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Dialing up to do business

Paving the way for a cashless society

From CNN's Kristie Lu Stout
Mobile phone banking sees customers connected to their accounts at the push of one button.
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South Korea
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SEOUL, South Korea (CNN) -- Big money is changing hands every day in South Korea, and a large percentage of it is happening at the touch of a cellphone button.

The country is the world's most Internet-connected nation and most people have a high-tech third generation (3G) mobile phone.

It's no surprise then, that locals such as e-commerce entrepreneur Sohn Won Pil take advantage of doing their banking with high-tech handsets.

In the hustle and bustle of Seoul's trendy Myong Dong district, Sohn pushes the "M" button on his phone, which connects him to his bank account. He then pays his suppliers.

Sohn is one of almost a million Koreans who use their mobiles to dial into their bank account.

"At first, I was intimidated by the novelty of the whole thing, but money transfers are very important here and mobile banking allows me to easily transfer money to my customers and vendors," he told CNN.

Bank account data is encrypted on a smart-card chip. To access the service, just hit the "M" button on your cell phone and you are connected to your accounts.

South Korea's largest bank, Kookmin, rolled out the country's first mobile banking service less than two years ago.

The service saves the bank millions of dollars -- mobile banking transactions cost Kookmin a tenth of the price of a face-to-face transaction.

Kookmin CEO Kang Chung Wong told CNN that 400,000 of its customers were already using the service, and that number is expected to hit one million by the end of 2005.

All of South Korea's banks have followed Kookmin's lead and are now offering the service.

About 400,000 shops are fitted with equipment to accept payments via mobile phone, and throngs of commuters can travel on the subway by flashing their phones at the turnstyles.

Kang told CNN the potential for mobile banking in South Korea could cover 50 percent of households.

"Once we have a critical mass of customers in Korea, I think it makes sense to go global," he says.

Information technology consultant Simon Bureau, of Vectis, monitors South Korea's technology scene on behalf of overseas clients.

He told CNN other countries may follow the mobile banking trend in future.

"I would say some countries in Asia, like Singapore or Hong Kong and maybe some countries in Europe, might be the one to be the first to adopt it. But there are clear conditions that are needed for the service to be adopted."

He said mobile banking services would need to be secure and easy-to-use, and would need to have support at government level.

Those factors, along with an extremely mobile consumer base, have allowed mobile banking to become a reality in South Korea, Bureau says.

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