Originally published: April 30, 2008
Source: CGAP
A new report from CGAP predicts that, with the right market conditions, mobile banking could reach large numbers of poor people who are outside the formal financial system. The Early Experience with Branchless Banking calls for the development of interoperable payments platforms, practical and risk-based approaches to regulation, as well as shared networks of cash-handling agents.
"Market forces are driving down costs. In the Philippines, we see that a transaction on a cell phone or at an ATM costs one fifth that of a traditional visit to a bank branch," said Gautam Ivatury, manager of CGAP's Technology Program and co-author of the report. "Yet globally, we estimate that fewer than one in ten mobile phone banking customers are poor, new to banking, or doing anything more than payments and transfers."
The report finds that:
- Payments and funds transfers dominate mobile financial services for many reasons;
- Mobile operators prefer to market payments services as this is more aligned with traditional revenue models. These services are also less likely to cause operators to run afoul of banking regulation;
- Challenges to the growth of branchless banking include a reluctance on the part of banks to get involved, as well as outdated or inadequate regulations.
Read the complete article: Mobile Banking to Transform Microfinance