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CGAP Branchless Banking Indicator Research 2013
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CGAP Branchless Banking Indicator Research 2013

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Initial scoping on global supply side indicators in branchless banking (BB): CGAP and other Mastercard Foundation grantees, including the IFC and UNCDF, and other partners such as the Bill and Melinda …

Initial scoping on global supply side indicators in branchless banking (BB): CGAP and other Mastercard Foundation grantees, including the IFC and UNCDF, and other partners such as the Bill and Melinda Gates Foundation and USAID are interested in identifying common supply side indicators -- core indicators to measure business-level progress across a range of models and across countries – and a mechanism to track them.

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  • Our initial aim with this global data project was to understand what branchless banking data is out there, who ’s gathering it, etc. We came across a list of surveys, most of which scope is financial inclusion at large, but that somehow incorporate branchless banking elements that might be interesting to us. On the left side, we ’ve categorized those that we looked at that take a supply-side perspective, that means, from the provider or regulator point of view, and on the right, the demand-side surveys from the users‘ point of view. We ’ve also organized these along a spectrum of those with broader coverage of countries, vs those with deeper coverage but in fewer countries. If we apply this framework to the surveys we reviewed, we end up with these at the top belonging to item 1 in our framework, which is global data, and those more detailed surveys, covering fewer countries at the bottom-right belong to the impact category. The list is not exhaustive
  • Our initial aim with this global data project was to understand what branchless banking data is out there, who ’s gathering it, etc. So we came across a list of surveys, most of which scope is financial inclusion at large, but that somehow incorporate branchless banking elements that might be interesting to us. On the left side, we ’ve categorized those that we looked at that take a supply-side perspective, that means, from the provider or regulator point of view, and on the right, the demand-side surveys from the population’s point of view. And we ’ve also organized these along a spectrum of those with broader coverage of countries, vs those with deeper coverage but in fewer countries.

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  • 1. Branchless Banking and MFS Global Data:A Survey of Funding Agency Indicators and Definitions March 2013
  • 2. Agenda1. Project Scope1. What is the universe of interest?2. Publicly-available data on BB and MFS3. Non-public data on BB and MFS (from funding agencies)4. What levels of indicators are funding agencies tracking?5. Focus: Provider-level indicators 2
  • 3. Project Scope Initial scoping on global supply side indicators in branchless banking (BB): CGAP and other Mastercard Foundation grantees, including the IFC and UNCDF, and other partners such as the Bill and Melinda Gates Foundation and USAID are interested in identifying common supply side indicators -- core indicators to measure business-level progress across a range of models and across countries – and a mechanism to track them. CGAP conducted an initial feasibility assessment as part of this effort. Specific tasks included: (1) Survey and summarize the definitions of key terms used by the industry and funding agencies for branchless banking and mobile money; (2) Survey and summarize the key indicators for branchless banking and mobile money including, how they are defined and calculated by the industry; (3) Identify which branchless banking and mobile money indicators are generally and reliably available from the industry; (4) Identify where there are significant differences in definitions of key terms or key indicators. This is very much intended to be a descriptive rather than a prescriptive analysis. This presentation should be read alongside the excel sheet provided (which contains terms and indicators along with their definitions). The AFI MFSWG and CGAP published a basic terminology note for MFS in July 2012, attached as well. 3
  • 4. What is the universe of interest? Definition Who tracks what? • The delivery of financial services outside conventional Branchless Banking Branchless Banking bank branches, using agents and other third-party intermediaries as the principal interface with customers, (BB), agent banking (BB), agent banking and relying on technologies, such as card-reading point of-sale terminals and mobile phones, to transmit transaction details. (source: AFI MFSWG Guideline Note on Terminology) • The use of a mobile phone to access financial services Mobile Financial Mobile Financial and execute financial transactions. This includes both Services (MFS) Services (MFS) transactional and non-transactional services, such as viewing financial information on a users mobile phone. (source: AFI MFSWG Guideline Note on Terminology) • A digital account is one where (i) value is stored in digital form (ii) there is no need for paperwork or face to face Digital interaction to initiate some common transactional use Digital cases associated with the product and (iii) in particular clients can initiate a transaction to pay or be paid by a wide range of counterparties without a face-to-face transaction or paperwork. (source: BMGF’s Common Indicators document) In the financial inclusion world, MFS isis a subset of BB. In the financial inclusion world, MFS a subset of BB. 4Note: BMGF currently will only track mobile enabled accounts as these are the only examples that meet the above definition of digital.
  • 5. Publicly-available data on the universe of interest:BB and MFS Supply Side Demand Side Broad coverage • IMF Financial Access Survey • Global Findex • WB Global Payments Survey • GSMA Global Mobile Money Adoption Survey (public at the • Finscope HH Survey aggregate level only) •Gallup Payment Survey module • FI Tracking Survey (Intermedia) • RCTs Deep coverage Note: This figure is a representation adapted from Financial Access 2011 and Bill & Melinda Gates Foundation “Measurement Challenge” 5 note prepared for the 2010 Global Savings Forum. The list presented is not exhaustive.
  • 6. Non-public indicators on BB and MFS (funders included inresearch) Supply Side Demand Side Broad coverage Tools analyzed for study: • CGAP Monitoring Database (excel-based) • GSMA deployment tracker and adoption survey • IFC Advisory Services Operational Portal • UNCDF Reporting Format and Quarterly reports (excel based) • USAID Mobile Money indicators sheet (excel-based) • BMGF-FSP Quarterly reports and Common country indicators (excel-based) Deep coverage Note 1: This figure is a representation adapted from Financial Access 2011 and Bill & Melinda Gates Foundation “Measurement Challenge” note prepared for the 2010 Global Savings Forum. 6 Note 2: Most of BMGF demand-side surveys are publicly available.
  • 7. Conception of indicators: How did it happen? (someexamples) • Developed a conceptual framework outlining a theory of how poor clients get the most benefit from digital financial services. A common set of indicators should address 3 key questions: i) What indicators measure success and positive progress towards our objectives?, ii) When we don’t see progress, what data will help us diagnose which barriers are blocking market growth?, and iii) Which data helps us test our assumptions and refine our strategy? • Industry/Market-level approach: Tracking the size and growth of the branchless banking industry since 2009 (194 BB deployments in CGAP‘s database as of Dec 2012). Indicators include: number of registered and active users, and savers. • A business-model driven approach combined with a corporate- driven approach (in order to standardize indicators across regions). IFC’s previous and current work with deployments have further shaped indicators that are tracked. • Established “mobile money aims” for its program and indicators that help track these aims. Mobile money aims include: i) Increased usage of MFS, ii) increased demand for MFS, iii) conducive MFS system is in place, and iv) conducive legal and regulatory conditions. 7
  • 8. What levels of indicators are funders tracking? Observations Target for research Public surveys or central banks Not relevant for research Limited to a small num of countries 8
  • 9. Provider and market level indicator categories Categories Categories Examples Examples 1. Outreach and Growth Registered users, OTC users 2. Activity Levels 30-90 days active, balance levels 3. Service Points & Agent Num of agents, avg trnx/agent, Provider- Economics agent training costs Provider- level level 4. Business Health Trnx volume, trnx segmentation, cost of trnxs EBITDA margin, opex ratio, 5. Financial Performance commission revenue 6. Other Num of FT MFS employees Num of bank accounts, wallets, 1. Outreach & access num of mobile subscribers Market- Market- 2. Infrastructure Num of bank branches, agents, level ATMs, POS devices level % of FS providers connected to 3. Other the platform Note : I have created these categories in order to fit all of the different funding agency indicators into one single framework. All agencies had different categories depending on their objectives/goals.
  • 10. Provider-level indicators:Outreach & Activity Levels Highlights CUSTOMERS CUSTOMERS Definition & Consensus Differences • Cumulative number of customers that have • The universe of deployments vary by registered for the service, regardless of funding agency (some only MFS,Registered usersRegistered users whether they are active. Consensus in that others all BB) OTC customers should not be counted. • Number of ppl who use the service without • As BMGF only tracks digital, this OTC users having a registered account. BMGF and translates to counting ppl doing money OTC users transfers (MT). CGAP counts bill CGAP track this indicator. payments in addition to MT. • Number of customer accounts used to • BMGF: 30/90 days perform at least one transaction in the last • IFC: 30 days Active users Active users • GSMA: 30/60/90 days 30/60/90 days. Txn cannot be associated w/ registration, balance inquiries. • UNCDF: 90 days Note: Exact definitions per agency are laid out in the accompanying excel document. 10
  • 11. Provider-level indicators:Outreach & Activity Levels (Additional Variations) CUSTOMERS CUSTOMERSCustomerCustomer ✓ ✓ ✓Balances Balances Gender ✓ ✓ ✓ ✓ ✓ Gender ✓ ✓ Rural (1) Rural (1) ✓UnbankedUnbanked Note: Exact indicators and definitions per agency are laid out in the accompanying excel document. (1) Still to be defined by funding agencies. 11
  • 12. Provider-level indicators:Service Points and Agent Economics Highlights SERVICE POINTS / /AGENTS SERVICE POINTS AGENTS Definition or Consensus Differences • The total num of physical locations where • BMGF has a slighter variation of this: subscribers are able to transact. Includes CICO points (cash-in, cash-out points) Service Points Service Points both human and electronic (ATMs) points and disaggregates them by agent, of service. Tracked by UNCDF and BMGF. branch, ATM. • Any third party acting on behalf of a bank • UNCDF distinguishes between agents or other FS provider to deal directly with and retail agents. IFC distinguishes btw Agents Agents customers. All funding agencies track proprietary & non-proprietary agents. agents. • Commissions paid to service points • BMGF: 1) Avg commission earned per Service Point or Service Point or (includes cash-in commissions). Different agent, 2) agent training cost indicators tracked by BMGF, UNCDF and • UNCDF: 1) commissions paid (tot), 2) Agent Agent commissions paid to service points, avg. USAID. Commissions Commissions • USAID: 1) ongoing agent costs/agent/mo, 2) agent acquisition costs Service Point or Service Point or • Transactions conducted per service point or • BMGF: Avg transactions per agent agent location. Directly tracked or • UNCDF: 1) Transactions per service Agent Agent calculated by BMGF and UNCDF. point, 2) Total service points balance, 3) Transactions Transactions Avg balance per service point 12 Note : Exact definitions per agency are laid out in the accompanying excel document.
  • 13. Provider-level indicators:Business Health Highlights CUSTOMER TRANSACTIONS CUSTOMER TRANSACTIONS(Number and value) Cash-in Cash-in ✓ ✓ ✓ ✓ Cash-out Cash-out ✓ ✓ ✓ ✓P2P transfer P2P transfer ✓ ✓ ✓ ✓International International ✓ ✓ ✓ ✓ Remittance Remittance Includes Includes Bill pmts Bill pmts ✓ ✓ ✓ them inin total them total trxn num trxn num Airtime top- Airtime top- ✓ ✓ ✓ Includes Includes ups them inin total them total ups trxn num trxn num Bulk pmts Bulk pmts ✓ ✓ ✓Mobile micro- Mobile micro- ✓ ✓ insurance insurance Merchant Merchant ✓ ✓ pmts pmts • Consensus: Registration, PIN renewals and balance inquiries are not counted as transactions. • BMGF actual indicator under each category is: Median num of txns/client/month 13 Note: Exact indicators and definitions per agency are laid out in the accompanying excel document.
  • 14. Provider-level indicators:Business Health Highlights – Transactions (continued) Other Indicator Variations Other Indicator Variations • Avg. ratio of num of cash-in and out trnxs to digital trnxs from customer wallets • In-store sales paid from digital account (/value of all in-store sales) • Cost of transactions (USD10 value) • PRODUCTS: Adults w/ <USD2/day paying insurance premiums, with a savings account and receiving or repaying a credit through a digital account (3 separate) • PRODUCTS: Number of different products delivered by channel • Number of products used per client • Cost saved per transaction (by the entity) • Cost of P2P • Cost of cash-out Note: Exact indicators and definitions per agency are laid out in the accompanying excel document. 14
  • 15. Provider-level indicators:Financial Performance Highlights FINANCIAL PERFORMANCE FINANCIAL PERFORMANCE • EBIDTA Margin • Opex Ratio for Quarter • Operating efficiency (operating • Fee revenue received • Total ATL Marketing Expenditures(1) costs/assets) – only for FIs • Sustainability of business (% fee rev • Total BTL Marketing Expenditures (1) • Improvement in cost of funding (for spent on commissions- incl sales to • Total Agent Commission Expenditures FIs) agents) (1) • Sustainability of channel (operating • Sustainability of service points (% fee • Total Agent Training and Monitoring revenue/operating expenses) rev spent on commissions to service Expenditures (1) points) • Total IT Expenditures to-date • Operating Income for Quarter • Cash Reinvested during Quarter To discuss: How should financial performance indicators vary depending on the type of To discuss: How should financial performance indicators vary depending on the type of provider (MNO vs bank vs MFI, etc)? provider (MNO vs bank vs MFI, etc)? Note: Exact indicators and definitions per agency are laid out in the accompanying excel document. 15 (1) Expenditures to-date.
  • 16. Appendix Global Data
  • 17. Financial Inclusion Supply-side DataInitiative Description Coverage Frequency Public? (Y/N)GSMA Global Mobile MNO-led mobile money Global. 52 out Annually Aggregated (Y).Money Adoption implementations surveys. Data on: num of 123 Disaggregated (N)Survey of registered, active customers, agents, providers txn volume across tx types surveyed.AFI Mobile Financial Core set of indicators tracking MFS NA NA Public in Sep 2012Services Working access and usage, perhaps quality. Not Global PolicyGroup a survey. Applicable to MNO-,bank- or Forum third-party-led models.IMF/CGAP/IFC Survey w/ financial supervisors, Global. 151 Annually Y.Financial Access collecting indicators on access to economies.Survey savings, credit, payment services in banks and regulated NBFIs.WB Global Payments Survey w/ CB’s providing snapshot of Global. Bi-annual YSystems Survey payment/securities settlements. Includes outreach of pmt systems info (ATMs, POS)Global Financial 18 question (43 variables) survey w/ Global. Full survey (3 YInclusion Index indicators measuring levels and 150,000 times over 10(Findex) – patterns of use of different financial respondents yrs) 2 Qs onWBG/Gallup services. Q on use of mobile phone to credit/bank send/receive money, or pay bills accts yearly 17
  • 18. Financial-Inclusion Demand-side DataInitiative Description Coverage Frequency Public? (Y/N)Global Financial 18 question (43 variables) survey w/ Global. 150,000 Full survey (3 YInclusion Index indicators measuring levels and respondents times over 10(Findex) – patterns of use of different financial yrs) 2 Qs onWBG/Gallup services. Q on use of mobile phone credit/bank to send/receive money, or pay bills accts yearlyGallup Payments 30 questions attached to Gallup DRC, Kenya, Annually Y- emailSurvey module World Poll . Measuring payment Nigeria, S. authors. behaviors (money transfer, Africa, Underlying remittances, gov and wage Tanzania, data available payments, utilities, bills). Qs on Uganda, later in 2012 channels used (mobile, etc.) Zambia.Finscope Household Consumer survey. Landscape of 17 countries. Every 4 yrs? YSurvey access measuring transactions, SSAfrica and savings, credit and insurance. No Qs Pakistan on mobile/branchless. 18