TELECOM firm Smart Communications Inc. said it will establish the country’s first microfinance bank, in which the company will tap its mobile-phone subscribers focusing on those who have little or no access to the formal banking system.
The company already announced its plan during a summit in Italy last month, wherein the country’s top mobile phone company said it will soon launch mBank Philippines after it secured the necessary approvals from the Bangko Sentral ng Pilipinas. Smart will utilize the mBank Holding, the mobile microfinance firm of PLDT-Smart Foundation, Finnish development finance company Finnfund and Dutch development bank FMO in launching the micro finance bank.
Pilot services are already being offered by mCompany, a non-government organization, which will spin off into mBank Philippines once the central bank approves its application for a formal banking license, Smart said in a statement.
“By offering simple and effective financial services, mCompany and eventually mBank seek to increase financial inclusion and ensure that people have enough money at any given moment,” said Smart Financial Services Head Tricia Dizon.
Once the microfinance bank is launched, Smart and Talk ‘N Text subscribers will be able to open a savings account with the help of mBank field agents deployed in their communities. Activated account holders can apply for a loan product, immediately get a response about their application and select a weekly repayment schedule–all via their mobile phone.
“The process eliminates the need to travel far to deposit and withdraw money, apply for loans, and pay amortization. This is very convenient especially for those who cannot afford to be absent from work or leave their sari-sari stores,” Dizon said.
Bank will operate a very advanced credit risk management capability delivered by Experian, a credit risk management automation firm.
“We believe this is the right way to go to drive financial inclusion in the countryside. In our Leyte pilot, we started offering the product on Sept. 26, 2012. By October 16, mCompany already had 110 account holders and had already disbursed P265,700 in loans to Smart subscribers,” said Arnaud Ventura, board director of mCompany and co-founder of mBank Holding.
Smart has earlier tried to offer financial solutions and services for the un-banked and underserved. Previous projects include Hapinoy with MicroVentures and CARD-MRI and the Islands Activations Program with SeedFinance.
The company was also tapped by the United States Agency for International Development for its Scaling Innovations in Mobile Money project which seeks to boost mobile money transactions in the country using Smart Money.