INTRODUCTION
Banks play a vital role in the economic life of a nation. The wellbeing of an economy is intimately correlated to a healthy banking system. Bankers borrowing; lending and related activities make possible the process of production, distribution, exchange and consumption of wealth. Therefore banks are very valuable associates of economic growth. Banks play an imperative 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 country’s 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 payments etc via a mobile device; commonly mobile phones. Terms such as M-Banking and SMS Banking are commonly used for mobile banking.
This report will look in to the importance of introducing a mobile banking system to the Republic of Maldives, A country formed of 1190 coral islands each separated by open sea. According to the MMA (Maldives Monetary Authority- Central Bank) they are gearing up to launch a mobile banking system in the country from 1st Feb 2011. MMA named its upcoming mobile banking system as “Keesa” a local word used for wallet.
In an Interview given to National 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 financial sector and setting an example for the rest of developing countries in the world”. (MNBC-One, 2010)
OVER VIEW OF MALDIVES ECONOMY
The 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 induced fall in tourist arrivals, the economy rebounded by 19.1% in 2006 and appears to have remained robust in 2007.
The population of Maldives was estimated 2, 98968 according to the preliminary census 2006. Fishing and tourism plays a vital part of Maldives economic progression. According to MMA there are 6 commercial banks in Maldives with 176186 Account Holders.
At present there are only two Mobile service providers in Maldives, who provides Service for 259889 Customers. Dhivehi Raajeyge Gulhun Pvt. Limited or Dhiraagu is Joint Venture 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 become the preferred mobile network for Maldivian locals and tourists alike. The company’s quest for perfection and dedication to complete customer satisfaction has placed it on the forefront of Telecommunication solutions in the Maldives. (Wataniya Telecom Maldives 2009)
Tabulated profile of Maldives
Details
%
No
Total population
 
298968
Between 15 – 64 years
62.5
186904
In Employment
 
110231
Workers on Male’
10.3
38971
Workers on Atolls
89.3
71260
Employment By Sector
 
 
Fishing Industry
11
12125
Tourism
23
25000
Government
31
34000
Others
35
39000
Expatriate Workers
 
70075
Mobile Subscribers
 
259889
Resident on Male’
41.5
106554
Resident on the Atolls
59.5
153335
Bank Accounts
 
176186
Resident on Male’
65
113893
Resident on The Atolls
35
62293
ATM Cards Issued
 
62275
Source: 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 banks
A MOBILE 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, more than 95% of Maldives is covered geographically by the mobile operators in Maldives. Mean while nearly 90% of population owns mobile phone. According to the Ministry of Planning and National Development Ministry the mobile operators also 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
Implement state of the art inter-bank settlement and eliminate risk and increase the safety and efficiency in payment systems
Introduce full cheque truncation and automate clearing
Promote economic efficiency in the country
Reduce dependence on cash and paper based instruments by facilitating electronic payments
Establish a fully interoperable retail payment system using cards, mobile and Internet
Make banking accessible to all citizens of the Maldives, despite adverse geographic conditions
Government and banking sector
Mobile banking would save costs 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 industry
According to preliminary census figures of 2006, 11% of Maldivian work force is engaged in fishing industry. Exporting different products of fish is also one of the two main sources of income for the government. It’s estimated that there are more than 12000 fishermen in Maldives who spend more than 70 percent of their life in the open sea. Therefore introduction of the mobile banking system, all fishermen are led to access the bank and carry out important transaction any time. This will ease and solve lot of existing difficulties for them regarding banking. It will also circulate more idle cash and contribute to the economy as a whole.

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Tourism Sector
Maldives economy is vastly dependent on Tourism Sector. According to former president of Maldives Mr. Gayoom, “tourism is life blood 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 basically only travels to their native islands twice a year. There are no personal banking facilities at present in most 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 & CONS
Mobile banking also have unenthusiastic side, though over all mobile banking system is very efficient and generous to business men and other individuals.
Pros
Banking everywhere & any where:
Banking is a basic necessity in today’s economic world. Accessing a bank or carrying out a banking transaction is all most part and parcel of every day. Mobile banking allows banking from anywhere and everywhere. Physical presence is not required to make a banking transaction. Therefore mobile banking saves time and energy.
Important Notifications:
The important notifications such as when an account is debited or credited, it will inform in almost no time. Therefore basic banking functions becomes more simple informative on real time.
Important means for Accounts Safe keepings
It enhances to minimize unauthorized transactions. Since the account holder will be notified immediately via a text. Therefore to be a victim of a bank fraud makes less likely and in case can act upon fraud quickly.
Fast and easy payment:
Mobile banking allows paying bills, utilities, insurance or any other parallel payments on time.
Important means of banking in case of emergency:
Mobile banking allows banking 24/7, and more over no waiting time is required. Therefore it is a vital means of banking-in case of emergency
Cons
Security:
Though there are few viruses and Trojans targeted for mobile phones, mobile phone 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.
Compatibility
All 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.
Cost
Though mobile banking is relatively cheaper and save times, some of the banks charges extra fee for mobile banking and in most of the cases extra software charges are applicable and add upon banking expenses.
LITERATURE REVIEW
Mobile 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 people
This 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 closing the poverty gap.
Africa’s mobile banking revolution (BBC, 2009)
This report by Luice Greenwood provides the facts and figures of how a mobile banking system could contribute Africa’s 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.
Accordingly the statistical data provided throughout the report, briefs about the countries like South Africa and Kenya mobile banking service providers has touched 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 away at the fingers tips
This report shows how practical mobile banking system can be and how easy it could be serving the larger population like In Tanzania just 5% of the populations have bank accounts. In Ethiopia there is one bank for every 100,000 people.
EMPIRICAL EVIDENCE
With 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 branches 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 VERDICT
Providently 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 inhabited islands across the country. During my career, I personally experienced and felt the difficulties of banking by resort workers and local island natives. Though implementation of Mobile banking system in Maldives will undoubted fully Increase economic efficiency and promote social welfare of nation as a whole
CONCLUSION
The 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 inhabited 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 technology to overcome the barriers of geography, low population density and a small population, and deliver financial service at low cost across the country.