Regulating transformational branchless banking: Mobile Phones and Other Technology to Increase Access to Finance

Abstract

Branchless banking using information and communication technolo- gies and retail channels to reduce the costs of delivering fi nancial services holds great promise for clients beyond the reach of traditional banks. Much of the current buzz involves mobile phone banking and retail agents serving as banking correspondents equipped with point-of-sale terminals. Policy makers and regulators share a common challenge in formulating pro- portionate policies that foster innovation and scale without compromising safety. Finding the right approach to supervising activities of banks and non- banks (e.g. mobile phone companies) who outsource conventional banking transactions to retail agents, as well as risk-sensitive regimes for combating money laundering and terrorist fi nancing, are important preconditions for branchless banking for poor people to be legally and economically feasible. Policy makers must also consider issues such as proportionate regulation for issuing e-money and other stored-value instruments, consumer protection, inclusive payment systems, and competition among a diversity of providers.