The report says current hype about the potential of branchless banking is running ahead of reality. Massive sustained success in reaching the poor requires more accurate insights on their financial needs and adoption behaviour.

Branchless banking, notably through mobile phones, will inevitably grow in most countries over the next 10 years, says Cgap. Across Africa, Latin America and Asia, the number of people who do not have a bank account but do have a handset is set to grow from 1 billion today to 1.7 billion by 2012.

However, it's far less certain whether large numbers of the unbanked poor will use these alternative channels for financial services beyond payments, such as savings and credit.

How much progress is made by 2010 relies heavily on four forces that will shape branchless banking, says the report.

Demographic changes - including a greater number of younger consumers coming into the market and greater mobility at least within countries - will be favourable for the adoption of branchless banking.

Activist governments will play a greater role as regulators of the financial sector, providers of social safety nets, and providers or encouragers of the rollout of low-cost bank accounts and financial infrastructure.

While security concerns about cash crime will continue to drive the adoption of electronic transaction channels, the rise of e-crime will affect consumer confidence and test the risk management of financial providers.

Finally, the report identifies Internet browsing via mobile phones as an important factor, reducing costs of financial transactions and enable new players to offer financial services.

Elizabeth Littlefield, CEO, Cgap, says: "Mobile banking pioneers give us hope that millions of poor people, especially those living in rural areas, finally might be served by the banking system. That said, new business models and partnerships that provide the right incentives to banks and banking agents are vital if we are to move beyond simple payments and transfers to being able to offer other basic banking services, especially savings, that poor people need and want."

Gareth Thomas, UK minister for trade and development, adds: "The poor are kept in poverty when they are financially excluded. This means they lack safe places to save money, the opportunity to invest in their future and cannot reduce the risk of their savings being lost in natural disasters. As this report shows, governments and the private sector both have a huge role to play in ensuring investment is made to deliver technology-based financial services to billions of poor people."

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