Banking for the Unbanked

Posted by Ashay Thakur on April 01, 2010

Only one out of five consumers in Nepal has access to banking channels. In partnership with Kumari Bank, one of the leading banks in Nepal, Deerwalk is launching Mobile Banking solutions targeted at both the banked population and the unbanked mass in the country.

The millennium development goals earmark the BOP population (people earning below $2 a day) as the area to work on. This populace does not have access to financial resources, and is vastly ignored by the formal banking sector. And, it forms the most vulnerable population. High cost of capital, with no banks, they easily fall prey to loan sharks. They are exposed to risks of carrying cash in the vulnerable security situation of the country. In consistency with the goals, Kumari Mobile Cash is a financial product meant to target client of micro finance initiatives.The overall service provision utilizes mobile phones as “mobile wallets” allowing subscribers to send and receive domestic remittances through SMS, make purchases and payments at retail establishments, pay bills, and encash mobile wallet money.

Kumari Mobile Cash is not your typical mobile banking tool in that it allows you to interact with your Bank account, but a comprehensive solution to get reputed financial services inside your living room. This is not an innovation; South African countries have seen successful implementation of the process. 10% of Kenya's GDP flows through the Mobile payment portal in the country. This is a country that is exceptionally similar to Nepal. Their currency is 75 to a dollar. Their population is 35 million and the country had come off turmoils after presidential elections when the Mobile solution was launched. We however, bring the services to our country in a manner that suits the Nepali mindset and, obviously, Nepali laws.

The early adopters will be the urban youth. The ability to not having to carry cash, or to depend on a bank account, gives freedom not seen before in our market. The major target group is the BOP population. Adoption at this level is an even bigger challenge.

Literacy – We have a literacy rate of 60% according to UNICEF and that substantiates the claims that lesser people understand SMS technology and an even smaller number understands finances. The system will roll out easier methods of access in its second phase, so that access to finance becomes easier.

Affordability – Service costs need to be low. The charges levied are much lesser than traveling charges that would be incurred in case of alternate forms of money transfer.

Agents – For access to cash-in and cash-out facilities the services of local agents become essential. A key issue is not just the proximity of agents, and his knowledge of the locality, but also trust in the individual agent concerned, as well as trust in the technology and the financial security of the service provider.

We believe that the community of Kumari Mobile Cash users can increase to a fifth of all mobile users and beyond. Welcome to the new era of money; where your money resides in your phone.

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