Vodafone and pals call for banking shakeup

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Jul 2007
, July, 06 2007 - A new regulatory framework is needed to encourage financial transactions via mobile phones and transform access to financial services in developing countries.

The Transformational Potential of M-Transactions, was published today by Vodafone in partnership with Nokia and Nokia Siemens Networks.

 Vodafone’s sixth policy paper, of which three focus on the social impact of mobile phones, gives details of new, allegedly independent research by economists from Frontier Economics, Groupe d’Economie Mondiale and some consultants from the World Bank.

Lack of access to banking services forces people to rely on a cash-based economy with little security, a more casual informal labour market and a lower tax base for governments.And financial services are critical for economic development and inclusive financial services for the those without access to a bank are essential to in the fight against poverty.

Over the last two years, pilot programmes in Africa and Asia have highlighted the potential for mobile phones to deliver basic financial services. Its shows how these services provide the first real opportunity for many poorer people to get on to a formal “banking ladder” with benefits including reduced threat of crime, saving time and secure savings.

The sponsors recommend the following:

• new regulation is needed concerning deposits to be less bank-centric and allow m-transactions operators to enter the market;

• as new entrants, m-transactions operators must have access to clearing systems;

• ‘Know your customer’ and anti-money laundering rules need to be adapted to conditions in developing markets where formal documentation and access to photocopiers is limited. The customer data held by mobile operators could, with appropriate safeguards, offer an alternative to existing forms of regulation;

• interoperability of m-transactions schemes must be carefully considered to enable operators to benefit from network effects, but ensure that the intensity of competition in new markets and need for innovation is not stifled.

• the development of m-transactions is also expected to introduce significant improvements in financial services, such as easier and cheaper international payments especially for remittances home, or reduced risk in domestic payments by near real-time transfers.



 

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