had inaugurated it through deposited 2000Tk. in his Mobile Bank account.

Bangladesh is a large country with a large unbanked population. Because of the high levels of poverty and a large rural population, it is difficult to offer commercially viable services to this sector of the community. More than forty banks offer limited electronic access to financial services and customers have to visit branches (predominantly in the cities) to be served. The functionality of existing mobile payment services is limited (typically only offering bill payment).

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That is why mobile banking service has been launched in Bangladesh as per the guidelines laid by central bank. Utilization of an extensive agent network through small retailers, this service is available in all parts of the country and has already shown good growth since it was launched. The central bank has provided 10 licenses to banks to offer the full range of mobile financial services. By late 2011 and into 2012, two early leaders have emerged with the largest customer bases and agent networks; the bKash service is provided by BRAC Bank in cooperation with its subsidiary bKash and Dutch-Bangla Mobile is a new service from Dutch Bangla Bank. Combined these two providers made the largest contribution to the nearly 500,000 new mobile accounts and more than 9,000 new agents.

Some Basic Mobile Banking Services in Bangladesh        Person 2 Person Transfers Mobile Wallet Utility Bill Payments Mobile Top‐‐‐Ups Merchant Based Banking Mobile Remittance Service Distribution of Government Funds such as Agricultural Aid, Grants.  Cash Withdrawal from ATM using Mobile
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bKash: Bangladesh’s first complete mobile financial service provider
Company Profile bKash Limited (a subsidiary of BRAC Bank) is a joint venture between BRAC Bank Limited, Bangladesh, and Money in Motion LLC, USA. The ultimate objective of bKash is to ensure access to a broader range of financial services for the people of Bangladesh. It has a special focus to serve the low income masses of the country to achieve broader financial inclusion by providing services that are convenient, affordable and reliable.

More than 70% of the population of Bangladesh lives in rural areas where access to formal financial services is difficult. Yet these are the people who are in most need of such services, either for receiving funds from loved ones in distant locations, or to access financial tools to improve their economic condition. Less than 15% of Bangladeshis are connected to the formal banking system whereas over 50% has mobile phones. These phones are not merely devices for talking, but can be used for more useful and sophisticated processing tasks. bKash was conceived primarily to utilize these mobile devices and the omnipresent telecom networks to extend financial services in a secure manner to the under-served remote population of Bangladesh.

Vision By providing financial services that are convenient, affordable and reliable, bKash aims to widen the net of financial inclusion. bKash wants to provide a solution for mobile financial services, built on a highly scalable mobile money platform, allowing people of Bangladesh to safely send and receive money via mobile devices.

Mission bKash wants to provide a complete mobile financial service solution to increase access to a broader range of financial services for every citizen of Bangladesh and promote sustainable savings to achieve the ultimate goal of financial inclusion.

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BenefitsGuaranteed bKash is dedicated to widening the net of financial inclusion among the people of Bangladesh by facilitating money transfer through mobile phones. bKash provides mobile financial services allowing customers to send, receive, and pay money from their mobile phones.

Fast: Send and receive money, or make payments the fastest way there is! bKash enables you to send money to anyone, using an advanced technology available on your own mobile phone. The recipient will receive money instantly, no matter where s/he is. Payments through bKash also makes your life easier as you do not have to go back home or anywhere else for bringing cash when you need to buy something if you are out of cash. Even if you don't have the required amount in your bKash Account, someone else can easily send you the amount in times of need.

Affordable: Send or receive money with minimal effort and cost. bKash provides the highest benefit to its customers at an affordable cost, enabling everyone to access the formal financial system of the economy. bKash is for everyone, and we do not distinguish among our customers.

Secure:bKash money won't be lost even if you lose your mobile. Every transaction is protected by your very own PIN and what's more, state-of-the-art technology provided by VISA ensures your money is always safe and secure in our system. bKash is a BRAC Bank subsidiary fully authorized by Bangladesh Bank to provide mobile financial services throughout the country.

Convenient: Easy, no queues, no waiting, bKash is the most convenient way of transferring money anytime, anywhere. You can now send money instantly staying at home just by pressing a few buttons on your mobile phone. Sending money has never been this easy!

Nationwide: No matter where you are in Bangladesh, bKash is always with you. The service is supported by the mobile networks of all leading telcos, and over 18,000 Agents, all of which assures availability of bKash services even in the remotest areas of Bangladesh.

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bKash Services
bKash is designed to provide financial services via mobile phones to both the unbanked and the banked people of Bangladesh. It provides services to its customers through its agents across the country.

The bkash customers can deposit and withdraw money from their nearest agents. They can also transfer money to someone else located elsewhere. Cash in and Cash out are among the various services facilitated through the use of wallet whereas money transfer and payment can take place with or without a wallet. In this case a token must be created instead. The services are described further in detail below— Cash in Customers need to have money stored in your bKash wallet to avail the services. So, before doing any transaction, they have to be sure of having sufficient balance in your wallet. The procedure for putting money in wallet is as follows1. Go to any bKash agent 2. Let him know the amount you want to Cash In 3. Write down your wallet number and the Cash In amount in Agent register 4. Pay the amount of money you want to cash in 5. In exchange, the agent will send bKash money to your wallet. Cash In done! 6. You and the agent both will get confirmation message. Remember to put your signature in the agent register before leaving the counter Cash Out If customers have sufficient credit in theirbKash wallet, they can withdraw cash anytime from anywhere. To Cash Out from your wallet1. Go to any bKash agent 2. Let him know the amount you want to cash out 3. Write down your wallet number & the amount in Agent register
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4. Dial *247# on your mobile for bKash menu 5. Choose “Cash Out” 6. Choose “From Agent” 7. Enter Agent’s wallet number (ask the agent) 8. Enter the amount 9. Enter your wallet PIN 10. Done! You and the Agent both will receive confirmation message. Count the amount and put your signature in Agent register before leaving the counter Send Money  With Wallet

Send Money enables customers to transfer money to other's wallet. The steps are mentioned below 1. Go to bKash Menu by dialing *247# 2. Choose 'Send Money' 3. Enter the wallet number you want to send money to 4. Enter the amount you want to send 5. Enter a reference about the transaction. Do not use more than one word, avoid space or special characters 6. Now enter your wallet PIN to confirm the transaction 7. Done! You and the Receiver both will receive confirmation message  Without Wallet

In case of money transfer with a token, the token option needs to be selected in mobile. From Token option, customers can create token to send bKash Money to someone who does not have a bKash wallet. Afterwards, they can encash the token amount from any bKash agent. Here is how you do it1. Go to bKash menu by dialing *247#
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2. Choose Token 3. Choose 'Create Token' 4. Select a Photo ID type of the Receiver from the given options. The Receiver has to show this ID while encashing the token 5. Enter the Photo ID number of the ID type that you have chosen earlier 6. Enter the amount you want to send 7. Confirm the amount and photo ID by pressing "1" 8. Now you need to give a Secret Code (not your PIN number, a different code for this transaction only). It is better to be a number ranging from 4 to 8 digits. Along with the selected Photo ID type and number, the receiver will need this code to encash the amount. Make sure that the Secret Code is secret between you and the receiver only. 9. Now enter your PIN to finish creating token. 10. You will get a confirmation message with details of the token you just created You have received your “Token Number” in that message which you will have to communicate to the receiver along with the Secret Code provided by you during creating the token. The receiver needs to go to a bKash agent along with his Photo ID to encash the token in 14 days from its creation.

Operational Strategy
For specificity we have segmented the bKash operational strategies into following categories: Automation Strategy:

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The Distributed Transaction Platform deployed both at the mobile operator’s site and at the financialinstitution securely manages financial operations carried out between the mobile user and the bank, overthe wireless network.

Specifically, this platform:  Maintains communication between the SIM card and the financial institution  Routes mobile banking messages  Manages mobile banking sessions  Securely handles sensitive information  Ensures the confidentiality and security of mobile transactions  Manages user information  Authenticates users. Transactions Strategy: As incorrectly established transactions policy can strangle a service business, Bkash adopted an innovative strategy that minimizes its cost of transactions. Bkash follows following strategies: Transaction Limits Maximum Number Amount Per Transaction of Transactions Per Day Per Month Minimum Maximum (Tk) (Tk) 5 20 5 5 No Limit 50 70 50 50 No Limit 50 10 50 2,000 1 125,000 10,000 125,000 20,000 No Limit

Transaction Type

Maximum Amount Per Day (Tk) 125,000 10,000 125,000 50,000 No Limit No Limit Per Month (Tk) 250,000 25,000 250,000

Cash In Send Money Cash Out from Agent Cash Out from ATM Payment

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Price Strategy:
From (Taka) 50 101 301 1,101 2,601 4,501 6,501 8,501 Over 10,500 To (Taka) 100 300 1,100 2,600 4,500 6,500 8,500 10,500 Charges (Taka) 5.00 10.00 15.00 37.00 73.00 100.00 120.00 135.00 1.25%

Registration Cash In Send Money (Individual) Cash Out from ATM Payment (Merchant) Create Token (from Own Account) Create Token (via Agent) Encash Token Redeem Token (from Own Account) Redeem Token (from Agent)

No charge applicable No charge applicable Tk. 2.00 (for any amount) 2% of transaction amount No charge applicable Tk. 5.00 (for any amount) Tk. 5.00 (for any amount) Same as Cash Out from Agent charges Tk. 5.00 Cash Out charge + Tk. 5.00

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Registration Cash In Send Money (Individual) Cash Out from ATM Payment (Merchant) Create Token (from Own Account) Create Token (via Agent) Encash Token Redeem Token (from Own Account) Redeem Token (from Agent)

No charge applicable No charge applicable Tk. 2.00 (for any amount) 2% of transaction amount No charge applicable Tk. 5.00 (for any amount) Tk. 5.00 (for any amount) Same as Cash Out from Agent charges Tk. 5.00 Cash Out charge + Tk. 5.00

Staffing Strategy: bKash follows two types of staffing- customer contact point and Back-end point at bKash. Three parties are involved in Customer contact point that includes: bKash Agents, Brac Bank, and Mobile Operators. bKash only staffs their own agents whereas bank and mobile operators use their existing employees. Therefore, there is no requirement for new staffing in case of bank and mobile operator. In back-end point at bKash, it staffs for respective functional activities including Technical, Marketing, and Financial activities. Retail versus corporate focus: With the options in mobile banking, payments and commerce increasing, banks cannot rely on a one size fits all offering. They need to decide whether to go down the retail banking route of high volume, low value transactions or focus on providing business customers with services such as MIS, approval and authorization, alerts and so on. Banks focusing on retail customers must fine tune their strategy further depending on their goals and core audience. For instance, banks focusing on existing urban customers might want to improve user experience whereas those pursuing financial inclusion would look at reach and cost effective delivery.
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End-to-end Security Strategy: Since mobile banking transactions can be initiated from almost anywhere and transaction details are transmitted over unprotected networks, security poses the biggest challenge in developing a successful solution and is likely to be a make-it-or-break-it factor for mobile banking. bKash takes security issues and concerns seriously. bKash uses the state-of-the-art security technology to secure mobile applications.

Security and Confidentiality of Information The Mobile Banking solution provides end-to-end security and confidentiality of data by ciphering information in the SIM for secure transfer over the mobile phone, the GSM network, the operator’s infrastructure and the connection to the financial institution. The information entered by the user is collected and encrypted by the applet residing in the tamper-proof SIM card.

Strong Two-factor Authentication Bank customers must be sure that no one can make transactions on theirbehalf, and banks must be able to verify that customers are indeed whothey claim to be. bKash responds to this requirement with strong twofactorauthentication.

Users are required to identify themselves to the bank with a Mobile BankingPIN that protects access to financial information and
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transactions.Secret keys only known to the SIM card and the bank are used to encryptand sign transaction data, further proving the identity of the user.

Data Integrity Since data is digitally signed, any attempt to manipulate it will be detected because the signature will nolonger correspond to the signed message.

Non-repudiation Non-repudiation refers to authenticating the customer and the financialinstitution participating in a financial transaction with high degree of certainty. To ensure non-repudiation, a proof must be generated toshow that the transaction was performed by that party.bKash Mobile Banking addresses this requirement through the use of:  A user PIN known only to the user and protected by encryption  A transaction confirmation code sent by the bank  A transaction log that records the details of every transaction.

Conclusion
Although banking sector is an aged sector in Bangladesh, but it is still city centric. People of rural areas are still out of the banking service. In Bangladesh, illiteracy and infrastructure are the major problems. That's why banks cannot take their services to remote areas even if they want. It is the mobile technology that is reaching out to the rural population. There are more than nine crore mobile subscribers in the country, while only 15 to 20 percent of the population uses banking services. M-banking has great potential in bringing in unbanked and rural populations under the banking umbrella. Moreover, mobile banking presents an opportunity for banks to retain their existing, technology-savvy customer base by offering value-added, innovative services. A monthly report published by bKash, stated that the company has registered more than 800,000 users since its inception, 14 months ago. The Brac-based company, so far, has dominated the market. While it may be too early to comment on the effect that bKash can have in the rural areas, the fast-increasing number of users, however, reflects its growing popularity. Whether bKash will remain a tool to address payment and money transfer efficiently will depend upon its performance in the coming years. Apart from marketing their tool, they'll also have to make people accept a completely foreign technology.
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