 |
|
|
    |
Philippine regulatory approach provides exemplary m-banking model
|
|
|
From New Horizon Q1 2008
The Philippine Central Bank fosters an environment that helps bring mobile banking services to rural shopkeepers, street vendors and household-based entrepreneurs.
In the Philippines micro, small and medium-sized enterprises make up 99.6 percent of total businesses and employ 70 percent of the workforce. Around 4.1 million families belonging to the lowest-income strata are engaged in microenterprise activities.
Without access to financial services, these microenterprises are forced to rely on more expensive sources of credit, such as informal money lenders, that limit their growth capacity.
|
|
The Philippine Central Bank (BSP) recognizes these challenges and has fostered an enabling regime that supports microfinancing while ensuring the regulatory soundness of institutions engaged in banking services. Mobile banking (m-banking) plays a potentially revolutionary role in further expanding the reach of microfinance.
Creating an enabling environment
The General Banking Law of 2000 paved the way for microfinance to flourish within the banking sector, because it mandated the BSP to recognize microfinance as a legitimate banking activity.
Since then, the BSP has taken a proactive stance in developing an enabling policy and regulatory environment that increases access to financial services. This environment allows for flexibility and innovation while making certain that the policy and regulations are in place to ensure safety and soundness as well as maintain necessary safeguards against money laundering. The environment covers mobile and electronic banking risk management, security procedures, internal controls, anti–money laundering regulations, knowyour-client requirements and consumer protection.
New technologies, unique opportunities
The BSP also created a core information technology supervisory group to effectively supervise and remain abreast with the latest developments in mobile and electronic banking. The BSP is especially cognizant of new technology platforms that help make banking easier, and is closely coordinating with the mobile operators and banks on mobile banking to fully understand the operational details. Through electronic cash platforms such as Smart Money and Globe GCASH, mobile phone users are able to make payments and transfers, send remittances or make purchases. New technologies present a unique opportunity to reach a wide range of clients, including the lower-income segments of the population, often in rural areas, who are traditionally underserved and unbanked.
Innovating low-value payments
The Rural Bankers Association of the Philippines – Microenterprise Access to Banking Services (RBAP-MABS, funded by USAID) has a joint project with G-Xchange Inc., the mobile commerce subsidiary of Globe Telecom, which is one of the Philippines’ largest telecommunication companies. The joint project provides m-banking services using the GCASH platform. Banks under this program are allowed to become “cash in” and “cash out” outlets that are accredited to convert actual money into electronic money and electronic money into actual money, respectively. The BSP has approved the guidelines, training and other mandates that the bankers’ association requires banks to follow for GCASH services.
As of March 2007, there were 43 rural and cooperative rural banks offering electronic banking services, particularly m-banking. According to Mr. John Owens, chief of party at RBAPMABS, transactions are growing and have increased substantially over the previous year, with over 2,000 clients being registered weekly by rural banks as m-banking clients. The potential for widespread m-banking is significant, as SMS usage in the Philippines is one of the highest in the world in ratio to population.
■ This article is based on Philippine experience in alternative payments platform to increase access to financial services, a presentation delivered by the Philippine Central Bank at the World Bank event Next Generation Access to Finance in Washington, DC in September 2007. For more info about RBAP-MABS, see www.mobilebanking.rbap.org.
Download this story with the 1st Quarter 2008 Issue of Expanding Horizon at Nokia.Com
|
|
|
