Services such as M-Pesa in Kenya prove
beyond doubt that the mobile phone provides a viable solution to
meeting the financial services needs of the world’s unbanked.
Thanks to successes such as M-Pesa, financial
support for mobile banking in developing economies is coming to the
fore, as highlighted by two significant funding initiatives
announced by the British government and the Bill & Melinda
Gates Foundation (BMGF) in February.
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First off the mark was the UK’s International
Development Secretary, Douglas Alexander who announced the launch
of Facilitating Access to Financial Services through Technology
(FAST), a £1.4 million ($2 million) three-year project to bring
what he termed branchless banking to millions of the world’s
poorest people in Africa and Asia.
“Advancements in technology and growth in
mobile phone use is changing how we all live our lives and has the
potential to give people access to financial services no matter
where they live,” said Alexander.
Goals of the FAST project include:
• Research into how technologies
such as mobile phone banking, smart cards and biometric banking can
help the poor to access financial services;
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By GlobalData• Evaluation of pilot projects;
and
• Developing industry standards that
will regulate the new technology and make it secure and cheaper for
people to use branchless banking. This will include regulators from
20 developing countries.
Following close on the heels of the UK
government, BMGF announced a $12.5 million grant to support mobile
network industry body the GSM Association’s (GSMA) new Mobile Money
for the Unbanked (MMU) project. Established by Microsoft founder
Bill Gates and his wife Melinda, the BMGF is the world’s
fourth-largest private foundation.
Backed by the grant, the MMU project will fund
regulatory and market research to help overcome some of the
barriers of providing mobile banking services and demonstrate the
business case for serving the unbanked market. Of the total grant,
$5 million will be allocated to encouraging mobile network
operators to create new services for unbanked people in emerging
markets.
The MMU programme will support about 20
projects focusing on Africa, Asia and Latin America with the goal
of reaching 20 million previously unbanked people with mobile
financial services by 2012.
“This represents a huge opportunity and mobile
operators are perfectly placed to bring mobile financial services
to this largely untapped consumer base,” said GSMA CEO Rob
Conway.
Based on the initial findings of research by
development body the Consultative Group To Help The Poor and
consultancy McKinsey & Company, the GSMA believes mobile money
for the unbanked has the potential to become a $5 billion market
opportunity over the next three years, Conway added.
Stressing the benefits of mobile payments, the
UK’s Department of International Development said that mobile phone
money transfers have the potential to lower international
remittance costs by as much as 75 percent.
Based on total annual remittances of $275
billion at an average cost of 10 percent, cutting this cost by only
50 percent would save about $13 billion a year, noted the
department.
