Bridging the Financial Divide

We have talked at length about bridging the Digital Divide and providing educational services and communications to those in rural regions of the world who do not otherwise have connectivity. The changes that this access to communications can bring about are enormous and one of these changes – probably the most significant change - is a financial one. In past editions of Sat Investor I have written about satellites as ‘wealth creators’, giving communities the tools to enter the global marketplace, to sell local goods online and create their own businesses. However, a crucial aspect of running these businesses is how the money is managed. This means that access to the financial services that will enable rural businesses and individuals to develop their financial knowledge is hugely important.

The Internet can facilitate banking services and can help isolated communities take out loans to help their businesses expand, to make transfers, to pay bills and gain access to bank accounts. However, there is another method of banking that is taking off in a big way and that is Mobile Banking or M-Banking. The term is used to describe the banking services that are available on a mobile device, such as a mobile phone, where the user can access their balance, transactions and even make payments as on the Internet.

After the revolution of Internet banking, financial institutions are always trying to find new ways to make banking services available on the move, 24 hours a day, 7 days a week. The exponential rise in ownership of the mobile phone and other mobile devices mean that there is a ready-made, enormous target market for mobile banking. According to Celent, a financial consultancy, 35 percent of online households will be using mobile banking by 2010. Eventually, mobile banking will allow users to make payments at the physical point of sale (contactless payments). In Asian countries such as China, Indonesia and the Philippines, mobile infrastructure is quite substantial and mobile banking has already made an impression through companies such as Globe. However, in more remote locations, satellite cellular backhaul technology can complete the ‘last mile’ thus making mobile banking available where cellular infrastructure does not reach.

Mobile banking is having quite an impact in Africa where Kenya’s Equity Building Society has been regularly dispatching a fleet of four-wheel drive vehicles to remote parts of the country using GSM satellite backhaul technology. The mobile units work from an existing bank. Account information is continually transferred from the mobile unit to the bank using GSM technology and satellite dishes located in each village.

The mobile banks service around twenty villages and visit each location once or twice a week. The satellite technology helps GSM overcome its geographical limitations. The mobile banks offer goods and services to many small businesses and smallholder farming households. The ability to bank also increases economic activity in poor areas and improves the living standard and opportunities for the poor. The improved financial services in turn encourage investment in infrastructure.

Using satellite, especially VSAT services, to facilitate last mile connectivity, opens up an array of services to communities that otherwise would not be able to visit a bank in their nearest town or perhaps have never had any access to a bank account. This asserts them within wider society and encourages saving, awareness of financial management and business creation and expansion leading to profit-making – profit that can be ploughed back into a community to help it develop and flourish.

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