A recent story by GMANews reports that eight million Filipinos are currently using mobile banking, illustrating an important development in microfinance by allowing people to deposit, transfer, and withdraw money from one e-money account to another. This is particularly important for people who don’t have a bank account but do have a mobile phone which they can use to manage their financial lives.
The number of rural banks offering mobile banking in the Philippines has risen to 49 when just five years ago not a single one offered the service. BSP Deputy Governor Nestor Espenilla Jr. said the Philippines has been recognized by international organisations for its microfinance initiatives and is viewed as a trailblazer in mobile banking solutions for the poor.
According to a 2009 study carried out by CGAP, the independent policy and research centre dedicated to advancing financial access for the world’s poor, and GSMA, an association of mobile operators, one billion people do not have a bank account but do have a mobile phone. Mobile banking is often more affordable than traditional banking and is especially helpful to people in rural areas who have to travel long distances to access banking services.
Mark Pickens, one of the authors of the study, explained, ‘Banking needs to be affordable, convenient and trusted for poor people to access it and reap the benefits. The study shows that compared to bank branches and ATMs, most mobile banking users say it falls closest to their ideal way of doing banking.’
Microfinance is a key development strategy used to provide financial services to the poor and thereby helping them to lift themselves out of poverty. Mobile banking has been shown to extend financial services to people who would normally be unable to benefit from them, so this is an important match.