Branchless banking allows banks to better serve a variety of mass consumer segments, whether they are those with limited access to bank branches or those with low account balances.
According to a 2012 study by Gallup, Inc. and the World Bank, an estimated 2.7 billion people in emerging markets — almost 40 percent of the world’s population — are without access to even basic financial services, meaning they remain “unbanked” and don’t use formal or semi-formal financial services.1 The lives of these unbanked could be improved through access to the most basic array of banking services, such as deposits, savings, instalment loans, simplified and secure remittances and bill payment.
“The financial services that may be delivered through the mobile channel are, in essence, no different to those delivered through conventional banking channels and agent channels emerging in a number of developing markets.” This quote, from the report Regulatory Issues Around Mobile Banking, authored by Paul Makin refers to the rapid rise of mobile phones in emerging markets, including Africa, the Middle East and Pakistan.
As mobile adoption continues, it presents a huge opportunity to improve access to financial services and products by building upon its widespread presence, low cost of deployment and easy-to-use technology. However, reaching new customer segments in these underserved markets requires not just a purely mobile banking (m-banking) solution, as is prevalent in the developed world, but rather a broader “branchless banking” solution that can encompass the needs of the mass unbanked. While there are many definitions of branchless banking, for this report it is defined as a mechanism that allows customers to deposit, withdraw and transact their funds in a secure and efficient manner through non-branch customer channels — such as mobile phones, terminals or agents.
To read more on branchless banking, download the full report from TSYS.