Nadi, Fiji: Mobile phone banking could increase access to finance for the underbanked in the Pacific region by reducing costs and reaching new customers.

Mobile Banking or M-Banking, whereby, a mobile phone becomes a device to process financial transactions, was discussed this week at the Pacific Microfinance Week 2009 in Fiji.

In the Pacific region, many people live in rural areas, leaving them isolated and unable to participate in the formal banking sector. Travelling to deposit or collect money can be an expensive and hazardous exercise, often taking days to complete. During the journey, money may be spent, lost or stolen with the possibility of the customer returning home more in debt than when he left.

For banking institutions, high service delivery costs leave them with little incentive to offer competitive prices to their customers. With the availability and use of mobile phones rapidly increasing across the Pacific region, mobile banking holds great promise for addressing these obstacles.

“At long last, the cost reductions and increased reach made possible by such technologies should enable us to serve remote areas and poor people viably,” said Robert Simms, IFC’s Access to Finance Programme Manager.

In Papua New Guinea, for example, there is great demand for a system that enhances cash safety. This system would include not only mobile phone transfers but also a means to transact, store and accumulate value for later use.  The challenge is in making the product safe, reliable, well managed and cost effective so that it address the majority of the population’s demand for cash security and wins their trust.

IFC is the principal sponsor of Pacific Microfinance Week 2009, a week-long series of events, meetings and gatherings of a range of organisations and individuals that share an interest in promoting the provision of inclusive and sustainable financial services in the Pacific. IFC’s Access to Finance programme forms part of a regional Advisory Services program to improve private sector development in the Pacific. The governments of Australia, Japan, and New Zealand are IFC’s donor partners.