Mobile banking: knowledge map and possible donor support strategies

Could mobile phones provide access to banking for poor people?

Should donors support the development of mobile phone banking? This paper considers this question by assessing the likely impact of m-banking on the lives of poor people in developing countries and identifying current needs and gaps to date.

The study concludes that, given the rapid expansion of mobile phone use in developing countries, access to m-banking could offer low cost, accessible banking for poorer customers and those currently without access to banking services. It could also do so faster than other e-banking methods. By improving access to financial services, the paper argues, this would have the potential to reduce the vulnerability of, and create opportunities for, poor households.

To support expansion of this banking method, there is a need for:

more successful transformational models which have reached financial sustainability, to create a suitable demonstration effect
systematic information collection and knowledge dissemination to guide potential entrants and policy makers and fill significant gaps in information in all but a few countries
an enabling policy and regulatory environment which has sufficient openness and certainty to allow new models to start up and grow

The report advises that, rather than offering direct funding to initiate m-banking projects, donors should provide indirect support for m-banking, focusing on the creation and dissemination of knowledge and improving the regulatory and technical environment. The following project areas are suggested:

studies of customer adoption across different models
establishment of a web portal as a resource centre and dissemination point
country environment reviews which may lead to requests from regulators for technical assistance to bring about changes
sponsoring a commercial conference to provide focus for dissemination of work done

The report acknowledges that not all m-banking products will broaden access to financial services substantially at first or even at all. However, it suggests that, even where services initially target existing customers, these may over time extend to currently unbanked groups.

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Mobile banking: knowledge map and possible donor support strategies