The three-year UK-led project - dubbed Facilitating Access to Financial Services through Technology (Fast) - will explore the options for introducing 'branchless banking' in developing countries, such as Kenya, Tanzania, Pakistan, Nigeria, India, Bangladesh and Ghana. Pilot projects will be evaluated by teams of finance and technology experts and where appropriate aid will be extended to promote increases in scale or spread to different countries.

The effort will also encourage international research into how new technologies such as mobile phone banking, smart cards and biometric banking can help the poor to access financial services; and bring together regulators from 20 countries to help develop industry standards to promote wider uptake.

International Development Secretary, Douglas Alexander, says of the initiative: "A lack of access to finance in some parts of the developing world stifles entrepreneurship, stunts development and leaves people trapped in a poor, cash-only society.

"Advancements in technology and growth in mobile phone use is changing how we all live our lives and has the potential to give people access to financial services no matter where they live."

The potential market for technology and mobile phone companies is huge, and by piggy-backing on existing technologies and infrastructures, the transaction cost can be much cheaper than traditional banks, says Alexander.

The new project will build on earlier DFID-funded pilot programme like Vodafone's M-Pesa and Equity Bank's biometric-based social welfare programme.

M-Pesa was set up to test whether a mobile phone-based platform to transfer money in remote parts of Kenya would work. Two years later, M-Pesa has 5 million users, more than all the bank accounts in Kenya, and is being expanded to support remittances, salary payments and bill payments. It is estimated to be 45% cheaper than bank-operated payment transfer services.

In Kenya, DFID is also supporting Equity Bank to help make social benefit payments to poor people through the use of smart cards and biometric identification. Currently northern Kenya has only five bank branches in an area the size of the UK with a population of 1.5 million. Equity Bank's operations will help double the physical branches and add 150 agents.