Banking via Phone

The Catch-up effect in Economics is when a developing country can grow faster because they are benefiting from the developed countries technologies.

We are seeing this will cell phones in Africa. Leonard Waxman of the London Business School says “for every ten mobile phones per hundred people, means that there is a half of a percent extra GDP growth per person.”

A recent article in the Economist talks about how the people of these developing countries are now using this tool for banking.

“…typically allow customers to deposit and withdraw cash through a mobile operator’s airtime-resale agents, and send money to other people via text messages that can be exchanged for cash by visiting an agent. Workers can then be paid by phone; taxi drivers and delivery-drivers can accept payments without carrying cash around; money can be easily sent to friends and family.”

This I found to be very interesting because it is more advanced than our system. The demand for this type of service is very high there because we have things they don’t, like roads and lots of banks/ATM’s.

Cell phones grew faster than their bank branch systems. We had a well established banking system well before we even thought about cell phones.

Of course this brings up interesting security questions and I wonder how much cell phones in developing countries have effected GDP. We may not know all the answers but this is just something I noticed that was interesting.

~PCCapitalist

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Published in: on December 2, 2007 at 12:23 am  Leave a Comment  
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