Accelerating growth through M-Banking & M-Health


While only roughly about 5% of the population has access to computers, more than 50% of the world population has mobile phones. Mobile phones have become cheaper and are more ubiquitous these days. Hence given the penetration of mobile phones it makes sense to use them for improving the lives of those in emerging economies. Two such technologies which hold enormous potential are m-banking and m-health described below.

M-banking: Financial services, a key driver for economic growth, is either negligible or completely absent in remote rural areas. Regular banking services are unviable in these areas. The small deposits and loans held by the rural poor make it unprofitable for traditional banks to operate in these areas through traditional delivery methods.  In these areas m-banking is truly a god send.

M-Banking refers to financial services offered by Service Providers to the unbanked poor in rural areas. The people in these villages can purchase either pre-paid or post-paid units from the Operator. They can then use these units to pay for goods and services. M-Banking offers a safe and secure method to the unbanked poor for sending and receiving payments through SMS’es. To make m-banking a reality, requires the coming together of the 3 major players namely the Service Provider, the Application developer and the financial institution which can regulate and disburse units of money.

A recent report by McKinsey with GSMA in 147 countries shows that more than 1.7 billion people in emerging economies will have a mobile phone without access to banking services. The McKinsey reports also states that by 2012 the opportunity in m-banking would generate $5 billion annually in direct revenue from financial transactions and $3 billion in indirect revenue through reduced customer churn and higher ARPU for traditional voice and SMS services.

Some examples of success are M-Pesa of Kenya, Wizzit in South Africa and Globe in Philippines.  M-banking provides a 24×7 service in the village and does not require any complicated infrastructure. One could imagine services where the unbanked poor could receive instant payment for the farm produce, could save money on a regular basis and pay for electricity bills instantaneously through SMS. This will increase both the sense of security and personal well being.

M-banking provides for tremendous socio-economic growth in the villages. With the increasing penetration and the ubiquity of mobile phones m-banking represents a sure-shot way of ensuring all round economic transformation in the villages.  M-banking helps in reducing risk and brings true convenience to financial transactions. However, appropriate authentication and authorization procedures should be used.

Mobile banking does not need expensive infrastructure that is required of banks, the network of ATMs for depositing and withdrawal of money. M-banking is convenient, secure, easy to use and can be quickly deployed. While the Service Providers are the facilitators of m-banking, it is the financial institutions that will regulate and provide banking facility to the unbanked poor.

Hence m-banking is a complete win-win situation for the all the players involved namely the CSPs, the financial institutions and the unbanked poor. Besides providing convenience, m-banking will be a key driver for all round economic growth in the villages.

M-Health: Another companion technology which has enormous potential in emerging markets is m-health. M-health relates to the provision of health services in rural areas where there is an acute shortage of qualified health workers. In these areas the use of mobile communication can help in addressing key health needs of the poor, thanks to the explosive growth of mobile phones in these areas.

Some of the key benefits of m-health is the ability to spread timely health related information and diagnoses to the health workers in the villages enabling the ability to quickly track and contain the spread of diseases and epidemics. Other applications include remote data collection and monitoring of health related issues.

Recent estimates indicate that half of the population in remote areas will have a mobile phone by 2012. This provides inmates in even the remote villages’ instant access to the important health related information’s-health along with m-banking can allow Health organizations to transfer funds which the needy can use for performing health checkups.

Like m-banking SMS is a key enabler of m-health. SMS’es can be sent to educate and spread awareness of diseases, transfer funds and for informing the availability of health services. Health workers can mobile phones or PDAs to collect and send disease related data.

M-health also provides a unique opportunity for Service Providers, Health institutions, insurance companies and the patients themselves.

Conclusion: With the increasing penetration of mobiles both m-banking and m-health are particularly relevant today. Both these technologies are capable of not only transforming the economic landscape but also providing the CSPs, financial and health institutions with a sound business and strategic advantage.

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