Mobile Phone Banking and New Technologies: Providing New Channels to Serve Clients Better, Faster, and 24/7

NRT MPB 1Alternative ways of delivering banking services are changing the way rural banks are servicing their clients. Not only that, these innovations are also helping the Philippine Government reach families at the bottom of the economic pyramid.

During the 2011 RBAP-MABS National Roundtable Conference, rural banks shared how technology has been useful to them in expanding microfinance services.  As of May 2011, more than 160,000 rural bank clients have processed more than PhP10 billion (US$220 million) in mobile phone banking transactions via the GCASH platform.

Banking practices have been evolving and expanding coverage geographically, as well as in terms of network, client base, and products and services being offered to clients.  Mobile phone banking services were first introduced to rural banks through an effort promoted by the RBAP-MABS program back in 2004.

From left: Lt. Gen. William Hotchkiss III (Ret.) of Cantilan Bank, Ms. Ma. Cecilia Tanael of the Rural Bank of Mabitac, and Ms. Cynthia Rudinas of First Valley Bank

From left: Lt. Gen. William Hotchkiss III (Ret.) of Cantilan Bank, Ms. Ma. Cecilia Tanael of the Rural Bank of Mabitac, and Ms. Cynthia Rudinas of First Valley Bank

Sharing his experiences in employing new technologies, Cantilan Bank President Lt. Gen. William Hotchkiss III (Ret.) recalled how the town of Cantilan had only one payphone back in 1999, when the bank first became a MABS participating bank. “Five years later,” he said, “Globe and Smart … put up their cell sites,” which paved the way for the massive use of mobile phones and SMS (short message service) in the area. This development eventually became instrumental in enabling Cantilan Bank to offer mobile phone banking services (MPBS) for its clients, including cash-in and cash out services, Text-A-Deposit, Text-A-Withdrawal, Text-A-Payment, Text-A-Bill Payment and Text-A-Remittance.

Cantilan Bank is also one of the first rural banks to make use of a special SMS Gateway system to enhance their marketing campaign and increase efficiency of services, while also minimizing their transaction cost. The SMS Gateway system is a specialized program that allows the bank to send SMS blasts to multiple mobile phone numbers at once with the use of a computer and a special modem. Cantilan Bank uses this system to send announcements of new products and services to its clients, and plans to use this tool for loan release notification and payment reminders.

Rural Bank of Mabitac President Ma. Cecilia Tanael, on the other hand, talked about providing 24/7 access to cash to its clients by partnering with Encash and deploying more ATMs to distant areas. This saves them both time and cost as opposed to traveling to commercial districts where most of the ATMs are located.

First Valley Bank Compliance Officer Cynthia Rudinas shared how the bank, through its mobile money transfer services, helps in the successful implementation of the Department of Social Welfare and Development’s (DSWD) Pantawid Pamilyang Pilipino Program (4Ps) in the bank’s service areas. First Valley Bank is one of the MABS participating banks serving as channels through which the DSWD sends financial aid to thousands of very poor households in a convenient  and cost-efficient way.

The 4Ps is “a poverty reduction and social development strategy of the national government that provides conditional cash grants to extremely poor households to improve their health, nutrition and education particularly of children aged 0-14”. (View source: DSWD website) However, the country’s dispersed geography makes it difficult for the government to disburse cash grants. It takes several hours using different modes of travel to reach remote provinces. There are people who travel considerable distance just to reach transit points. The distance of the distribution points and high transportation cost are barriers in disbursing and claiming monthly monetary assistance. Finding a cost-effective way of cash grant distribution in areas like these is important to the success of the whole program. Thus, the rural banks’ strategic role in reaching these people in far-flung areas is proving vital.

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Mr. Jaime Fraginal, Sales Group Head of Globe’s G-XChange Inc. (GXI), shared how the company partnered with rural banks also to aid in the government’s initiative of providing financial aid to poor households living in far-flung areas. With the use of GXI’s GCash Remit, rural banks like First Valley Bank and Cantilan Bank, which offer mobile phone banking services, have become effective means for the disbursement of conditional cash grants.

Through more aggressive acquisition campaign, the USAID-supported RBAP-MABS program envisions to reach more of these clients, and make the Philippines go beyond being the texting capital of the world to being a leader in mobile phone banking and mobile money transfer.