Technology Making Microfinance More Accessible

July 14, 2009

Using mobile phones to buy electricity, accessing banking services through Electronic Funds Transfer at Point of Sale (EFTPOS) units and bank cards to transfer remittances are some examples of how technology can bring financial services to remote areas of the Pacific.

The experience from the implementation of these systems, which are already in place in some Pacific Island countries, was shared with delegates at the Pacific Microfinance Week yesterday during a panel discussion on Microfinance and Technology.

Asian Development Bank’s Jeremy Cleaver said that the use of technology to provide financial services was primarily aimed at reducing costs.

For people living in the rural areas, instead of traveling to a bank in an urban area, which may require a few hours of journey, it is easier to consult their bank accounts using a mobile phone. Similarly, people can check if their salaries have been deposited from their homes, for example, and make and receive payments.

“A coffee grower in Papua New Guinea, can for example can receive money from a buyer using a mobile phone,” said Mr. Cleaver.

Mr. Cleaver said that enough certainty that providers are operating safely but enough openness to allow new products to develop was important in ensuring mobile banking services.

Such an environment is existing in Papua New Guinea and recently, Papua New Guineans can buy electricity using mobile phones.

Sundar Ramamurthy, the General Manager of Datanets, a company which produced the mobile application that allows the purchase of electricity said that the response of people to this technology was overwhelming.

“We have an average of 26,000 transactions per day,” said Mr. Ramamurthy emphasizing that it showed that Papua New Guineans were willing to take up this form of payment.

Technology has also come to assist Pacific Islanders reduce the cost of sending remittances home. Speaking about the Westpac Pacific Banking Remittance Card, Anne Templeman-Jones said they had developed a two card system, in which the remittance sender had the primary card and the remittance receiver the secondary card. Remittance receivers were able to retrieve their money using the card at any ATM or getting cash back at a store instead of paying money to money transfer agents to do so.

John Aruhuri, Head of Rural Banking Services in Vanuatu shared his experience of the practicalities of rural banking. Mr Aruhuri described the challenges the bank had in servicing its remote branches. These ranged from having a bank officer travel to communities on a motor bike, to bank officer climbing on the roofs of their building in order to get a mobile network signal. He also highlighted the solutions they were developing to address these issues.

Tillman Bruett, of the Pacific Financial Inclusion Programme (PFIP), and moderator of the session on Microfinance and Technology said most of the initiatives discussed were client focused and recognised the daily needs of people to move money safely.

PFIP is a Pacific-wide programme helping provide sustainable financial services to low income households. It is funded by the United Nations Capital Development Fund (UNCDF), European Union and the United Nations Development Programme (UNDP) and operates from the UNDP Pacific Centre.

PFIP is one of the sponsors of the Pacific Microfinance Week.