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Mobile Banking Offers Promise for Developing Nations, According to Dallas Fed’s Economic Letter

For immediate release: October 10, 2012

DALLAS—The use of mobile banking in emerging economies offers an enticing development opportunity with the capacity to boost the purchasing power of unbanked households, according to the latest issue of the Federal Reserve Bank of Dallas’ Economic Letter.

Economic Letter can be found at: /~/media/Documents/research/eclett/2012/el1211.ashx

In “Bringing Banking to the Masses, One Phone at a Time” assistant economist Janet Koech finds that mobile telephone technology can provide banking services to those with no previous banking relationship or augment services offered to existing customers.

There were 6 billion mobile phone subscriptions worldwide in 2011, up from 719 million in 2000, according to Koech. Most of that growth came in developing nations.

“Mobile phones represent one of the largest distribution platforms to provide the social and economic benefits of formal financial services to the unbanked,” Koech writes.

Koech cites Kenya’s M-Pesa system, which allows customers to deposit and withdraw funds using a mobile phone account, as a prime example.

M-Pesa had more than 14 million subscribers—about 59 percent of Kenya’s adult population—as of April 2011, Koech notes.


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