One of the key messages in You Can Hear Me Now is that cell phones are not only providing untold rural income opportunities that didn’t exist before, but also providing access to financial services for the “unbanked.” This mobile banking revolution is also greasing the skids for remittances from overseas relatives, which now total in the range of $300 billion per year, most of that going to people without bank accounts. In many countries, remittances outpace foreign investment and foreign aid combined.

Cell phones are helping the flow of money by cutting out the middle man, i.e. banks and transaction agencies, such as Western Union. In some cases, people in the West are sending money directly to the phones of relatives in poor, rural areas; in other cases, the money goes to a bank or money store. Smart Communications and Globe Telecom in the Phillipines have been at the forefront of this particular revolution.

Look for this money flow to explode over the next decade. The GSM Assosiation, along with 19 mobile cellphone operators and MasterCard International, has embarked on a pilot to engage local banks as payment centers. GSM expects that this could increase the flow of remittances from $300 million to $1 trillion over the next decade.

Smart Communications, for example,  plans to launch several pilot projects in collaboration with mobile phone operators and banks in Bahrain, Italy and other countries hosting large Filipino migrant populations. In Bahrain, Smart will work in partnership with MTC Vodafone Bahrain and a leading bank in the Middle East.

“Aside from lowering costs, we shall provide Filipinos overseas greater control over the manner in which their remittances are transmitted and used back home — enabling them to send funds in the amounts of their choice, whenever they want, wherever they are,” said Napoleon L. Nazareno, Smart President and CEO.

That’s 1,321 Philippine pesos, sent from London to Manila via cell phone, as described in New Conductors Speed Global Flows of Money from The Washington Post.

It’s no secret that remittances sent home by foreign workers eclipse both foreign direct investment (FDI) and foreign aid in many countries. In the Philippines, for example, remittances equal nearly 16% of total GDP. In India, nearly $23 billion is sent home from overseas, but just 3% of GDP.

Those numbers are going to increase, thanks to the cell phone, which is facilitating the process and speed of transactions, and dramatically lowering costs. Overall, anywhere from $250 to $300 billion in remittances are sent each year, with bank costs and fraud eating up 20-30% of the money. People in 17 countries can now send money to the Philippines by cellphone.

From a 2006 editorial in Dhaka’s The Independent, as quoted in You Can Hear Me Now:

“Further rapid increase in the use of cell phones is a good indicator of social progress. The fact that these phones are also being used widely by rural people is a happy trend in the reduction of distance in urban-rural communication.”