Banking 2.0: Microfinancing and Mobile Banking

The world tends to revolve around one thing: money. And if Web 2.0 is about social interactions and using the Web as a platform, you'd have to expect that money would play more of a part than simply getting venture capital or monetizing your app.

While banking may have been a bit slower out of the gate than some other industries to embrace the Web 2.0 phenomenon, they are catching up quickly to use all the available tech tools to their advantage.

One of the most interesting banking ideas to come out of the Web 2.0 movement is microfinancing. More and more, users are turning to the web either as a non-traditional lending source (investing or borrowing through companies like Zopa) or as a way to give back.

Sites like Kiva and FINCA International are gaining attention from both regular Web users as well as international celebrities like Natalie Portman. Even without having large amounts of money to invest, people can assist budding entrepreneurs in Third World countries get their businesses off the ground, providing funding to those who might otherwise be unable to fund their businesses.

But microfinancing isn't the only way banking is changing. Web 1.0 companies like PayPal have led the way for even easier ways to transfer money. Forget having to go home, sit down at your PC, firing up your browser, and logging into a PayPal account. Companies like Obopay, which recently partnered with Citibank and AT&T/Cingular, are at the forefront of turning your cell phone into a mobile banking platform. Obopay allows you to send money via text message, your phone's Internet browser, or via the downloadable Obopay app you can run right on your cell phone.

For a mere $0.10 a transaction (free to receive from another Obopay user and check your balance), you can send money for just about anything: splitting a bar tab, paying a bill, or sending your kid in college spending money. With companies like Western Union charging up to 11% per transaction, and PayPal charging a flat fee plus percentage for anyone receiving over $500 a month, the Obopay fee model is certainly an attractive one.

eBay has already launched PayPal Mobile, and other cell carriers, banks, and payment services are bound to follow suit. I wouldn't be surprised to see Google Mobile Checkout coming soon to a phone near you.

Additional source: BusinessWeek