Mobile Money As An Enabler For Microfinance

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This presentation is an updated version of our experience in the Philippines working with more than 800 rural bank branches to utilize mobile money platforms to facilitate banking and microfinance services.

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Mobile Money As An Enabler For Microfinance

  1. 1. MABS
Program
 
The
Microenterprise
Access

to
Banking
 Services
or
MABS
Program
provides
technical
 assistance
and
training
to
rural
banks
in
 microfinance
best
prac;ces.

 


The
program
is
designed
to
develop
the
 capability
of
rural
banks
to
profitably
provide
 financial
services
(loans,
deposits,
insurance,
 money
transfer,
micropayments)
to
 microenterprises.



  2. 2. Mobile
Phone
Banking
Penetra;on
 •  Very
rapid
expansion
over
the
last
10
years
 •  More
than
50%
of
Filipinos
are
mobile
phone
subscribers
 Mobile
Phone
 Mobile
Phone
 Mobile
Phone
 Subscribers

 Subscribers
 Subscribers
vs.
Bank
 (World
Projec;ons)
 (Philippines)
 Accts
(Philippines)
 >
68
million
subscribers
 1998
 1998
 2008
(ITU):

 >
Projec;ons
76
M
 Bank
Acct:
>
23
M
 Bank
Acct:
>
23
M
 2008
(ITU):

 4
Billion
 >
60%
penetra;on
rate
 (2010)
 Mobile

sub:
>
1.7
M
 >
70
million
subscribers
 Mphone:
>
1.7
M
 4
Billion
 2040
(World
Bank):

 >
Projec;ons
76
M
(2010)
 2040
(World
Bank):

 2009:
 6
Billion
 2008:
 Bank
Acct:
>
32
M
 6
Billion
 Bank
Acct:
>
32
M
 Mobile
sub:
>
70
M
 Mphone:
>
68
M

  3. 3. Opportuni;es
for
Mobile
Phone
 Banking
 Mobile
Phone
 Remi]ance
Business
 Rural
Banks
 Industry
 Growing
($17B
in
2009
&
 Subscriber
base
is
growing
 More
than
50%
of
 expected
to
grow
to
$18B
in
 rapidly.
 popula;on
is
located
in
the
 2010)
 rural
areas
where
many
are
 S;ff
compe;;on
among
 under‐banked
or
unbanked
 Transac;ons
and
transfer
 telcos
is
bringing
costs
of
 due
to
high
transac;on
costs
 methods
now
increasingly
 service
down
(unlimited
 using
E‐Money
(GCASH/ text,
rebates,
promos.)
 Very
minimal
investment
 Smart
Money)
 needed
to
offer
mobile
 Mobile
Phone
Cost
is
 phone
banking
services.
 ge[ng
cheaper.

  4. 4. Breakthroughs
&
Milestones:

 Mobile
Phone
Banking
for
Rural
Bank
&
their
Clients
 BSP
approved
Smart
Money
Pilot
in
2
Rural
Banks
 Mobile phone banking specialist program generated more than in
July.
 2007
 60,000 new users; more than 3,400 signed up as local merchants RBAP
signed
an
MOA
with
Globe
(GXI)
for
Loan
Payment
using
 2004‐2005
 2006
 2008
 2009
 Some
RBs
started
paying
employees
salaries
or
allowances
with
 Gcash
 Salary disbursements (Text-A-Sweldo) expanded to other businesses Gcash
 Mobile Phone Marketing program launched 55
Accredited
Rural
Banks
with
830
branches
and
 in the community other
banking
offices
 BSP
approved
pilot
of
Text‐A‐Payment
to
selected
rural
banks
 M‐commerce
was
used
by
local
merchants
 400 branches are Gcash More than 40 rural banks with more than Text-A-Bill Payment was initiated by a rural bank with local utility accredited outlets cooperative 44%
increase
in
M‐Banking
Transac;ons
in
2009
 BSP
approved
Cash‐in/Out
(Text‐A‐Remi]ance)
services
for
rural
 Autoloadmax
retailers
as
Gcash
outlets
was
launched



 banks

 RBAP and Globe (GXI) partnership renewed (Gcash) Cumula;ve
Mobile
Banking
Transac;ons
via
the
 Text-A-Withdrawal was approved by BSP Study
on
Cost
Savings
conducted
in
selected
rural
banks
on
the
 GCASH
plajorm
exceed
$100
million
 RBAP signed an agreement with Nokia Philippines (Nokia phone BSP
approved
Text‐A‐Deposit
service
for
rural
banks
 use
of
G‐Cash
for
loan
payment
 materials for was launched Mobile Phone Banking Specialist Program mobile phone financing and educational Strategic
Planning
was
conducted
with
5
pilot
banks
 RBAP Signed an agreement with Smart Communications (Smart Money)
  5. 5. Prac;cal
Issues
between
Mobile
 Money
Issuers
and
MFI
partnerships
 ✔
 Flexible
 ✔
 Responsiveness
 ✔
 Marke;ng
Support
 ✔
 Training

  6. 6. Preparing
Small
Financial
Ins;tu;ons
 to
Promote
Mobile
Money
and
Mobile
 Financial
Services

  7. 7. Environment
for
Mobile
Phone
 Banking
&
Mobile
Commerce
 •  Evolu:on
of
the
retail
and
financial
sectors:
 –  Nature
of
financial
and
retail
market
is
important
for
determining
 func:onality
 •  Level
of
financial/electronic
literacy:
 –  Influences
nature
of
transac:ons
 •  Regulatory
and
Policy
Environment
 –  Need
suppor:ve
environment
for

 



mobile
phone
banking
&
mobile
commerce
 –  Bring
the
regulators
on
board
–
early
 –  New
Philippine
E‐Money
Circular

  8. 8. Regulatory
Environment

 •  Basle
CommiJee
on
Banking
Supervision
–
 important
role
of
regulators
to
balance
e‐ banking
risks
while
suppor:ng
innova:on

 •  Regulatory
framework
governing
e‐banking:
 – Underlying
soundness
of
the
banking
ins:tu:on
 – Adequate
risk
management
surrounding
e‐ banking
ac:vity

  9. 9. Regulatory
Environment •  Philippine
Central
Bank
(BSP)
–
sees
e‐ banking
as
way
to
improve
efficiency
&
 increase
access
to
banking
services
 •  BSP
remains
responsive
to
the
rapidly
 developing
technologies
related
to
 electronic
banking
 •  BSP
has
issued
numerous
circulars
to
 oversee
&
support
e‐banking

  10. 10. Regulatory
Environment
 
 
BSP
Circular
511
(Technology
Risk
 Management)

 – Risk
Management

 – Opera:onal
issues
 – Compliance
 – Reputa:on
and
strategic
risks
 associated
with
tech‐related
products

  11. 11. Regulatory
Environment
 Circular
542
Series
2006
(Consumer
Protec:on
for
E‐Banking)
 –  Board
Oversight
 –  Internal
Controls
 –  Security
 –  Authen:ca:on
 –  Customer
origina:on/verifica:on
 –  Monitoring
and
repor:ng
 –  Disclosure
and
complaint
resolu:on

  12. 12. Regulatory
Environment

 •  BSP
built
up
its
capacity
to
respond
&
support
the
e‐ banking
environment
in
the
Philippines
 •  Crea:on
of
a
Core
Informa:on
Technology
Supervisory
 Group
(CITSG)

 – Central
group
to
monitor
&
address
electronic
 banking
issues

 – Includes
Mobile
Money
&
Mobile
Phone
Banking

  13. 13. Regulatory
Environment
 
 Product
Approval
Process:

 ‐  Proposal
for
banks
used
as
Cash
In/
Cash
Out
outlets
 allowed
BSP
to
evaluate
the
GCASH
product
and
features
 –  Key
areas
reviewed:
 •  KYC
 •  An:
Money
Laundering
Requirements
 •  Risk
Management
 •  Integrity
 •  Security
and
Confiden:ality

  14. 14. Regulatory
Environment
 
 Measures
approved:
 •  Transac:on
cap

 – PhP
40,000/day
($1,000)
 – PhP
100,000/month
($2,500)

 •  Process
flow
was
devised
for
more
expedi:ous
 product
approvals
in
the
future
 – Banks
interested
in
providing
approved
service
can
 apply
through
their
respec:ve
banking
associa:ons
 – Associa:on
accredits
member
banks
aaer
complying
 with
requirements
and
training
 – Associa:on
submits
to
BSP
the
list
of
accredited
banks

  15. 15. Regulatory
Issues
Considered
 
 •  Key
areas
of
confiden:ality,
money
laundering,
risk
 management
should
be
upheld
even
with
the
new
 modali:es
 •  Consumer
protec:on
is
especially
important
in
e‐banking
 •  Risk
and
security
management
requirements
as
well
as
 regulatory
costs
should
be
commensurate
to
risks
involved
 •  Responsiveness
to
innova:on
and
experimenta:on
is
 important

  16. 16. Regulatory
Issues
Considered
 
 •  Ins:tu:onal
arrangements
are
important
especially
if
 the
e‐banking
services
outsource
to
non‐bank
 ins:tu:ons
(i.e.
E‐Money
Issuers
(EMI)/Mobile
Network
 Operators
(MNOs).

 •  When
third
party,
such
as
EMI
or
MNO,
handles
or
 supports
banking
transac:ons,
BSP
has
the
authority
to
 inspect
the
database
of
the
third
party.
 •  Confidence
in
industry
associa:on
and
networks
–
key
 issue
for
BSP
in
suppor:ng
expansion
of
e‐banking
 services.

  17. 17. E‐money
Circular
 •  Defines
Electronic
Money
&
E‐Money
Issuers
 •  Uses
of
Electronic
Money
  P2P
  Payroll
  Remi]ances
  Purchases
  Payments
  Disbursement
of
loans,
etc.
 •  Load
limit
of
PhP
100,000/
month
 (accumulated)

  18. 18. The
Business
Model
for
Small
Financial
 Ins;tu;ons
to
offer
and
use
Mobile
 Money:


  19. 19. The
Business
Model
for
Small
Financial
 Ins;tu;ons
to
offer
and
use
Mobile
 Money:

 Reduce
Interest
rates
on
Micro
 Loans
Clients
(TAP)
 Ac;vate
Mobile
Money
Resellers
 (Source
of
Mobile
Money
of
TAP
 Clients)

  20. 20. Issues
and
Lessons
Learnt
from
Pilot
 Tests
 Understand
your
market
 Acceptance
 and
fear
of
 Importance
of
registra;on,
 the
use
of
 training,
and
adop;on
of
 service
by
clients/merchants

 technology
 especially
 Ecosystem
Development
–
 among
 mul;ple
sources
and
uses
–
 elderly
clients
 m‐banking/m‐commerce

  21. 21. Issues
and
Lessons
Learnt
from
Pilot
 Tests
 Value
 Proposi;on
   onvenience
 C   educes
transac0on
 R for
Clients,
   educes
risks
 R Merchants
&
  ncreases
sales
 I Customers

  22. 22. Issues
and
Lessons
Learnt
from
Pilot
 Tests
 Effec;ve
training
and
 Lack
of
 educa;ng
Loan
Officers
 and
Front‐line
staff
 Mobile
 Money
 Release
of
employee’s
 Outlets
or
 payroll
or

 source
 Allowances
via
mobile
 especially
in
 money
 the
rural
 Plan
for
sufficient
cash‐in/ areas
 cash‐out
points

  23. 23. Issues
and
Lessons
Learnt
from
Pilot
 Tests
 How
to
reach
 Informa;on
and
Product
Awareness
 clients
in
 Campaigns
through
media
print,
radio,
 remote
 TV,
online
 communi:es
 Mobile
Phone
Banking
website

 ‐
awareness
 h]p://mobilephonebanking.rbap.org
 and
 informa:on
 Promote
Mobile
Money
by
banks
in
key
 campaign
 loca;ons/events
(such
as
local
fes;vals)

  24. 24. Issues
and
Lessons
Learnt
from
Pilot
 Tests
 Incen;ve
 programs
for
 Increasing
of
 accredited
rural
 volume
and
 banks
 usage
of
 Mobile
Phone
 mobile
 Banking
 money
in
the
 conferences
&
 rural
areas
 workshop
 dialogue
events

  25. 25. Issues
and
Lessons
Learnt
from
Pilot
 Tests
 Crea;ng
a
sense
of
ownership
among
 bank
partners
 Working
with
 Regular
Accredita;on
training

 MFIs
–
 Networks
are
 Rural
Bankers
Membership
Mee;ngs
 key
to
 outreach
 Tes;monials
from
accredited
rural
 banks
 Globe
GCASH
promo;on

  26. 26. Overcoming
Cash‐in/Cash‐out
 Constraints
in
Rural
Communi;es
 Bank
partnered
with
Local
 Merchants
to
act
as
 resellers
of
mobile
money
 in
rural
areas.
 Larry
Bat‐ao,
Can;lan
Bank
Merchant‐Deposit
 and
provider
of
GCASH


  27. 27. Overcoming
Cash‐in/Cash‐out
 Constraints
in
Rural
Communi;es
 Bank
established
kiosks,
 sub‐offices,
and
other
 business
offices
(OBOs)
to
 provide
Cash‐In
and
Cash‐ Out

  28. 28. Overcoming
Cash‐in/Cash‐out
 Constraints
in
Rural
Communi;es
 Bank
coordinates
with
GXI
 for
AutoLoadMax
Dealers
 to
provide
Cash‐Out
 func;ons

  29. 29. Developing
Mobile
Money
Ecosystems

 Commitment
of
Bank
Management
 Development
of
Mobile
Money
Ecosystem
 Sufficient
Cash‐In/Cash‐Out
Agents/Resellers
 Crea;ng
Awareness
of
the
use
of
Mobile
Money
in
the
Rural
Community
 Promote
the
value
proposi;on
for
businesses,
clients,
and
customers


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