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IDB funds mobile banking study in Jamaica
By Ross Sheil Online Co-ordinator rsheil@jamaicaobserver.com
Sunday, December 21, 2008
With local banks and cellular providers considering launching mobile banking (m-banking) services, Government has secured assistance from the Inter-American Development Bank (IDB) to assess its feasibility for Jamaica and recommend necessary legislation.
The project will serve as a pilot for the entire Latin America and Caribbean region with the IDB providing funds of US$100,000 ($8 million) and Government US$20,000 ($1.6 million) to produce an action plan for Jamaican m-banking. Scheduled to begin in February, the work is to be co-ordinated by the Planning Institute of Jamaica and will consider a range of issues not least security which is a common concern regarding m-banking (accounts are protected by PIN numbers similar to debit and credit cards).
Software Architects Limited chief executive officer Damian Daley. (Photo: Ross Sheil)
Established in other developing countries including the Phillipines, India, Brazil, South Africa and Kenya, m-banking has been credited with widening access to banking and reducing transaction costs. Meanwhile in Jamaica, which has reached near 100 per cent cellular penetration, it is thought that banking via those same handsets might prove more amenable to lower income groups under-served by traditional banking and those who live in remote areas.
"Given our situation in Jamaica where we have a lot of poor people, we thought it would be good to have such a project and we were quite interested to because we are currently revising the telecommunications policy for the post-liberalised market and we are looking at value-added services," said Karlene Francis, principal director in the Ministry of Telecommunications. "Already I am quite excited because I am hearing of young Jamaican entrepreneurs working on value-added applications on their mobile phones as well as applications for m-banking."
According to the IDB, the number of mobile phone subscribers in Jamaica is, "well in excess of the minimum profitability requirements" experienced in existing m-banking markets.
Cellular providers Digicel and Claro declined to comment for this article while competitor LIME was yet to respond up to press time.
Sunday Finance has tested one locally developed m-banking system, 'Mobile Money' by Software Architects Limited which has mobile commerce (m-commerce) and inventory management applications. Funds are relatively simple to send and receive via the commonly used SMS text message application.
"What this basically does is allow people to complete financial transactions via their mobile device. We use the most basic form currently, which is SMS text messaging, which we use to send commands to the server to buy and sell services. Mobile Money will give you the ability to pay for stuff in the stores with your cellphone and also inventory management for businesses. It will give you the ability to buy tickets for events and anything that you can do currently in our society," explained Software Architects chief executive officer Damian Daley.
Software Architects has already licensed its technology to Cool Corporation, which uses it to sell phone credit. Software Architects have at least two other local competitors, SMS Communications Limited and Paytext Limited. The three companies have entered into discussions with cellular providers and financial institutions about bringing m-banking products to the market.
But as SMS Communications CEO Stephen Spence observes, all that developers essentially require from cellular providers is access to their network while the role of a financial institution in marketing an m-banking product would confer valuable prestige and reassurance over security. His system differs from Software Architects' which was designed to operate autonomously from a bank but can also draw money from an Automated Teller Machine (ATM) via a debit card.
"Right now we set it up so it can be autonomous but really and truly for m-banking to be effective, it must have a bank because you have the issue of getting money on the accounts. For this to happen, we need the legislation passed so banks can get involved in this," said Daley.
Government preference would be for m-banking services to be operated by recognised financial institutions.
"If it's say for example a National Commercial Bank subsidiary which is some sort of merger with a telecommunications interest then the banking regulation would have to govern that so the regulatory framework would be in place to protect the consumer because we don't want a recurrence of what happened with the unregulated financial institutions (UFOs or 'ponzi schemes')," said Francis.
Scotiabank acknowledged that they planned to partner with a cellular provider.
While some in the financial sector fear competition from m-banking, a counter argument is that many m-banking customers would not be exisiting customers of traditional banks but that the technology could enable them to open accounts with them.
"It is something for the sector to embrace," said Scotiabank spokeswoman Simone Hull. "Because of the inherent convenience that mobile banking brings to customers, banks will experience increased volumes of electronic-type transactions as access to banking information will be more convenient and easier."
Added Georgia Crawford, managing director of Paytext, whose m-commerce marketing campaign is scheduled for launch next month: "The banks and mobile companies already know about mobile banking and many of the banks can already facilitate it, but they need to be bold, to create change instead of reacting to change, to say to the populous this is the way forward and to hold their hands and willingly go where no one has gone before."
IDB on Jamaican mobile banking
According to the IDB there are several factors which favour mobile banking in Jamaica:
(i) High cellular penetration;
(ii) Sophisticated banking sector with micro-financing experience;
(iii) High crime rates in certain areas make cash transactions risky;
(iv) Limited access to financial services among the poor;
(iv) Large informal sector without formal access to financial services;
(v) Substantial remittances from abroad and from urban to rural areas;
(vi) Recently approved Electronic Transactions Act that provides basic framework for m-banking.
http://www.jamaicaobserver.com/magaz..._TRANSFER_.asp
IDB funds mobile banking study in Jamaica
By Ross Sheil Online Co-ordinator rsheil@jamaicaobserver.com
Sunday, December 21, 2008
With local banks and cellular providers considering launching mobile banking (m-banking) services, Government has secured assistance from the Inter-American Development Bank (IDB) to assess its feasibility for Jamaica and recommend necessary legislation.
The project will serve as a pilot for the entire Latin America and Caribbean region with the IDB providing funds of US$100,000 ($8 million) and Government US$20,000 ($1.6 million) to produce an action plan for Jamaican m-banking. Scheduled to begin in February, the work is to be co-ordinated by the Planning Institute of Jamaica and will consider a range of issues not least security which is a common concern regarding m-banking (accounts are protected by PIN numbers similar to debit and credit cards).
Software Architects Limited chief executive officer Damian Daley. (Photo: Ross Sheil)
Established in other developing countries including the Phillipines, India, Brazil, South Africa and Kenya, m-banking has been credited with widening access to banking and reducing transaction costs. Meanwhile in Jamaica, which has reached near 100 per cent cellular penetration, it is thought that banking via those same handsets might prove more amenable to lower income groups under-served by traditional banking and those who live in remote areas.
"Given our situation in Jamaica where we have a lot of poor people, we thought it would be good to have such a project and we were quite interested to because we are currently revising the telecommunications policy for the post-liberalised market and we are looking at value-added services," said Karlene Francis, principal director in the Ministry of Telecommunications. "Already I am quite excited because I am hearing of young Jamaican entrepreneurs working on value-added applications on their mobile phones as well as applications for m-banking."
According to the IDB, the number of mobile phone subscribers in Jamaica is, "well in excess of the minimum profitability requirements" experienced in existing m-banking markets.
Cellular providers Digicel and Claro declined to comment for this article while competitor LIME was yet to respond up to press time.
Sunday Finance has tested one locally developed m-banking system, 'Mobile Money' by Software Architects Limited which has mobile commerce (m-commerce) and inventory management applications. Funds are relatively simple to send and receive via the commonly used SMS text message application.
"What this basically does is allow people to complete financial transactions via their mobile device. We use the most basic form currently, which is SMS text messaging, which we use to send commands to the server to buy and sell services. Mobile Money will give you the ability to pay for stuff in the stores with your cellphone and also inventory management for businesses. It will give you the ability to buy tickets for events and anything that you can do currently in our society," explained Software Architects chief executive officer Damian Daley.
Software Architects has already licensed its technology to Cool Corporation, which uses it to sell phone credit. Software Architects have at least two other local competitors, SMS Communications Limited and Paytext Limited. The three companies have entered into discussions with cellular providers and financial institutions about bringing m-banking products to the market.
But as SMS Communications CEO Stephen Spence observes, all that developers essentially require from cellular providers is access to their network while the role of a financial institution in marketing an m-banking product would confer valuable prestige and reassurance over security. His system differs from Software Architects' which was designed to operate autonomously from a bank but can also draw money from an Automated Teller Machine (ATM) via a debit card.
"Right now we set it up so it can be autonomous but really and truly for m-banking to be effective, it must have a bank because you have the issue of getting money on the accounts. For this to happen, we need the legislation passed so banks can get involved in this," said Daley.
Government preference would be for m-banking services to be operated by recognised financial institutions.
"If it's say for example a National Commercial Bank subsidiary which is some sort of merger with a telecommunications interest then the banking regulation would have to govern that so the regulatory framework would be in place to protect the consumer because we don't want a recurrence of what happened with the unregulated financial institutions (UFOs or 'ponzi schemes')," said Francis.
Scotiabank acknowledged that they planned to partner with a cellular provider.
While some in the financial sector fear competition from m-banking, a counter argument is that many m-banking customers would not be exisiting customers of traditional banks but that the technology could enable them to open accounts with them.
"It is something for the sector to embrace," said Scotiabank spokeswoman Simone Hull. "Because of the inherent convenience that mobile banking brings to customers, banks will experience increased volumes of electronic-type transactions as access to banking information will be more convenient and easier."
Added Georgia Crawford, managing director of Paytext, whose m-commerce marketing campaign is scheduled for launch next month: "The banks and mobile companies already know about mobile banking and many of the banks can already facilitate it, but they need to be bold, to create change instead of reacting to change, to say to the populous this is the way forward and to hold their hands and willingly go where no one has gone before."
IDB on Jamaican mobile banking
According to the IDB there are several factors which favour mobile banking in Jamaica:
(i) High cellular penetration;
(ii) Sophisticated banking sector with micro-financing experience;
(iii) High crime rates in certain areas make cash transactions risky;
(iv) Limited access to financial services among the poor;
(iv) Large informal sector without formal access to financial services;
(v) Substantial remittances from abroad and from urban to rural areas;
(vi) Recently approved Electronic Transactions Act that provides basic framework for m-banking.
http://www.jamaicaobserver.com/magaz..._TRANSFER_.asp