Building financial capabilities through m-banking

Rural banks already play a big role in small communities. They serve over one million low-income families who trust them for microinsurance, loans, savings and other crucial banking services that help them build a financial foundation to support themselves and their families.

As such, it is important that these services are made readily available and accessible to the poor in remote places, where a vast majority of rural bank clients’ are situated. By improving access to financial services, rural banks represent a key component to the government’s vision of inclusive growth by reaching a wider number of clients while effectively saving on costs.

In fact, since mobile banking was introduced in 2006, the rural banking industry has been able to process more than P16 billion in mobile money transactions, involving almost 100 rural banks and their 1,200 branches and other banking offices.

Through its Microenterprise Access to Banking Services program or MABS, the Rural Bankers Association of the Philippines (RBAP) assisted member-banks to increase the financial services offered to small farmers, fisherfolks and small and micro-entrepreneurs by providing microfinance technical assistance and training.

On the other hand, trained banks develop their products and services–such as loans, deposits, and money-transfer services, to name a few–to specifically suit the needs and requirements of the poor. One of the tools constantly utilized by rural banks is mobile banking.

While bigger banks have been investing in their own ATMs, most rural banks have partnered with a third party ATM provider such as ENCASH and offering a GCash and Smart Money-enabled ATM card services to their customers. Mobile money-enabled services, SMS banking, Point of Sale systems, cash cards, ATM cards, and prepaid debit cards are technologies that are now within the grasp of rural banks.

Improved banking services are likewise complimented by regulations that provide greater opportunities for rural banks to grow and expand both their services and their market reach.

Already, rural banks and their clients have a strong relationship; there are challenges that need to be addressed. One is building awareness amongst banks, cash-in/cash-out partner merchants and clients of the benefits of mobile phone banking services; and two, ensuring that banks maintain a close and continuous relationship with their clients and seeing to it that they are updated on the various new services that will make their financial situations easier and more productive.

Recently, MicroFinance Opportunities (MFO) has developed an online Course and Toolkit aimed at supporting branchless banking providers interested in incorporating Consumer Education as part of their adoption strategies. This Toolkit gathers lessons learned and insights from the implementation of a Consumer Education for Branchless Banking (CEBB) Program in India, Zambia and Philippines.

Practitioners will be able to use the Toolkit to identify the challenges their customers face as they adopt their branchless banking service and determine how consumer education can help to address them. The steps and guidance provided in the Toolkit will then enable practitioners to design a successful consumer education strategy for their branchless banking services.

Branchless banking is important because it allows microfinance institutions to serve more clients at lower cost, increases reach into areas where a full branch would not be cost-justified, and allows clients to access their accounts more frequently and manage their loan funds more easily. It likewise enables clients to access their funds closer to their homes or businesses through automated teller machines (ATMs), for instance, which implies less waiting time, less travel time to the service outlet, and 24 hour a day access to their funds.

Last March 7, MFO, together with the RBAP and its technical arm, the Rural Bankers Research and Development Foundation, Inc. (RBRDFI), launched the first run of the CEBB training at the Asian Institute of Management Conference Center Manila. The event – attended by various member rural banks and microfinance institutions and cooperatives – was graced by representatives from the Bangko Sentral ng Pilipinas, USAID, and the Asian Development Bank. The next run will be sometime May 2014.