Mobile Banking for Inclusive Growth

This paper discusses the potential of mobile phone technology in decreasing government intermediation and helping the poor access services directly. It describes a project in Kenya that provides commercial banking services to remote rural communities at village satellite centers, which are mobile banking units attached to existing branches. It derives lessons for India from this project.

The paper states that the revolution in information technology has created an opportunity to directly reach customers without government intermediation. Banks are introducing mobile banking to help villagers access financial services easily and at low costs. Key points include:

• Lack of availability of reliable data on the financial health of their clients is a significant obstacle in banks use of mobile phones for financial inclusion;
• Kenyan project has reversed a long term trend of commercial banks withdrawing from rural areas in Kenya;
• Kenyan project has proved successful, and many banks in Africa have expressed interest in replicating this model;
• Collaboration among the internet, mobile network operators, and banks can help to make mobile banking can become an effective tool to decrease government intermediation, corruption, and costs in India.