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by Teresa Martin

Banks have been sporting an ugly black eye lately. So when you hear about double-digit millions being invested in banking technology for Africa, southeast Asia, and India you can't help but ask ... why?

In this case the application is mobile banking, and the millions are coming from the Bill and Melinda Gates Foundation and the International Finance Corporation (IFC), in three separate projects.

The most recent announcement - and the one that garnered the most splash - happened a couple of weeks ago, in late February 2009. The Gates Foundation, pledged $12.5M to develop mobile banking options in developing regions of Africa, Asia, and Latin America through the Mobile Money for the Unbanked (MMU) program. MMU is running through the international mobile communications trade organization GSMA and the project's goal is expand the availability of financial services to millions of people in the developing world through mobile phones.

This investment follows closely on the heels of the Foundation's November 2008 $1.7 million grant to Paris-based PlaNet Finance to enable PlaNet Finance and Orange, a division of France Telecom , to implement and evaluate its mobile banking platform for microfinance institutions in Senegal and expand the program to Jordan, Egypt, and Ivory Coast.

The International Finance Corp., the World Banks private-sector investment arm, has been involved in a dozen mobile-banking operations in poor regions of Asia, Africa and Latin America. According to IFC's mobile banking consulting Janine Firpo, only 5 to 20 percent of households in East Asia and the Pacific have basic bank accounts and access to bank branches. Conversely mobile phones are pervasive, even in rural areas, with something in the order of 40 million people having cell phones but no bank accounts in Indonesia alone.

OK, so about now you are probably scratching your head and wondering, again, why? Why is this is such a big deal to the Gates Foundation and the World Bank? Is it just part of some multi-national plot to keep control in the hands of those evil bankers? Is it a way for the mobile carriers of the world to gobble up another piece of the action?

Well, it turns out the intersection of technology and finance has the potential to make significant changes in global poverty. It isn't about being trendy; it is about accessing tools to enable people to move beyond sustenance existence.

"Mobile phones in poorer nations play a different socio-economic role. In these countries, having a mobile phone is not as much about being hip as it is about creating opportunities for a better life," explain Seongwook Yang, from SK Telecom's Commerce & Media, Business Development Team, writing in the online publication Enterprise Innovation. SK Telecom owns about 50% of the mobile market in South Korea - where mobile apps are a way of life.

The IFC says it is interested in advancing mobile banking because it addresses the dual barriers of cost and access barriers by transforming every cell phone into a financial transaction device. This enable basic services, like transferring money and making payments.

These are things that we take for granted. No matter where in the world we are, we need to pay for food and medical care, invest in school, grown and develop businesses, and save a little reserve for the time when bad things might happen. We routinely save money, pay bills, and apply for loans.

Here, in North America, these are by and large safe and secure processes. But in many corners of the globe, they aren't. Money is stored under a straw mattress. Payments are intercepted and stolen. Access to capital is limited, costly, or controlled by one group. Informal middlemen are corrupt or unreliable. Access to larger markets for selling products is difficult.

According to the Gates Foundation, "the primary critical gap in the ability of almost 3 billion people to acquire wealth is the dearth of basic financial services including savings accounts, access to credit, and efficient means to move money." In other words, to move out of poverty, you have to have a system for dealing with money.

This isn't about handing over money; rather, it is about building the tools for securely accessing and using money. The banking industry arose to fill this need back in the 1400s. But even today, hundreds of millions of people aren't part of this system.

The rise of microcredit (very small loans) as a tool for social entrepreneurship and helping developing communities create businesses and move beyond daily survival only highlights this need even more.

Microcredit has helped millions of people in developing countries improve their lives -- and proved that poor people are reliable customers who want, and will pay for, financial services. The success of microcredit made it possible to offer a range of financial services, including savings, insurance, loans, and payment, to a whole new market in the developing world ... if there were a way to reach the market.

Enter mobile technology, where private, public, and foundation markets are all stirring the pot.

For example, in Kenya which has a highly developed mobile telecommunication system, the formal banking sector reaches just 19 percent of Kenya's 36 million people. Vodafone's mobile banking M-Pesa service launched in February 2007, and by the end of 2008 claimed 1.6 million subscribers.

M-Pesa lets customers add credit to their account at more than 1,500 shops and kiosks, where customers can also pick up sent cash. Customers can also send credit to other mobile phones via a code-bearing text message and pay between .45 and $6 per transaction. This is a nice business for Vodafone - but is also an empowering service for the 81% of the population that was previously unable to participate in a formal financial structure before.

In August 2008, US-based Obopay and India-based Grameen, teamed up to offer mobile banking applications in developing nations in their joint "Bank A Billion" project. Obopay is California startup whose genesis was its founders' volunteer work in Africa. Carol Realini noticed that people in the most remote areas carried a mobile phone, but not a wallet and when she returned to the States, this serial entrepreneur launched a new company at the intersection of money and mobility. Dr. Muhammad Yunus, 2006 Nobel Peace Prize winner, founded Grameen Bank in 1976 and is globally recognized as an innovator of microcredit. Grameen includes 22 organizations and 35,000 employees focusing on people-centric businesses with socio-economic development objectives.

The Obopay/Grameen alliance targets the delivery of mobile banking technology and services to a billion of the world's poorest people by 2018 - including functions like cross-border remittances, money transfer, payments, savings and credit accounts. The project began delivering services last October, launching in Mumbai, India and Bangladesh.

Money, it seems, does make the world go round. GSMA estimates that the money transfer market on mobile phones could represent 5 billion dollars by 2012. Which all adds up to a pretty big reason why the Gates Foundation, the World Bank, and so many others are trying to figure out how to sort through the technology, interoperability, and regulatory thickets to clear a path through to the technical tools that can help enable financial access and maybe, just maybe, even change the world along the way.