Mobile banking: WING expands services to Cambodia's unbanked

MANILA, Philippines - The banks and telecommunications companies (telcos) in Cambodia are now targeting the unbanked communities, which could result in huge savings for the poor, higher transaction earnings for telcos, and more financial activities for the banks.

According to a quarterly analysis by financial consultants McKinsey & Co., the cost of serving customers is reduced by 50 to 70 percent by using mobile phones, making it possible to offer financial services to a vast population once considered unprofitable.

And a subsidiary of the Australia and New Zealand Bank (ANZ) is taking advantage of the growth of mobile banking.

WING managing director Brad Jones, Managing Director of WING, which launched mobile transactions in Cambodia in late 2008, said that the potential is obvious.

“There are four billion cell phones in the world, but only 1.6 billion bank accounts representing a massive market opportunity for organizations that can develop business models to serve this group,” he said.

WING uses existing channels on mobile-phone networks – including Hello and Mfone - to transfer money from person to person (P2P) through text or small message system (SMS). After a user sets up a WING account - for a subscription fee - their money is held by ANZ bank and moved between WING users by SMS.

In its first year of operation, the service attracted 100,000 users – an estimated 56 percent of which were previously unbanked. It is now working with microfinance institutions (MFIs) to expand to loan repayments.

For ANZ, the plan gives birth to more financial transactions while telcos will see SMS traffic and revenue balloon.

The expansion of mobile banking in Indochina is driven by experiences in Kenya and the Philippines.

Nick Hughes of Vodafone is said to be responsible for developing mobile banking in Kenya some five years ago. Kenya’s Mpesa service is reportedly enrolling an average 10,000 customers daily, and it is giving birth to similar services in Afghanistan and Tanzania.

In the Philippines, roughly eight percent of its unbanked population has subscribed to mobile banking, McKinsey reported in February. Experts say that the potentials are limitless in the Philippines where half of the population has a mobile phone, more than the number of those with bank accounts.

The sector is rapidly expanding. McKinsey estimates that 120 operators in 70 markets will deploy mobile-money offerings worldwide within the next six to 12 months.

“Today, only about 45 million people without traditional bank accounts use mobile money, but we expect that this number could rise to 360 million by 2012 if mobile operators were to achieve the adoption rates of of some early movers,” it said.

It added that by 2012 the sector has the global potential to generate $5 billion in direct revenue, such as transaction fees and cash out, and $3 billion in indirect revenues, including telco provider churn and higher average revenues per SMS.