Mobile Banking As Aid Tool

How can the power and popularity of the mobile phone be harnessed to improve access to financial networks?

According to this article in the Post Chronicle, mobile phones are becoming commonplace - even in some of the remotest parts of the world. In wealthier countries, such developments as a multi-functioning phone complete with built-in camera, internet access, and MP3 player are "no longer novel." In early June 2006, mobile giant Nokia predicted that demand for handsets that act more as mobile computers than phones will increase over the next few years.

But it is the proliferation of mobile handsets in developing countries that is the focus of this article. For instance, the International Telecommunications Union indicates that the number of African mobile-phone subscribers grew from 7.5 million to 76.8 million between 1999 and 2004, while the Progressive Policy Institute expects that number to increase to 250 million over the next 4 years.

As mobile phone use has expanded, the ways in which the technology can be used have, too. Even in regions where electric supply and phone connections are sporadic, mobile phones are increasingly being used as a tool for microfinance, as they provide access to bank accounts and allow the transfer of funds and payment of bills. As many people in countries like the Philippines and South Africa own cell phones, mobile banking improves access to credit: "they can be part of a society that depends less on actual cash and more on credit information, which is more convenient and safer, by using a tool that they already have and are familiar with." Further, such services may be particularly convenient in locations where the nearest local bank might be miles away.

To cite one illustration of how this trend may play out in the day-to-day lives of mobile phone users, the Philippines' Globe Telecom allows users to download cash onto their phones at the company's own outlets or at partner merchants. That money can be used like cash and can be used to pay for goods in stores or be transferred to other people with Globe accounts on their mobile phones.