Since 1997, USAID has provided support for the Rural Bankers Association of the Philippines Microenterprise Access to Banking Services (RBAP MABS) program www.rbapmabs.org [A1] which has been providing training and technical assistance to its participating rural banks to help them establish profitable, sustainable microfinance operations. MABS works under the Rural Bankers Research and Development Foundation (RBRDFI) to provide training and technical assistance to 700 member rural banks with more than 2,150 branches nationwide.  Over 200 rural banks now have active microfinance operations reaching more than 800,000 borrowers.  The sector as a whole provides deposit services to mostly low income households and they now manage more than 6 million deposit accounts. MABS has identified however that rural banks need to improve efficiency and reduce transaction costs in order to effectively reach more microenterprise clients especially in rural areas.

 

With over 66 million mobile phone subscribers in the country and with the existence of two mobile money platforms (GCASH and SMART Money), the ability for banks to reduce operational and transactional costs and reach out to more clients is now being offered via m-banking..  Since early 2005, the MABS program has developed a full set of m-banking applications that utilize the GCASH platform that run on almost all basic mobile phones.  Services include person-to-person money transfers, international and domestic remittances, micro loan disbursements and payments, deposits and withdrawals, payroll services, bill payments, and the ability of merchants to buy and sell products using GCASH while facilitating remote deposit and cash-out services at accredited rural banks. Over 70,000 clients have been registered by accredited banks and plans are to reach out to more than 500,000 clients and customers over the next three years. M-banking transactions tripled in 2006, 2007, and again in 2008. There is now a huge opportunity to expand m-banking for microfinance through RBAP’s recent partnership with SMART (with almost 35 million subscribers) as well as renewed support and commitment from Globe (with almost 25 million subscribers). There are also plans to expand m-banking services to include automated message alerts, loan payment reminders, and other services through an SMS gateway.

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MABS was quick to see the potential of the large subscriber base and the falling costs of mobile services to develop m-banking applications. In 2004, with the support of MABS, RBAP and Globe entered into a partnership to develop m-banking services.  RBAP-MABS also developed detailed manuals and procedures and helped RBAP to secure approval from the Philippine Central Bank (BSP) to launch these m-banking services.

 

The first service that RBAP-MABS developed was the Text-A-Payment (TAP) service whereby borrowers of participating banks enroll their accounts and pay their loan amortizations using GCASH through their mobile phone.  In 2006, RBAP-MABS applied for and BSP approved several services: cash-in (exchange of cash for GCASH)/cash-out (GCASH for cash), Text-A-Remittance and Text-A-Deposit (which allows clients of rural banks to make remote deposits via SMS). Several rural banks also started implementing salary disbursements of their employees through electronic money through Text-A-Sweldo (Text-A-Salary). MABS and GXI also worked towards expanding the mobile commerce ecosystem (network of merchants and retailers accepting GCASH as payment for goods and services, or changing cash for GCASH).

In 2007, RBAP-MABS launched and BSP approved the Text-A-Withdrawal service, which allows depositors of rural banks to make withdrawals through SMS. Five pilot rural banks also launched the Mobile Phone Banking Specialist Program. This program generated more than 70,000 new m-banking subscribers including more than 3,400 microenterprise merchants who now accept GCASH for payment http://blog.mobilephonebanking.rbap.org/ were signed up by the specialists and the banks. More than 40 rural banks with more than 400 branches are now GCASH accredited outlets. http://www.mobilephonebanking.rbap.org/page/map

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