Mobile system eyes rural market

Written by Sebastian Strangio and George Mcleod

Monday, 26 January 2009

ANZ's WING system will allow people to transfer funds using their mobile phones, with development agencies saying the technology could play a role in fighting rural poverty Photo by: SOVANN PHILONG ANZ Managing Director Brad Jones speaking last week at the launch of WING – a mobile payment service. The company says WING will allow workers to transfer small amounts of money quickly and securely, and provide an important service to the poor. EVERY month, hundreds of thousands of garment workers send much-needed income to their families through informal networks of couriers, friends or money-lenders. With no electronic tracking, many of these funds are lost, stolen or taken in service charges from already impoverished workers. But a new mobile phone money-transfer service launched by Australia and New Zealand Banking Group (ANZ) aims to giving millions of Cambodians the ability to transfer money securely and quickly, bank officials say. Industry insiders are predicting a rosy future for the new technology, saying it could make inroads into the Kingdom's rural cash economy. WING, ANZ's new branchless banking service, will enable rural Cambodians to make low-cost person-to-person payments and transfers directly from their mobile phones, reducing the risks associated with handling large amounts of cash, the bank said. "WING will help improve people's livelihoods and reduce poverty by increasing their access to banking services," said ANZ Chief Executive Officer Mike Smith at the launch of the new service last week. He said that mobile banking will open up large portions of the Cambodian market to banking services, allowing rural Cambodians access to banking and a route out of cycles of rural subsistence. "Access to financial services and the ability to save and transfer money is a significant challenge in Cambodia. By enabling customers to create savings accounts, we can help break the cycle of subsistence living," he said. "WING will help people make secure payments and create sustainable communities, and for ANZ it's a sustainable business opportunity, so it's a real win-win." Mobile payment systems - also known as M-banking or SMS banking - have proven successful across the developing world, from South Africa and Kenya to Latin America. Kinsey & Company, a global management consultancy, wrote in the South China Morning Post in 2007 that the technology also had the potential to unlock a massive market of rural Chinese, noting that the prize of adopting mobile banking would be "substantial". The service will help Cambodians to transfer money home, especially garment workers. Growth potential Margarete Biallas, program manager of the Access to Finance program at the International Finance Corporation, which has assisted in the development of WING, said that the technology had the potential to take off in Cambodia as it has in Kenya, where three million customers have signed up since mobile banking was introduced three years ago. The IFC is the private sector arm of the World Bank group. "Mobile phone banking has huge potential in Cambodia," Biallas told the Post, adding that the technology had a ready-made market in the Kingdom's thousands of garment factory workers, who are often paid in cash. "The service will help Cambodians to transfer money home, especially garment workers, who are already sending home $25 to $30 per month from their salary. They are now transferring money through friends and other informal networks, which is costly and not secure," she said. Operating challenges One of the main challenges in getting mobile payment services to rural Cambodians is the ingrained sense of distrust towards banking services in the countryside, where local money lenders have traditionally held peasants in their sway with exorbitant rates. "This is one of the big challenges to starting a business that offers branchless payment services," said WING Managing Director Brad Jones, who said a concerted education and marketing program would be launched shortly to familiarise rural customers with the technology. According to Jones, most WING customers' first point of contact will be the company's local salesman - called a WING "pilot" - who will help recruit customers locally. "We're training them and they're earning an income to provide these services, so WING will become very much a part of the community," he said, adding that the technology does not require a technologically advanced handset, and that lower-end Nokia phones, which make up the majority of the Cambodian market, would run the new WING software as well as more expensive models. So Ponnary, executive vice-president and chief operating officer of ACLEDA Bank, agreed the technology was well suited to the Cambodian context and added that ACLEDA was hoping to launch its own mobile payments system by the end of 2009. "We are developing it, but we need to study all the risks of the project, so our customers feel confident with the service," she said. Security concerns While security has been a concern in the establishment of M-banking services around the world, Jones added that WING had improved on the system used in Kenya, in which money accidentally sent to the wrong person could not be retrieved. Unlike older systems, no customer information would be stored on the phone, which would in turn be protected by a PIN number and customer registration code, Jones said. Cambodian banking officials also see the macroeconomic benefits of the new banking format. National Bank of Cambodia Deputy Governor Neav Chanthana said the new technology - which will offer payments services in riels only - could contribute to the stabilisation of the financial sector and bring vast rural areas into the national banking framework. "The provision of M-payment services will result in substantial social and economic benefits to Cambodia," she said at the launch. "WING provides our transient labour population the ability to stay financially linked to their families faster than ever before."