Branchless banking seen expanding in next 10 years
An international report indicates that branchless banking in microfinance, which utilizes mobile phone banking extensively, will expand further until 2020.
But the Consultative Group to Assist the Poor (CGAP) report, bursts of rapid acceleration will be followed by periods of falloff or flatter growth.
“Recent surveys of customers using branchless channels in Kenya, Brazil, Philippines, South Africa and India show that today’s customers are primarily not the un-served majority,” FinanceAsia said quoting the CGAP report.
“We were able to identify only a few providers who are using mainly branchless channels and who meet two criteria: serving more than a million active low-end clients and making a profit from doing so.”
The report from CGAP and the Department for International Development (DFID) of the United Kingdom, is part of a six-month scenario-building project that engaged nearly 200 leaders from more than 30 countries. CGAP is
It stipulated that the success in branchless banking depends on offering a far superior product to existing options.
“To date, branchless channels meet this standard only for some clients.
High initial adoption can be followed by high dormancy rates or infrequent usage, which indicate that the service is not as useful as it first appeared. Ultimately, poor people will use the new electronic services when they meet real needs,” Sarah Rotman, co-author of the report, said.
The report identified four key forces, which are likely to increase the use of branchless channels by the poor. These are:
* Demographic changes – including a greater number of younger consumers coming into the market and greater mobility at least within countries – will be favorable for the adoption of branchless banking.
* Activist governments will play a greater role as regulators of the financial sector, providers of social safety nets, and providers or encouragers of the rollout of low-cost bank accounts and financial infrastructure. This expanded role may be helpful for financial inclusion.
* While security concerns about cash crime will continue to drive the adoption of electronic transaction channels, the rise of electronic crime will affect consumer confidence and test the risk management of financial providers.
• Internet browsing via mobile phones will reduce costs of financial transactions, and enable new players to offer financial services.
Source: http://www.philstar.com/Article.aspx?articleId=528251&publicationSubCategoryId=74