Opinion: What Papua New Guinea must do to achieve digital financial inclusion

Papua New Guinea has a high level of mobile phone penetration, but Tony Westaway, Managing Director of Nationwide Microbank, believes the country has significant barriers to overcome if it is to achieve optimum financial inclusion in the digital age. He outlines some of the issues.

Tony Westaway discussing financial inclusion at the Asia-Pacific-Financial-Inclusion-Summit-in-Hano Source: MiBank

Tony Westaway discussing financial inclusion at the Asia Pacific Financial Inclusion Summit in Hanoi  Source: MiBank

Compared to Papua New Guinea, many other countries are seeing significant penetration in the use of mobile phone technology to access banking services.

It is adding significant value to their economies. Local financial institutions are also providing mobile-based solutions.

‘Agents need the banking transactions they perform to be profitable for their business. This requires critical mass.’

However, the scale that is seen in other emerging economies is not reflected in PNG, mainly due to the country’s smaller population density when compared with the rest of Asia.

Agents

Another problem is the lack of tenure of [financial services] Agents. Many Agents in PNG operate in trade store-type environments which are not conducive to the sustainable and consistent provision of financial services.

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Agents need the banking transactions they perform to be profitable for their business. This requires critical mass and. in the PNG context, given the lack of population density, that is not happening.

‘MiBank works closely with the Centre for Excellence in Financial Inclusion (CEFI), in providing financial education for women.’

One way to address the issue is for financial institutions to share Agents. This will require a willingness from PNG financial institutions to collaborate, or it may require a ‘push’ from the regulator, the Bank of PNG, to discourage Agent exclusivity by institutions.

Potential

There is also strong potential for the spread of digital financial services in PNG. Increasing access for women is one way to increase scale.

MiBank works closely with the Centre for Excellence in Financial Inclusion (CEFI), in providing financial education for women. When providing such training, we also teach the women how to utilise mobile phones to access banking services.

‘Another initiative that would help increase scale is to deepen the value proposition of the mobile phone technology.’

Another initiative that would help increase scale is to deepen the value proposition of the mobile phone technology by introducing additional functionality to meet the needs of the clients.

An example of this is using the phone to make bill payments such as easipei or ‘Pay-as-you-Go’ solar, via the mobile phone.

Unless the financial services sector can develop an appropriate Agent model for PNG that addresses trust, tenure, profitability for Agents and creates interoperability between institutions, we will still have a long way to go.

This article is based on Tony Westaway’s speech to the Asia Pacific Financial Inclusion Summit, held in Hanoi in March, 2017.

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