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Submitted by Mike Grenville on Mon, 13 Nov 2006 13:15 |
By reducing costs and the need to travel to banks, a report suggests that mobile phone banking has big potential benefits to the world's poor.
The report is published by The Consultative Group to Assist the Poor (CGAP) together with the United Nations Foundation (UN Foundation) and The Vodafone Group Foundation
It reveals the economic and social benefits being created by mobile banking (m-banking) amongst the
world's poorest communities.
Vodafone partnered with The Consultative Group to Assist the Poor (CGAP) and World Resource Institute (WRI) to research the impact of mobile phones in enabling economic transactions. It also worked with
Forum for the Future (FFF) to understand the social and economic impact of its Airtime Transfer product in Egypt.
The report, titled Economic Empowerment through Mobile, is the third in a series of Corporate Responsibility Dialogues produced by Vodafone and includes the results from three independent research projects.
Huge Market Potential
The authors say that their findings confirm early optimism about the potential for mobile phones to provide banking services to the poor. With over 70% of the more than 2 billion mobile subscribers worldwide in developing countries, a figure that grew more than five-fold between 2000 and 2005, the size of the potential market is significant.
In South Africa and Botswana, one-third of people are without bank accounts, many of whom are poor, but they either own a mobile phone or have access to one according to Finmark Trust. South Africa has a high penetration of mobile phone usage and access amongst the currently unbanked (19% of unbanked people have a pre-paid cellphone and a further 11% have access to a friend/family members cellphone). This suggests that there is potential to utilise cellphone banking as a vehicle to expand access to financial services in the poorer market segments, who traditionally have less access to these services.
Another obvious benefit is that mobilephone banking cuts the need to travel to banks/ATMs which can often be far away from poor communities.
"Mobile phone ownership is exploding in developing countries, presenting a tremendous opportunity to deliver financial services cost effectively to the nearly three billion people who do not currently have bank accounts," said Elizabeth Littlefield, CEO of CGAP. "And that matters because financial services can help poor people increase household incomes and build assets, making them less vulnerable to crises so that they can ultimately plot their own paths out of poverty."
Cheaper Banking
The related study, titled "Mobile Phone Banking and Low Income Customers: Evidence from South Africa," is based on surveys of 515 low-income South Africans, including 300 who do not use m-banking and 215 customers of WIZZIT--a "virtual bank" which has no branches of its own, but instead offers a bank account which is accessible via mobile phone and debit card. The company targets the 16 million South Africans (48 percent of adults) who are unbanked or have difficulty accessing formal banking services.
It showed how it is valued as it can be more affordable than traditional banking according to 94% of users. The report found that as m-banking transaction costs far less to process than a transaction at an ATM or branch so banks can make a profit handling even small money transfers and payments
m-banking is up to one-third cheaper than the cheapest full-service account offered by South Africa's "Big Four" banks, for the customers surveyed. However, findings also show most low-income people who are not customers have negative perceptions about banking, and know little about mobile banking.
Charlotte Grezo, Director of Corporate Responsibility, Vodafone commented: "We have been supporting systematic research into the socio-economic impact of mobile phones in developing markets since 2004. We have learned a lot about the potential to utilise mobile banking from our own micro payment solution, M-PESA, which has been successfully piloted in Kenya. This was developed in partnership with the UK Department for International Development. It is essential we continue to understand and explore the social impacts of mobile technology so that the products and services we develop maintain a positive influence."
Guatam Ivatury, Microfinance Specialist, CGAP commented: "Financial services help poor people increase household incomes, build assets, and become less vulnerable to crises. Mobile phones have tremendous potential to deliver these financial services to billions of low-income people who otherwise would not have the opportunity to save or improve their financial literacy using a traditional bank."
Mobile Phone Banking and Low Income Customer: Evidence from South Africa
Economic Empowerment through Mobile
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