Wednesday, August 06, 2008

Banking by phone for the poor

By Associated Press

NEW DELHI (AP) _ It can scale mountains in a single bound and wend its way down the most wretched roads. It is the mighty cell phone signal -- and the latest hope for bringing financial services to the world's masses who don't have access to banks.

Grameen Solutions, an affiliate of Nobel Prize winner Muhammad Yunus' Grameen Bank, this week teamed with Obopay Inc., a for-profit mobile payment company based in California, to bring banking to a billion poor people using cell phones.

"Today, it's difficult to reach these people," Obopay India Executive Director Aditya Menon said at a news conference in India's financial capital, Mumbai. "If you solve that problem, you are enabling them to enter the economy."

The joint venture plans to launch pilot programs in India and Bangladesh in October and aims to reach 1 billion people globally by 2018, in large part by keeping costs ultra low -- possibly through the help of charitable foundations.

Obopay, whose partners include Verizon Wireless, Citigroup, BlackBerry maker Research In Motion Ltd. and AT&T Inc., is already active in the U.S., where customers who want to send money pay 10 cents per transaction. After opening an Obopay account, you can transfer money between bank accounts, credit cards and phones via text messages.

Obopay founder and CEO Carol Realini did not say what transaction fees would be for India and Bangladesh.

The announcement comes at a time of increasing convergence between telecom and financial services, especially in the developing world, where far more people have access to cell phones than banks. Mobile banking services have proven popular in the Philippines, Kenya and South Africa, for example.

The payoff could be big for companies providing these services. People who are now "unbanked" in China, India and Brazil alone could generate $85 billion in banking revenue by 2015, according to an estimate by the Boston Consulting Group.

In January, India's ICICI Bank Ltd., the nation's second-largest bank, launched a mobile banking system. The State Bank of India, which has more than 100 million customers, many without Internet access, has tapped Indian telecom Spanco Telesystems & Solutions Ltd. to set up its mobile banking systems.

The Bank of India, another public sector bank, also plans to launch mobile services soon, allowing customers to transfer funds, pay bills and even buy movie tickets over the phone.

All, however, have to wait for the finalization of India's mobile banking guidelines, which the Reserve Bank of India says will happen soon. Reserve Bank spokeswoman Alpana Killawala says she can't specify when "soon" might be.