CGAP Drives Expansion of Mobile Banking to Reach the World's Poorest PeopleBy Cgap, PRNE
Monday, November 15, 2010
WASHINGTON, November 16, 2010 - Ground-breaking mobile and agent banking programs have enabled poor
people from Kenya to the Philippines to access financial services for the
first time. CGAP today announced a further 3-year commitment to take this
innovative approach to millions more around the world.
The Bill & Melinda Gates Foundation is providing CGAP, an independent
microfinance group housed at the World Bank, with a grant of US$6 million to
support the next phase of CGAP's Technology Program to promote mobile and
agent banking to scale up in developing countries. The grant is in addition
to a major grant the foundation provided in 2006, as well as CGAP funding and
GBP 8 million that the UK's Department for International Development (DFID)
committed to the CGAP Technology Program in March.
"The concept works. Now it's time to take it out of the lab and into the
mainstream," said Tilman Ehrbeck, CGAP's chief executive officer. "There is
tremendous potential for innovative delivery channels to reach the 2.7
billion poor people who have no access to affordable financial services."
CGAP's Technology Program aims to help drive the expansion of a range of
financial services for the world's poorest people by significantly reducing
transaction costs. It will focus on target markets to demonstrate how such a
system would work at full scale, while also improving industry knowledge and
practice to ensure the systems work effectively.
The Technology Program at CGAP will also advise governments on how to put
in place appropriate regulations to ensure growth is balanced by appropriate
protection for mobile banking customers, and help them connect social safety
nets and remittance payments to mobile banking networks to ensure the poor
can more readily use financial services to save, pay bills, and even buy
To date, CGAP has provided financing and technical guidance to more than
a dozen mobile banking start-ups in Asia, Africa, and Latin America and has
performed detailed policy assessments in 13 countries.
"If we are to take the initial success seen in the limited markets so far
and really bring it to the people, we need to go a lot further in
demonstrating its successes, its sustainability, and its security for all
those involved," said Ehrbeck.
In 2009 alone, there were 120 e-money initiatives globally. CGAP research
shows that nearly 40% of branchless banking customers in developing countries
previously had no access to services at all. CGAP researchers have found that
branchless banking scales five times faster than traditional microfinance
institutions, and is 38% cheaper than traditional banks for low value
transactions typically done by the poor. But much more work is needed,
according to CGAP, to design innovative saving, insurance, and other
financial products that take advantage of branchless banking channels to
provide a full set of financial services that poor people can use to improve
their families' lives.
"One of the key lessons is that to reach the sort of scale that's needed,
you absolutely must have the right business models, and the right regulations
to ensure that the people relying on branchless banking can be confident it
will last, and will be secure," said Stephen Rasmussen, Technology Program
Manager at CGAP.
This grant was announced today by Melinda French Gates at the Global
Savings Forum in Seattle, Washington, as a part of the foundation's $500
million pledge to expand access to savings accounts and help the world's poor
build financial security. The pledge included a package of six grants,
totaling $40 million, from the foundation's Financial Services for the Poor
initiative, to support projects and partnerships that will bring quality,
affordable savings accounts and other financial services to the doorsteps of
the poor in the developing world.
CGAP is an independent policy and research centre dedicated to advancing
financial access for the world's poor. It is supported by over 30 development
agencies and private foundations who share a common mission to alleviate
poverty. Housed at the World Bank, CGAP provides market intelligence,
promotes standards, develops innovative solutions and offers advisory
services to governments, microfinance providers, donors, and investors. More
In Washington: Jeanette Thomas of CGAP, +1-202-473-8869, +1-202-744-4829, Jthomas1 at cgap.org
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