This story from Radio Netherlands talks to mobile banking expert Lukas Wellen. He has set up microcredit banks throughout the world, and has the same set of problems in setting up mobile banks in Africa. Radio Netherlands reporter Johan Huizinga profiles Wellen and the challenges he has encountered.
The economist says that fraud actually occurs in only a small percentage of cases. However, there are many stages at which things can go wrong. The person taking the money to the bank can mess around with the group bookkeeping, he may meet a friend along the way who needs money in a hurry and can't pay him back until next week. Then he can commit fraud with the receipt he receives from the bank and won't have to show to the credit controller for another week.
Lukas Wellen explains that mobile banking removes many of these obstacles. The weekly repayment to the bank can be carried out with a simple text message. All the data goes straight into the computer. Manual administration and paper receipts are virtually unnecessary, since everything can be checked directly by mobile phone and the lender doesn't have to rush off to the bank at three o'clock in the afternoon to deposit his money before it closes.
Safer and cheaper
The group meetings can be a lot shorter since the money doesn't have to be counted and it doesn't have to take place anywhere near the bank. It can be held at a different place - near a church or market, for example - where all the members go anyway on a weekly basis. In other words microfinance by mobile phone is more efficient, safer and cheaper for the customer.
Professor Robert Lensink, economist at the University of Groningen, specialises in research into microcredit. He regards mobile banking as a major step forwards, says it makes monetary transactions much safer. People who have made a lot of money in the market no longer run the risk of being robbed on their way home. And, since they no longer have to go to the bank themselves, it's also cheaper.
However, Lukas Wellen emphasises that the advantage for the bank is more significant. It has direct control and insight into the repayment behaviour of the lenders, which make it easier to attract investors who can be presented with a clear financial perspective.
Into the bush
In fact, credit banks no longer need local branches. Armed with a laptop and a mobile phone, the credit controller can travel into the bush to do his work. For the time being, however, he suggests they keep local branches open. He knows another overhead which can be made cheaper and more efficient.