Mobile Banking in Developing Countries: Financial Power to the People

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Mobile banking as a lever for equitable international development.

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  • Hi Jean Carlo,

    Sorry you weren't able to view this. I just went through and was able to see all of the slides. It's not too big...around 8MB. At this time, there is no other place to view it. What would you like to see it for? I might be able to email it to you.

    Thanks,
    SeMe
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  • I am having trouble viewing this.. Is it big? Any other place where I can see this presentation?

    Thanks,

    Jean Carlo ( jcsandy@yahoo.com)
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  • We are Team X: Jake Blackshear, SeMe Sung, and Justin Bean. We were interested to learn how mobile banking can be used to improve access to capital markets in the developing world. In our first presentation we covered the history of capital markets in developing regions, then explored best practices in those areas.
  • As you remember from our last presentation, a majority of people in most developing countries do not have access to a bank account or capital markets. This lack of access to finance has been consistently cited as one of the biggest challenges, if not THE biggest challenge facing entrepreneurs and the development of business in these countries.
  • As you remember from our last presentation, a majority of people in most developing countries do not have access to a bank account or capital markets. This lack of access to finance has been consistently cited as one of the biggest challenges, if not THE biggest challenge facing entrepreneurs and the development of business in these countries. Missing middle.
  • As you remember from our last presentation, a majority of people in most developing countries do not have access to a bank account or capital markets. This lack of access to finance has been consistently cited as one of the biggest challenges, if not THE biggest challenge facing entrepreneurs and the development of business in these countries.
  • We also talked about the opportunities for equitable economic growth associated with high mobile subscription rates and mobile banking growth. As you can see from the chart on the left, there are more mobile phone subscriptions than people in most developed regions. Developing regions have higher growth rates, as shown by the green line. Mobile banking is also growing quickly and is projected to experience explosive growth globally over the next few years. But there exist many barriers to sustainable mobile banking implementation, which we will now address. Jake:
  • We also talked about the opportunities for equitable economic growth associated with high mobile subscription rates and mobile banking growth. As you can see from the chart on the left, there are more mobile phone subscriptions than people in most developed regions. Developing regions have higher growth rates, as shown by the green line. Mobile banking is also growing quickly and is projected to experience explosive growth globally over the next few years. But there exist many barriers to sustainable mobile banking implementation, which we will now address. Jake:
  • Fraud has been a major concern and could be a barrier for sustainable mobile banking, as it compromises the security of accounts, creates a considerable risk of doing business, and increases costs.This fraud has already cost Mpesa over 21 million Kenyan Shillings (just over $331,787), which is roughly equal to .006% of all transactions to date (Annual revenues of over $974m USD). Many fraudulent transactions given the $500 limit and purchasing power parity.Two notable forms of fraud:“Tumbling” – is a program that puts together a database of stolen serial numbers, numbers, etc. Normally a system can trace the fraudulent account using unique serial numbers, but due to a supply of phones from a cheap Chinese source without unique serial numbers, investigators cannot trace the fraudulent accounts.Mpesa inspectors are impersonated using extremely accurate badges and IDs, inspecting logbooks and extracting account information, which is then used by another fraudster to complete a counterfeit transaction.
  • SS:• So we just explained a bunch of barriers and recommendations for the successful implementation of mobile banking. • These fell into 4 categories…OperationsSecurity RegulationAndStrategic moves for the key players within the industry (which are telecoms, banks, NGOs, + governments)Which if done right will increase liquidity in the financial systems and allow the missing middle access to the benefits of capital markets…and increased social equity.
  • SS: 2 months ago, we wrote a letter containing recommendations in all 4 of those areas. We wrote to a total of 16 people at the IFC, The UN Conference on Trade and Development, and the developing countries of Peru and Uganda. And then 2 weeks later, we followed up with all of them.Sent it to 4 people in the Peruvian government, including Head of the Economic Department.
  • SS: And this is what we got back…Of the 3 people at the IFC, one of them wrote us back tell us that she sent it along to the person who leads their mobile banking effort. We are patiently waiting in anticipation for the boss to contact us.Because when he does, We will discuss our recommendations, Which if done right will increase liquidity in the financial systems and allow the missing middle access to the benefits of capital markets…and therefore increased social equity.it’s going to help catalyze equitable access to capital markets.
  • Mobile Banking in Developing Countries: Financial Power to the People

    1. 1. Mobile Banking in Developing Countries:<br />Financial Power <br />to the People<br />Justin Bean <br />Jake Blackshear<br />SeMe Sung<br />
    2. 2. Background<br />Percentage of households with access to banking<br />Image source: World Bank<br />
    3. 3. Background<br />Financial barriers are a serious problem for firms in developing countries<br />Image source: Finance for All, World Bank<br />
    4. 4. Background<br />Access to finance reduces inequality<br />Image source: Finance for All, World Bank<br />
    5. 5. Background<br />Mobile Subscription Rates<br />Mobile Banking Growth<br />Image sources: International Telecommunications Union, FSOkx<br />
    6. 6. Background: Regions<br />Image sources: Sources: ITU (2010); Global Entrepreneurship Monitor (2009); World Bank (2008).<br />
    7. 7. How Mobile Banking Works<br />1. cash to e-float<br />2. e-float to e-wallet<br />3. e-wallet to e-float<br />4. e-float to cash<br />Image sources: ShaswatPatel, Christian Science Monitor<br />
    8. 8. Barrier: Liquidity Management<br />• Travel times and cost<br />• Personal harm or robbery<br />• Employee malfeasance<br />• High working capital<br />Image sources: The Economist, The Huffington Post<br />
    9. 9. Recommendation: Liquidity Management<br />• Secure Infrastructure<br />• Secure Loans for Agents <br />Image sources: The Economist, The Huffington Post<br />
    10. 10. Barrier: Interoperability<br />• Banks: Different mobile money platforms<br />• Phones: Different handset technologies<br />Image source: David Ajao blog <br />
    11. 11. Recommendation: Interoperability<br />• Banks: Different mobile money platforms<br />• Phones: Different handset technologies<br />Image source: David Ajao blog <br />
    12. 12. Barrier: Fraud<br /><ul><li>Growing concern for mobile banking networks.
    13. 13. Cost MPESA 21m KES (.006% of all transactions to date).
    14. 14. “Tumbling” – fools the validation process.
    15. 15. Counterfeit MPESA ID badges and impersonation used to defraud agents.</li></li></ul><li>Barrier: Regulatory Environment<br />
    16. 16. Barrier: Regulatory Environment<br />Issues in India<br /> Banks Only<br /> Existing Customers Only<br /> Domestic Only<br /> Physical Presence<br /> Payment Infrastructure<br /> Low Transaction Limit<br />
    17. 17. Barrier: Regulatory Environment<br />Success in Kenya<br /> Non-Bank Model<br /> Easy Enrollment<br /> National Payment System<br /> Higher Transaction Limits<br />
    18. 18. Regulatory Questions<br /><ul><li> Who is allowed to carry payment instructions?
    19. 19. Who can dispense cash?
    20. 20. What types of transactions should be permitted?
    21. 21. How to protect users against fraud?</li></li></ul><li>Regulatory Recommendations<br /><ul><li> Empower Mobile Communications Companies
    22. 22. Embrace Innovative Regulatory Approaches
    23. 23. Create a Dedicated Advocacy Organization
    24. 24. Engage in Public-Private Partnerships </li></ul>Image source: MPesa<br />
    25. 25. Recommendations:<br /><ul><li>Operations
    26. 26. Security
    27. 27. Regulation
    28. 28. Strategic</li></li></ul><li>Our Letter<br /><ul><li>Alexandra Klopfer
    29. 29. Adriana Gomez
    30. 30. Vanessa Bauza
    31. 31. Hon. Ruth Nankabirwa
    32. 32. Hon. Aggrey Awori
    33. 33. Hon. Sydda Bbumba
    34. 34. Perezi K. Kamunanwire
    35. 35. Mr. Charles Ssentongo
    36. 36. Miguel Samanez
    37. 37. Mijail Quispe
    38. 38. Ana María Deustua
    39. 39. José Corbera
    40. 40. Ms. Anne Miroux
    41. 41. Mr. Heiner Flassbeck
    42. 42. Mr. James Zhan
    43. 43. Ms. Jo Elizabeth Butler</li></li></ul><li>Our Letter<br />
    44. 44. Thank You!<br />
    45. 45. References:<br />Bridges to Cash: The Retail End of M-PESA2010, Eijkman, F., Kendall, J. & Mas, I.<br />http://mbanking.blogspot.com/2008/09/interoperability.html<br />http://microfinancehub.com/2011/03/17/importance-of-mobile-banking-interoperability/<br />http://www.economist.com/node/16319635<br />http://www.rbi.org.in/Scripts/bs_viewcontent.aspx?Id=1660<br />http://www.gmeltdown.com/2010/02/m-pesa-fraud-agents-beware.html<br />http://www.microfinancegateway.org/gm/document-1.9.25001/36204_file_M_banking_Enab_Env.pdf <br />Ondiege, Peter (2010): Mobile Banking in Africa, Taking the Bank to the People. Retrieved from: http://www.mfw4a.org/resources/documents/documents-details/mobile-banking-in-africa-taking-the-bank-to-the-people.html<br />http://catdir.loc.gov/catdir/samples/cam034/2002041243.pdf<br />http://www.bis.org/publ/bppdf/bispap36g.pdf?frames=0<br />http://www.bseindia.com/#<br />http://www.frbsf.org/publications/banking/asiafocus/2010/pdf_asiafocus-november.cfm<br />http://www.hsbc.com/1/2/about<br />http://www.imakenews.com/bga/e_article000719024.cfm?x=b11,0,w<br />http://www.money-zine.com/Investing/Stocks/Bombay-Stock-Exchange/<br />http://www.prnewswire.com/news-releases/ifcs-first-mobile-banking-investment-in-latin-america-and-the-caribbean-supports-financial-inclusion-105857958.html<br />http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2004/06/22/000160016_20040622141728/Rendered/PDF/28989.pdf<br />http://econ.worldbank.org/WBSITE/EXTERNAL/EXTDEC/EXTRESEARCH/EXTPRRS/EXTFINFORALL/0,,contentMDK:21534425~menuPK:4099726~pagePK:64168098~piPK:64168032~theSitePK:4099598,00.html<br />

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