Branchless banking in the Pacific is allowing thousands of people to have a bank account for the first time.
Experts say the Pacific is leading the world in its approach to mobile banking, with many people now able to get access to a bank account for the first time.
As part of their efforts to support the expansion of mobile banking, the Asian Development Bank (ADB) and CGAP have brought together technology companies with commercial banks and regulatory authorities together for a brainstorming session in Sydney.
CGAP is a Washington DC-based financial inclusion resource centre.
Stephen Rasmussen, manager of business innovation at CGAP told the conference central banks in the Pacific have taken a cutting-edge approach to the regulation of branchless banking.
“They are enabling different things to take off, they are open to innovation and I think that is step one,” he said.
“We see a lot of places in the world where the regulator regulates too early and prevents things from happening.”
Tony Westaway, the managing director of the regions' largest microbank, Nationwide Microbank in Papua New Guinea, says his organisation would never have not taken off if not for the support of the country's central bank.
“In the early days, I knocked on the doors of the commercial banks trying to create some collaboration, trying to extend our outreach to the grassroots people and I don't think the banks thought that small microfinance institutions such as ourselves could embrace this sort of technology.
“Well, they were wrong. We were able to partner with Digicel, we were able to go to the marketplace and that was very much with the support of the central bank,” he said.
John Arahuri, the head of rural banking in government-owned National Bank in Vanuatu says the bank has already opened 15,000 accounts.
“That goes to show there are 15,000 people who have never been able to come close to a bank in the past now understand what the benefits of banking is all about and our challenge now is that they continue to build up those savings,” he said.
“Individuals (who) have never saved in their lifetime and for individuals who save small amounts of money like a dollar, two dollars a day can be able to structure their savings over a 12 month period, and by the end of 12 months they have, for the first time, enough savings to be able to meet their own household needs.”
Branchless banking is growing fast in the Pacific but it has a long way to go before it reaches the penetration of other regions of the world and it returns the profit needed to secure its future.
Gane Simbe, the Deputy Governor of the Central Bank of Solomon Islands, says success in mobile banking in developing countries is not easy.
“It takes the latest mobile phone technology and banking systems and companies willing to deal with very small deposits that don't easily return a profit,” he said.
“It's very important that we get these things right so people in the rural areas who need to be connected to the financial system can be best connected.”
Currently, there are now five companies providing branchless banking and mobile wallets in PNG.
Nationwide Microbank's Tony Westaway sees a continuing need for good governance by the central bank.
“I think the regulator will need to step in and promote inter-operability between the wallets in order that everyone can participate and all Papua New Guineans whether they have got a digicel phone or a Bmobile phone or a BSP WantokMoney or Nationwide Microbank Micash that they can send money to each other and can share agents,” he said.
Westaway says the governor of PNG central bank Loi Bakani has committed the state to 2 million new bank accounts over the next 2 years.
“We are only going to be able to do that with some collaboration with all the parties in the marketplace working together so I think inter-operability is very important,” he said.