Consumer trust the key to boosting mobile banking in the Pacific


The key to boosting the use of mobile phone banking services in the Pacific is ‘trust’ in the system, particularly as mobile phone providers begin providing financial services, according to a new report by the Asian Development Bank.


A MiCash agent. Credit: ADB

A MiCash agent. Credit: ADB

PNG’s financial services are mainly focussed in urban areas. People on low incomes, and rural and remotely-located people are mostly unbanked. Women in particular are excluded. It is common practice in rural areas to save money by burying it, or hiding it in and around homes.

Enter mobile banking.

Commercial, bricks-and-mortar banks involve high costs and infrastructure, so small scale microbanks and technology-led initiatives are driving financial inclusion for those who were previously unbanked.

The ADB's Dr Peter Dirou

The ADB’s Dr Peter Dirou

The secret to achieving that promise, according to Peter Dirou, Senior Financial Sector Expert with the Asian Development Bank’s (ADB’s) Pacific Private Sector Development Initiative, is trust.

‘If the system is seen as secure, the uptake will increase,’ he tells Business Advantage PNG. ‘By secure, I mean people feel sure they aren’t going to lose money through fraud or theft.’

Story continues after advertisment...

BSP was first financial institution to launch mobile banking in the Pacific, in 2009. In 2011, MiBank set up the mobile wallet, MiCash, using the Digicel mobile phone network. ANZ’s goMoney uses multiple mobile operators, as does Westpac.

‘The phone becomes the tool for financial inclusion.’

‘Mobile phone banking may have been around for a while in the developed world but it has truly blossomed in the developing world, providing people at the “bottom of the economic pyramid” with access to financial services that they have not had before,’ observes Tony Westaway, CEO of MiBank.

‘Education the key’

Based on ‘our figures’, says Westaway, PNG consumers are not wary of using phone banking.

Nationwide Microbank's Tony Westaway

MiBank’s Tony Westaway

‘We have found that education is the key component to increasing confidence in use of mobile phones for banking. Our outreach programs have a large focus on the use of the mobile phone for ease of banking. The phone becomes the tool for financial inclusion.

‘We have processed more than 100 million kina in transactions through our mobile wallets since inception.

‘The issue is about achieving more scale and that will only happen with better tenure of agents and interoperability across the different platforms of the financial service providers.’

One way of lowering costs is for mobile banking providers to improve their technical compatibility, says Dirou.

Mobile banking is a small part of the banking system. But the use of point of sale technology (EFTPOS) is increasing, as is the incidence of bill paying, loan repayments and sending remittances by mobile phone. 

‘It’s a blurring of the boundaries between financial service providers and mobile communications providers.’

‘We have some 90,000 mobile numbers on our database,’ says Westaway. ‘Mobile is an important delivery channel for MiBank and we have been very much pioneers in this space. But at this point in time, across the industry, people will use [debit] cards before mobile in PNG.

‘However, there have been interesting developments in other countries, such as ANZ’s recent new deal in Australia with Apple Pay, so that consumers will have the option of using  ‘tap & go’ with their phone, instead of their card.’

Mobile operators

As well, mobile network operators, like Digicel, through its EasiPay and Cellmoni services, are providing their own financial services by using their agents’ network for a range of banking services. The expectation is that this trend will increase, as has happened in Africa.

In Kenya, for example, transactions on mobile phones now account for half the nation’s GDP.

‘It’s a blurring of the boundaries between financial service providers and mobile communications providers,’ notes Dirou.

‘As convergence develops, there could be unintended consequences through the application of the two different regulatory systems.

‘So it’s important for financial regulators and telecommunications regulators to work through issues like security, and ensure consistency and compatibility.’

The potential for mobile banking is especially high in developing countries. In Kenya, for example, transactions on mobile phones now account for half the nation’s GDP, according to the London Review of Books:

‘Credit goes from phone to phone, and that credit is a new form of money, making the kinds of facility you get from a bank account available to all sorts of people who don’t have one. Once you have a record of successful payments on your phone, merchants and institutions will take that as a sign you can be extended other forms of credit, and you can start to move from the informal economy where the poor are trapped – where there are no records of their credit, no records of what they own – to the wider economy.’


  1. Barnabas Pondros says

    BSP was the first bank in the region to introduce SMS Banking in the region in 2009. This set the pace for other developments.

Leave a Reply