14 DAY TRIAL // A fresh report published by Vodafone in association with Nokia and Nokia Siemens Network shows that a new "regulatory framework is needed to encourage financial transactions by mobile phones and transform access to financial services in developing countries".
The report, published today, is called "The Transformational Potential of M-Transactions" and it's Vodafone's sixth policy paper, containing details about researches conducted by high-experienced economists (from Frontier Economics and Groupe d'Economie Mondiale) and World Bank consultants.
The mobile phones' ability to deliver basic financial services in developing countries has been studied in the last two years by pilot programmers in Asia and Africa. They concluded that mobile devices have a big potential in delivering this type of services.
A large number of people from all over the world rely on low-security cash-based economies, due to the absence of proper banking services. The new report, pointing out that financial services are crucial for economic development, says that bringing these services to people who don't have access to them is vital for poverty reduction. Also, the services will bring the first concrete chance for the not-so-wealthy people to reach a formal "banking ladder". Moreover, there will be advantages like time saving, reduced threat of crime and secure savings opportunities.
Alan Harper, Vodafone Group Strategy Director, stated: "The case for mobile transactions has been well proven by recent pilots. In a country such as Kenya there are 400 bank branches, 600 ATMs and 10 million mobile phones. There is clearly the potential to bring access to finance for hundreds of thousands of individuals for the very first time. However, there is also an increasing need to ensure that current banking regulations do not undermine or limit this growing potential."
Although mobile transaction schemes seem to bring only advantages, the banking regulation that currently exists is not suitable for their growth. This is why in today's report, Vodafone, Nokia and Nokia Siemens Networks suggest some changes to the regulation. The changes should positively influence the review of deposit taking, the access to the clearing system, the adaptation of "know your customer" and anti-money laundering, the interoperability of m-transaction schemes etc.
"A regulatory approach that tries to force m-transactions into the existing structure of retail banking regulation and financial supervision could impose high fixed costs and significant compliance problems. Any new framework needs to be risk based, sensitive to practical issues relating to underserved developing markets, and encourage experimentation and innovation," said Diane Coyle, author of the report.
Nokia's Business Development Director, Antonio Torres, declared: "The growth of mobile phone usage in remote and rural parts of the world is creating many positive opportunities to widen access in an affordable way to other social and economic services. This report highlights the need for some fresh thinking and a new approach if the full potential of this new found mobility is to be achieved."
It is believed that mobile financial services will come with major improvements to the overall financial services, like reduced risk in domestic payments or faster and cheaper international payments.