Including the rural poor in formal financial systems can be difficult because of the high cost of traditional banking models, which include brick-and-mortar branches. Although developments in mobile phone banking are on the rise, some banks are trying a less high-tech kind of mobile bank – one on wheels.
When the poor have no access to formal banking institutions, they instead resort to hiding their money at home, which can make it hard to keep safe and perhaps even harder to save. The rural poor often encounter more risk in their day-to-day lives, and individuals who have money on hand may be expected to help with the more frequent family emergencies inherent with increased risk.
With a bank account, money is out of reach and account holders can save up for future expenses such as education, fertilizer, and medical care.
So with the rise of tech-driven banking in developing nations, why is this rubber-to-the-road method of reaching customers gaining traction? In Uganda, many of the rural unbanked still prefer the physical presence of a banker, even though they have access to the technology for mobile banking.
“The market reality is that people want bank services closer,” according to Tonny Miiro, managing director of Uptime Solutions Uganda, one of the banks in Uganda that is using vans to reach more far-flung residents. “That is what we are doing. It is important that government comes up with more policies that call for more inclusive bank services provided by financial institutions, as there is demand.”
In the Philippines, however, the goal of mobile banking vans is bringing microinsurance to a hard-to-reach population. Cebuana Lluillier’s “Micro-insurance On Wheels” program teaches potential policyholders about insurance, hoping this will increase policy sales and allow the rural poor to avoid financial ruin in case of disasters, such as a flood or an earthquake.
The initiative aims to teach poor, rural Filipinos about how microinsurance works. It is part of a global movement to promote microinsurance as the next big idea in poverty reduction.
“Ordinary people see ‘insurance’ as something that only rich people can afford,” says Jonathan Batangan, the company’s general manager. “We are offering ordinary Filipinos affordable insurance with the added benefits of accessibility, reliability, and convenience.”
In Rwanda, Bank of Kigali uses vans to address two issues. First, the vans will serve as the first point of contact for the 50 percent of the population that is currently unbanked. Second, the vans will increase the effectiveness of rural microfinance institutions that need to make more deposits and withdrawals to serve their members adequately.
By both promoting its own brand and helping local organizations that provide financial services, Bank of Kigali plans to be a major player in reaching the government’s 2020 goal of 90 percent financial inclusion.
Whatever the reason, mobile banking isn’t just for telephones anymore.