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Among the more obvious reasons is the simple elimination of overhead and initial construction costs for new bank branches. Though such costs are shared by all banking customers, it requires a sizeable initial investment on the part of the bank, and customers might not be plentiful enough to make the sharing of these costs feasible for either potential customers or the banks. With mobile banking, not only are the overhead costs of a physical branch eliminated, but many transactions can actually be conducted without any contact between the customer and bank personnel. This further eliminates costs associated with branch banking while allowing more affordable access to more complex services.
This reduction of overhead costs is observable in other forms of branchless banking, as well, as can clearly be seen in the massive reduction in costs when point-of-sale third party agents were introduced to the microfinance arena (CGAP a 2009). Additional transaction cost savings are introduced by mobile banking with the removal of these third party agents in a large number of transactions; only cash transactions require the physical presence of an agent. The spread of mobile phones puts technology capable of bank interfacing directly in the hands of many potential customers, increasingly including the poor (CGAP a 2009). The cheaper technology costs and availability of mobile banking devices is responsible for the spread of microfinancing...
Simple marketing programs to make consumers aware of the more complex baking features available to them do not exist, and instead fee-driven services such as transfers and payments are heavily promoted (WorldBank 2008). As the spread of mobile technology will almost certainly continue to be advertiser-based, effective strategies for marketing the more complex but more economy-boosting services that microfinance institutions are capable of providing will need to be developed. In addition, though their costs are significantly lower, third-party agent fees are subject to more volatility and variance than branch fees, which could possibly harm the perception of such agents and microfinancing as a whole when the handling of cash is concerned.
References
CGAP a (2009). "Mobile banking: Overview." Accessed 13 November 2009. http://www.cgap.org/p/site/c/template.rc/1.11.14910/
CGAP b (2009). "Technology: Project profiles." Accessed 13 November 2009. http://www.cgap.org/p/site/c/template.rc/1.11.45745/
WorldBank. (2008). "Mobile banking to transform microfinance." Accessed 13 November 2009. http://web.worldbank.org/WBSITE/EXTERNAL/NEWS/0,,contentMDK:21765683~pagePK:64257043~piPK:437376~theSitePK:4607,00.html
SBAB: Shaping Bangladesh's Banking Landscape The Savings Bank of Bangladesh Limited (SBAB), established in 1991, has emerged as a significant player in Bangladesh's financial sector (SBAB, n.d.). SBAB is a specialized bank focused on providing financial services to small and medium enterprises (SMEs) and microfinance institutions (MFIs), playing a crucial role in promoting economic growth and financial inclusion (Bangladesh Bank, n.d.). SBAB's services cater to the underserved segments of the population, offering
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