Banking by Phone

Another type of Mobile Banking is where your bank is on your phone.  Africa is far ahead of the rest of the world in mobile phone banking.  In this article by The Economist, called Press 1 for Modernity, it states that "Three-quarters of the countries that use mobile money most frequently are in Africa"  More than half of adults bank over their mobile phones in Kenya, Sudan and Gabon.  These are some of the highest rates in the world.


Think about that - half of all people in Sudan are banking over their mobile phones.  That is truly amazing.

This is a leapfrogging of technology that is common in developing countries where infrastructure costs can be exorbitant.  Many developing countries skip land lines and go straight to cell phones.  Likewise, they are skipping brick and morter and moving straight to banking on their cell phones. 

Mobile Banking Gets Boost in Haiti

USAID and the Gates Foundation are giving up to $10 million to the Haiti Mobile Money Initiative (HMMI).  The goal is to encourage mobile operators and banks to help set up mobile banking in Haiti.  Digicel won the first  $2.5 million award in January 2010.

Greta Greathouse, the Chief of Party for the USAID funded "Haiti Integrated Finance for Value Chains and Enterprises" Project (HIFIVE) made some important points in an interview.

• A positive regulatory environment can facilitate the creation of sustainable money services
• NGOs currently deliver large sums of money at work sites.  This could be done more safely, efficiently and inexpensively via mobile cash transfers.
• The prize money will be awarded on two levels:
• 1)  "First to Market Award" to encourage quick growth of mobile banking facilities in the short term
• 2) "Scaling" prizes who build out services to target levels within 18 month

Read the full article: "Haiti: Could Mobile Banking Be A Legacy of the Earthquake" on the CGAP Website.

Learn more about the Haiti Mobile Money Initiative.

The Unlikely Roots of Mobile Banking

 This short article in Fast Company magazine delves into the accidental beginnings of mobile phone banking.  The story states that a woman who was piloting the M-PESA micro-finance system ended up paying her bus fare by phone after her money was stolen.

While not the original intent of the M-PESA program, it was quickly recognized as a revolutionary way to store, save and transact money.

And now... mobile banking is used by over 13 million customers in Africa, Afghanistan and India - with millions of others spread across the globe.

Read the full article:  A Mobile Banking Powerhouse Born From Bus Fare Thef.

Estonia Rides the Bank Bus

Estonia joined the Bank Bus revolution through Swedbank's portal banks in 2009.  At these "Mobile Branches" customers can obtain a full range of banking services.  According to the Swedbank Website, services include:

• opening a current account
• bank transfers
• cash withdrawal from ATM
• cash deposit via ATM
• conversion of foreign currencies held in accounts (not in cash)
• ordering debit cards
• signing deposit contracts
• setting up standing orders
• signing mobile services contracts
• ordering e-bills
• signing Internet and telephone bank contracts
• applying for and ordering credit cards
• applying for small loans, study loans and overdrafts
• signing small loan, study loan, overdraft and suretyship contracts
• joining the mandatory funded pension system
• requesting account information – account balance - transaction copies - account statements
• information about all services of the bank
• using the Internet bank

Learn more about Swedbank's bank bus!

Mobile Bank Bus - Hop Aboard!

There are many incarnations of mobile bank buses.  The picture at right shows one used in Virginia, USA which allows people to file taxes, get online banking tutorials, run credit reports, and access bank and mortgage services from BB&T Bank.

Similar buses are being used across the developing world to bring banking to remote areas that otherwise would be too small and distant to warrant a bank branch.  In Nagpur India, for example, IDBI has launched "Mobile Bank" Buses.  They have promised not to charge account holders for savings accounts for the first five years of service.

These buses will target 73,000 villages with populations under 2,000 each.  IDBI is planning to open hundreds on bank bus branches this year. (Source:  NewKerala.com: IDBI Launches 'Mobile Bank' Bus)

If successful, these bank buses could bring banking services, loans, savings and investment to those who would otherwise have extremely limited access.

Mobile Banking Continues To Boom!

Mobile banking is expected to grow to $22 billion by 2015.  It is being propelled due to higher rates of cell phone ownership, greater acceptance, and wider knowledge of the service.  Cell phone usage in Africa has grown from half a million people a decade ago to an expected 800 million by 2015.

The mobile banking industry's dramatic moves are being fed, in part, by successes such as Safaricom - one of the major suppliers of mobile banking services in Africa.

Safaricom began with a $1,000 four yeras ago.  Safaricom now runs 218 outlets across the globe.   While successful thus far, several starup companies are gearing up to complete one for the online music market.

What is Mobile Banking?

How do you reach a Billion people with a cell phone, but no bank account?  Easy - run your bank account through your phone.  Mobile banking allows individuals to add money to their account, and then spend it by sending the money to a merchant's phone.  See a video from the BBC on how Mobile Banking by phone works.

While mobile banking has been able to overcome some banking challenges, it cannot as easily overcome illiteracy or extreme poverty for those who cannot afford a cell phone.  In Africa, more stable, richer countries with mobile infrastructure have been the first to receive these types of services.  The higher literacy rates and cell phone penetration make them less risky options.

Internet Banking Booms with Mobile Banking Still in Infancy

Even so, mobile banking was making big inroads into some of the more developed nations of Africa in late 2009, and has continued to spread since.

Although the developing world was beginning to embrace mobile banking, in the US a September 2009 survey shows that only 1% of people preferred  mobile banking to other methods.  At that time, the break through was that internet banking had just taken over as the most preferred method of banking.

View the detailed Survey: Consumers Perfer Banking Online at Marketing Daily.