Beyond Branch Banking

Introduction The concept  Provide access to finance  In 75 years of formal banking era, less than 30% of population has access to formal financial services  More than 7.5 mio. mobile phone users within 7-8 years of market penetration with annual growth of 35%  Use mobile phone as an interface to banking activities  Nation-wide supporting agent network  Delivery of financial services in a fast, secure and low cost manner  Local Remittance  Send / receive money to and from anywhere in the country  Microfinance  Support microfinance activities in rural areas  Mobile phones are rapidly growing - Medium to spur entrepreneurial activities  Currently 20% of the population uses mobile phones, with projection of 50% by 2014

What is Kumari Mobile Cash (KMC) KMC is an innovative mobile phone based payment system introduced by Kumari Bank. It is a product that enables business transactions via mobilephones. It offers various services such as point-to-point remittance, payment of goods and services, and much more, all across Nepal!

Why KMC  It is a result of our continued focus on technology driven service delivery  to leverage technology as our delivery channel to customers  to reduce cost of transaction and save transaction time  It provides convenient and an efficient way to conduct business transactions  It provides much better market penetration compared to other products  Bank Branches (Per 100,000 People) 4.12  ATMs (Per 100,000 People) 3.40  Credit/Debit Card (Per 100,000 People)2000  Mobile Phones (Per 100,000 People) 25,000

We cannot ignore this large customer base 15 million users 7.2 million users Why KMC cont… Source for : "Nepal - Telecoms, Mobile, Internet & Forecasts" published by BuddeComm; Data for are authors’ own projection based on YoY population growth rate of 2% and YoY mobile user growth rate of 20%

 Point to point Remittance  Receive and send money directly from/to mobile phones anywhere in Nepal  Available on Nepal Telecom GSM Network across Nepal  Ncell Network still being Pursued  Top-up cash or withdraw cash from mobile phones  At an agent or at a bank counter  Pay for goods and services at shops and stores anywhere in Nepal  Transfer money to family and friends  Peer to Peer Lending  Air-time top-up at face value  Associate bank account  Allows cash transfer from/to bank account  Pay utility bills  Web Portal KMC Solution Features

Impact on Economy  Kenyan Experience  10% GDP flows through M-Pesa  5-30% increase in Income for those who use M-Pesa With 20% of the population using M-Pesa, that translates to roughly 3.5% GDP growth and 1.75% decline in unemployment (Okun’s Law)  Easier access to finance  Increased economic activities  Easier to get microfinance loans and pay monthly installments  Secondary services on top of the platform  Mobile phone based transactions is a rapidly-adopting alternative business tool, especially in developing countries. Examples:  G-Cash, Phillippines  Grameen Phone, Bangladesh  M-Pesa, Kenya  Combined market for all types of mobile phone based transactions is expected to reach more than $600 Billion globally by 2013.

Social Benefits  This service is available to all mobile phone users, and customers registering for this service do not have to have a Kumari bank account!  Government distributing money to almost 4000 village development committees (VDCs)  Current: Disbursement to one point requiring villagers to travel  Future: Disbursement directly to end user via a mobile phone  Retired veterans receiving pension  Current: A monthly camp setup in one place requiring the recipients to travel  Future: Pension funds disbursed directly into recipient’s mobile phone  A person living in a remote place no longer has to walk for one day to make microfinance loan payments  Eliminating travel costs that sometimes is more than the amount of the loan installment  Son working in Kathmandu can send money to his parents in a village instantaneously  Eliminate physical travel  Eliminate risk of carrying cash  Daughter studying in Kathmandu can receive money from her parents instantaneously to pay school fees

 Built on Java platform – scalability and security  Supports any phone  Structured SMS for lowest common denominator  J2ME application for java enabled phones allows greater usability  Security  All transaction require PIN authentication  ISO 8583 standard communication  Firewall secured network of servers  Secured SMS Gateway using short code 2274 (CASH)  Transaction Amount Monitoring  Cap per transaction, per day, per month  Reduced physical cash handling KMC Technology

How it Works

Merchant/Agent Enrolment

 Mobile Cash Committee  Inclusion of all relevant departments  Product Development  Phase wise Implementation  Mobile Cash Department formed  Call Center with a country wide Toll Free Number  Meeting with Multilaterals:  World Bank, DFID, ADB, IFC  Meeting with Finance Ministry, NRB and NT  Advertisement and Informatials concept  TVC, Radio, Print Media, Animations, Pocket Guide etc.  Training to prospective agents, merchants and our employee in following locations completed  Eastern Region: Biratnagar, Birtamode, Itahari, Urlabari  Western Region: Argakhanchi, Beni, Baglung, Bhairahawa, Butwal, Damauli, Palpa, Pokhara  Central Region: Kathmandu, Birgunj, Narayanghar  Mid West Region: Nepalgunj, Surkhet, Salyan, Dang  Far West Region: Dhangadi, Mahendranagar The Approach

Launched on 17 th August 2010

 Promotional Campaign  Educational and Awareness Programs through:  TV Interviews  Radio Programs  Local Events  Kiosks at various locations  Branding KMC to various neighborhoods  Advertisements on All major newspapers  Advertisements on All major TV channels  Advertisements on Many radio stations including regional ones Roadmap – Short Term

 Enroll All KBL Bank A/C Holders into Mobile Cash  Approximately 70,000 customers will be contacted  All Customers with Mobile Phones have been sent SMS  All Customers with records have been ed  Enrollment of Agents/Merchants  500 Agent Outlets  200 Merchant Outlets  Ncell Gateway  Testing in Progress  Agreement to be signed in the near future  Dedicated Network at Large Supermarkets  Establish VPN and deploy API  Ability to initiate transactions online  Currently can initiate transactions only with mobile phones  Utility Payment  Various utility providers Roadmap – Short Term

 IVR – Interactive Voice Recognition  Customers able to conduct transactions with the help of voice prompts  USSD – Unstructured Supplementary Service Data  Quicker Response Time compared to that of SMS  Much better customer experience; the transactions are real time rather than “store and forward” concept of SMS  Dependent upon Telecom Provider Service Availability  PoS (Point of Sale) Device  Device that scans phones based on RFID signal, accepts payments, and generates receipt  Localization  Menu interface and SMS messages in Nepali Language  Support for GPRS Application  Internet Enabled  Application Built into the SIM  Dependent upon Telecom Provider Cooperation Roadmap – Medium Term

 Pension Disbursement to Gov’t Retirees  Microcredit payment Facility  Salary Disbursement  International Remittance  School Fee Payments  Insurance Premium Payments and many more…….. Roadmap – Long Term

Growth Milestones

Challenges  Regulatory Framework  Distribution Network  Awareness and Promotion  Illiteracy & Resistance to Change  Trust Factor These challenges can be address with joint effort of Government, Multinationals and other stakeholders…. We can help on Technicalities and Financial solutions..

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