Experts Help Boost Mobile Banking in Emerging Markets

CHARLOTTESVILLE, Va., May 27, 2011 /PRNewswire-USNewswire/ -- Mobile phone ownership is commonplace all over the world. A ubiquitous symbol of modernity, these communication devices are now a platform for providing financial services to underserved populations.

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Darden School of Business Professor Frank Warnock and Batten Institute Fellow Veronica Cacdac Warnock have joined ShoreBank International (SBI) in their efforts to assist two new mobile banking companies achieve the goal of increased access to financial services for those outside the banking mainstream in Bangladesh and Pakistan.

The team, whose participation is funded through SBI's $16.9 million grant from the Bill and Melinda Gates Foundation, will design a structure for evaluating the businesses and their progress toward the goal of financial inclusion for poor and underserved populations in the two countries.

"Companies operating in the social sector are expected to run their businesses as well as any traditional for-profit company," says Frank Warnock. "We are tasked to provide guidance on putting in place an efficient system to track the processes and enable timely and critical review of the business."

bKash, a new joint venture between BRAC Bank and Money in Motion, will offer an easy, safe and affordable way for Bangladeshis to store, transfer and pay bills via their mobile phones. UBL Omni, also a bank-led branchless banking venture, launched pilot programs beginning in 2009 to provide broad financial services that best address the unique set of needs of Pakistanis with limited use of banking services. In both ventures, the Warnocks' role is to help the companies by providing technical assistance and business expertise along a number of dimensions, including market intelligence and economic impact.

"Mobile banking for the poor has been successfully implemented in a number of countries, including Kenya and South Africa. bKash and UBL Omni aim to go beyond the traditional focus on transactions and transfers by broadening the poor's participation in the financial system as savers and borrowers," Veronica adds. "Over time, we hope to be able to extract lessons and stylized facts that will deepen the understanding of what does and does not work in the social space."

The ultimate goal is two-fold: effective and efficient delivery of bKash and UBL Omni financial services consistent with the needs of the population who have been managing their lives at the periphery of formal financial institutions, and bring them to a position where they can save, borrow and invest in order to better their conditions.

Broadly, microfinance is the provision of small-scale financial services such as loans, savings and insurance to low-income people. Micro-saving has emerged as an integral element of microfinance, which benefits many of the world's poor when their hard-earned money is protected in banks rather than kept hidden in homes and vulnerable to theft. Frank and Veronica care deeply about opportunities in underserved markets, and work to increase awareness of them among emerging entrepreneurs at Darden and U.Va., as well as in the broader business community. Along with Darden Professor Saras Sarasvathy, they also guide their students in developing "Markets in Human Hope," a practicum course for Darden's Second Year students.

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SOURCE University of Virginia's Darden School of Business