Sri Lanka: a star in mobile banking
Sri Lanka is one of the few countries that have been successfully running mobile banking, reaching out to 50 percent of the rural population in the last three years through its two largest operators, Dialog and Mobitel.
Take, 24-year-old Rajan, a resident of Wakkala district in the western province of Sri Lanka. On the morning of January 23 he transferred Rs 5,000 to his village from a Dialog mobile service centre.
In a matter of seconds, the money reached his wife, who is 110 kilometres away. The transfer occurred without the help of a bank.
Launched in 2012, the service has already amassed more than 2.2 million subscribers and bagged Sri Lanka the prestigious GSMA Award for it.
Other than sending and receiving cash, people can now also pay electricity, phone and other service bills through it. They can also do shopping and save money on their mobile phone accounts if they like.
Fariq Cader, vice-president of Dialog Axiata, told The Daily Star that initially the regulator had various reservations about mobile banking, fearing the system would make it easier to launder money and finance terror activities.
And for the mobile operators too, it would be difficult to abide by all the Know Your Customer (KYC) rules.
But with the help of the central bank, they were finally able to introduce the service in Sri Lanka, which is now greatly benefitting the rural poor.
The central bank provided the guideline for mobile banking, which allowed the operators to transact amounts up to Rs 10,000 with limited KYC. For transactions above Rs 25,000, full KYC would be required.
Previously in 2007, the National Development Bank started a similar service named eZ pay.
But customers needed to have a bank account to take the service, which is why common people did not come forward much. In the first year of its operation, eZ Pay could attract a mere 17,000 customers, which rose to 37,000 in 2012, against the total population of 2.2 crore.
Dialog introduced its mobile banking service, eZ Cash, in 2012 and in the first month alone 3.7 lakh people signed up for it, according to Cader. The number has now gone up to about 21 lakh. The company has 16,000 retail points from which people can store money in their mobile accounts, or take out cash.
Not only that, eZ Cash customers can purchase a host of items including television, fridge, electronic products, cell phones, motorcycles, from 4,000 retail shops with their mobile bank accounts.
“Traditional banking services have not yet reached farmers, factory workers, taxi drivers and other people belonging to this income group,” said Cader.
Before the arrival of mobile banking, they used to store cash under their pillows or beds, or in mud banks.
“Because of the central bank's changed policy, the mobile phone operators were able to take banking services to these people's doorsteps. They can now store cash and take cash out within a kilometre from their homes.”
If a person earns Rs 150 to Rs 200 per day and can save Rs 50 from the amount, he/she can deposit the savings in his mobile wallet some 500 metres away, which is not possible in case of general banking by the small savers.
Mobitel, the government-owned telecom operator, launched mCash in 2013. It offers the mobile banking service to customers the same way as Dialog.
Kalhara Gamage, head of mobile money of Mobitel, told The Daily Star that 50 percent of all mobile bank transactions transfer money from urban to rural areas, which has resulted in an increased cash flow to rural areas.
“It is helping in poverty eradication.”
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