Mongolia is going cashless — we spoke with the guy leading the charge
Mongolia's largest bank has an ambitious plan to bring the entire country into the mobile banking world.
"By the end of the year, we hope to have 95 percent of transactions in Ulaanbaatar be digital," Enkh-Ireedui Soninpurev, head of Digital Banking and ATM Channel Department at Khan Bank said.
Khan Bank is Mongolia's largest bank, accounting for over 50 percent of the country's accounts and it has been an early adopter and long-time supporter of digital banking countrywide. Of the company's over 2.2 million customers, over half utilize mobile banking, with a significantly higher proportion in urban areas. To put that into perspective, the Federal Reserve estimates around 43 percent of Americans use mobile banking.
To get there, they've had to adopt a number of technologies aimed at a diverse clientele. The bank serves not only wealthy elites in Ulaanbaatar but the city's burgeoning middle class and an impressive portion of people living in the country's vast countryside.
For urban customers using smartphones attached to cellular data, the company unveiled a much-heralded service called Khan Pay in August. The service attaches to a person's cellphone number or Facebook account and allows users to send and receive money at the press of a button. For transactions that occur in a retail environment, the service utilizes Bluetooth, wifi and GPS to find other users that are nearby.
This is all bundled into the bank's existing app and encrypted with passwords and biometrics.
"In Mongolia, everyone knows three numbers by heart," Soninpurev said. "Their personal identification number, their phone number and their bank number. We wanted to provide them with an easier and more secure way to make transactions than using their bank account number."
The company says that when Khan Pay was launched over 300,000 of their customers were immediately able to use the service, with around 70 percent of those located in the Ulaanbaatar. But, as smartphone penetration continues to grow — it's currently used by around 66 percent of the total population — this is the direction that mobile payments will take.
But, for now, solid 3G connectivity is mostly limited to Ulaanbaatar and regional capitals, meaning Khan Pay is still the future for many.
"You'd be surprised by how much of the country has cellular coverage. Not cellular data, but cell phone coverage," Soninpurev said. "It's something like 92 percent of the country."
To serve these customers, the company offers a STK-based mobile payment option. The technology allows the users to install a banking app directly onto a their SIM card. That, in turn, allows the app to send and receive payments when it is not connected to the internet.
"You only need one bar of coverage for this work," Soninpurev said. "When I leave the city, this is how I make transactions."
That service is wildly popular among the country's rural population, though as 3G connection continues to roll out, Khan Pay is the obvious successor.
Digital banking is important for the country and the bank. In addition to lowering the overhead of banks (operating branches is expensive), it's a big boon to overall efficiency. People who no longer have to travel to a branch to do their banking are able to spend their time doing more productive things. And, in Mongolia, where Ulaanbaatar's traffic-clogged streets turn even short journeys into an odyssey and the countryside where the nearest bank could be half a day away, that's a particularly big boon. A cashless society also offers transparency and better security.
"Mongolians are very good about adopting new things," Soninpurev said. "Everyone is eager to try a new technology."
Images via Josie Stoker and Khan Bank.