Mobile money transfer is now the new ‘bank of the poor’
Posted Monday, March 1 2010 at 00:00
Mobile phone-based money transfer and banking solutions have been recognised as the avenue to take banking services to people outside the formal financial industry.
The services have helped reduce the cost of access to financial services for 2.3 billion people in the world who live on less than $2 per day and cannot afford formal financial services.
According to the “Banking and mobile money transfer solutions in the Comesa region” conference held in Nairobi, these figures go to show that the opposition by banking institutions to financial inclusion of the new technological banking solution was baseless.
The meeting, organised by Africa IT Exhibitions and Conferences (Aitec), underscored the use of mobile phone-based money transfer services to provide banking services to those who cannot access formal services.
The services are cheaper than conventional banking, which comes with expenses the poor could not afford.
Apart from various existing mobile banking solutions in the region like M-pesa, Zap and yuCash, there are about 120 other pilot mobile banking services around the world.
The only concern is how to replicate the success services like M-pesa to other countries.
According to Bill and Melinda Gates Foundation senior programme officer for financial services for the poor Claire Alexandre, mobile banking services have various benefits to the population, including increased productivity and capital flows, helping to manage cashflow as well as enhancing management of erratic incomes.
Ms Alexandre said that opposition from formal banks to networks offering mobile banking is uncalled for as only 10 per cent of people living on less that $2 per day have access to formal savings services.
“The difference between transferring data and voice traffic by mobile operators and transferring money via mobile banking is very minimal,” said Ms Alexandre at the opening session of the two-day conference with the theme “Banking leadership through innovation.”
She however urged mobile banking providers to look at ways through which the cost of the services could be reduced to reach more people in developing countries, adding that there is “no need to see new players unveiling new mobile money solutions as existing players are enough to create the necessary competition.”
Kenya’s Deputy Prime Minister and Minister for Finance Uhuru Kenyatta urged financial industry players to promote innovations for their potential clients.
While acknowledging the challenges posed by innovations such as mobile money phone-based transfer services, Mr Kenyatta stressed the need to further strengthen the supervisory capacity of regulatory institutions.
He said this was crucial in light of a recent survey that revealed that 38 per cent of the population is excluded from accessing services from financial institutions.