CELL PHONES

The Philippines is not unlike any other third world nation in that everyone has a cell phone. Cell phone penetration here is estimated at around 70-80%. The ironic thing is how people in the developed world view this as a luxury item, but here it’s almost a necessity. Case in point, there is a banking system built on the mobile platform. You can share your load on your pre-paid cell phone with your friend by simply texting the amount +2+their phone number. If you’re at a restaurant and your friend is out of cash, they can easily transfer (or smart money) the amount to you directly. In the US, you’d have to either get the balance in cash, or get a check from your friend. If you happen to bank at the same bank, you might be able to transfer money directly – all of which takes time and is far from instantaneous. Even merchants accept money via cell phone.

For someone with a banking background, I see the convenience. I also get why a model like this would never work in the US. For one, we have a substantial network of banks. In the Philippines, some of the areas across these 7,000 islands are so remote, that it’s a great inconvenience to get to a bank. The other reason it would never work in the US is because the mobile banking system largely caters to the “un-banked”, which in the US would be seen as aiding illegal immigrants or traffickers and the like gain access to the banking system. Most of the accounts here are pretty small (likely under $100). Anyway, I just thought that was fascinating and worth sharing.