The Potential of Using Mobile Money Systems for Enhancing Financial Inclusion in Sri Lanka

In common with many developing countries, financial exclusion among the poor is a major constraint to poverty reduction in Sri Lanka. Mobile phones have been increasingly used as a means to overcome this constraint in several developing countries, the most prominent among them being Kenya and the Philippines. The objective of this study is to explore the potential of using mobile money systems in Sri Lanka to extend financial facilities to the poor so as to smoothen their economic activities. The findings of the study reveal that although mobile phones have become common in Sri Lanka over the last decade covering rural areas where there is acute poverty and lack of access to formal banking institutions, they are hardly used for financial transfers and payments. As a result, the country has been losing opportunities to use mobile phones to extend financial facilities to the poor who do not have access to formal finance. The study also reveals that lack of awareness about mobile banking acts as a major impediment to the expansion of mobile money systems. The application of mobile banking is largely limited to commercial bank customers in Sri Lanka making it an additive model. Our focus group discussions reveal that most of the bank customers are unaware of such facilities. A major reason for this could be that mobile banking is not widely publicized. In Sri Lanka, the mobile phone operators have not yet launched mobile money systems. The mobile transactions platform needs to be harnessed in the country without further delay to overcome the problem of financial exclusion.

Sri Lanka Journal of Advanced Social Studies Vol. 1 - No. 2 - Page 3-24

DOI: http://dx.doi.org/10.4038/sljass.v1i2.4854