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Four Forces to shape future

Four Forces to shape future

(24 November 2009 – Global) A report released by a micro finance group at the World Bank and the UK’s Department for International Development (DFID) said that the growing use of branchless banking, including mobile banking, is inevitable in most countries; but uncertainty still remains around how the unbanked poor will utilise the services. The report entitled, Scenarios for Branchless Banking, sets out four scenarios on the future of branchless banking and is the result of a six month scenario-building project that engaged nearly 200 leaders for the technology and finance fields from more than 30 countries.

In all four scenarios, the adoption and use of branchless banking services are forecast to be higher that today, but in two of the scenarios bursts of rapid acceleration are followed by periods of falloff or flatter growth.

Gareth Thomas, Minister for Trade and Development said that the fact that many of the 2.7 billion people who currently don’t use a bank will have access to branchless banking through methods such as mobile phones and the internet by 2020 is a huge step towards financial inclusion for people in developing countries.

Mr Thomas highlighted that the poor are kept in poverty when they are financially excluded.
This means they lack a safe place to save money, the opportunity to invest in their future and the risk of their savings being lost in a natural disaster, Mr Thomas added.

Researchers found that across Africa, Latin America and Asia, the number of people who do not have access to a bank account but do have access to a mobile is set to grow from one billion today to 1.7 billion by 2012.

The researchers found that there are four forces that will shape the future of branchless banking; firstly, demographic changes including a greater number of younger consumers coming into the market and greater mobility within countries.

Secondly, activist governments will play a greater role as regulators of the financial sector, providers of social safety nets, and providers or encouragers of the roll out of low-cost bank accounts and financial infrastructure will all play a part in financial inclusion.

Thirdly, security concerns about cash crime will continue to drive the adoption of electronic transaction channels; however the rise of electronic crime will affect consumer confidence and test risk management of financial providers.

Finally, internet browsing via mobile phones will reduce the cost of financial transactions and set the scene for new players to offer financial services.
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