Sunday, September 17, 2006

Microfinance/M-Commerce thoughts

Been reading focus notes of a recent world bank publication listing Financial Institutions that use E-Payments to serve the poor. Particularly interested on using mobile phones as a means to carry out basic banking transactions.

Was surprised that for the Philippines we only have one entry (Rural Banks Assocations of the Philippines via Globe G-Cash?), and it was only offering one service: Payments.

Anyway, it also mentioned some reasons why potential users are cautious in using m-commerce. Nothing new here, I have mentioned this a couple times in this blog.

- Mobile banking applications are not yet inter-operable.
- Mobile phone payments may not conform to international security standards. And if I may add SMS as a basis for m-commerce transactions just doesn't cut it. Message delivery reliability issues still haunts this platform.
- For banks, a "mobile phone only" channel has not yet proved profitable. Chicken and Egg scenario here.
- Mobile phone banking may not be able to reach the most remote and poor areas. I don't see this as much of a hindrance in the Philippine setting. Rather (as I repeatedly mentioned on this blog) the lack of infrastructure for cash-to-electronic/electronic-to-cash convertions.
- Mobile phone banking may not be easy to use for illeterate and older users. True. Its a fact also that these young at heart would rather stick to tried and tested finance channels.
- Regulation surrounding mobile phone banking is not yet clear. There is no clear cut regulation yet in the Philippines. Am still confused with the whole cellco performing basic banking functions stand (Is it a bank or not?)

And only G-Cash was identified. Where is Smart Money?

Anyway am looking at this from an angle of an industry obeserver. I still lack the depth of a true blooded microfinance expert. Been itching to pursue a graduate study on microfinance, if only it wasn't that expensive!

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