Mobile Banking, Now In Maldives
Last week we saw how M-Pesa is taking Kenya by storm. In Maldives too, all of the country’s banks are being brought under another umbrella system that allows their citizens to transact without having to travel to their banks. In cases of rural citizens, a bank branch could be miles away. The 2004 Tsunami, besides washing away a lot of infrastructure had also left a lot of Maldivians homeless and had caused them to lose their entire lives’ savings, which in the rural areas was mostly bundled up in tin cans or pillows. A large portion of the population uses mobile phones, making mobile banking easily acceptable. This endeavour, started with World Bank’s $7.7 million loan works through tele-calling and not text messaging, making it simple for illiterate users as well. The widespread use of m-banking has given rise to an argument: should mobile banking really be a priority in rural areas where basic necessities like health and education are still meager? But Tom Standage, Business Editor of The Economist magazine begs to differ. According to Standage, the next wave of economic development will surely be driven by mobile banking. He supports his argument by stating the fact that in a typical developing country, for each extra 10% of people with mobile phones, an extra half a percentage point is put on GDP growth a year. Watch him explain the relationship between GDP and mobile use in this video here.