A 'SMART Money' Solution for South Asia
The Philippines' SMART Money mobile financial service offers a solution for economies in South Asia, which heavily depend on remittances from overseas workers.
Economies in South Asia are heavily reliant on overseas workers' remittances, which comprise over three times higher than foreign direct investments, and ten times than official development assistances.
The growing number of migrant workers brought remittance inflows to South Asia to a record high $72 billion in 2010. However, the figure only covers officially recorded figures: the total remittance, including those that pass through informal channels, is substantially greater, according to a working paper of the Asian Development Bank (ADB) published in May 2012.
Despite the South Asian governments' efforts to increase remittances through formal channels, including a ban on informal agents, the informal remittance system remains the channel of choice for an estimated 40% of the population that is not served by banks. This poses a concern for South Asian governments and regulators as informal remittances fail to promote financial inclusion, but also become sources for smuggling, money laundering, and other illegal activities, the study said.
ADB's Strategy 2020 seeks to create an enabling environment for financial inclusion, and explore new technologies to expand access to financial services. Its projects focus on capturing a larger volume of the remittances in the formal financial system through the use of technology and financial innovations.
A good example of these financial innovations is SMART Money in the Philippines, a renowned mobile financial service launched in 2001.
Bangladesh, India, Nepal, Philippines, Sri Lanka, Finance sector development, Information and communication technology
Last updated: September 2016
The views expressed in these articles are those of the authors and do not necessarily reflect the views of the Asian Development Bank, its management, its Board of Directors, or its members.