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Beyond Branch Banking
Introduction
The concept
Provide access to finance
In 75 years of formal banking era, less than 30% of population has access to formal financial services
More than 7.5 mio. mobile phone users within 7-8 years of market penetration with annual growth of 35%
Use mobile phone as an interface to banking activities
Nation-wide supporting agent network
Delivery of financial services in a fast, secure and low cost manner
Local Remittance
Send / receive money to and from anywhere in the country
Microfinance
Support microfinance activities in rural areas
Mobile phones are rapidly growing - Medium to spur entrepreneurial activities
Currently 20% of the population uses mobile phones, with projection of 50% by 2014
What is Kumari Mobile Cash (KMC)
KMC is an innovative mobile phone based payment system introduced by Kumari Bank.
It is a product that enables business transactions via mobile phones.
It offers various services such as point-to-point remittance, payment of
goods and services, and much more, all across Nepal!
Why KMC
It is a result of our continued focus on technology driven service delivery to leverage technology as our delivery channel to customers to reduce cost of transaction and save transaction time
It provides convenient and an efficient way to conduct business transactions
It provides much better market penetration compared to other products Bank Branches (Per 100,000 People) 4.12 ATMs (Per 100,000 People) 3.40 Credit/Debit Card (Per 100,000 People) 2000 Mobile Phones (Per 100,000 People) 25,000
• We cannot ignore this large customer base
2006 2007 2008 2009 2010 2011 2012 2013 20140%
10%
20%
30%
40%
50%
60%
2% 5%
15%21%
25%30%
35%41%
48%
Mobile Phone Users in Nepal
Year
Perc
ent
of P
opul
ation
15 million users
7.2 million users
Why KMC cont…
Source for 2006-2009: "Nepal - Telecoms, Mobile, Internet & Forecasts" published by BuddeComm; Data for 2010-2013 are authors’ own projection based on YoY population growth rate of 2% and YoY mobile user growth rate of 20%
Point to point Remittance Receive and send money directly from/to mobile phones anywhere in Nepal Available on Nepal Telecom GSM Network across Nepal Ncell Network still being Pursued
Top-up cash or withdraw cash from mobile phones At an agent or at a bank counter
Pay for goods and services at shops and stores anywhere in Nepal
Transfer money to family and friends Peer to Peer Lending
Air-time top-up at face value
Associate bank account Allows cash transfer from/to bank account
Pay utility bills
Web Portal
KMC Solution Features
Impact on Economy Kenyan Experience
10% GDP flows through M-Pesa 5-30% increase in Income for those who use M-Pesa
With 20% of the population using M-Pesa, that translates to roughly 3.5% GDP growth and 1.75% decline in unemployment (Okun’s Law)
Easier access to finance
Increased economic activities
Easier to get microfinance loans and pay monthly installments
Secondary services on top of the platform
Mobile phone based transactions is a rapidly-adopting alternative business tool, especially in developing countries.Examples:
G-Cash, Phillippines Grameen Phone, Bangladesh M-Pesa, Kenya
Combined market for all types of mobile phone based transactions is
expected to reach more than $600 Billion globally by 2013.
Social Benefits
This service is available to all mobile phone users, and customers registering for this service do not have to have a Kumari bank account!
Government distributing money to almost 4000 village development committees (VDCs) Current: Disbursement to one point requiring villagers to travel Future: Disbursement directly to end user via a mobile phone
Retired veterans receiving pension Current: A monthly camp setup in one place requiring the recipients to travel Future: Pension funds disbursed directly into recipient’s mobile phone
A person living in a remote place no longer has to walk for one day to make microfinance loan payments
Eliminating travel costs that sometimes is more than the amount of the loan installment
Son working in Kathmandu can send money to his parents in a village instantaneously Eliminate physical travel Eliminate risk of carrying cash
Daughter studying in Kathmandu can receive money from her parents instantaneously to pay school fees
Built on Java platform – scalability and security
Supports any phone Structured SMS for lowest common denominator J2ME application for java enabled phones allows greater usability
Security All transaction require PIN authentication ISO 8583 standard communication
Firewall secured network of servers
Secured SMS Gateway using short code 2274 (CASH)
Transaction Amount Monitoring
Cap per transaction, per day, per month
Reduced physical cash handling
KMC Technology
How it Works
Merchant/Agent Enrolment
Mobile Cash Committee Inclusion of all relevant departments
Product Development Phase wise Implementation
Mobile Cash Department formed Call Center with a country wide Toll Free Number
Meeting with Multilaterals: World Bank, DFID, ADB, IFC
Meeting with Finance Ministry, NRB and NT
Advertisement and Informatials concept TVC, Radio, Print Media, Animations, Pocket Guide etc.
Training to prospective agents, merchants and our employee in following locations completed Eastern Region: Biratnagar, Birtamode, Itahari, Urlabari Western Region: Argakhanchi, Beni, Baglung, Bhairahawa, Butwal, Damauli, Palpa, Pokhara Central Region: Kathmandu, Birgunj, Narayanghar Mid West Region: Nepalgunj, Surkhet, Salyan, Dang Far West Region: Dhangadi, Mahendranagar
The Approach
Launched on 17th August 2010
Promotional Campaign Educational and Awareness Programs through:
TV Interviews Radio Programs Local Events
Kiosks at various locations Branding KMC to various neighborhoods Advertisements on All major newspapers Advertisements on All major TV channels Advertisements on Many radio stations including regional ones
Roadmap – Short Term
Enroll All KBL Bank A/C Holders into Mobile Cash Approximately 70,000 customers will be contacted All Customers with Mobile Phones have been sent SMS All Customers with email records have been emailed
Enrollment of Agents/Merchants 500 Agent Outlets 200 Merchant Outlets
Ncell Gateway Testing in Progress Agreement to be signed in the near future
Dedicated Network at Large Supermarkets Establish VPN and deploy API
Ability to initiate transactions online Currently can initiate transactions only with mobile phones
Utility Payment Various utility providers
Roadmap – Short Term
IVR – Interactive Voice Recognition Customers able to conduct transactions with the help of voice prompts
USSD – Unstructured Supplementary Service Data Quicker Response Time compared to that of SMS Much better customer experience; the transactions are real time rather than “store and forward” concept of
SMS Dependent upon Telecom Provider Service Availability
PoS (Point of Sale) Device Device that scans phones based on RFID signal, accepts payments, and generates receipt
Localization Menu interface and SMS messages in Nepali Language
Support for GPRS Application Internet Enabled
Application Built into the SIM Dependent upon Telecom Provider Cooperation
Roadmap – Medium Term
Pension Disbursement to Gov’t Retirees Microcredit payment Facility Salary Disbursement International Remittance School Fee Payments Insurance Premium Payments and many more……..
Roadmap – Long Term
Growth Milestones
Challenges
Regulatory Framework
Distribution Network
Awareness and Promotion
Illiteracy & Resistance to Change
Trust Factor
These challenges can be address with joint effort of Government, Multinationals and other stakeholders….
We can help on Technicalities and Financial solutions..
Thank you