New banking services open up rural business
Innovative technology is helping BSP to bring banking services to remote areas of Papua New Guinea, in the process helping to bring rural businesses into the formal economy.
Until very recently, access to banking in Papua New Guinea was limited to those who could travel to a bank branch to deposit or withdraw their money. That could involve a long trip and an expensive bus fare.
According to the Bank of Papua New Guinea, an estimated 90% of the country’s population is ‘unbanked’—that is, they do not use the banking system and subsist entirely in the cash economy.
For farmers, access to a bank account will help to open up new markets, since larger retailers in Port Moresby and other towns often require farmers to have a bank account so that payments can be made electronically.
Drive into rural areas
The major banks are using state-of-the-art technology to bring in new customers in remote rural areas of PNG who have never used bank accounts before. Some are landowners seeking to save the royalties from the massive PNG LNG project. Although some areas do not have serviceable roads, people can access banking services thanks to mobile phone coverage.
With a more than 100% growth in transactions since the start of the year, BSP’s branchless banking service is really booming, BSP Rural Head Peter Komon told Made in PNG.
BSP’s Rural Banking program aims to grow to 200,000 customers in the rural market segment by the end of 2014, up from 120,000 customers currently.
‘We are targeting the 8% of the population, living mainly in rural areas. So far, most are unbanked and rely on the risky and costly cash-based informal economy to transact, save money and access credit,’ Komon said.
In addition to mobile banking, BSP also has a dense network of thousands of ATMs, EFTPOS merchants and agents, significantly increasing the customer’s ability to access their bank account and save.
While BSP dominates the retail and rural markets, its competitors have their own projects to reach out to remote communities.
Westpac PNG recently introduced in-store banking in local trade stores in the New Ireland province, and the ANZ has introduced its own mobile phone banking technology.
For its part, ANZ has set a target in 2013 of introducing mobile phone banking to 50,000 rural customers across PNG, Vanuatu, Samoa and Solomon Islands.
BSP’s Komon predicts it will require a long-term investment in time and resources to educate PNG’s unbanked population of the benefits of joining the formal financial system and gain their confidence.
‘We are preparing the next generation of customers,’ he said.
Farmer George Waire of Magautou village signs his new BSP card at Magaut.