Mobile Banking: Knowledge map & possible donor support strategies
Mobile banking (m-banking) involves the use of a mobile phone or another mobile device to undertake financial transactions linked to a client’s account. M-banking is one of the newest approaches to the provision of financial services through ICT, made possible by the widespread adoption of mobile phones even in low income countries. The roll out of mobile telephony has been rapid, and has extended access well beyond already connected customers in developing countries. There is mounting evidence of positive social impact on poorer people and communities as a result.
There are sound reasons for the hope that m-banking could have similar impact. A mobile network offers a high technology platform onto which other services can be often provided at very low cost to deliver an effective result. Mobile data channels are often under-used and therefore may be offered at low cost by the network operator. M-banking services which use channels such as text messaging/ SMS can be carried at a cost of less than US1c per message. The low cost of using existing infrastructure makes such channels more amenable to use by low income customers. M-banking is new in most countries, and there has been limited donor support in the sector to date.
This report considers the case for donors to support m-banking as a sector, by assessing:
- The likely impact on the lives of poor people in theory and practice—the ‘why’ of donor intervention.
- The needs and gaps arising from the development of the sector to date, in the light of what donor-funded programs are already doing.
In the light of this assessment, the report considers strategies and particular initiatives which donors may take to respond concretely to the needs and gaps identified.