PHL ready for mobile-banking takeoff

PHL ready for mobile-banking takeoff

Monday, 23 May 2011 19:24 Jun Vallecera / Reporter

MOBILE-phone use in the Philippines as platform for obtaining financial services is considered the best among countries with the strongest market as well as institutional mechanisms in place for such services, the World Economic Forum (WEF) said.

Prepaid mobile phone users in the Philippines number more or less 60 million based on estimates supplied separately by the global payments services firm Visa, and its potential as delivery platform for financial services is considered very high.

But while the Philippines tops four other countries in terms of high readiness in the use of mobile phones, the WEF said relatively few people in developing markets as the Philippines actually use them.

“Only a few smaller countries have seen adoption of mobile-financial services reach more than 10 percent of the adult population. Services deployed at scale in these countries are focused primarily on payments,” the WEF said in a paper titled “The Mobile Financial Services Development Report for 2011.”

A copy of the report was made available by the Bangko Sentral ng Pilipinas, the central bank being a strong advocate for the use of mobile phones as a tool in its financial-inclusion program.

Financial inclusion, as the term suggests, aims to empower even the financially savvy poor who are often excluded from the use of the various financial services readily available to most everyone else.

According to the WEF, the Philippines leads such countries as India, Brazil and Pakistan whose market and institutional environments for mobile phones as financial-services platform is accorded the highest state of readiness.

But it also said the services deployed in the cited countries are focused primarily on payments systems rather on the whole gamut of financial services.

Also, mobile phone use for financial services often results from lack of alternatives and often dictates their initial adoption.

“Countries with currently high mobile-finance adoption rates have relatively low levels of access to traditional financial services. While proportional regulatory frameworks and competitive markets are highly important for the long-term development of mobile financial services, they have not been as important as the sheer lack of alternatives in driving initial adoption,” WEF said.

It also said countries that have been most ready to adopt mobile phone technology as financial services platform may not be the most ready for the development of a portfolio of services.

“The institutional environment [which includes regulatory proportionality and consumer protection] and market environment [spanning market competitiveness and the presence of certain key catalysts] together can be considered an indicator of ‘readiness’ for the long-term development of mobile-financial services. A number of countries identified as ‘most ready’ have not yet achieved significant scale but may be poised to do so across a portfolio of services,” WEF said.

“A well-developed agent network is a threshold requirement for achieving scale. A dense and capable agent network is a necessary precondition for achieving scale. In addition to providing vital cash-in, cash-out services and enrolling new customers they also can be important for building trust for first-time users of formal financial services. The analysis confirms that countries that have achieved high adoption levels distinguish themselves from other countries by the density of their agent network,” it said.

 

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