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May 23, 2013
Asia's financial services industry is keeping an eye on the continent's surge of mobile device use as millions of migrant workers use this method to send money back home to their families.
A report released earlier this week, which was co-authored by the World Bank and the International Fund for Agricultural Development, noted that almost every town and village in Asia has access to this option, making Asia the fastest growing market for mobile services.
Nearly 60 million migrant workers from the Asia-Pacific region sent $260 billion home to their families last year through mobile banking. Approximately 70 million Asian households benefited from these flows.
Most Asian households receiving remittances still live outside the world's financial system with limited access to savings accounts. The report calls for a reduction in remittance fees in order to increase the benefits from the money transfers. Mobile telephony offers a way to do so by cheaply connecting hundreds of millions of unbanked rural and low-income people to financial services.
In the past, workers sending money home to families faced higher remittance charges. The cost of mobile transactions is about 2 percent of that of a typical bank, 10 percent of ATMs and 50 percent of Internet banking. Based on their payment networks, 98 percent of all payment points could be reached through mobile remittance-sending technology.
"The promise of low-cost, instantaneous transfers of funds over large distances directly through mobile phones is one of the most exciting prospects in the industry today," the report said.
If the lure of mobile banking sounds too good to be true, it might be, as the authors of the report noted caution when it comes to using the service. According to the report, mobile banking's long-term success depends on the development of economically sustainable business models, which remains a massive challenge in most areas.
Edited by Alisen Downey