Abstract

Mobile banking is one of the latest tools for easy and convenient banking in the current world.

Day to day mobile payment and banking has become popular in Bangladesh. The main objective

of the study is to find out the problem and prospect of mobile banking in Bangladesh and also a

fresh look at the current M-Banking situation in Bangladesh and highlight some

recommendations for rendering M-banking services effectively. Mobile Banking is a Banking

process without bank branch which provides financial services to unbanked communities

efficiently and at affordable cost. To provide banking and financial services, such as cash-in,

cash out, merchant payment, utility payment, salary disbursement, foreign remittance,

government allowance disbursement, ATM money withdrawal through mobile technology

devices, i.e. Mobile Phone, is called Mobile Banking. “Dutch Bangla Bank Limited” (DBBL)

has for the first time introduced its mobile banking service expanding the banking service from

cities to remote areas. Currently many banks are providing this service and some banks are going

to lunch this M-banking service. Among them “BRAC Bank Limited” mobile banking service

named Bkash, Banglalink, Dhaka Bank and Western Union”, “Dutch Bangla Bank Limited”

services are most popular. “Bangladesh Post Office”, also provide mobile money services seems

like m-banking. Mobile banking is not available on every device and still some popular bank

does not provide mobile banking at all. The most potential customer of mobile banking is rural

people. About 35% of mobile banking consumers are highly satisfied with present mobile

banking service. After analyzing collected data eventually put some recommendation that may

be proposed for further improvement of Mobile Banking in Bangladesh. In recommendation to

reduced M-Banking limitation all banks should provide this opportunity, Government should

provide help about mobile banking. Banks can use all mobile operators to make more available

in all over the country. Also they should provide User guide to make easier the use of b-banking

to all intended customers.

Introduction

E-banking has revolutionized the way business is transacted by globalizing the business

enterprise. Mobile banking is one of the parts of E-banking. Mobile banking (also known as M-

Banking, m-banking, SMS Banking) is a term used for performing balance checks, account

transactions, payments, credit applications and other banking transactions through a mobile

device such as a mobile phone or Personal Digital Assistant (PDA). Mobile Banking is also

refers to provision and availment of banking and financial services with the help of mobile

telecommunication devices. The earliest mobile banking services were offered over SMS.

Mobile Banking is one of the latest tools for easy and convenient banking in the current world.

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 i-Phone 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. Day by day mobile payment has become popular and it’s

fulfilling consumer’s demand. But in Bangladesh Mobile Banking hasn’t improved rapidly. The

large numbers of Bangladeshi people are facing much harassment due to the lack of modern

banking facilities. For paying utilities bill, money transfer and doing banking activities people

need to go to the bank by physically and waiting in big queue. This is due to the fact that

Bangladesh has more than 40 banks but still now banks couldn’t introduced fully internet and

mobile banking services. Another problem is that 46% of the population lives below the poverty

line and wretched transportation system overall the country. Bearing this in mind, banks are

trying to provide a novel service which gives retail customers account information and real-time

transaction capabilities from their mobile phones.

Mobile Banking can be said to consist of three inter-related concepts:

Mobile Accounting

Mobile Brokerage

Mobile Financial Information Services

Most services in the Accounting and Brokerage categories are transaction-based. The non-

transaction-based services are however essential for conducting transactions - for instance,

balance inquiries might be needed before committing a money remittance. 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.

Electronic banking has got tremendous importance in banking sector and banking customer as

well. This is why, the researcher find some interest to explore something regarding Mobile

banking in some extent.

Objectives of the study

The main purpose of the study is to highlight the mobile banking prospects and services as banks

apply to our country. In order to materialize the objectives, the following specific objectives have

been considered:

To provide precise knowledge about Mobile banking and its infrastructure.

To narrate the present scenario of Mobile banking in Bangladesh.

To focus on the prospects of Mobile banking in Bangladesh.

To focus on the problem of Mobile banking improvement in Bangladesh.

To highlight some recommendations for proper implementing and improving Mobile

banking services effectively.

Methodology of the Study

Methodology is a system of broad principle or rule from which specific methods or procedures

may be derived to interpret or solve different problems within the scope of a particular discipline.

Methodology is not a formula but set of practices. The present study is a part of academic

curriculum. The collected data and information have been processed and analyzed carefully. It

has been prepared in present from to make the study more informative and useful. The study was

conducted to identify the problems and prospects of mobile banking in Bangladesh.

There are two sources of data have been used to collect data. The sources are-

1. Primary Sources: Interviewing method with proper questionnaire.

2. Secondary Sources:

Website

Books and related journals

Different seminar papers

Other manual information

Literature Review

Mobile banking is growing at a remarkable speed around the world. In the process it is creating

considerable uncertainty about the appropriate regulatory response to this newly emerging

service. Researcher sets out a framework for considering the design of regulation of mobile

banking. Since it lies at the interface between financial services and telecoms, mobile banking

also raises competition policy and interoperability issues that are discussed in his paper. Finally,

by unbundling payments services into its component parts, mobile banking provides important

lessons for the design of financial regulation more generally in developed as well as developing

economies.( Klein, 2011).

I think I should clarify some of the suggestions you gave.

1. I agree that GP should have an option to link to bank accounts. But until now they have

refused to allow such a link. 8 Banks already have this technology but GP has prevented them

from serving GP customers. Banks have taken the initiative but GP has stopped it just because

they can and thinking that their proposal will pass.

2. Yes GP will not pay interest. But that doesn't stop GP from earning interest on this money (the

simply put it together and put it in a FDR)

3. As much as GP wants you to believe, Bangladesh isn't the only country where there are more

mobile users than bank users. (I will get into that in another article). None of those countries are

considering GP's version of mobile banking.

4. Short term deposits are more crucial to the banking industry than what you estimate. Nowhere

in the world has a mobile company been put in charge of short term deposits.

GP clearly didn't have good intentions. Otherwise all the foreign banks wouldn't group with local

banks to oppose this outlandish proposal. Again this is not only me that feel this way. The entire

world acted in opposition to GP's Mobile Banking Thesis. GP's Mobile Banking is not the same

as 'Mobile Banking'. Ahmed Ali said... (2010).

Due to the widespread use of computer technologies in almost all aspects of life, organizations

that are connected to the Internet started extending their services to their customers to include

new applications and services that satisfy their customers’ desires to make better businesses. One

of these emerging applications is mobile banking. The term mobile banking (or m-banking)

describes the banking services that the user can perform via a mobile device ubiquitously at

anytime and from anywhere. In order for users to access their accounts, they need a mobile

device and network connectivity. Therefore, sitting in front of a computer is not a requirement

anymore; accessing accounts can occur while users are waiting their turn at the dentist clinic or

relaxing at the beach! (Al-Akhras and Qwasmi, 2011).

Investigated the customers' perspectives of mobile banking, their perceived importance for it,

usage patterns and problems rising on its utilization. The paper discussed the strategic

implications of the research findings. Empirical data were gathered from bank customers in

Kuwait to achieve the research objectives. All bank customers in Kuwait were considered as

population of research interest. The results showed the perceived importance of internet banking

services by customers, current and potential use of MB services in Kuwait and problems

perceived by bank customers in using MB. The researchers' main hypothesis tested that top five

services considered relative important in Kuwait banks were "Review account balance", "Obtain

detailed transactions histories, "Open accounts", Pay bills" and Transfer funds between own

accounts". (El-Sherbini et al. -2007)

Investigated why corporate customers do not accept mobile banking, which can assist banks to

implement this self-service technology more efficiently. Many Thai banks are currently

implementing mobile banking. Banks that offer service via this channel claim that it reduces

costs and makes them more competitive. However, many corporate customers are not highly

enthusiastic about mobile banking. They used in-depth qualitative interviews methodology for

collecting their data. The interviews with Thai firms suggested that security of the Internet is a

major factor inhibiting wider adoption. Those already using Internet banking seem to have more

confidence that the system is reliable, whereas non-users are much more service conscious, and

do not trust financial transactions made via Internet channels. Non-mobile banking users tend to

have more negative management attitudes toward adoption and are more likely to claim lack of

resources. Legal support is also a major barrier to Internet banking adoption for corporate

customers. (Rotchanakitumanuai and Speece, 2003)

Current scenario of mobile banking in Bangladesh

Though the developed countries in the world started providing Mobile banking services more

than one decade ago, the developing country like Bangladesh stared it three years back. In

Bangladesh, multinational banks are operating for long besides our nationalized, private and

specialized banks. Multinational banks are offering better services than others. They offer better

customer services, personal financial services, corporate facilities, trade services with the help of

efficient operational department, credit department, information technology department and the

most important department is the marketing department. Presently some banks have started

mobile banking service.

Bangladesh has just entered in the era of mobile banking. The idea is very much new here.

Dutch-Bangla Bank Limited (DBBL) is the pioneer bank in Bangladesh, who introduced mobile

banking service which is Sybase 365 to bring poor people from remote area under smart banking

service. Then Brac joined in this list by introducing bKash- their mobile banking service. DBBL

are offering the service by the help of mobile phone operator Banglalink and Citycell, and Robi

helps Brac to start “bKash”.

Although DBBL first introduced mobile banking in Bangladesh, but “bKash” is the first

complete banking solution through mobile. It is designed to provide financial services via mobile

phones to both the unbanked and the banked people of Bangladesh. The overall bKash value

proposition is simple: a safe, convenient place to store money; a safe, easy way to make

payments and money transfers. The bKash mobile wallet, a VISA technology platform which is

fully encrypted to ensure most secure transactions, will be the customer account into which

money can be deposited and out of which money can be withdrawn or used for various services.

Customers will be able to receive electronic money into their bKash accounts through salary,

loan, domestic remittance, and other disbursements and eventually will cash out the electronic

money at any of the hundreds of cash out agents which bKash assign. bKash provides a

wonderful opportunity for millions of unbanked people who have a cell phone to have a bank

account where they will be able to deposit, pay out and transfer funds as they wish safely and

securely.

Beside Dutch-Bangla Bank and Brac Bank, Islami Bank, Eastern Bank, Dhaka Bank, Western

Union, Woori Bank and some other banks are also offering mobile banking service at present.

With this perspective in view, Bangladesh Post has launched a new money order service named

Electronic Money Transfer Service (EMTS), commonly known as Mobile Money Order Service.

This fulfilled the expectations of people to remit the desired amount of money to their near and

dear ones so as to utilize when they need. This is mobile as well as web based remittance service

available in all important post offices of the country. The sender can send the money within a

minute and recipient/beneficiary can collect it instantly. Both sender and recipient get

confirmation of the remittance and disbursement as soon as it is made in their mobile phones.

This service is available in all important post offices of the country.

Mobile Banking provides services such as the following:

1) Account Information:

Mini-statements and checking of account history

Alerts on account activity or passing of set thresholds

Monitoring of term deposits

Access to loan statements

Access to card statements

Mutual funds / equity statements

Insurance policy management

Pension plan management

2) Payment, Deposits, Withdrawals & Transfers:

Domestic and international fund transfers

Micro-payment handling

Mobile recharging

Commercial payment processing

Bill payment processing

A specific sequence of SMS messages will enable the system to verify if the client has sufficient

funds in his or her wallet and authorize a deposit or withdrawal transaction at the agent. When

depositing money, the merchant receives cash and the system credits the client's bank account or

mobile wallet. In the same way the client can also withdraw money at the merchant: through

exchanging sms to provide authorization, the merchant hands the client cash and debits the

merchant's account.

3) Investments:

Portfolio management services

Real-time stock quotes

Personalized alerts and notifications on security prices

4) Support:

Status of requests for credit, including mortgage approval, and insurance coverage

Check (cheque) book and card requests

Exchange of data messages and email, including complaint submission and tracking

5) Content Services:

General information such as weather updates, news

Loyalty-related offers

Location-based services

Mobile banking will be attractive mainly to the younger, more "tech-savvy" customer segment.

They may consider performing some kind of financial transaction through their mobile phone.

But most of the users are interested in performing basic transactions such as querying for account

balance and making bill payment.

Prospects of Mobile banking in Bangladesh

Mobile Banking is a Banking process without bank branch which provides financial services to

unbaked communities efficiently and at affordable cost. The aim of the service is to bring more

people under the umbrella of banking service. Bangladesh Bank governor Dr Atiur Rahman

inaugurated the service through deposit and withdrawal of money from two banking outlets in

the city. Government thinks it has a great prospect as it is a new technology in digital

Bangladesh. But in Bangladesh many people think traditionally, because they cannot think it has

any facility to use mobile banking. 69% people feel mobile banking has prospect in Bangladesh

whereas 31% think it has no prospect in Bangladesh as many people will not feel interest or have

belief on mobile banking. But the growth of mobile banking technology is increasingly hard to

ignore. With 2012 being the year in which mobile banking broke into the mainstream, 2012 will

be the year in which financial institutions will look to capitalize on the full potential of the

mobile channel moving from basic user functionality to full mobile finance; or, "Your bank in

your pocket."

Where We Are Now

The majority of banks currently are in transition between their introductory mobile solutions and

a second generation of offerings with greater capabilities. The introductory mobile offerings

most banks deploy closely mirror users' online experiences. While this is a fraction of the full

potential of the mobile channel, it is an essential stepping-stone to move users from the branch

and online banking to their own handsets for financial interaction.

While the mobile channel still is far from being definitively proven, consumers demand it. Banks

are moving from one-way alerts and simple notifications to proactive content in the form of real-

time, "actionable alerts." These are personalized, two-way alerts that enable customers to quickly

and easily take action directly on their mobile devices in response to previously set alert

thresholds or financial events as defined by the consumer.

For instance, if a customer's account balance falls below a predefined threshold, an actionable

alert is sent to the customer, who can then instantly transfer funds by responding to the alert.

Many financial industry analysts, including Javelin, believe that the delivery of real-time, two-

way, transaction-driven alerts is one of the keys for financial institutions to provide value to their

customers and to drive adoption and usage of mobile banking.

Where we’re going

As mobile banking gives firms the ability to fully engage in conversations with customers

through their mobile devices, coordination of a "business workflow" across different banking

systems is required. In order to accomplish this, mobile banking providers must establish open

ways to access these different sources of information. This "connectivity" is crucial to delivering

fully mobile banking.

By opening up the mobile channel to multiple back-end and third-party systems or networks such

as Visa Net, mobile payments hubs such as Cash Edge or PayPal, remote check-deposit capture

technologies such as those offered by Mitek, or contextual marketing systems capable of

determining when to present offers, banks can capitalize on the full capabilities of the mobile

phone as a consolidation point of all other existing bank channels -- e-mail, online, customer

service, and mobile-specific SMS or push notification alerts.

In order to provide authoritative value to customers and produce strong adoption (and with it,

definitive ROI), third-generation mobile banking solutions must empower institutions to use the

mobile channel as an extension of and integrative point for existing technologies. This will

instantly resolve consumer issues and complete tasks faster and more economically -- making

alerts fully actionable.

Many financial institutions and mobile vendors today, however, still are tied to basic core

functionality, either because they developed a non-scalable, non-adaptable elementary mobile

solution, or because they signed binding contracts with core financial technology providers in

order to rush a baseline mobile solution to market. The smart mobile banking solutions of

tomorrow must anticipate the future expectations of consumers and recognize the potential that

the mobile channel represents -- a technology set to increase customer loyalty and satisfaction

via conversation creation.

The prospect of automated banking is no doubt huge in Bangladesh but the existing banking

system with a touch of automation will be running up to the next 5-10 years. About the prospect

of mobile banking, the central bank governor rides on a high hope.

Findings & Analysis

Mobile banking is real time on-line banking. As it is on-line banking it takes less time than

traditional banking. It will make access to banking and advanced payment, transactions at

affordable cost. People have not to wait by standing in a long line which is happen in traditional

banking system. But some people think it takes higher time and some people think it takes same

time as traditional banking.

In this report we can see some major Findings:

Service providers are increasingly using the complexity of their supported mobile

banking services to attract new customers and retain old ones.

A very effective way of improving customer service could be to inform customers better.

The banks add to this personalized communication through the process of automation. 

Security of financial transactions, being executed from some remote location and

transmission of financial information over the air, are the most complicated challenges

that need to be addressed jointly by mobile application developers, wireless network

service providers and the banks' IT departments.

Mobile banking is not available on every device. Some banks do not provide mobile

banking at all.

Complicative application of mobile banking.

Many people are illiterate and unconscious about mobile banking.

The cost of mobile banking might not appear significant if we already have a compatible

device, but we still need to pay data and text messaging fees. 

Mobile Banking reduces the costs of providing service to the customers. 

Most of the rural area people are the potential customer of mobile banking.

Mobile banking is available anytime, anywhere throughout the country. So it can save one’s

time. But all people not think the same. Many people heard about mobile banking. But they yet

have not felt that they should use it as they are happy to use traditional banking system. Some

people feel interest to use it. Mobile Banking drastically cuts down the costs of providing service

to the customers. It is convenient, affordable and it is much more effective in developing savings

habits, it will make access to banking and advanced payment transactions at affordable cost. All

people know that its cost is not higher than traditional banking and it is affordable than

traditional banking. A positive aspect of mobile phones is that mobile networks can reach remote

areas at low cost. It is much safer and safeguard against fraudulent transactions. One can trust

mobile banking as traditional banking system. It has secured pin code which is known by the

user, and also has a check digit without it no one can deposit money. But in Bangladesh

traditional branch-based banking remains the most widely adopted method of conducting

banking transaction. The poor often have greater familiarity and trust with mobile phone

companies than formal bank in institutions. Furthermore a mobile handset can easily be adapted

to handle banking transactions. But it is not commonly known by all. It is much more effective in

developing savings habits. Its using system is also easy. Anyone can use it. Poor people are often

not considered viable customers by the formal financial sector as their transaction sizes are

small, and many live in remote areas beyond the reach of banks branch networks. Informal

banking services such as microfinance and village savings and loan associations remain limited

in their reach. So, mobile banking system develops to bring poor people into banking system.

The problems of mobile banking improvement in Bangladesh

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.

Most of the people were illiterate and obviously they were technology ignorant and that is

the reason they don’t know how to use this technology.

Infrastructural problem in implementing mobile banking in rural area.

Less government consciousness.

Less improvement of ICT banking infrastructure, mobile network and internet services.

Application servers are complicative in use.

Recommendation & Conclusion

On the basis of observations and analysis of the gathered information from the relevant studies

the following recommendations may be proposed for further improvement of Mobile Banking in

Bangladesh:

Government has to be taken initiative even in the root level to develop it literacy and

consciousness about ICT in the country.

Mobile banking sector depends on telecommunication and Internet services. So

government, banks and mobile operators should work jointly to develop the

telecommunication and internet network throughout the country.

We should develop software in our country for our banking system.

The whole country should be connected under fiber optic backbone for electronic

banking infrastructure as soon as possible.

Government should provide legal framework for E-banking.

Application servers should be easy to install, configure and add new services.

Wireless services will use the latest in technology.

BTTB should utilize their extensive network so that the users can connect their banks

easily via mobile.

Mobile Banking In Bangladesh presents an opportunity for banks to retain their existing,

technology-savvy customer base by offering value-added, innovative services. It might even help

attracting new customers. Further, Mobile Banking presents a chance to generate additional

revenues.

Its main contribution, however, can be expected to take place in the strategic field as it is all set

to become an instrument of differentiation. Many banks recognize this threat and are already

taking preventive measures by introducing mobile services. The foremost significance of Mobile

Banking would therefore be of a defensive nature. Instead of providing a positive differentiation,

Mobile Banking would be employed to thwart negative differentiation vis-à-vis rivals. Mobile

Banking seems to possess the potential to become one of the widely spread and accepted

application in the field of Mobile Commerce, particularly in the backdrop of its high acceptance

across commercially important sections of the society. We may expect to see Mobile Banking go

into the footsteps of Online Banking, i.e. to become a standard service offered by every bank

worth its name in our country.

Reference

1. http://www.google.com

2. The Daily star-Friday, July 22, 2011

3. http://www.iiste.org

4. www.enterpriseinnovation.net

5. www.wikipedia

6. www.marketresearch.com

7. www.ampublisher.com

8. www.bwtp.org

9. Dutch bangla bank ltd Mobile banking

http://www.dutchbanglabank.com/electronic_banking/mobile_banking.html

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11. http://www.bangladeshpost.gov.bd/EMTS.asp

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18. And many other PDF report on Mobile Banking collect from internet.

Questionnaires

1. Have you ever heard about mobile banking?

a. Yes b. No

2. Do you use any mobile banking service?

a. Yes b. No

3. What do you think how much time mobile banking takes than traditional system?

a. Higher b. Lower c. Same

4. What are the main reasons why you have not used mobile payments?

________________________________________________________

5. What do you think? It is

a. Speedy process b. Slow process c. Average

6. Which class of people can use mobile banking?

a. Upper b. Middle c. Poor d. All

7. What is your opinion of mobile banking?

_________________________________________

8. Do you think you should use it?

a. Yes b. No

9. Do you think mobile banking is trust worthy?

a. Yes b. No c. Not sure / confused