The Bill & Melinda Gates Foundation and the GSM Association (GSMA), an organisation representing more than 750 of the world’s cell phone operators have unveiled  Mobile Money for the Unbanked programme (MMU).

This initiative is aimed at expanding the availability of financial services to people in the developing world through the use of mobile phones.

The programme which is supported by a 12.5 million dollar grant from the Gates Foundation, will work with mobile operators, banks, microfinance institutions, governments, and development organisations to expand reliable, affordable, mobile financial services to the unbanked. The services would allow people to set aside a small amount of savings in a safe place to guard against risks, build assets, and provide opportunities for the next generation.

According to Bob Christen, director, the Financial Services for the Poor initiative, Gates Foundation, “Traditional financial services are often too costly and inconvenient for people who earn less than 2 dollar a day to use, and too expensive for banks to provide.” He said technology like mobile phones is making it possible to bring low-cost, high-quality financial services to millions of people in the developing world so they can manage life’s risk and build financial security. 

The MMU programme will fund research efforts to help overcome some of the barriers of providing mobile banking services and demonstrate the business case for serving this market, he said.

 The programme also includes a $5 million grant to catalyze a new wave of mobile money innovation, encouraging mobile network operators to create services for previously unbanked people in emerging markets.

Moreover, it will support approximately 20 projects in developing countries, focusing on Africa, Asia, and Latin America, with the goal of reaching 20 million previously unbanked people with mobile financial services by 2012.

Rob Conway, CEO and member of the board of the GSMA said, mobile phone operators have strong incentives to team up with microfinance companies serving untapped markets. “There are over one billion people in emerging markets today who don’t have a bank account but do have a mobile phone, he said.” 

This, he said, represents a huge opportunity, and mobile operators are perfectly placed to bring mobile financial services to this largely untapped consumer base.

He believes that Mobile Money for the Unbanked (MMU) has the potential to become a 5 billion dollar market opportunity over the next three years.

The grants to the MMU programme is part of the Bill & Melinda Gates Foundation’s broader Financial Services for the Poor initiative, which is working with a wide range of public and private partners to use technology and innovation to bring high quality, affordable savings accounts and other financial services to the doorsteps of the poor in the developing world.