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The Mobile Money Opportunity - MMU presentation - ASEAN-EU Business Summit - March 2013

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Presentation on the mobile money opportunity delivered at the ASEAN-EU Business Summit in Hanoi, Vietnam, on March 9, 2013

Presentation on the mobile money opportunity delivered at the ASEAN-EU Business Summit in Hanoi, Vietnam, on March 9, 2013

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  • 60m registered mobile money customers in June 2011 from 52 deployments6m customers were active as of June 2011 (Excluding Safaricom and Smart)11 services had more than 1m registered customersThe 52 mobile money providers who participated in our survey, including Safaricom, Smart and Globe, together reported over 60 million registered customers in June 2011. This understates the number of customers who are using mobile money, because it excludes customers who transact solely OTC.For every data point in this survey, we collected information for the beginning and the middle of 2011. As such the growth in customer base you see on the right-hand side of the chart is actual. To put this in context, the light shade of green represents data that have been extrapolated back to when the earliest mobile money services launched.Within our sample, 11 services (out of 52) reported having more than 1 million registered customers in June 2011. These 11 services are represented by the bars colored in dark green.Together, these eleven services accounted for 85% of the registered customers reported in our survey.
  • … at scale, mobile money has proven that it can reach the poorIn Kenya, a recent study found that “The share of poor households who have M-PESA went from 28% in 2008 to 51% in 2009. Similarly, the percent of rural households with an M-PESA account went from 29% to 59%, and the percent of unbanked using M-PESA went from 25% to 50%… and it can help the poor weather financial shocksThat same study also found that M-PESA users were able to fully absorb large negative income shocks – things like job loss, livestock death, harvest or business failure, or poor health – without any reduction in household incomewhereas statistically comparable non-users saw consumption fall on average 7 percent.…Finally it can even make businesses more productiveThe rate of mobile money usage by business owners is much higher than national average, and many report significant benefits: increased efficiency from time saved and improved logistics. Most find mobile money much easier than banks: the locations are more accessible, customer service is better, transactions are faster, and it's much easier to sign up for an account.
  • The potential of mobile technology to improve people’s lives is growing exponentially as mobile network operators (MNOs) expand digital connectivity and bring more people in emerging markets into the mobile network. The potential of mobile money is clear: There were 5.9 billion active mobile connections worldwide in 2012.The total number of unique mobile subscribers is 3.2 billion (46% of the world’s population) and is forecast to grow to 4 billion in five years.Number of connections reflects all SIM cards (for mobiles, tablets etc), but also counts multi-SIM owners (common in the developing world to save money on calls) and some people who are registered but are only very infrequent users of their phoneActive subscriber penetration reflects our estimate for the number of people who actively subscribe to mobile servicesThis is a more representative measure in market sizing Mobile for DevelopmentReflects potential human user base of a serviceOverlay population with access to a mobile (relevant for some sectors such as mobile learning)World population: 7 million, of which 5.9 million in emerging markets and developing countries
  • Growth in active mobile subscribers in the developing world has been very strong the last 5 years at over 10%. The number of GSM mobile connections doubled in the last four years in Africa and South East Asia, and more than tripled in South Asia.
  • On an ownership basis, the mobile phone is the most widely owned communication device in the developing world.The PC is owned by a much smaller share of people, with tablets smaller still.Access to a PC will be greater than ownership given device sharing, but the same is true of mobile, so the gap is unlikely to change.Even though we expect growth to slow to 2017, this still translates into around 130 million new people subscribing to mobile services every year in the developing worldBy contrast, most mature markets have reached saturation (something which will happen in developing regions, but not for several years)Note: mobile is proportion of people that subscribe to mobile servicesSource: GSMA-MDI estimates based on GSMA Wireless Intelligence, Strategy Analytics, Telegeography
  • Traditionally stability has be the priority for financial sector policy makers. And still is. Integrity has become a priority after 9/11 – FATF. To achieve stability and integrity, you also need financial systems to be inclusive and safe. Refer to MMU reg paper. Refer to Malaysia financial sector blue print after the crisis of the Asian tigers in the 1990s.THE ENEMIES…To tackle those enemies, financial sector policy makers have identified financial inclusion has a key priority. THE OBJECTIVE
  • Mobile money encompasses a wide variety of different business models, and many elements vary significantly from market to market. For example, in some countries, mobile money is more frequently used to send money from one person to another, while in others, the emphasis is on making it easier to pay utility bills.Nevertheless, when you analyse mobile money services around the world, it is possible to identify certain hallmarks among them. Today, I’m going to share with you five key “building blocks” of the mobile money business model that we see recurring in almost every market in the world. I’ve selected these building blocks because they are not only key drivers of the business case for mobile money; they also illustrate how different the mobile money business model is from traditional banking.1. As I just mentioned, mobile money is usually designed to help customers move money around. 2. To do so, every mobile money service relies on independent, third-party agents to get cash into and out of the system. This is what makes mobile money convenient for customers and cost-effective for service providers.3. Third, mobile money advances inclusion because it is simple for customers to register for a mobile money account. As you know, one of the big barriers to financial inclusion is the difficultly that many customers have opening bank accounts. Mobile money services make this as easy as possible.4. Perhaps the most distinctive feature of mobile money is its reliance on the mobile infrastructure as a way for customers to communicate with the service provider. As we will see, this has dramatic implications both in terms of access and cost management.5. The revenue model for mobile money is radically different than for banking. It turns out that mobile operators make significantly more money from mobile money than they charge in fees, which in turn allows them to offer a service that is affordable even for very poor customers.6. Finally, mobile money is not an alternative to or a challenge to the traditional banking system. In fact, as we will see, mobile money rests on the foundation of the existing banking systems, and it is reliant on banks and other financial institutions in important ways.
  • Before mobile money, people thought about financial inclusion in terms of access to savings and credit. In fact, M-PESA was originally developed as a way for customers to repay microfinance loans. But when Safaricom tested the service in Kenya, they found that customers were far more enthusiastic about using M-PESA as a way of sending money to each other rather than to an MFI. It turned out that Kenyans often wanted to send money home to their families, but the mechanisms that they had at their disposal for doing so were often poor. They would send it via bus drivers, for example, and hope that the driver was reliable and trustworthy. Sometimes, of course, he wasn’t. This is not only a Kenyan phenomenon: a survey of customers in eight sub-Saharan African countries showed that more than half of those interviewed had sent money in the last month, and that half of those respondents only used informal mechanisms to send the money.It is for that reason that Safaricom launched M-PESA with the famous “Send Money Home” campaign. Along the bottom of the slide you can see that survey respondents in Kenya overwhelmingly considered M-PESA to be faster, more convenient, safer, and cheaper than their previous method of sending money.Now as we will see later, mobile money is a great way to deliver other financial services, like savings and loans. But typically, mobile money becomes successful first as a payment tool.
  • So how exactly does mobile money help customers make payments? Perhaps the most fundamental building block of a successful mobile money business model is the existence of a large, trusted, and liquid network of mobile money agents.A mobile money agent is a business that offers customers two simple but vital services: the ability to convert cash into e-money (a cash-in transaction), and e-money into cash (a cash-out transaction). Successful services build a large network of agents, and in doing so enable customers living in even the most remote areas of a country, to find a place to transact. Note that in Kenya there are now over 25,000 M-PESA agents. By comparison there are fewer that 2,000 ATMs, and fewer than 1,000 bank branches and post offices.Part of the reason that mobile money services can build such large distribution networks is the cost structure of mobile money agents. An agent’s costs are almost entirely variable, rather than fixed.The tools of a mobile money agent are simple and inexpensive: a mobile phone, and typically some portion of a staff member’s time. There’s no need to make the same investments in land and buildings that banks need to in order to grow their distribution networksFinally, it’s important to highlight a key security measure that ensures this entire set-up is safe: mobile money agents operate on a prepaid model In other words, for an agent to perform a cash-in transaction for a customer – that is is, a transaction where they receive cash from the customer and pay out electronic money in exchange – they must first have themselves purchased electronic money from the issuer. The key implication is that this prepaid structure eliminates any credit risk: it is impossible for an agent to accept cash from a customer – in the form of cash-in transactions – and run off with it to earn a profit.
  • In Kenya, Madagascar, Tanzania and Uganda, there are more mobile money accounts and agent outlets than bank accounts.A large proportion of the GDP of in Uganda, Tanzania and Kenya moves through mobile money platforms.
  • For a mobile money service to succeed, account opening must not be a barrier to usage. This means that:First, customers should be able to register for mobile money at any agent. This ensures that its easy for customers who are interested in mobile money to convert that interest into registration. Experience has shown that it’s simply too much to ask customers who are interested in mobile money to seek out the service by travelling a long distance, or waiting in a long queue, simply to register. Prospective customers must be able to register at the agent in their community or place of work.This also enables mobile money services to offer agents an important source of early revenue – commissions for registering new customers. This rewards the investment they’ve made in becoming a mobile money agent, and ensures their interest level remains high, perhaps before a meaningful volume of cash-in and cash-out transactions materialiseSecond, KYC requirements should be proportionate to riskIn many countries, low-income customers lack the kind of formal documentation that banks would typically require of new customers to discharge their CDD requirements. If these same requirements were imposed when customers open mobile money accounts, it would hamper adoption.Fortunately, the Financial Action Task Force encourages national regulatory authorities to adopt a risk-based approach to simplify customer due diligence (CDD) procedures. Third, registration should be instantaneousCustomers register for mobile money because they have a need for it: its not surprising, then, that they want to be able to use it immediately. The risk of non-instantaneous registration is low customer activity. In other words, if customers must wait after registration before being able to use their service, there’s a risk that they simply never begin using it, often because they never had an opportunity to learn, so in turn forgot or lost interest.
  • I’ve already shared with you one important channel innovation in mobile money: the use of agents. But the more obvious channel innovation is the use of the mobile telecommunications infrastructure itself.As you know, the global explosion in mobile penetration around the world has been extraordinary.In most mobile money deployments, customers can use their mobile phones to initiate transactions like sending money, and to perform routine account maintenance operations such as checking one’s balance or changing one’s PIN. The technologies that are used ensure that even customers with the most basic handsets can access the service.This is important for customers because they can make transactions “anytime, anywhere.” If you get a call that a loved one needs money quickly late at night, you can initiate the transfer without even getting out of bed. So the use of the mobile channel makes mobile money much more convenient to use for customers.But the use of the mobile channel is equally important for the mobile money business model. Allowing customers to access their account information and initiate transactions on their phone is inexpensive for mobile operators, because it is entirely automated and leverages the existing mobile infrastructure. (It’s the same reason why banks in the developed world prefer their customers to use internet banking rather than coming into the branch for service.) This allows them to offer services more affordably to customers than they would otherwise be able to do. customers can use their mobile phones to initiate transactions
  • Many traditional banking services are associated with fees that make it unaffordable for people with low incomes. How is it possible for mobile money to serve these customers less expensively?It turns out that mobile operators are able to unlock a host of indirect benefits when they offer mobile money. This means that they realize a great deal of value beyond the fees that they charge customers directly. In fact, a recent analysis of MTN Uganda’s MobileMoney found that just 52% of the service’ gross profit contribution [CLICK] came from transaction fees. And the rest?When customers use mobile money to purchase airtime directly on their handset, mobile operators avoid the need to pay regular channel distribution commissions. Savings here can be significant, and so mobile operators are highly incentivised to encourage customers to register for and use mobile money as a tool for purchasing airtime. [CLICK] 12% of the value that MTN reaped from MobileMoney was attributable to airtime distribution savings.As mobile markets become increasingly competitive, operators are constantly seeking opportunities to differentiate, and to ensure that existing customers continue to use their services rather than a competitors. Mobile money is a sticky service: customers who register for it are significantly less likely to leave for a competitor, and so mobile operators are able to make more money in their core business when customers use mobile money. [CLICK] [CLICK] Importantly, these benefits flow only to mobile operators who offer mobile money. This is one of the reasons why MNOs have embraced mobile money so aggressively around the world.For the unbanked, there’s an important implication of the fact that operators can unlock indirect benefits: it typically means lower transaction fees, and no minimum monthly fees.
  • Many traditional banking services are associated with fees that make it unaffordable for people with low incomes. How is it possible for mobile money to serve these customers less expensively?It turns out that mobile operators are able to unlock a host of indirect benefits when they offer mobile money. This means that they realize a great deal of value beyond the fees that they charge customers directly. In fact, a recent analysis of MTN Uganda’s MobileMoney found that just 52% of the service’ gross profit contribution [CLICK] came from transaction fees. And the rest?When customers use mobile money to purchase airtime directly on their handset, mobile operators avoid the need to pay regular channel distribution commissions. Savings here can be significant, and so mobile operators are highly incentivised to encourage customers to register for and use mobile money as a tool for purchasing airtime. [CLICK] 12% of the value that MTN reaped from MobileMoney was attributable to airtime distribution savings.As mobile markets become increasingly competitive, operators are constantly seeking opportunities to differentiate, and to ensure that existing customers continue to use their services rather than a competitors. Mobile money is a sticky service: customers who register for it are significantly less likely to leave for a competitor, and so mobile operators are able to make more money in their core business when customers use mobile money. [CLICK] [CLICK] Importantly, these benefits flow only to mobile operators who offer mobile money. This is one of the reasons why MNOs have embraced mobile money so aggressively around the world.For the unbanked, there’s an important implication of the fact that operators can unlock indirect benefits: it typically means lower transaction fees, and no minimum monthly fees.
  • Whether it’s unlocking such indirect benefits or leveraging existing mobile infrastructure, a big part of the mobile money business model is leveraging the assets and capabilities of MNOs. But the same can be said about banks. Indeed, you cannot have mobile money without them.It is essential that a regulated bank be the ultimate custodian of customer funds, and financial authorities should insist that a bank is always responsible for holding this account. Otherwise, however, banks and MNOs are best positioned to allocate the activities in the value chain between them. One role we often see banks taking on is the so-called “superagent” role. One of the biggest challenges facing mobile money services is the need to keep agents, particularly in rural parts of the country where customers primarily seek to perform cash-out transactions, stocked with enough cash to meet demand. Banks have established cash logistics networks and instituted appropriate security measures to maintain deep pools of liquidity in their branches; as such, these branches can support the agent network by allowing agents to exchange electronic value for cash in their branches. In Burundi, we understand that some post office branches are overwhelmed by the demand for cash-in/cash-out service from customers. it is very easy to imagine the post offices, which currently serve as cash-in/cash-out points for customers, evolving into cash-in/cash-out points for agents. Lastly, banks have an important role to play in developing sophisticated services—i.e., those beyond payments—for customers to access through mobile money. We’ll come back to this in a few minutes.
  • These, then, are the core building blocks of the mobile money business model. Given that these are all innovations, you might think that it’s hard to implement them all successfully. And you’d be right.
  • Growth rate is increasing – 40 new services in 2012Competition is increasing - 40 markets have at least 2 mobile money services
  • In Kenya, Madagascar, Tanzania and Uganda, there are more mobile money accountsand agent outlets than bank accounts.■ A large proportion of the GDP of in Uganda, Tanzania and Kenya moves throughmobile money platforms.
  • In Kenya, Madagascar, Tanzania and Uganda, there are more mobile money accountsand agent outlets than bank accounts.■ A large proportion of the GDP of in Uganda, Tanzania and Kenya moves throughmobile money platforms.
  • In Kenya, Madagascar, Tanzania and Uganda, there are more mobile money accountsand agent outlets than bank accounts.■ A large proportion of the GDP of in Uganda, Tanzania and Kenya moves throughmobile money platforms.
  • What does the future hold?Mobile money is an exciting innovation. But it’s important to point out that we are only in the early stages of exploiting the full potential of mobile money for financial inclusion. Once mobile money has become well established in Burundi, the next step will be to give access to an expanded range of functionality.First, mobile money makes it easier for banks, MFIs, and insurance companies to offer customers sophisticated products like interest-bearing savings accounts, loans, and microinsurance policies. Today, it is hard for these players to serve low-income people because the cost structure of building bricks-and-mortar branches to serve them is expensive. But in Kenya, for example, financial institutions now allow M-PESA to do that hard work of collecting and disbursing cash for them. Equity Bank, for example, offers a suite of products—a savings account, a credit facility, and an insurance policy, to customers through M-PESA. In this way, you can promote the usage of formal financial products.Second, once customers are connected to a payments network in Burundi, it will be possible to connect them to international payment networks as well. Many mobile money services are now connected to Western Union or other, similar international remittance networks to allow customers to make and receive international remittances directly from and to their mobile money accounts. Not only is this more convenient for customers; it is also often cheaper, too. This will be a boon in Burundi, both because it will make it easier for the international diaspora to send money home, but also because it will facilitate trade in the EAC.
  • The number of GSM mobile connections doubled in the last four years in Africa and South East Asia, and more than tripled in South Asia. The total number of unique mobile subscribers is 3.2 billion (46% of the world’s population) and is forecast to grow to 4 billion in five years
  • The number of GSM mobile connections doubled in the last four years in Africa and South East Asia, and more than tripled in South Asia. The total number of unique mobile subscribers is 3.2 billion (46% of the world’s population) and is forecast to grow to 4 billion in five years
  • We show below the geographical distribution of live M4D services in the developing world tracked by the GSMAMobile money has a concentration in Africa, learning and education in Asia, while health and agriculture are more evenly split between these two regions
  • 60m registered mobile money customers in June 2011 from 52 deployments6m customers were active as of June 2011 (Excluding Safaricom and Smart)11 services had more than 1m registered customersThe 52 mobile money providers who participated in our survey, including Safaricom, Smart and Globe, together reported over 60 million registered customers in June 2011. This understates the number of customers who are using mobile money, because it excludes customers who transact solely OTC.For every data point in this survey, we collected information for the beginning and the middle of 2011. As such the growth in customer base you see on the right-hand side of the chart is actual. To put this in context, the light shade of green represents data that have been extrapolated back to when the earliest mobile money services launched.Within our sample, 11 services (out of 52) reported having more than 1 million registered customers in June 2011. These 11 services are represented by the bars colored in dark green.Together, these eleven services accounted for 85% of the registered customers reported in our survey.

The Mobile Money Opportunity - MMU presentation - ASEAN-EU Business Summit - March 2013 The Mobile Money Opportunity - MMU presentation - ASEAN-EU Business Summit - March 2013 Presentation Transcript

  • AEBS 2013 - ICT 1
  • ICT sessionAEBS 2013 - ICT 2
  • The mobile money opportunity Title Date ASEAN-EU SUMMIT Hanoi, 8 March 2013 Simone di Castri - Regulatory DirectorRestricted - Confidential Information © GSMA 2013 3
  • GSMA contribution to achieve the scope of the ASEAN-EU Business Summit  Raise awareness of the mobile money opportunity  Facilitate the dialogue between the private sector and different parts of the government to build enabling environments for mobile money to drive economic and social developmentRestricted - Confidential Information © GSMA 2013
  • Community Power for MobileAgenda Mobile growth and ubiquity What is mobile money? State of the mobile money industry GSMA and the Mobile Money for the Unbanked (MMU) ProgrammeRestricted - Confidential Information © GSMA 2013
  • People, households, citizens Live in urban and rural areas Live in the cash economy Rely on informal economy financial networks Work and save money To pay food, goods, house, weddi ng, education To face emergencies and shocks Mobile can drive development Mobile money is a key driver of M4DRestricted - Confidential Information © GSMA 2013
  • Mobile can drive development Mobile connects people, government, and business fast and at low cost. Through their mobile, households can gain access to services and information that are life-enhancing. They use their mobile to access education, health, agriculture, and financial services. Mobile is changing the life of people, and improving the way companies and public institutions deliver their services, bringing economic development in the communities and expanding markets. The power of mobile is transformational, particularly in emerging markets and developing countries where it’s by far the most available communication channel and device. The rapid growth and the ubiquity of mobile is enabling socio-economic growth Mobile money is a key driver of the mobile ecosystem Payment systems are crucial because they enable people to collect payments from customers, buy goods, pay for water and electricity, and send money to friends, family, and business partners. Therefore mobile money is They also enable governments to collect taxes, disburse social payments, monitor and manage the economy more effectively (cash is expensive and risky). Enabling digital payments and transfers is the first step to create universal access to financial services and improve the stability and safety of the financial system. Payment and transfer services are the building blocks of efficient economies and financial systems Restricted - Confidential Information © GSMA 2013
  • The benefits of mobile money can be widely felt  ―The share of poor households who have M-PESA went from 28% in 2008 to 51% in 2009. Similarly, the percent of rural households with an M-PESA account went Mobile money from 29% to 59%, and the percent of unbanked using M-PESA went from 25% toreaches the poor… 50%.‖  41% of Tameer Bank / Telenor Pakistan’s Easypaisa’s users live on less than $2.50 per day.… and it helps them  ―M-PESA users were able to fully absorb large negative income shocks (such as job loss, livestock death, harvest or business failure, or poor health) without any weather financial reduction in household income whereas statistically comparable non-users saw shocks consumption fall on average 7 percent.‖  ―The rate of mobile money usage by business owners is much higher than nationalMobile money also average, and many report significant benefits: increased efficiency from time savedmakes SMEs more and improved logistics. Most find mobile money much easier than banks: the locations are more accessible, customer service is better, transactions are faster, and productive its much easier to sign up for an account.‖Restricted - Confidential Information © GSMA 2013 Restricted - Confidential Information © GSMA 2012
  • The mobile money opportunity Mobile growth and ubiquity ASEAN-EU SUMMIT Hanoi, 8 March 2013 Simone di CastriRestricted - Confidential Information © GSMA 2013
  • The rapid growth of mobile is enabling the mobile for development revolution Mobile in emerging markets and developing countries 5 47% 50% 39% 4 40% 3.0 3 30% Penetration 24% 2.3Billion 2 20% 1.3 1 10% 0 0% 2007 2012 2017 Active subscribers Penetration Restricted - Confidential Information © GSMA 2013
  • The rapid growth of mobile is enabling the mobile for development revolution Mobile in emerging markets and developing countries 4Individual subscribers (billion) 2.9 3.0 3 2.7 2.8 2.5 2.3 2.1 1.9 2 1.7 1.5 0.8 0.8 0.8 0.9 0.9 0.9 0.9 0.9 0.9 0.9 1 0 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Developed Developing The number of connections doubled in South East Asia in the last four years Restricted - Confidential Information © GSMA 2013
  • Mobile: the closest to ubiquity Penetration of communication devices in emerging and developing countries 50%Individuals as a percentage of the global population 40% 39% 36% 33% 30% 30% 27% 24% 20% 10% 8% 5%5% 5% 2%3% 3%4% 1%2%0% 2%3% 1% 1% 2% 0% 0% 0% 2007 2008 2009 2010 2011 2012 Mobile subscribers Smartphones On an ownership basis, the mobile phone is the most widely PCs Tablets owned communication device in the developing world Restricted - Confidential Information © GSMA 2013
  • The mobile money opportunity What is mobile money? ASEAN-EU SUMMIT Hanoi, 8 March 2013 Simone di CastriRestricted - Confidential Information © GSMA 2013
  • Public policy goalsSocio-economic growth Financial inclusion Mobile money helps to reduce the vulnerability of theIn some countries, the total Financial stability financial system and mitigatevalue of mobile money risks due to the widespreadtransactions is equivalent to Financial integrity use of cash and informala significant proportion of Consumer protection financial servicesthe country’s GDP:  > 60 % in Kenya OBJECTIVE  > 30% in Tanzania Universal access to safe and convenient financial  > 20% in Uganda services  Payments  Investment  Transfers  International  Storage remittances  Savings  Credit  Insurance  PensionRestricted - Confidential Information © GSMA 2013
  • What factors limit access to financial services? Long distances & low pop density High bank costs relative to return Low financial education Poor product / channel design Source: CGAPRestricted - Confidential Information © GSMA 2013
  • Mobile growth and ubiquity vs lack of outreach of banks Mobile money can overcome market and policy failures that lead to financial exclusion Of the 2.5 billion people in the world who still lack access to the financial system, 1.7 billion already have a mobile phoneRestricted - Confidential Information © GSMA 2013
  • Mobile money Additive  Merely adds to range of choices or enhances the convenience for existing customers  Examples: balance enquiry via mobile phone; internet bankingTransformational  The use of information and communication technologies (ICTs) and non- bank retail channels to extend the delivery of financial services to clients who would not be reached profitably with traditional branch-based financial services.  Examples: e-wallets to make P2P transfers or payments, to receive salary, or a transfers from the government Customers get money into and out Customers initiate transactions using of the service by going to a an interface that is available on basic network of transactional agents mobile handsets outside of bank branchesRestricted - Confidential Information © GSMA 2013
  • Six hallmarks of the mobile money business model Originally focused Ubiquitous on meeting Simple account transactional transfers and opening agents payment needs A unique revenue Extensive use of MNO-bank model that yields the mobile channel partnership affordabilityRestricted - Confidential Information © GSMA 2013
  • Mobile money was developed for paymentsNon- mobile money customersIn a survey of customers in eight sub-Saharan African countries,  in cash with traveling friends51% reported sending or receiving a payment over the previous 30 days, of which 50% sent money informally:  via money carriers like bus drivers, or  traveling in person to make large paymentsMobile money customers M-PESA is faster than M-PESA is more M-PESA is safer than my M-PESA is cheaper than my previous method of convenient than my previous method of my previous method of sending money previous method sending money sending money 98% of M-PESA users 96% of M-PESA users 98% of M-PESA users 96% of M-PESA users Restricted - Confidential Information © GSMA 2013
  • Agents are convenient for customers, and they transformthe economics of digitalising cash Number of transaction points, Kenya (40,000+ today) 25,000 20,000 15,000 10,000 5,000 - 2007 2008 2009 2010 Bank branches ATMs M-PESA outlets Post offices Fixed costs per transaction Agent $0.04 Bank teller $0.78Agents operate on a prepaid model, eliminating credit risk Restricted - Confidential Information © GSMA 2013
  • In 28 countries there are more mobile money agents thanbank branches (out of 49 surveyed) TANZANIA504 bank branches - since 1925(? – Barclays in TZ) 17.549 mobile money agents - since 2008 Restricted - Confidential Information © GSMA 2013
  • The mobile money for the unbanked business modelFor mobile money services to succeed, account openingmust not be a barrier to usage KYC requirements Customers should Registration should be be able to register should be proportionate to at any agent instantaneous risk  Enables mobile money  Enable low-risk customers  If customers cannot begin services to easily convert to register and transact using mobile money customer interest into within certain limits by immediately after registration providing basic registration, they are far  Provides agents with an identification less likely to do so—ever immediate source of revenueRestricted - Confidential Information © GSMA 2013
  • Leveraging the mobile channel empowers consumers andreduces costs Customers can use their own basic handsets to initiate transactionsRestricted - Confidential Information © GSMA 2013
  • Mobile operators are uniquely positioned to offer mobilemoney services that are affordable for the unbankedMNOs’ assets MNOs incentives experience with airtime distribution  use mobile money to cross-sell new services to SIM card and data channel on customer handsets customers they already serve give users and third parties an interactive interface  to compete for customers on other networks at a very low cost brand recognition MNOs unique forms of indirect confidence that MNOs have revenue from mobile money established among customers  savings from airtime distribution in many countries  reduced churn  increased share of wallet for voice and SMSMNOs skills expertise in mass marketing building managing a broad distribution infrastructureNot surprisingly then, MNOs are often more keen to make investments inbuilding and scaling mobile money services than banks and other non-banks. Restricted - Confidential Information © GSMA 2013
  • Mobile operators are uniquely positioned to offer mobilemoney services that are affordable for the unbanked Gross profit contribution to date (MTN MobileMoney Uganda, March 2010) 2 Airtime 12% distribution savings 52% 36% Increased 3 customer Transaction loyalty and fees spending 1 Only accrue to MNOsRestricted - Confidential Information © GSMA 2013
  • Successful services leverage the assets and capabilities ofMNOs and of banksMobile operator activities Bank activities  Marketing (branding and communications)  Float holding  Agent network management  Superagency  Technology  Sophisticated product development  Customer care Custody of customer funds activities Support License acquisition, regulatory engagement, and compliance Product and business development Marketing Agent network management Technology Customer care Branding Transactional platform Liquidity management (superagency) Communications Access to the handset Primary activities Restricted - Confidential Information © GSMA 2013 Restricted - Confidential Information © GSMA 2012
  • Six hallmarks of the mobile money business model Focused on Ubiquitous Simple account meeting payment transactional opening needs agents A unique revenue Extensive use of MNO-bank model that yields the mobile channel partnership affordabilityRestricted - Confidential Information © GSMA 2013 Restricted - Confidential Information © GSMA 2011
  • The mobile money opportunityState of the mobile moneyindustryASEAN-EU SUMMITHanoi, 8 March 2013Simone di CastriRestricted - Confidential Information © GSMA 2011
  • Mobile money is expanding at a dizzying rate 150 live services in 73 countries, 40 of which launched in 2012 150 109 65 36 15 6 7 10 1 2 2 4 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Sub-Saharan Africa East Asia and Pacific South Asia Latin America and the Caribbean Middle East and North Africa Europe and Central AsiaRestricted - Confidential Information © GSMA 2013
  • Mobile money is expanding at a dizzying rate 82m mobile money subscribers 30m active mobile money users 4 countries with more mobile money accounts than bank accounts USD $4.6bn moved through mobile money in June 2012 28 countries with more mobile money agent outlets than bank branches x2: twice as many mobile money users than Facebook users in Sub- Saharan Africa in June 2012Restricted - Confidential Information © GSMA 2013
  • How do customers use the mobile money? Average value of P2P transactions is $35Restricted - Confidential Information © GSMA 2013
  • The pathway to digital financial inclusion Source: BMGFRestricted - Confidential Information © GSMA 2013
  • Once mobile money has established itself with customers, arange of additional opportunities presents itself More sophisticated financial services Cross-border transfers and remittances Restricted - Confidential Information © GSMA 2013 Restricted - Confidential Information © GSMA 2012
  • References: www.gsma.com/mmuRestricted - Confidential Information © GSMA 2013
  • The mobile money opportunityGSMA and the Mobile Moneyfor the Unbanked (MMU)programmeASEAN-EU SUMMITHanoi, 8 March 2013Simone di CastriRestricted - Confidential Information © GSMA 2011
  • The GSMA represents the interests of mobile operators worldwide. Spanning 219 countries, the GSMA unites nearly 800 of the world’s mobile operators, as well as more than 200 companies in the broader mobile ecosystem, including handset makers, software companies, equipment providers, internet companies and media and entertainment organisations. GSMA Mobile for Development brings together our mobile operator members, the wider mobile industry and the development community to drive commercial mobile services for underserved people in emerging markets. We identify opportunities for social, economic and environmental impact and stimulate the development of scalable, life-enhancing mobile services.Restricted - Confidential Information © GSMA 2013
  • Mobile technology is increasingly being leveraged to deliver life-enhancing Value Added Services 600 Live deployments 500 Asia Latam Africa Oceania Central/Eastern Europe 400 300 200 100 0 Money Health Agriculture Learning Entrepreneurship Education Health Agriculture Employment Financial Services• Career development / • Remote monitoring / • Helplines for advice / • Business advice • Money transfer life skills diagnosis trading assistance helplines • Airtime & prepaid• Health education • Data collection • Broadcast info content • Job posting services services• Language learning • Adherence & • Automated, localised • Training and skills • Bill payment• Edutainment compliance content development • Bank account• Teacher training and • Training & capacity • Farmer financial • Inventory ordering and management tools building services stock management • Microfinance • Health education & • Data collection • Microsavings promotion • Weather monitoring • Microinsurance • Health supply chain • Supply chain efficiency • Corporate payments • Healthcare payments & • mCommerce insuranceRestricted - Confidential Information © GSMA 2013 • Medical devices
  • EXTEND THE DIGITAL SHAPE REGULATORY SCALE ECOSYSTEM ENVIRONMENTIdentify and implement best Understand and promote Successfully advocate forpractices around how to mechanisms for harnessing and shape regulatoryscale mobile money economies of scale across environments that enabledeployments that sustainably multiple mobile money them to sustainablyserve poor and unbanked providers contribute to financialclients inclusionOperational assessment of mobile Capacity buildingmoney deployment, using global Local advocacybenchmarks & industry best practice Facilitate engagement betweenAction planning with mobile money regulators and providersteam & senior management Global dialogue withImplementation support policymakers, regulators, standard setting bodies and other stakeholdersRestricted - Confidential Information © GSMA 2013 Restricted - Confidential Information © GSMA 2012
  • MMU regulatory work stream: 2012 outputs CAPACITY BUILDING GLOBAL ADVOCACY IN-COUNTRY ADVOCACYTo equip mobile money Create/maintain enabling policy environments and regulatoryproviders to understand frameworks for mobile moneyregulatory frameworks and MMU Leadership Forum Initiatives into advocate for enabling Policy paper on enabling regulatory Burundi, Indonesia, UEMOApolicies solutions for mobile money (BCEAO), and Kenya2 regulatory trainings for MNOs: 1:1 Tech session for regulators onOnline interactive mobile money mobile money security atregulatory guide NFC&MMSEstablished regulatory working Constructive dialogue with standardgroup setting bodies (i.e., FATF and CPSS) and influencers (e.g., AFI, UN, WB, BMGF, etc.) BlogsRestricted - Confidential Information © GSMA 2013
  • MMU regulatory work stream: Mobile money can effectively contribute to financialkey messages inclusion, stability, integrity, and consumer protection OPEN AND LEVEL PLAYING FIELD SAFEGUARD OF CUSTOMER MONEY CUSTOMER DUE DILIGENCETo unleash the potential of mobile Certain risks posed by licensed non-bank Mobile money reduces the risk of moneymoney, regulators must create an open mobile money providers can been laundering and terrorist financing sinceand level playing field that allows both successfully mitigated through prudential electronic transactions can be monitoredbanks and non-bank providers to offer requirements that safeguard funds and traced more easily than cash.mobile money services – particularly entering the system and meet customer Proportional AML/CFTMNOs, which are well suited to building demand to cash out electronic value. regimes and simplified risk-basedsustainable services and extending the customer due diligence (CDD)reach of the formal financial sector requirements are crucial for customerrapidly and soundly INTEROPERABILITY adoption of mobile money. Service providers and policy makers DISTRIBUTION AND OUTSOURCING CONSUMER PROTECTION should work together to understandBanks and non-banks must outsource different types of Mobile money strikes a balance betweencustomer registration, cash interoperability, including the creating innovative forms of financialcollection, and disbursement activities to benefits, costs, and risks. The role of the access and offering an acceptable levellower the cost of financial policy maker is to facilitate dialogue of consumer protection. Tailoredservices, expand their reach, and thereby between providers, ensuring that guidance from the regulator can helpincrease financial inclusion. Building an interoperability brings value to the mobile money providers to improveefficient mobile money distribution customer, makes commercial sense, is transparency in their relationships withnetwork depends on proportional and set up at the right time, and regulatory customers and prevent third party fraud.cost-effective regulation. risks are identified and mitigated.Restricted - Confidential Information © GSMA 2013
  • MMU publications, toolkits, trainings, events, research papers, etc.Restricted - Confidential Information © GSMA 2013
  • Data and analyticsDeployment tracker, status of the industry annual report, and benchmarkingfor each deployment Registered customer Active customer accounts All transactions Payments accounts 6 60 10 Millions Millions Millions 40 5 50 8Millions 30 4 40 6 3 30 20 4 2 20 10 +49% 1 +96% 10 +107% 2 +93% 0 CAGR 0 CAGR 0 CAGR 0 CAGR Dec-10 Jun-11 Dec-10 Jun-11 Dec-10 Jun-11 Dec-10 Jun-11Restricted - Confidential Information © GSMA 2013
  • www.gsma.com/mmu Title sdicastri@gsma.com DateRestricted - Confidential Information © GSMA 2012 43
  • 44AEBS 2013 - ICT