Policies and Regulations for Expanding e-banking to the Poor

This paper argues that electronic banking (e-banking) has the potential to expand the outreach of microfinance to large segments of the population, provided the legal systems regarding electronic transactions are appropriately framed.The paper:

• Describes the advantages of and progress made by electronic banking (e-banking);
• Divides the various factors affecting the development of e-banking and e-commerce in developing countries into infrastructure, service and application layers, and makes policy recommendations for each layer;
• Explains the development of ICT in Pakistan and its impact on financial sector growth.

The paper concludes that:

• New and innovative channels such as banking and e-commerce have great potential and promise to extend a wide range of financial service to the poor;
• For the poor to benefit from ICT, there is a need for public private partnership vis-A-vis policy intervention and investment that embraces infrastructure, service, application, technology and human resources;
• Policies that can have a great impact in facilitating e-banking and e-com services to the poor should be directed towards:
  • Attracting private sector investment in ICT,
  • Facilitating accessibility and cost effectiveness of ICT services and equipment,
  • Computer literacy and general awareness,
  • Transaction security and consumer protection,
  • Conflict of laws.