Abstract
It is estimated that about 90 per cent of the people living in developing countries do not have access to financial services. Also, in some developing countries including Ghana, some people live below the international poverty line of US $1 a day. Some of the issues related to this phenomenon include; difficulty in accessing banking services owing to geographic distance, bureaucratic nature of banking services and misconception regarding the inability of the poor to repay their loans. This article argues that if the traditional financial setting does not allow the poor to access to the financial services like banking, the poor could be offered banking services through mobile technologies. This article therefore proposes a Mobile Banking Model that conceptualizes key ways by which mobile phone technology can be used to increase pathways to banking access for poor people. Future research will focus on empirically testing this model.
Similar content being viewed by others
References
Robinson, M.S. (2001) The Microfinance Revolution: Sustainable Finance for the Poor, 1st edn., Washington, DC: The World Bank.
Human Development Report. (2005) Human Development Report 2005: International Cooperation at a Crossroads, Aid, Trade and Security in an Unequal World, United Nations Development Programme, New York, NY.
Beck, H.T.L., Demirgüç-Kunt, A. and Levine, R. (2007) Finance, inequality and the poor. Journal of Economic Growth 12: 27–49.
Dixon, R., Ritchie, J. and Siwale, J. (2006) Microfinance: Accountability from the grassroots. Accounting, Auditing and Accountability Journal 19 (3): 405–427.
Sadeq, M.A. (1997) Poverty alleviation: An Islamic perspective. Humanomics 13 (3): 110–134.
Dao, Q.M. (2004) Rural poverty in developing countries: An empirical analysis. Journal of Economic Studies 31 (6): 500–508.
Odhiambo, N. (2009) Financial deepening and poverty reduction in Zambia: An empirical investigation. International Journal of Social Economics 37 (1): 41–53.
Koveos, P. and Randhawa, D. (2004) Financial services for the poor: Assessing microfinance institutions. Managerial Economics 30 (9): 70–95.
Hassan, K.M. and Renteira-Guerrero, L. (1997) The experience of the Graemeen Bank of Bangladesh in community development. International Journal of Social Economics 24 (12): 1488–1523.
Megicks, P., Mishra, A. and Lean, J. (2006) Enhancing microfinance outreach through market-oriented service development in Indian regional rural banks. International Journal of Bank Marketing 23 (1): 107–125.
Kumar, A.T.S. and Newport, J.K. (2005) Role of microfinance in disaster mitigation. Disaster Prevention and Management 14 (2): 176–182.
Matin, I., Hulme, D. and Rutherford, S. (2002) Finance for the poor: From microcredit to microfinancial services. Journal of International Development 14: 273–294.
Mahajan, V. and Ramola, G.B. (1996) Financial services for the rural poor and women in India: Access and sustainability. Journal of International Development 8 (2): 211–224.
Dusuki, W.A. (2008) Banking for the poor: The role of Islamic banking in microfinance initiatives. Humanomics 24 (1): 49–66.
Gehlich-Shillabeer, M. (2008) Poverty alleviation or poverty traps? Micro credits and vulnerability in Bangladesh. Disaster Prevention and Management 17 (3): 396–409.
Hussain, M.M., Maaskooki, K. and Gunasekaran, A. (2001) Implications of Grameen banking system in Europe: Prospects and prosperity. European Business Review 13 (1): 26–41.
Bouman, F.J.A. (1990) Informal rural finance: An Aladdins Lamp of Information. Sociologia Ruralis 30: 155–173.
Hawke Jr, J.D (2002) Shaping the future of rural America: Banks and economic development. Community Affairs Online News Articles.
Henson, S.W. and Wilson, J.C. (2002) Strategic challenges in the financial services industry. Journal of Business and Industrial Marketing 17 (5): 407–418.
Germain, R. (2000) Were banks marketing themselves well from a segmentation perspective before the emergence of scientific inquiry on services marketing? Journal of Services Marketing 14 (1): 44–62.
Ahmad, F.U.A. and Ahmad, R.A.B. (2009) Islamic micro finance: The evidence from Australia. Humanomics 25 (3): 217–235.
Paulson, J.A. and McAndrews, J. (2001) Financial Services for the Urban Poor: South Africa's E Plan. New York: Federal Reserve Bank of Philadelphia. Working Paper.
Firpo, J. (2005) Banking the Unbanked: Technology's Role in Delivering Accessible Financial Services to the Poor. Working Paper.
Hinson, R., Dasah, J. and Owusu-Frimpong, N. (2009) Key motivations for bank patronage in Ghana. International Journal of Bank Marketing 27 (5): 381–399.
Adjasi, C.K.D. and Osei, K.A. (2007) Poverty profile and correlates of poverty in Ghana. International Journal of Social Economics 34 (7): 449–471.
Woldie, A., Hinson, R., Iddrisu, H. and Boateng, R. (2008) Internet banking: An initial look at Ghanaian bank consumer perceptions. Bank and Bank Systems 3 (2): 35–46.
Koku, S.P. (2009) Doing well by doing good-marketing strategy to help the poor: The case of commercial banks in Ghana. Journal of Financial Services Marketing 14 (2): 135–151.
Boadi, R.A., Boateng, R., Hinson, R. and Opoku, R. (2007) Preliminary insights into M-commerce adoption in Ghana. Information Development 23 (4): 253–265.
Jagun, A., Heeks, R. and Whalley, J. (2007) Mobile Telephony and Developing Country Micro-enterprises: A Nigerian Case Study. University of Manchester: Institute for Development Policy and Management. Development Informatics Working Paper no.29.
Goodman, J. (2005) Linking mobile phone ownership and use to social capital in rural South Africa and Tanzania from Africa: The Impact of Mobile Phones. Vodaphone Policy Paper Series no.3, http://www.vodafone.com/etc/medialib/attachments/cr_downloads.Par.78351.File.dat/GPP_SIM_paper_3.pdf.
Ghana Telecommunication Report Q2. (2010) Ghana's mobile phone penetration reaches 63% in 2009, http://www.ghanaweb.com/GhanaHomePage/NewsArchive/artikel.php?ID=17956, accessed 8 November 2010.
Dogbevi, E.K. (2010) More in Africa use mobile phones than on any other continent, http://www.ghanabusinessnews.com/2010/01/04/more-in-africa-use-mobile-phones-than-on-any-other-continent, accessed 8 November 2010.
ITU. (2009) World telecommunication indicators database, http://www.itu.int/ITUD/ict/publications/world/world.html.
Conservation for a Better World. (2010) The importance of the mobile phone to developing countries, http://www.conversationsforabetterworld.com/2010/05/the-importance-of-the-mobile-phone-to-developing-countries/.
Heeks, R. (2008) ICT4D 2.0: The next phase of applying ICT for international development. IEEE Computer 41 (6): 26–33.
Dunn, S. (2009) From voice ubiquity to mobile broadband: Challenges of technology transition among low-income Jamaicans. Info 11 (2): 95–111.
ITU. (2008) World telecommunication/ICT Indicators database. 12th edn., http://www.itu.int/ITUD/ict/publications/world/world.html.
Waverman, L., Meschi, M. and Fuss, M. (2005) The impact of telecoms on economic growth in developing countries. The Vodafone Policy Paper Series 2 (March): 10–23.
Government of Ghana Budget Statement. (2009) Budget Statement 2009 – Investing in a Better Ghana, http://www.ghana.gov.gh/documents/budget2009.pdf.
Sridhar, K.S. and Sridhar, V. (2007) Telecommunications infrastructure and economic growth: Evidence from developing countries. Applied Econometrics and International Development 7 (2): 37–61.
de Silva, H. and Zainudeen, A. (2007) Poverty reduction through telecom access at the bottom of the pyramid. Paper presented at the Centre for Poverty Analysis Annual Symposium on Poverty Research in Sri Lanka, 6–7 December, Colombo.
Van-Biljon, J. and Kotzé, P. (2007) Modelling the factors that influence mobile phone adoption. Proceedings of the 2007 annual research conference of the South African institute of computer scientists and information technologists on IT research in developing countries Port Elizabeth, South Africa. New York: ACM Press.
Meso, P., Musa, P. and Mbarika, V. (2005) Towards a model of consumer use of mobile information and communication technology in LDCS: The case of sub-Saharan Africa. Information Systems Journal 15 (2): 119–146.
Chakraborty, S. (2005) Mobile Phones Bridging the Information Divide, Issues and Lessons from Africa. University of North Carolina at Chapel Hill JOMC 223: Global Impact of New Communication Technologies.
Donner, J. (2005) The rules of beeping: Exchanging messages using missed calls on mobile phones in sub-Saharan Africa. Paper submitted to the 55th Annual Conference of the International Communication Association, New York, 26–30 May.
Thompson, H. and Garbacz, C. (2007) Mobile, fixed line and internet service effects on global productive efficiency. Information Economics and Policy 19 (2): 189–214.
Abraham, R. (2006) Mobile phones and economic development: Evidence from the fishing industry in India. Proceedings of the International conference on information and communications technologies and development, ICTD 2006. Berkeley, CA: IEEE.
Norton, S. (1992) Transaction costs, telecommunications, and the microeconomics of macroeconomic growth. Economic Development and Cultural Change 41 (1): 175–196.
Hardy, A. (1980) The role of the telephone in economic development. Telecommunications policy 4 (4): 278–286.
Hinson, R. (2010) Banking the Poor: Key prospects and constraints. International Business Economics. Aalborg University, no. 55, June 2010, pp 1–20, Working Paper Series.
Bennett, L., Goldberg, M. and Hunte, P. (1996) Ownership and sustainability: Lessons on group-based financial services from South Asia. Journal of International Development 8 (2): 271–288.
Pitt, M.M. and Khandker, S.R. (1996) Household and intrahousehold impact of the Grameen Bank and similar targeted credit programs in Bangladesh. The World Bank, Washington, World Bank Discussion Papers no. 320.
Shankar, S. (2007) Transaction costs in group microcredit in India. Management Division 45 (8): 1331–1342.
Jacklen, H.R. (1988) Banking on the informal sector. Paper presented at the International Conference on Microenterprise Development, Washington, DC.
Zeller, M. and Meyer, R.L. (2002) Improving the performance of microfinance: Financial sustainability, outreach and impact. In: M. Zeller and R.L. Meyer (eds.) The Triangle of Microfinance: Financial Sustainability, Outreach and Impact. Baltimore, MD: The Johns Hopkins University Press.
Braverman, A. and Guasch, J.L. (1986) Rural credit markets and institutions in developing countries: Lessons for policy analysis from practice and modern theory. World Development 14 (10-11): 1253–1267.
Alderman, H. and Paxson, C. (1994) Do the poor insure? A synthesis of the literature on risk sharing institutions in developing countries. In Economics in a Changing World: Proceedings of the Tenth World Congress of the International Economics Association, Moscow. London: Macmillan Press.
Morduch, J. (1997) Income smoothing and consumption smoothing. Journal of Economic Perspective 9 (3): 103–114.
Haddad, L. and Zeller, M. (1997) How can safety nets do more with less? General issues with some evidence from Southern Africa. Development Southern Africa 14 (2): 125–153.
Rutherford, S. and Arora, S. (1996) City Savers. Delhi, India: Overseas Development Administration.
Ledgerwood, J. (1999) Microfinance Handbook: An Institutional and Financial Perspective (Sustainable Banking with the Poor). Washington, DC: The World Bank.
Adams, D.W. and Vogel, R.C. (1986) Rural financial markets in low-income countries: Recent controversies and lessons. World Development Review 14 (4): 477–487.
Sinclair, P.J.N. (1998) Why do the poor save so little? Department of Economics Discussion Paper, University of Birmingham, Birmingham.
Wilson, K. (2001) Principal Practices in Microfinance. Baltimore, MD: Catholic Relief Services (CRS).
Akerlof, G. (1970) The market of lemons. Quarterly Journal of Economics 17: 488–500.
Diamond, D. (1991) Monitoring and reputation: The choice between bank loans and directly placed debt. Journal of Political Economy 99: 689–721.
Holmstrom, B. and Tirole, J. (1993) Financial Intermediation, Loanable Funds, and the Real Sector. Toulouse, France: IDEI and Toulouse University.
Field, E. and Torero, M. (2004) Do property titles increase credit access among the urban poor? Unpublished, Harvard University.
Goswami, D. and Raghavendran, S. (2009) Mobile-banking: Can elephants and hippos tango? Journal of Business Strategy 30 (1): 14–20.
Frempong, G. (2009) Mobile telephone opportunities: The case of micro-and small enterprises in Ghana. Info 11 (2): 79–94.
Frempong, G.K. and Essegbey, G.O. (2006) Ghana case study. In: C. Stork and S. Esselaar (eds.) Towards an African e-Index: SME e-Access and Usage. Witwatersrand, South Africa: Link Centre.
Samuel, J., Shah, N. and Hadingham, W. (2005) Mobile Communication in South Africa, Tanzania and Egypt: Results from Community and Business Surveys. The Impact of Mobile Phones, Vodafon Policy Report Series No. 2.
Jacob, K. (2007) Are mobile payments the smart cards of the aughts? Chicago Fed Letter, no. 240, Federal Reserve Bank of Chicago Chicago, IL.
Batchelor, S., Scott, N. and Hearn, S. (2007) Senegal Household Survey: M-payment Analysis. Reading, UK: Gamos.
Chipchase, J. and Tulusan, I. (2007) Shared Phone Use, http://www.janchipchase.com/sharedphoneuse.
Comninos, A., Esselaar, S., Ndiwalana, A. and Stork, C. (2008) M-banking the unbanked, Research ICT Africa, Johannesburg.
Utsumi, Y. (2006) Editorial. Broadband for All, http://www1.alcatel-lucent.com.
Morduch, J. (1999) The microfinance promise. Journal of Economic Literature 37: 1514–1569.
Ghatak, M. and Guinnane, T.W. (1999) The economics of lending with joint liability: Theory and practice. Journal of Development Economics 60: 195–228.
Nwankwo, G.O. (1991) Bank Management: Principles and Practice. Lagos, Nigeria: Malthouse Press Limited.
Author information
Authors and Affiliations
Corresponding author
Rights and permissions
About this article
Cite this article
Hinson, R. Banking the poor: The role of mobiles. J Financ Serv Mark 15, 320–333 (2011). https://doi.org/10.1057/fsm.2010.29
Received:
Revised:
Published:
Issue Date:
DOI: https://doi.org/10.1057/fsm.2010.29