Call for New Regulatory Framework to Allow Greater Access to Financial Services Via Mobile Phones in Developing Countries
ESPOO, Finland, July 4 /PRNewswire-FirstCall/ -- A new regulatory
framework is needed to encourage financial transactions by mobile phones
and transform access to financial services in developing countries, claims
a new policy report 'The Transformational Potential of M-Transactions',
published today (4 July 2007) by Vodafone in partnership with Nokia (NYSE:
NOK) and Nokia Siemens Network.
The report, Vodafone's sixth policy paper, of which three focus on the
social impact of mobile phones, details new, independent research by
leading economists from Frontier Economics and Groupe d'Economie Mondiale
as well as consultants to the World Bank.
The suggested changes will have wide spread impact on both the economic
development of countries and the financial security of millions of people
currently without access to banking services.
Lack of access to banking services is currently forcing people to rely
on a cash-based economy with little security, a more casual informal labour
market and a lower tax base for governments. The report concludes that
financial services are critical for economic development and inclusive
financial services for the unbanked are essential for poverty reduction.
Over the last two years, pilot programmes in Africa and Asia have
highlighted the potential for mobile phones to deliver basic financial
services in developing countries. The report shows how these services
provide the first real opportunity for many poorer people to get on to a
formal "banking ladder" with benefits including reduced threat of crime,
time saving and secure savings opportunities.
However, existing banking regulation is currently inappropriate for the
growth of m-transaction schemes. Vodafone, Nokia and Nokia Siemens Networks
are calling for regulators to ensure they do not restrict commercial
experimentation or limit the schemes to sub-economical scale. Key suggested
changes to regulation detail in the report include:
- Review of deposit taking
Current regulation of deposit taking is shaped around the needs of
banks and at present mobile systems are limited in the size of transaction
they can undertake. Deposit taking regulation needs to allow new entry on a
larger scale by m-transactions operators.
- Access to the clearing system
As new entrants, m-transactions operators must be able to access the
clearing system.
- Adaptation of 'know your customer' and anti-money laundering
'Know your customer' and anti-money laundering rules need to be adapted
to conditions in developing markets where formal documentation and access
to photocopiers is limited. The customer data held by mobile operators
could, with appropriate safeguards, offer an alternative to existing forms
of regulation.
- Interoperability of m-transaction schemes
Interoperability of m-transactions schemes must be carefully considered
to enable operators to benefit from network effects but ensure that the
intensity of competition in new markets and need for innovation is not
stifled.
The development of m-transactions is also expected to introduce
significant improvements in financial services, such as easier and cheaper
international payments especially for remittances home, or reduced risk in
domestic payments by near real-time transfers.
Alan Harper, Director of Vodafone Group Strategy, "The case for mobile
transactions has been well proven by recent pilots. In a country such as
Kenya there are 400 bank branches, 600 ATMs and 10 million mobile phones.
There is clearly the potential to bring access to finance for hundreds of
thousands of individuals for the very first time. However, there is also an
increasing need to ensure that current banking regulations do not undermine
or limit this growing potential."
Diane Coyle, author of the report, said: "A regulatory approach that
tries to force m-transactions into the existing structure of retail banking
regulation and financial supervision could impose high fixed costs and
significant compliance problems. Any new framework needs to be risk based,
sensitive to practical issues relating to underserved developing markets,
and encourage experimentation and innovation."
Antonio Torres, Business Development Director, Nokia said, "The growth
of mobile phone usage in remote and rural parts of the world is creating
many positive opportunities to widen access in an affordable way to other
social and economic services. This report highlights the need for some
fresh thinking and a new approach if the full potential of this new found
mobility is to be achieved."
About Vodafone
Vodafone is the world's leading international mobile communications
group with operations in 25 countries across five continents and over 200
million proportionate customers by the end of January 2007, of which 100
million are in Europe, as well as 38 partner networks. For further
information, please visit http://www.vodafone.com
About Nokia
Nokia is the world leader in mobility, driving the transformation and
growth of the converging Internet and communications industries. Nokia
makes a wide range of mobile devices and provides people with experiences
in music, navigation, video, television, imaging, games and business
mobility through these devices. Nokia also provides equipment, solutions
and services for communications networks. For more information please visit
http://www.nokia.com
About Nokia Siemens Network
Nokia Siemens Networks is a leading global enabler of communications
services. The company provides a complete, well-balanced product portfolio
of mobile and fixed network infrastructure solutions and addresses the
growing demand for services with 20,000 service professionals worldwide.
The combined pro-forma net sales of EUR17.1 billion in fiscal year 2006
make Nokia Siemens Networks one of the largest telecommunications
infrastructure companies. Nokia Siemens Networks has operations in some 150
countries and is headquartered in Espoo, Finland. It combines Nokia's
Networks Business Group and the carrier related businesses of Siemens
Communications. For more information please visit
http://www.nokiasiemensnetworks.com
For further information, interviews and a copy of the report
The report is also available on Nokia's website at http://www.nokia.com/A4140025
http://www.nokia.com
framework is needed to encourage financial transactions by mobile phones
and transform access to financial services in developing countries, claims
a new policy report 'The Transformational Potential of M-Transactions',
published today (4 July 2007) by Vodafone in partnership with Nokia (NYSE:
NOK) and Nokia Siemens Network.
The report, Vodafone's sixth policy paper, of which three focus on the
social impact of mobile phones, details new, independent research by
leading economists from Frontier Economics and Groupe d'Economie Mondiale
as well as consultants to the World Bank.
The suggested changes will have wide spread impact on both the economic
development of countries and the financial security of millions of people
currently without access to banking services.
Lack of access to banking services is currently forcing people to rely
on a cash-based economy with little security, a more casual informal labour
market and a lower tax base for governments. The report concludes that
financial services are critical for economic development and inclusive
financial services for the unbanked are essential for poverty reduction.
Over the last two years, pilot programmes in Africa and Asia have
highlighted the potential for mobile phones to deliver basic financial
services in developing countries. The report shows how these services
provide the first real opportunity for many poorer people to get on to a
formal "banking ladder" with benefits including reduced threat of crime,
time saving and secure savings opportunities.
However, existing banking regulation is currently inappropriate for the
growth of m-transaction schemes. Vodafone, Nokia and Nokia Siemens Networks
are calling for regulators to ensure they do not restrict commercial
experimentation or limit the schemes to sub-economical scale. Key suggested
changes to regulation detail in the report include:
- Review of deposit taking
Current regulation of deposit taking is shaped around the needs of
banks and at present mobile systems are limited in the size of transaction
they can undertake. Deposit taking regulation needs to allow new entry on a
larger scale by m-transactions operators.
- Access to the clearing system
As new entrants, m-transactions operators must be able to access the
clearing system.
- Adaptation of 'know your customer' and anti-money laundering
'Know your customer' and anti-money laundering rules need to be adapted
to conditions in developing markets where formal documentation and access
to photocopiers is limited. The customer data held by mobile operators
could, with appropriate safeguards, offer an alternative to existing forms
of regulation.
- Interoperability of m-transaction schemes
Interoperability of m-transactions schemes must be carefully considered
to enable operators to benefit from network effects but ensure that the
intensity of competition in new markets and need for innovation is not
stifled.
The development of m-transactions is also expected to introduce
significant improvements in financial services, such as easier and cheaper
international payments especially for remittances home, or reduced risk in
domestic payments by near real-time transfers.
Alan Harper, Director of Vodafone Group Strategy, "The case for mobile
transactions has been well proven by recent pilots. In a country such as
Kenya there are 400 bank branches, 600 ATMs and 10 million mobile phones.
There is clearly the potential to bring access to finance for hundreds of
thousands of individuals for the very first time. However, there is also an
increasing need to ensure that current banking regulations do not undermine
or limit this growing potential."
Diane Coyle, author of the report, said: "A regulatory approach that
tries to force m-transactions into the existing structure of retail banking
regulation and financial supervision could impose high fixed costs and
significant compliance problems. Any new framework needs to be risk based,
sensitive to practical issues relating to underserved developing markets,
and encourage experimentation and innovation."
Antonio Torres, Business Development Director, Nokia said, "The growth
of mobile phone usage in remote and rural parts of the world is creating
many positive opportunities to widen access in an affordable way to other
social and economic services. This report highlights the need for some
fresh thinking and a new approach if the full potential of this new found
mobility is to be achieved."
About Vodafone
Vodafone is the world's leading international mobile communications
group with operations in 25 countries across five continents and over 200
million proportionate customers by the end of January 2007, of which 100
million are in Europe, as well as 38 partner networks. For further
information, please visit http://www.vodafone.com
About Nokia
Nokia is the world leader in mobility, driving the transformation and
growth of the converging Internet and communications industries. Nokia
makes a wide range of mobile devices and provides people with experiences
in music, navigation, video, television, imaging, games and business
mobility through these devices. Nokia also provides equipment, solutions
and services for communications networks. For more information please visit
http://www.nokia.com
About Nokia Siemens Network
Nokia Siemens Networks is a leading global enabler of communications
services. The company provides a complete, well-balanced product portfolio
of mobile and fixed network infrastructure solutions and addresses the
growing demand for services with 20,000 service professionals worldwide.
The combined pro-forma net sales of EUR17.1 billion in fiscal year 2006
make Nokia Siemens Networks one of the largest telecommunications
infrastructure companies. Nokia Siemens Networks has operations in some 150
countries and is headquartered in Espoo, Finland. It combines Nokia's
Networks Business Group and the carrier related businesses of Siemens
Communications. For more information please visit
http://www.nokiasiemensnetworks.com
For further information, interviews and a copy of the report
The report is also available on Nokia's website at http://www.nokia.com/A4140025
http://www.nokia.com
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