Reaching the ‘unbanked’

through technological

innovation

Amjad H. Khan

CEO,

Bangla Phone Limited

What limits financial inclusion

in developing countries?

Large rural population

High illiteracy

Low income

Remote areas

Lack of focus by banks/financial

institutions

Poor coverage by banks/branches

Unprofitable for providing

traditional banking services

Who are the unbanked?

• Underprivileged

people in rural and

urban areas

• People involved in

the informal sector

• Agricultural and

Industrial workers

• Unemployed

• Women & old

people

• Physically

challenged people

Technology solutions used

by banks

A number of technological solutions have been deployed

over the years to provide any branch or branchless banking

services, including:

1. ATM

2. Debit Card

3. Credit Card

4. Online/Internet banking

However, all of these solutions/services are exclusively

targeted towards the existing bank customers, enhancing

their choices/convenience

Technology solutions & innovation

to reach unbanked

The unbanked can only be reached

through transformational branchless

banking by tapping into infrastructure

that already reaches the rural/remote

areas.

Such branchless banking may

include a combination of technology

solutions and an innovative approach:

1.Technology-based—mobile

phones, prepaid/debit cards,

POS devices, biometrics,

Internet

2. POS in remote areas

3. Engaging Nonbank Agents (use of

third parties) to expand reach

New ways of offering banking services

The Mobile Phone is by far the

most widely adopted technology

platform in developing countries

The mobile phone network is the

most readily available

infrastructure to deliver

branchless/affordable banking

services to the unbanked

Illiteracy is not an issue (they

can already operate a mobile

phone)

Basic services can even be

delivered through low-end

handsets (SMS/IVR)

Bangladesh: A case study

Demographics

• Population: 150 m

• Below poverty line: 31.5%

• Urban population: 27%

• Population under age 25:

nearly 60%

Banking Infrastructure

•Bank Branches: 7,961

•Population having bank

accounts: 22 million(14%)

•Mobile subscriptions: 99

million (68% penetration)

Mobile Financial Services

After several years of deliberations,

Bangladesh Bank issued the

“Guidelines on Mobile Financial

Services (MFS) for the Banks” in

September 2011 (subsequently

amended in December 2011).

The central bank believes that fully

developed MFS operations can

reduce barriers to access and cost

and over time enable a much higher

proportion of the population to use

basic banking services

Entry to the formal financial sector

can lead to greater financial

intermediation and contribute to

growth.

Mobile Financial Services

Mobile Financial Services up

to June 2012 (excluding

remittance‐only

deployments):

• Banks licensed by Bangladesh

Bank: 23

• Live MFS deployments: 14

• Mobile Accounts Opened:

779,532

• Appointed Agents: 18,581

• Transaction (billion Taka): 10.08

Mobile Banking Solution

• Highly-secure mobile banking

access both on regular low-end

mobile handset and also online

through the Internet.

• The Commlink Mobile Banking

platform is secured through strong

encryption techniques and access

authentication.

• Easy-to-use customer interface has

been designed to ensure maximum

satisfaction.

• It is modular and flexible, supports

various channels.

• Supports SMS, USSD, IVR,

GPRS/EDGE/WAP, Web Client

and any other potential delivery

channel.

Bangla Phone along with its sister-concern Commlink Info Tech

Limited has developed a complete Mobile Banking solution

•Easy to Interface with any system that

supports web services.

• Session based authentication system.

•Can be integrated with any retail

outlets like chain grocery stores and

other merchant outlets

•Interface with Remittance Agents,

Cash-in partners, etc.

•Agent Management module is also

included

Service Features • Account Opening/registration

by alternative methods

• Cash in/Withdrawal

• Send/Receive money

• Mobile top-up

• Account statement/Balance enquiry

• Utility bill payment

• Foreign remittance

• Merchant payment

• Salary disbursement

• Tax Payment

• Government allowance disbursement

• Insurance payment collection

• Payment History Management

• Dispute Resolution

• Advanced Reporting

• Advanced Site Management

• Automatic Notification Generation

• Other customized features can be added

Security Features (1)

• The Commlink Mobile Banking solution has adopted

a robust security model to protect the users which is

device independent.

• It has enterprise-level security encryption capabilities

and even temporary data stored in the device are

encrypted.

• The platform requires the use of ‘activation number’

for the authentication of the software and a PIN code

to authenticate the user.

• Our system is completely web based. Security

measures have been considered using typical website

vulnerability:

• Remote code execution

• SQL injection

• Format string vulnerabilities

• Cross Site Scripting (XSS)

• Username enumeration

• Secured User/Agent management

• Total hierarchical management control of every

transaction at any given time.

Security Features (2) • Confidential pages are secured through

PKI (Public Key Infrastructure) using

HTTP over TLS.

• Combination of User Name, Password &

PIN for authentication.

• All the transactions in our Internet

Banking Solution are highly secured

through the use of https (http over

SSL/TLS).

• This ensures the use of public key

infrastructure (PKI)

• Our system supports two factor

authentications as we introduced and

incorporated SafeNet Ikey (USB Token)

into our system.

• Role based system management for

Access Control List (ACL) facilities for

bank users

• In addition, for the first time in

Bangladesh, biometric identification is

also being deployed to confirm the user.

The above tablet with finger print scanner

is custom-made and can also be used to

scan finger prints before selling a SIM

card for later identification, when needed

Mobile Banking Solution

• Bangla Phone Limited along with its

sister-concern Commlink Info Tech,

are jointly offering to set up a complete

end-to-end mobile banking solution on

a turn-key basis.

• The Commlink Mobile Banking

platform is compatible and easy to

integrate with the existing banking IT

systems.

• It would include the mobile banking

platform, related products, system

integration and other professional

services.

• The mobile banking platform can be

further customized to meet any

particular requirements of banks or

financial institutions.

Mobile Banking Solution

The Bangla Phone-Commlink

consortium is presently

implementing a mobile money and

e-commerce solutions called Post e-

Pay and Post e-Shop on a turn-key

basis for the Bangladesh Post

Office

It will play a key role on reviving the

fortunes of the postal office.

It will be introduced through all the

10,000 post office branches around

the country. In addition, over

100,000 agents will also be

appointed.

The touch-points will be equipped

either with a lap-top (post offices) or

a handheld tablet (agents) and will

have wireless online connectivity.

Network Architecture

16

BPO VPN

BPO Head Office LAN

Internet

Internet Users BPO Employees

Local Post Office Sylhet

Local Post Office Chittagong

3rd Party e-Commerce

Using e-Pay API

Bangladesh Post Office Head

Quarter

ePost Pay

Application Server

System Diagram

17

eShop

Application Server Data Center

Mobile App. Server

ePay API

3rd Party

e-Commerce

ePay API

ePay Web

e-Pay User

Local Post Office Employee

e-Shop User

User

Socket

Rich Client

Application

SMS Alert

THANK YOU