By Adam Thomson in Mexico City
Citigroup and Am?rica M?vil have announced a $50m joint venture to offer mobile banking services to millions of people throughout Latin America, starting with Mexico.
The alliance between the biggest providers of financial and telecommunications services in Latin America, dubbed Transfer, will allow customers to use basic mobile telephones to set up bank accounts, transfer money, withdraw cash from automatic teller machines, make purchases in stores, receive payments and pay bills.
The announcement comes as developing countries throughout the world are looking to spread banking services to the poor using technology such as mobile phones.
“We are putting your bank branch into your pocket,” said Manuel Medina-Mora, Citi president and director-general for Mexico and Latin America.
He said the venture would be operating in Mexico by the first quarter of next year, before being rolled out to the rest of Latin America.
Mr Medina-Mora said the platform could also be used by governments to distribute billions of dollars in subsidies to the poor and for civil service payrolls. The idea was to create an open platform on which rival banks and cellular phone operators could participate, he said.
Mr Medina-Mora said the cost to clients would be between one and two Mexican pesos per transfer or payment and that Citi and Am?rica M?vil’ would share revenues from the transactions equally.
Last week, central bankers and regulators from the Alliance for Financial Inclusion, a group of 81 developing countries, met in the Mexican resort of Canc?n to discuss strategies for creating appropriate regulatory frameworks to promote and facilitate financial services for the poor.
In the case of Mexico, as in the rest of Latin America, the difficulty and expense associated with building bank branches has slowed efforts to reach poorer and more remote sectors of the population.
For example, only about one-third of Am?rica M?vil’s 65m Mexican customers have bank accounts. At the same time, the use of mobile phones has grown exponentially, with many countries in the region nearing penetration rates among their populations of 100 per cent.
Daniel Hajj, chief executive of Am?rica M?vil, said the aim of Transfer during the next three years was to roll out banking services to about 35m people, about 15 per cent of the company’s mobile subscribers in the Americas.
“Cost has been a limit to getting people to open bank accounts,” he told a press conference in Mexico City on Friday. “Now, technology stops it from being a barrier.”
Initially, Transfer will be available for clients of Banamex, Citi’s Mexican subsidiary, and Telcel, Am?rica M?vil’s Mexican mobile telephone company.
? The Financial Times Limited 2011