Mobile Banking to Transform Microfinance
WASHINGTON, May 4 /PRNewswire-AsiaNet/ --
CGAP finds market conditions mean benefits for poor still several years away
A new report from the global microfinance body 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."
Payments and funds transfers dominate mobile financial services for many
reasons, the report finds. Mobile operators in particular 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.
"When it comes to reaching poor people who live outside the formal financial
sector, the reality of mobile phone banking doesn't match the potential, much
less the hype, at least not yet, said Ignacio Mas, CGAP advisor and co-author of
the report. "We see opportunities for service providers who move quickly to
create new products, especially if they can establish shared networks of cash-
handling agents to cover that 'last mile' of service delivery."
The report finds that in cases where market conditions are not driving broader
banking services such as credit and savings, there may be a role to play for
policymakers and those who advocate for increased financial access.
The Early Experience with Branchless Banking will be presented at the GSMA
CGAP (The Consultative Group to Assist the Poor) is the world's leading
resource for the advancement of microfinance. CGAP provides the financial
industry, governments and investors with objective information, expert opinion,
and innovative solutions to effectively expand access to finance for poor people
around the world.
SOURCE CGAP
CONTACT: Jeanette Thomas,
+1-202-473-8869,
jthomas1@worldbank.org,
or Jim Rosenberg,
+1-202-473-1084,
jrosenberg@worldbank.org,
both of CGAP
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