Markets + Enterprise White Paper
Dr. Allen L. Hammond
Innovations in Financial Services for the Poor
Over he pas 30 years, he rise o micronance hashelped many Base o he Pyramid (BoP) householdso improve heir livelihoods and even, in some cases,o climb ou o povery. Micronance is increas-ingly becoming a commercial aciviy wih signicaninvolvemen by banks. And wih an indusry-wideclien base o approximaely 80 million borrowers, i’sclear ha Muhammed Yunus deserved his Nobel PeacePrize. Bu he need or access o nancial services by BoP households is boh much larger han 80 millioncusomers and more varied han micro-savings andmicro-lending.I believe ha he nex ruly ransormaive innovaionin nancial services or he poor is now visible. ainnovaion is mobile phone banking—already ully commercial in he Philippines, in Souh Arica, and inKenya, and gahering momenum virually everywherein he developing world. While banks may play an im-poran role in his aciviy, he real caalyss are likely o be echnology owners and expers. Specically,wo paries will be key o he coming mobile bankingrevoluion: rs, he mobile elecom companies haown he neworks capable o reaching several billionunbanked people and he servers capable o process-ing many billions o iny ransacions; and second, hesarup mobile ransacion companies ha are guringou innovaive ways o use hose neworks.e ollowing repor, Biomeric Securiy or MobileBanking, addresses a key barrier o an impendingechnology-driven revoluion in nancial services orhe poor. is orward provides some conex or herepor and is ndings by describing echnology rendsand heir poenial implicaions or access o nancialservices.
Enabling echnology rends
ere are several echnology and business rends worh menioning here. One is he build ou o mo- bile elecom neworks, arguably he mos remarkable(and larges) recen echnological phenomenon on heplane. ere are already more han 1.5 billion mobilephones in use in developing counries, and ha num- ber is likely o reach 2.5 billion wihin he nex 5 years.More han 80 percen o new cusomers worldwide will come rom developing counries, and since nearly everyone in developing counries who is no par o he