Telcos upbeat about mobile phone banking

Telecommunication companies, or telcos, are upbeat about the outlook for the mobile-banking business amid the global financial crisis, executives told The Manila Times.

Rizza Maniego-Eala, president of Globe’s Telecom Inc.’s mobile commerce unit G-XChange Inc. (GXI), said the telcos were optimistic about mobile banking because the Bangko Sentral ng Pilipinas (BSP) and the Rural Bankers Association of the Philippines (RBAP) expect the microfinance industry to remain “strong and fundamentally sounds.”

Given this, Eala said she expected the growth of GCash to continue because most of the Filipinos were still “unbanked” or “underbanked.”

Unbanked is term referring to a person with no bank account, while underbank refers to a someone who has a bank account but still uses financial services, like check cashing, buying money orders and availing of pay-day loans, according to Internet sources.

GCash service is an “electronic wallet” that allows users to send and receive cash and make payments—including bills, donations and online purchases—via text messaging.

Eala said there was a lot of potential for the industry because the mobile-phone market is 80 percent penetrated, while 70 percent of the populations are still undbanked or underbanked.

The Consultative Group to Assist the Poor (CGAP) recently released a study showing that 1.6 million of active mobile-banking users in the Philippines are unbanked. The group, which is housed in the World Bank, offers research-based market intelligence.

Plus, the study reported that 26 percent of active users have incomes below $5 per day. On average, unbanked mobile money users spend $1.9 more a month.

Domestic remittances

“A big percentage of our users are unbanked. They use GCash for domestic remittances,” Eala said. She added that the company’s target markets were the domestic and international remittances users, consumers, and online community and others.

Eala said Globe’s GCash subscribers have reached 1.2 million at end June.

The report by the Consultative Group to Assist the Poor also showed that based on the Bangko Sentral’s estimate, the average inbound remittance is about $300 and typically costs the sender between $7 and $15, or between 2.5 percent and 5 percent of the value remitted.

In contrast, remitting money via GCash or Smart Money of Smart Communications Inc. costs less than 2 percent of the value.

Data from the central bank showed that from January to June, the total remittances rose 2.9 percent to $8.5 billion compared with the same period last year.

Globe’s GXI earlier launched GCash Click that allows users to buy, sell, or trade items through the Internet.

Eala said the GCash Click allows Globe’s subscriber to buy from accredited online merchants and pay for the items through GCash.

m-commerce and e-loading

Maybelle Santos, senior manager for Domestic Financial Services of Smart, said the prospect of its mobile commerce—or m-commerce or mobile banking—business is “positive.”

GCash Click is a haven for online shoppers and sellers who are looking for a safe and convenient means of payment and delivery.

Santos said Smart was eyeing to penetrate at least 5 percent of the unbanked Filipinos in five years.

She added that her company plans to establish Smart Money Centers nationwide to support structure for m-commerce growth in rural and remote communities.

The company’s Smart Money also increased livelihood opportunities via the electronic loading (e-loading) business. At present, there are currently more than 6 million active users of Smart Money.

Smart Money has also been utilized as a primary conduit for remittance initiatives undertaken with the country’s leading banks, international institutions like Western Union and the National Commercial Bank of Saudi Arabia, as well as microfinance partners.

Through Smart Money, subscribers are able to conduct electronic money transfers, purchase airtime load, pay utilities, make micro-payments and purchases, and engage in mobile banking with just a few clicks on their cellular phones.

It also allows unbanked account holders to have a service that provides access to channels otherwise limited to bank account holders. –Darwin G. Amojelar, Senior Reporter, Manila Times