Part of a series of posts from Bachelor of Commerce student blogger, Danny Hertz, written during a Loran Scholarship outreach project in the Philippines.

A significant new development in the area of providing financial services to the lower income segment of the population is broadly referred to as mobile banking. This consists of two major initiatives that I have been researching: money transfers via cell phones, and bringing ATMs to the rural areas. While both technologies face considerable barriers before they will ever become mainstream; the potential payoff from them is significant.

As many of you probably know, the Filipinos are one of the most active users of remittance services of any groups of people in the world due to the vast numbers of Filipinos working abroad and also the disbursement of the local population across the many islands of the Philippines. To transfer money to family members who are live in the rural areas or to students studying in the cities is quite expensive here, since businesses such as Western Union charge upwards of 5% of the transaction value. Through a partnership that Seed Finance has with the main telecommunications operator in the country, members of the Seed Finance network can now do this for as little as 2 cents via text messaging. The money can then be retrieved at a “money in-money out” center for a much more affordable rate. The ATM project has been a partnership with the only independent ATM deployer in the Philippines to bring the financial service to more remote communities.

Pensioners and government employees, such as teachers, are all paid via direct deposit to their bank accounts, and often the rural residents will have to travel 45 minutes to 5 hours via bus to the nearest bank branch. When an ATM is placed in their community, they can save up to $5 (which goes a surprisingly long way here!) and a significant amount of time by using the one in their community. Innovations such as these are proving that they have the potential to be profitable, as well as allowing the companies involved to practice positive CSR techniques for the fellow countrymen and women in hard to reach areas.