Increasingly in the UK, checking your bank balance, paying bills and transferring money are transactions that are carried out without ever stepping foot inside your local bank branch.
The growth of the internet and mobile technologies have transformed the way we conduct our financial lives. So too have these revolutions opened up the potential to increase financial inclusion for the world’s poorest people.By 2012, it is estimated that there will be 1.7 billion people across Africa, Latin America and Asia who don’t have a bank account but do have a mobile phone. More than 80% of the world’s population resides within mobile coverage and Africa has the fastest-growing mobile phone market in the world.
This week, the UK Department for International Development (DFID) is sponsoring a summit on mobile banking in Rio de Janeiro. DFID is supporting this conference because it believes that new technology-based financial services, such as mobile phone banking or the use of smartcards, have the potential to transform people’s access to finance.
The conference brings together mobile operators, finance institutions, and mobile money technology providers to look at new ways to both develop the market for businesses and provide greater access to mobile money services to the “unbanked” populations of the developing world.
“Access to basic financial services – the ability to save, transfer and invest even small amounts of money – can make a huge difference to people around the world. It can help a farmer to survive a bad harvest, or provide a slum-dweller with the vital capital needed to start a small business. It removes a huge barrier to people fulfilling their potential and contributing to economic growth”, says Secretary of State for International Development Andrew Mitchell.
“The GSMA Mobile Money Summit shows that mobile banking can be a win-win situation, benefiting both the private sector – banks and mobile phone companies – and the “unbanked” people of developing countries, giving them an escape route out of poverty.”
Even with the widespread availability of new technologies such as mobile phones, there is no guarantee that financial services will reach or be appropriate for people living in extreme poverty. DFID, in partnership with CGAP and the Bill and Melinda Gates Foundation recently announced a partnership to ensure that the world’s poor benefit from new innovations and gain access to financial services. See more in our previous blog on branchless banking.