Mobile money transaction
Mobile banking is a new and innovative way to extend financial inclusion to those who lack basic financial services. Like anything that is new and innovative, striking the right the regulatory balance can be difficult—too restrictive and you limit access, too lax and you put consumers at risk. USAID is committed to working with in-country regulatory authorities to develop risk based norms and standards to guide a safe and robust mobile financial services sector. USAID’s work in the Philippines serves as an apt example.
Five years ago, the Philippines had fewer ATM machines than islands. It was too costly for banks to reach far-off rural areas and serve them well, a problem no doubt exacerbated by the country’s fragmented geography. As a result, the vast majority of rural Filipinos have been forced to manage their money without access to basic financial services.
Fast forward to today. It is still too costly for banks to build bank branches across the archipelago. But in a country where seventy five percent of the population now has access to a mobile phone, we no longer need a physical bank to extend basic financial services to the rural poor. Take the Microenterprise Access to Banking Services (MABS) program as an example.
USAID has supported MABS for years. The program is meant to accelerate financial inclusion by encouraging the rural banking industry to expand access to microfinance services to microenterprises, small-holder farmers, and low-income households. We recently integrated the use of mobile phones into this programming. And the results have been quite positive.
- These banks have registered more than 250,000 mobile phone banking clients and have processed more than PhP 12 billion (US$250 million) in mobile banking transactions.
- Mobile money transactionMore than 90 MABS supported rural banks now manage approximately 250,000 micro-loan borrowers with a total outstanding micro-loan portfolio of more than PhP2 billion (US$46.6 million) and approximately 1.5 million micro-savings accounts amounting to more than PhP 2 billion (US$47.4 million).
This project would not have worked without a committed regulator, engaged early and often. From the onset, the MABS Program had a successful and collaborative relationship with the Philippines’ Central Bank (BSP) in the area of promoting financial inclusion and microfinance. Under the MABS Program, USAID worked closely with BSP to help support regulators’ efforts to train their officers and staff to get a better understanding of the unique regulatory requirements for microfinance operations.
The BSP itself has evolved into a champion of mobile money, and has become a key advocate for and leader in the development of risk-based regulation to enable this evolving financial channel. Thanks to their leadership and USAID’s diligent work, the limiting banking infrastructure won’t stand in the way of rural Filipino’s accessing basic financial services.