Importance Of Mobile Banking System In The Maldives Finance Essay

Importance Of rambling Banking System In The Maldives Finance turn outINTRODUCTIONBanks play a vital role in the economical life of a nation. The public assistance of an thriftiness is intimately correlated to a healthy banking system. Bankers borrowing lending and related activities make accomplishable the process of production, distribution, exchange and consumption of wealth. thus banks argon very valuable associates of economic growth. Banks play an self-assertive role in utilization of the resources of the country. Banks mobilize the savings of the people for the investment purpose. In the absence of bank, a countrys major portion of capital will remain redundant.Mobile banking can be described as a common phrase used for performing balance checks, account transactions, making and receiving of salarys etc via a spry device commonly wide awake names. Terms such as M-Banking and SMS Banking argon commonly used for wandering banking.This report will look in to the import ance of introducing a mobile banking system to the Republic of Maldives, A country formed of 1190 coral islands each separated by open sea. fit to the MMA (Maldives Monetary Authority- commutation Bank) they argon gearing up to launch a mobile banking system in the country from world-class Feb 2011. MMA named its upcoming mobile banking system as Keesa a local word used for wallet.In an interview given to issue Television in 2010 (MNBC-One) the Governor of MMA Mr. Fazeel Najeeb quoted The Maldives Mobile banking system designed to bring a revolution to the pecuniary sector and setting an example for the rest of developing countries in the world. (MNBC-One, 2010)OVER military position OF MALDIVES ECONOMYThe GDP growth averaged 8.0% over the past two decades raising per capita income about US$ 2,800, the highest in the region and moving the Maldives well into middle income status. After contracting by 4.6% in 2005 due to the tsunami induce fall in tourist arrivals, the scrimpin g rebounded by 19.1% in 2006 and appears to have remained robust in 2007.The universe of discourse of Maldives was estimated 2, 98968 according to the preliminary census 2006. Fishing and tourism plays a vital part of Maldives economic progression. match to MMA at that place be 6 commercial banks in Maldives with 176186 Account Holders.At model thither are only two Mobile dish up providers in Maldives, who provides Service for 259889 Customers. Dhivehi Raajeyge Gulhun Pvt. Limited or Dhiraagu is Joint gauge Company formed between the Maldivian Government and Cable Wireless and commenced its operations in the Maldives in 1988. (Dhiraagu, 2009).Wataniya telecom Maldives Started out operations in Maldives as a subsidiary of Wataniya Telecom in February of 2005, it has now run low the preferred mobile network for Maldivian locals and tourists alike. The companys quest for perfection and dedication to complete customer satisfaction has located it on the forefront of Telecommu nication solutions in the Maldives. (Wataniya Telecom Maldives 2009)Tabulated profile of MaldivesDetails%NoTotal population298968Between 15 64 years62.5186904In use110231Workers on Male10.338971Workers on Atolls89.371260Employment By SectorFishing Industry1112125Tourism2325000Government3134000Others3539000Expatriate Workers70075Mobile Subscribers259889Resident on Male41.5106554Resident on the Atolls59.5153335Bank Accounts176186Resident on Male65113893Resident on The Atolls3562293ATM Cards Issued62275Source Ministry of Planning and National Development Key Indicators 2006 Maldives 2006 preliminary census figures Monthly Statistics, February 2008-MMA CGAP survey results from Maldives mobile operators CGAP survey results from Maldives banksA smooth BANKING SYSTEM WILL RE-SHAPE AND AVANCE MALDIVIAN ECONOMY.Referring to the facts and figures given above (Under over view of Maldives economy) and Tabulated portfolio of Maldives, to a greater extent(prenominal) than 95% of Maldives is c overed geographically by the mobile operators in Maldives. Mean while nearly 90% of population gets mobile shout. According to the Ministry of Planning and National Development Ministry the mobile operators excessively already have the capacity of providing mobile banking service with minimal investment. (Key Indicators, 2006)The mobile banking system will benefit the Economy in following ways apparatus state of the art inter-bank settlement and eliminate risk and increase the safety and efficiency in payment systemsIntroduce full cheque truncation and automate clearingPromote economic efficiency in the countryReduce dependence on cash and paper based instruments by facilitating electronic payments move over a fully interoperable retail payment system using cards, mobile and Internet make believe banking accessible to all citizens of the Maldives, despite adverse geographic conditionsGovernment and banking sectorMobile banking would save cost associated with printing and supplying cash, free up resources currently used by banks to deliver banking services, automate the banking and clearing system, reduce the transaction costs of banking and payments settlements, deliver banking services to the whole country, increase national savings, and revolutionize the financial industry.Fishing industryAccording to preliminary census figures of 2006, 11% of Maldivian work force is engaged in fishing industry. Exporting different products of fish is alike one of the two main sources of income for the organisation. Its estimated that there are more than 12000 fishermen in Maldives who spend more than 70 percent of their life in the open sea. and then introduction of the mobile banking system, all fishermen are led to access the bank and moderate out eventful transaction any time. This will ease and solve lot of existing difficulties for them regarding banking. It will also scatter more idle cash and contribute to the economy as a whole.Tourism SectorMaldives economy is vastly dependent on Tourism Sector. According to former president of Maldives Mr. Gayoom, tourism is life short letter of our nation more than 23 percent of economic workforce is deployed in tourism sector. There are roughly more than 25000 people from 190 different islands working. 90% of these people are stationed at resorts who essentially only travels to their native islands twice a year. There are no personal banking facilities at present in roughly of the resorts. Therefore to send their earnings to support family and receiving money or accessing to banking services are very complicated presently. With the introduction of Mobile banking system, these existing complexities for banking will be solved.MOBILE BANKING PROS CONSMobile banking also have unenthusiastic side, though over all mobile banking system is very efficient and bounteous to business men and other individuals.ProsBanking everywhere any whereBanking is a basal necessity in todays economic world. Accessi ng a bank or carrying out a banking transaction is all most part and contribution of every day. Mobile banking allows banking from anyplace and everywhere. Physical presence is not required to make a banking transaction. Therefore mobile banking saves time and energy.Important NotificationsThe important notifications such as when an account is debited or credited, it will certify in almost no time. Therefore basic banking functions becomes more simple informative on existent time.Important federal agency for Accounts Safe keepingsIt enhances to minimize unauthorized transactions. Since the account holder will be notified at once via a text. Therefore to be a victim of a bank fraud makes less probably and in lawsuit can act upon fraud quickly.Fast and easy paymentMobile banking allows gainful bills, utilities, insurance or any other parallel payments on time.Important means of banking in case of emergencyMobile banking allows banking 24/7, and more over no waiting time is req uired. Therefore it is a vital means of banking-in case of emergencyConsSecurityThough there are few viruses and Trojans targeted for mobile names, mobile phone drug users can be attacked by a phishing scam. For example when a mobile banking user receives a forged text requesting for account passwords it might goes to a hacker pretending as the banker or teller.CompatibilityAll transaction might not be able to proceed in any phone and for some of the cheaper -phones mobile banking is not compatible at all. To get most out of mobile banking a good smart phone is necessary.CostThough mobile banking is relatively cheaper and save times, some of the banks charges otiose fee for mobile banking and in most of the cases extra software charges are applicable and add upon banking expenses. books REVIEWMobile banking closes poverty gap (BBC, 2010)This report published in BBC by Jane Wakefield, highlights the importance of Mobile banking to transform the way people in the developing world, transfer money and how it is poised to offer more sophisticated banking service which could make a real difference to peopleThis statement highlights that currently there are 2.7bn people living in developing countries who do not have any means to access financial service or banks. Simultaneously 1bn people throughout Africa, Latin America and Asia own a mobile phone (BBC, 2010)Further this report shed lights on Mobile banking as a very powerful way to deliver saving and money transfer services to the billions of people in countries like Kenya and Uganda where there are thousands of people with no means to any access to financial institutions. over all, this report makes it more vivid that the success of mobile banking in such countries there by gag law the poverty gap.Africas mobile banking revolution (BBC, 2009)This report by Luice Greenwood provides the facts and figures of how a mobile banking system could contribute Africas economy so vitally. It also highlights that Millions of Africans are using mobile phones to pay bills, move cash and buy basic everyday items. Africa has the fastest-growing mobile phone market in the world and most of the operators are local firms. wherefore the statistical data provided throughout the report, briefs about the countries like sulfur Africa and Kenya mobile banking service providers has affected millions of life by means of savings, security and transfer of cash. The simplicity of mobile banking system in Africa is also lessoning the rest of the world. To set up a bank account by a mobile phone is so easy and straightforward that all it requires is that just a phone and ID card to register anywhere from the country by an approved agent. The system activates the account in seconds and depositing and transferring of cash are right apart at the fingers tipsThis report shows how practical mobile banking system can be and how easy it could be share the larger population like In Tanzania just 5% of the populations have b ank accounts. In Ethiopia there is one bank for every 100,000 people.EMPIRICAL EVIDENCEWith the introduction of mobile banking system there has been a lot of progress in the socio- economic factors in many countries. The implication of mobile banking seems like more important for developing countries than developed countries where lots of peges of banks are available at a threshold. Countries like Kenya, South Africa and Tanzania has shown the world how important mobile banking system is for under developed and developing nations.Lessons from the lights of literature review, I personally believe in the importance of the introduction of mobile banking system in Maldives. This technology would contribute to government sector, banking sector, fisheries industry, tourism sector and islanders from all islands as a whole. To overcome the shadows cased on banking sector in Maldives, by its natural geographic obstacles mobile banking can be an important tool.PERSONAL VERDICTprovidently I have had an opportunity to work for Maldives Tourism Development Corporations as an Operations Manager. To perform my duties and carry out the responsibilities I have travelled more than 40 Resort Islands and above 45 populate islands across the country. During my career, I personally experienced and felt the difficulties of banking by resort workers and local island natives. Though murder of Mobile banking system in Maldives will undoubted fully Increase economic efficiency and promote affable welfare of nation as a wholeCONCLUSIONThe Maldives may be one of the most difficult countries in the world in which to deliver financial services through traditional branch networks. The country occupies 90,000 square kilometres, 99.5% of water. Its 2, 98,968 people live on 198 scattered islands in 26 atolls, and 60% of the dwell islands have less than 1,000 residents. Given the highly literate population and high coverage of the mobile phone network, there is great potential to use techn ology to overcome the barriers of geography, low population density and a small population, and deliver financial service at low cost across the country.