Functioning Of Branchless Banking
Branchless banking is a modern financial system employed for execution of tasks concerning financial issues, without the incorporation of normal branches of banks, or it may operate in combination with the existence of bank branches, thereby creating multiple opportunities for the customers. Branchless banking has substantial potential for expansion of their network in remote areas, where establishment of bank branches would not be economically viable, due to the exorbitant expenses involved, and lesser number of customers available. Customers will obtain the advantage of minimizing time required for availing banking services, and also reduce the expenditures involved in traveling for such purposes.
Channels Branchless Banking
Following channels are included in branchless banking, which provide particular banking services:
- Mobile phones, by which customers are identified, and transactions are executed.
- Third party means, such as traders and post offices that perform the functions of agents for financial concerns.
- Organization, with the sponsorship of an establishment, which is accepted by the government, such as an approved bank.
Requirements Branchless Banking
Following may be considered by regulators of branchless banking, for an efficient, secure, and cost effective financial system:
• The most important requirement of branchless banking is customer protection against fraud. These apprehensions are extreme due to huge gaps which divide the customers, retail outlets, banks or other non bank institutions. Regulators must address this issue thoroughly to gain the confidence of customers.
• System of payments.
• Instructions concerning provision of finances to promote terrorism.
• Competition among outlets.
• Complaints procedures.
Models Branchless Banking
Following models can be applicable for branchless banking:
- Agents can operate branchless banking.
- Joint venture between bank and mobile company or a non bank organization. Categories are as under:
- Bank presents services of mobile telephone banking, in association with a specific telecommunication company. Services available only to those customers utilizing connection of that telecommunication company. Can be a joint venture, or agency agreement between bank and telecommunication company. It has advantage of customization, high standard of service and multiple marketing. However, limited to customers utilizing services of that telecommunication company only.
- Bank provides services of mobile telephone banking, in association with any telecommunication company. Advantage of access to any customer, using any mobile telephone connection.
- Several banks, in collaboration with multiple telecommunication companies, propose their services to a large number of customers. Maximum advantages in this model
Services At Branchless Banking
Following services may be available at branchless banking outlets:
• Maintain account.
• Transfer of money .
• Deposit and withdrawal of money.
• Payment of utility bills.
• Payments concerning purchases.
• Payments of loans.