Ayala Group puts up RP's first mobile bank

The Ayala Group is putting up the country’s first mobile microfinance bank, initially capitalized at P500 million, through a three-way fund infusion by the conglomerate’s main units.

Ayala Corp., Bank of the Philippine Islands (BPI) and Globe Telecom signed yesterday a memorandum of agreement to create the said bank, Pilipinas Savings Bank, as a wholly-owned subsidiary of BPI.

The use of Pilipinas Savings Bank as vehicle, however, is still subject to the execution of definitive agreements and to getting the necessary approvals from the Bangko Sentral ng Pilipinas and other government regulators, Ayala Corp. general counsel Renato Marzan said.

BPI and Globe will have an equal stake of 40 percent while Ayala Corp. will own 20 percent of the bank, which has a subscribed capitalization of P350 million.

Marzan said the venture will extend wholesale microfinance loans to microfinance institutions and other microfinance products in the future, and will use mobile technology to deliver financial services and expand its retail client base.

He added that the move seeks to further enhance the Ayala Group’s participation in building a financial ecosystem within the microfinance community.

Marzan explained that BPI has an ongoing wholesale lending program for microfinance institutions while Globe has been providing a number of rural banks and microfinance institutions with its innovative G-Cash product, a text messaging based technology, for money transfers and loan collections.

Microfinance has been defined as the provision of financial services to poor or low-income clients, including consumers and the self-employed. The term also refers to the practice of sustainably delivering those services.

More broadly, it refers to a movement that envisions a world in which as many poor and near-poor households as possible have permanent access to an appropriate range of high quality financial services, including not just credit but also savings, insurance and fund transfers.

The microfinance industry as a whole is forecast to grow 10-fold to more than $250 billion over the next decade, according to recent research by Citigroup.

The creation of the mobile microfinance bank is expected to take mobile commerce (m-commerce) a step further.

About 40 rural banks offer mobile banking services in partnership with Globe while rival Smart Communications has partnered with Microventures, a social business enterprise, and the Center for Agriculture and Rural Development, the largest microfinancing institution in the Philippines, to put up some 8,000 stores in Southern Luzon that will offer mobile banking and Internet services.