A first-time debate on the role of mobile financial services to address financial exclusion in the Southern and Eastern Mediterranean was launched today by the European Investment Bank (EIB). A workshop, organised under the patronage of the EIB during the European Microfinance Week, brought together high-level representatives of central banks and telecom operators to share experiences and learn lessons in anticipation of the wide deployment of mobile finance in the region.
Financial services are accessible to only a small part of the region’s population unlike mobile phones which have high penetration rates. In the Mediterranean partner countries, less than 40 per cent of the population have access to traditional payment systems, while 9 out of 10 have a mobile phone.
These facts are highlighted in a new EIB report on “Mobile financial services in the Mediterranean partner countries” which represents the first-ever inquiry made by an international financial institution on the challenges and opportunities for mobile banking in the Southern and Eastern Mediterranean.
The report suggests that financial exclusion threatens economic and social development. However, due to the very high penetration of mobile technology in the Southern and Eastern Mediterranean, mobile banking could offer a solution:
- This technology would allow for increased international remittances to the region to boost the countries’ GDP;
- Payments of bills could be substantially simplified, by reducing transaction costs; and
- Sustainability of microfinance operations could be much improved in terms of efficiency and geographical coverage.
Central Banks representatives agreed during the workshop that mobile financial services can play a role in economic development. International remittances, retail payments and microfinance services could all be facilitated with the use of mobile financial services.
Mobile operators present at the event concurred that the main reason why mobile financing is expected to help solve financial exclusion in the region is that international transaction costs can be substantially reduced.
However, participants warned that there are important regulatory and infrastructure challenges that need to be addressed first. Cooperation between central banks and telecom regulators should be further encouraged, following the example of today’s meeting led by EIB.
EIB Vice President Philippe de Fontaine Vive said: “Today’s exchange of experience and best practice is a very concrete step that EIB has taken in support of the deployment of mobile financial services in our partner countries. There is a clear interest in this topic and I trust that the report we are also launching today can provide answers to financial exclusion in the region”.