Realizing the potential of branchless banking : challenges ahead

Abstract

Being able to make payments conveniently and securely is an essential ingredient in modern life and commerce. It enables economic livelihoods and supports many social relationships, communal support actions, and public welfare programs. Yet most people and micro enterprises in developing countries must rely on physical delivery of cash or actual goods to make payments. This imposes large costs and risks on those beyond the reach of modern payment networks. Access to payment facilities is a major enabler for achieving universal access to finance. In this paper the author further develop a broad vision for financial inclusion sketched out in Mas (2008), where payments can be easily made through an electronic network. What makes visioning such a payments utility possible is the technology author have today, which can be used to bridge distances, close information gaps, contain settlement risks, and generally reduce transaction costs. The author is confident that today's technology can do the job. Now the challenge is to develop attractive services that engage customers and workable business models that enable decentralized, largely private, and institutions to build this payments utility.