Technological progress made in the last 50 years surpasses what mankind may have achieved over centuries since the invention of the wheel. Major focus of human progress has been to improve & make life easy. Imagine a world without tea bags, without microwave ovens, without a computer and even without a mobile phone?  Imagine the hardship it would bring with it!

Let’s take the Mobile phone; a single device that has revolutionized our behavioral patterns in more ways than one and still continues to do so.  It took more than two decades to reach the first billion mobile subscribers, took only three and a half years to bring that number up to two billion and not surprisingly it has taken less than 24 months to reach the three billion mark.  It can safely be estimated that in the very near future more than 80% of mankind will be able to communicate at the press of a button!

Today we are not only using the mobile phone to communicate with others in the form of voice or SMS, we are using it to connect to the world.   Today’s mobile phone is no less than yesterday’s personal computer.

Indeed, computers revolutionized banking in the last decade or so, eliminating to some extent the need for branch visits.  Unlike developed economies, penetration of computers and use of internet in Pakistan had take-up and user experience limitations.  Therefore internet banking in Pakistan was not able to achieve desirable growth in the early years.  However when in comparison, we evaluate mobile phone penetration, it is far more in numbers, reach and user savvy-ness.

Remember! Even your cook & driver have learned the skills of device management that are beyond just voice communication from their mobiles sets.

It is true that numeric literacy in Pakistan is higher than our official literacy figure. This coupled with internet now available on a mobile phone has opened up a large resource pool that stands open for mass enrollment in the banking sector that ultimately will prove to be a harbinger for documenting the national economy.

With millions of mobile users and still growing, it is only natural that the banking sector will now begin to channel transactional and payments needs through the mobile device including utility & other bill payments and the freedom to transfer funds…..Instantly

Making payments using the mobile phone is easier said than done and certainly not quite as simple as it sounds. A lot of professional expertise and hard work is needed to design an integrated & reliable mobile payments system that conforms to the dynamics of all stakeholders: customers, financial institutions, telcos and banking / telecom regulators.

Pakistan is a country with a very high percentage of people without access to basic financial services like a bank account. We are still a predominantly cash led economy. One of the key objectives of the State Bank is to work towards financial inclusion of masses and consequently to improve the lifestyle of those who are still outside the realm of financial services. To this effect the State Bank has authored guidelines for both mobile and branchless banking that are proving instrumental in steering the banks and other stakeholders in the desired direction.

Currently there is fierce competition between telcos and banks; all are trying to maximize their share of the said opportunity. Resultantly a number of mobile banking solutions have emerged. All such solutions are unique. Some have been launched by the banks and some by the telcos. Some are extension of the online internet banking services and some are stand alone mobile banking platforms.

Let’s talk about the road that we decided to travel at MCB. About a month ago we launched a mobile payments service by the name of MCB Mobile.  This has been a roaring success with over 11,000 customers registered and thousands of transactions amounting close to one million dollars under our belt already.

With this not only have we started the race well but have created a leadership advantage for ourselves in this space. Our challenge now is to grow faster than anyone else in our category and continuously innovate by introducing new payment types and functionality. It is our intent to use our advantage in the mobile commerce space to create segmented financial products and services in order to reach out to new and previously untapped markets.

It has taken over 60 years for the banking industry to get approx 30 million bank accounts. It took Telcos less than 10 years to reach 90 million customers. Yes you’ve guessed it right. Bringing the next 30 million people into the formal economy by opening a bank account can now easily be achieved in the next 5 years.

In order for a market to grow at such a rate it is essential that the following five drivers are present and working together. Fortunately enough we have all of these in abundance in our market.

1. Conducive market conditions – 90 million + mobile phones
2. Enabling regulatory framework – State Bank and PTA policies
3. Banks willing to play
4. Telcos
5. Mobile payment / banking platforms

The real need today is a realization by both banks and telcos that a Utopian world where every mobile phone becomes a bank with ability to make payments is not going to be realized without banks and telcos working together. A true spirit of partnerships between these two cross industry players is essential to take mobile payments revolution to everyone. After all, both banks and telcos have their own strengths that need to be coupled together to create an uptake of this magnitude or else the growth is not going to be as dramatic as envisioned. Period.

© MCB Bank Limited
Authored by:
Amaar Naveed Ikhlas
Mobile Banking
MCB Bank Limited

This entry was posted on Thursday, August 13th, 2009 at 9:47 am and is filed under Uncategorized. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.