World Bank Funds Mobile Banking Development in Maldives
Published on: 17th Apr 2008
Note -- this news article is more than a year old.
The World Bank has approved a USD7.7 million credit to Government of Maldives designed to improve access to financial services by allowing users to access any bank account using their mobile phone.
The Mobile Phone Banking Project will create a single currency payment system which offers a set of mobile telephone-based accounts. The system will enable subscribers to transfer funds to and from bank accounts and to and from telephone-based accounts. In addition, the project aims to build an enabling environment and the capacity to support successful mobile phone banking systems.
"The widely dispersed population in the Maldives makes delivering financial services through traditional branch banking networks very difficult," said Alastair McKechnie, World Bank Country Director for the Maldives. "But given its highly literate population and high coverage of the mobile phone network, the country has a great potential to use technology to overcome the barriers of geography and low population density to deliver financial services at low cost across the country. This project will in particularly help reduce the vulnerability of people living in remote areas who currently have little access to formal bank outlets."
The target group that will most directly benefit from this project is people who live and work in the widely dispersed islands. Their remoteness from formal bank outlets forces them to carry significant amounts of cash and travel long distances to collect payments, pay bills, or transfer funds to relatives, friends, or suppliers.
A collaboration between the Maldives Monetary Authority (MMA) and the microfinance industry body CGAP (Consultative Group to Assist the Poor) was initiated to develop a concept and proposal that provided the basis for the project. As part of the project, CGAP will provide parallel funding of US$1.5 million to the project to provide policy advice to the Maldives Monetary Authority on the establishment of a regulatory framework for mobile banking.
"The early experience with mobile banking in places such as Kenya and the Philippines demonstrates how wireless technology might fundamentally change how poor people access financial services," said Elizabeth Littlefield, CEO of CGAP. "This bold project by the Government of Maldives aims to show that remote locations need no longer be barriers to accessing convenient, affordable financial services."
The Mobile Phone Banking Project is consistent with the government's Country Assistance Strategy objective of improving access to finance to enhance private sector development in the Maldives. The USD7.7 million credit from the International Development Association, the World Bank's concessionary lending arm, has 40 years to maturity with a 10-year grace period