Implementing Mobile Phone Banking
A major constraint to economic growth was limited access to financial services. Most Rural areas has limited access to financial services 10% of the population regularly did business with a bank. Lower socio-economic groups generally did not save with banks and were forced to turn to moneylenders, pawnshops or lending investors for loans. Rural banks are an ideal vehicle to reach lower income individuals. These 800 rural banks have approximately 1600 offices already operating in low income communities and already covering their overhead costs.
Some of the identified challenges for Rural Banks are:
- Reaching deeper into rural areas without costly investments in infrastructure
- Reducing costs of servicing
- Avoiding risks from robbery, holdup
- Reducing costs to clients
Among all industries, the mobile phone industry is the best partner for the Financial Services. There are three reasons:
- Mobile Phone penetration offers a way to cheaply and rapidly provide financial services to unbanked customers – no other technology offers the same way nowadays.
- There is no other technology aside from mobile telephony that is reaching maturity at a rapid rate in so many developing countries at the same time.
- Mobile phone’s physical proximity to human than other technology products.
Rural Areas are underserved market due to transaction cost and densities in rural area is too low for bank branching. Mobile Phone Banking is the great solution to reach the unserved or underserved (unbanked) rural community. You only need a cellphone (1 for each branch ) to start offering mobile phone banking services to your bank.
Text-A-Payment (TAP) service is an innovative mobile technology product that uses the mobile phone’s SMS technology (or texting) to allow micro-borrowers to perform microfinance loan payments.
Text-A-Deposit (TAD) is an innovative service designed for allowing mobile phone subscribers to perform deposit transaction to their existing bank account using their mobile phone.
Text-A-Withdrawal is a service that allows bank clients to remotely withdraw money from their bank accounts using their mobile phones.
These manuals are included in the training kit provided to the rural banks during the GCASH accreditation training.