KATHMANDU--When Shiv Bhushan Lal had first made a call to Nepal from Finland using a mobile phone the size of a small briefcase, he was absolutely amazed by the technology. The year was 1987, and Lal, an IT professional, had been attending a training organised by Nokia. In the almost three decades since, however, the realm of communications and mobile technology has witnessed a veritable explosion, the impact of which has been seen and felt the world over. The advancements therein have come to revolutionise lives, thanks to the many—and ever-growing—services that might’ve once seemed impossibly far-fetched, but are now available at the click of a button. And mobile-banking is a prominent instance among these, a feature that is fast gaining in popularity even in Nepal, and one that is set to forever change the way we conduct financial transactions.
The evolution of the mobile phone has been fascinating to behold. Simple boxy equipment with limited black-and-white display have now morphed into sleeker, more user-friendly designs, with great quality colourful visuals, as seen in the almost-ubiquitous smartphones, for example. But more than aesthetics alone, it’s how these hand-held devices have come to represent the centre of convergence between a range of technologies that has really defined their ascent. And that has precisely been the appeal of mobile-banking around the world, and what mobile financial services platforms like Fonepay and Hello Paisa are now out to cash in on in Nepal.
Lal is the present-day head of the IT directorate at Nepal Telecom (NT), which introduced the GSM (Global System for Mobile Communications) here in 1999, and he says that the ease of cashless transactions that mobile banking is set to offer is a major draw. "Imagine never having to handle bundles of paper money, and still being able to channel your savings as you please," he says. "Who wouldn’t prefer that?" Lal believes that in a country where mobile phones have spread so far and wide in a short while, and where it is not physically possible to establish bank outlets in all remote corners, a collaboration between telecom companies and banks could pave the way for mobile banking to become a dominant, and more convenient, mode of transaction.
So far, about 1.5 million Nepali bank customers have reportedly enrolled in mobile-banking services. Local experts predict that the number of people using ‘mobile-money’ innovations is bound to increase each year, as mobile penetration rate, literacy and incomes see a boost. After all, according to government statistics, mobile users in the country are nearing the 20 million mark, while people with bank accounts comprise roughly half of that, so 10 million. In a country with a total population of 26.49 million, these are some impressive projections, to say the least. Ananda Raj Khanal, the director of the Nepal Telecommunications Authority—regulator of the telecom sector—says that with the global market already moving from "e-commerce to m-commerce", mobile financial services are only bound to get bigger and better with time, especially once high-speed mobile broadband becomes accessible to all, a "future attraction" he hopes will be soon made possible.
A visible shift in the telecom sector in Nepal had occurred about a decade ago with the entry of the first private sector player in the GSM mobile services field—Ncell (formerly known as Spice Nepal)—an arena previously monopolised by the state-operated Nepal Telecom. As Nepal Telecom and Ncell began to compete aggressively for service expansion, consumers were benefitting from the rivalry as services became more streamlined and efficient, and mobile users grew rapidly in the process. And although these two companies continue to enjoy the biggest slices of the GSM mobile service pie—the fastest growing and major-earning segment in the domestic telecom market—more recently, two more parties have been welcomed into its fold: United Telecom Limited and Smart Telecom.
Given these circumstances, many banks and financial institutions have now wised up to the possibilities associated with the increasing versatility and popularity of mobile phones, partnering with telecom companies to offer phone-banking services to customers. At present, over three dozen banking and financial institutions are providing such services with limited features like fund transfer, checking balance, mobile balance top-up, and paying for utilities, among others. Ncell alone has been sought out by almost 20 commercial banks in the country—including Nabil, Everest and Laxmi Bank—for this very purpose, according to Milan Sharma, Ncell’s communication expert. Even the Nepal Rastra Bank (NRB) has lately opened up to mobile-banking, allowing payments to be made by branchless agents of various banks through phones, whereas before, the central bank only authorised banks to consider Point-of-Sale machine transactions. NRB representatives say that given the encouraging rate of mobile penetration today, new strategies need to be crafted to harness that and increase financial access nationwide.
Similarly optimistic is Biswas Dhakal, chairman of F1 Soft International, which introduced Fonepay. He predicts that in just five years’ time, 40 percent of all financial transactions will be made through mobile phones, and this is despite many hurdles such as rampant illiteracy and the relatively slower acceptance of new technologies in Nepal compared to other countries. If this does happen, we’re bound to see a flooding in of a range of associated services designed around the use of the technology that allows for cashless transactions, and we might just have to turn to our phones for something as huge as paying for a car, or as small as buying bread.
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