The International Telecommunications Union (ITU) has established a focus group on mobile money in a bid to help bring financial services to people in developing economies, such as in Africa, who do not have bank accounts.
The focus group is expected to develop an international standardization roadmap of interoperable digital financial services. The group is also expected to develop a toolkit to help policy makers and telecom sector regulators encourage the adoption of digital financial services.
The group will further seek to identify key technology trends in digital financial services and investigate how the roles of various stakeholders in the ecosystem will evolve in response.
Over 2.5 billion people do not have traditional bank accounts, the ITU said. Many countries in Africa have problems overcoming the longstanding challenge of reaching out to unbanked populations especially in rural areas.
But the ITU believes that standardized services will drastically reduce the cost of providing mobile financial applications to service providers and their customers, thereby opening the door to remote and underserved communities.
"The extraordinary impact of mobile money solutions in developing countries has highlighted that information and communication technologies (ICTs) are at the heart of innovation in financial services," Hamadoun Touré, ITU Secretary General said. "What is lacking is an international standard that will allow interoperability between the services offered by different operators."
The establishment of the focus group comes at a time when Africa is experiencing an explosion of mobile money services. Mobile phone operators are competing aggressively on the provision of mobile money services in order earn more revenue to cushion the impact of declining earnings from the voice market. Meanwhile, banks, fearing that they will become irrelevant, are also providing mobile money services to people without bank accounts.
In Zambia for example, the central bank has said the number of mobile money accounts now totals 3.4 million, surpassing the 2 million traditional bank accounts. It added that the number of users of mobile money services is expected to increase significantly over the next three years.
In Kenya, Africa's third largest telecom market, there are more than 25 million mobile financial services subscribers, according to the Communications Authority of Kenya.
Most people in Africa are now using mobile financial services to buy goods, pay utility bills and receive funds from abroad.
Generally, many people in Africa do not have bank accounts and customers typically have to travel long distances to access traditional banking facilities. In many cases, customers have to spend many hours in queues to make transactions through traditional banks.
Edith Mwale, telecom analyst at Africa Center for ICT Development, said in an interview "the initiative by ITU will certainly help accelerate the role out of mobile money services to remote rural areas and bring about financial inclusion because the set standards will help stabilize even the cost of sending money by phones."
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