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Google Brainstorm For M Chek Proposal

Google Brainstorm For M Chek Proposal






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    Google Brainstorm For M Chek Proposal Google Brainstorm For M Chek Proposal Presentation Transcript

    • Mobile Payments Opportunities
      for the Bottom of the Pyramid
    • Opportunity
      Social & Development Impact
      Secure mobile payments creates low-cost infrastructure for delivery of financial and other livelihood services to the BOP
      Increased access to financial and livelihood services creates second and third order long-term social impact
      Smoother income and consumption benefits health and child development
      Transaction and cash flow data collected via mChek creates financial reputation or record and catalyzes even more access to services
      By lowering operational and cash handling costs for any business, mobile electronic payments opens up new business models that did not before exist, thus creating opportunities for entrepreneurship and micro as well as macro development
      Profitable Business Models
      Improves traditional models
      Mobile payments creates win-win-win for all parties (banks, telcos, merchants), integrating into and improving existing business models
      Collaborate for expansion (e.g. telcos, banks)
      Value proposition
      Operational efficiency to serve existing customers
      Low-cost expansion
      Increased revenue
      Opens new business models for the BOP
      New fee structures appropriate for BOP
      Business models for livelihood services beyond financial and payments (e.g. health, education, information access)
      Micro-entrepreneurship using mobile point of sale (POS)
      Mobile ads subsidize cost to end users
    • Early mChek Initiatives: Cashless Economy
      Opportunity: Enabling suite of mobile transactions for BOP users creates win-win-win for stakeholders
      Mobile access will increase value of Bank Accounts: 30% of households have savings account and mobile phone but 2/3 of these access the savings less than once per month
      MFI Operational Cost Reduction: Could halve the 2/3 of MFI ops costs that go towards infrastructure and managing transactions
      Solution: Cashless Economy via MFIs
      Use high-frequency and trusted MFI transaction channel to reach users
      Relatively small marginal effort to mChek-enable other entities in local economy
      Transactions enabled: Loan disbursements and repayments, local merchant and biller payments
      New access to remote services
      MFI Groups
      Cash Points
      or BCs

      MFI Groups


      Bill Collector
    • Cashless Economy – Pilot Details
    • Cashless Economy – FundingSeeking Grants for execution of Cashless Economy pilots
    • Brainstorming collaboration with Google
      Phase 1 – Analysis and interpretation of payment and banking behaviors
      Test and prove institutional efficiencies and savings to accelerate expansion
      Refinement of core business model
      Phase 2 – Exploration and testing of new services business models
      Development of “organic” credit bureau and rating system for BOP borrowers, consumers, producers
      Leveraging the mobile channel for delivery of additional livelihood services
      Mobile advertising to supplement core business model
      Enablement of micro-entrepreneurs through Mobile POS
      Mobile aggregation of local SMEs and long-tail of businesses
    • mChek Differentiators
      Uniquely positioned for BOP and mass market expansion
    • mChek Innovations Expand Addressable Market and Differentiate mChek from Competitors
      Source: BCG study, 2007 “Ringing in the Next Billion Mobile Consumers”
      Source: mChek surveys across three MFIs (SKS, Equitas, GrameenKoota) on mobile phone penetration among urban and rural borrowers
    • mChek Approach is more flexible and innovative than other BOP mobile payments solutions
      South Africa
      • South African institution that provides a third-party bank account and mobile phone banking together (100,000 users)
      • Service sold through viral marketing initiatives such as ‘Wizz Kids’
      • 33% total cost savings versus traditional branch only
      • More than 50% of user transactions are made through mobile, with primary mobile uses being airtime purchase and balance inquiry (2/3 of transactions)
      • Largest wireless operator in Philippines provides, mobile payments and banking tied to wireless account (4 million users/900,000 active)
      • Pilot: Store owners/MFI borrowers get wholesaler discount for using mobile payments and banking
      • Majority of mobile transactions are airtime purchases
      • Mobile payments especially cost effective for small ‘satchel’ purchases
      • Smart is currently testing first Microfinance pilot. Only known pilot besides mChek
      • Indian MFI that implemented a small pilot testing the Business Correspondent model. Only tested deposit and withdraw for bank accounts, no loan payment
      • Pilots: Andhra Bank and A Little World/Bank of India; 1K users and ~2-3K transactions total
      • Usability problems with complicated phone menus
      • Users lacked education or understanding of the fundamental value of a savings account and earning interest
      • Early solutions limited by dependence on a) operator-driven models, b) loose regulatory regimes
      • mChek’s pilots are unique and ground-breaking compared to these previous, conservative tests
    • Initial BOP Target Market: India
      Economic and lifestyle characteristics of India’s BOP highlights needs and opportunities
    • Characterizing the Indian BOP market
      Based on an international definition of poverty, India has more than 900 MM people or 80% of the population earning less than $2 per day
      800 MM of the total population (72%) lives in rural areas, the vast majority working in the farming sector
      A significant minority is composed of those below the age of 15, who reflect more than 295 MM of the low income population
      Nearly all of the Indian low income work in the informal sector, including farming and informal enterprises
      Characterized by volatile cashflows
      Salary paid largely in cash
      61% of all Indians are literate, with less than half of women literate
      High cross-state variance, with rates as low as 47% in Bihar and as high as 90% in Kerala
      Upper/MiddleClass(60 MM)1
      LowerMiddle Class(170 MM)1
      Less than $2/day~Rs. 50/day (PPP)(500 Million)
      Low income segments
      Less than $1/day~Rs. 25/day (PPP)(400 Million)
      Indian poverty line2
      India’s massive low-income population lacks access to critical financial and livelihood services which mChek can enable
      1 McKinsey defines a strata of middle and upper class citizens that make Rs. 2 lakh and above per household that we call here “Upper/Middle Class”. 2 The Indian government uses a more restrictive version of poverty based on caloric intake, which equates to Rs. 10 to Rs. 18/day (excl. PPP adj)Source: World Bank (2000), Indian Census (2001), ILO, Martha Alter Chen, McKinsey Global Institute
    • Low availability of mobile phones requires innovative solutions
      Penetration is still largely poor for the low income, though 40% of the expansion in the next three years may come from low income rural markets
      Despite poor penetration, 80% of non-owners at the bottom of the pyramid can get to a phone in 15 minutes
      The largest rural network is run by BSNL, with Airtel currently available in half of India’s 600,000 rural villages
      The introduction of new mobile phone loans by MFIs will also support the growth in mobile phone usage among the low income
      Ideal % with new loan for mobile phone purchase
      Forecasted growth 2011(Gartner and internal analysis)
      • Achieving scale among the BOP requires models for Shared Phone infrastructure
      • MFIs with new ‘mobile phone loans’ provide synergistic channel to reach BOP users
      * Given the high growth of the Indian mobile market, by mid-2008 urban penetration is most likely near 60% and rural penetration near 8%.Sources: Voice & Data, MR Rao (SKS) Interview, The Hindu, LIRNEasia, Telecom Regulatory Authority of India, Gartner
    • Current BOP mobile phone usage informs business models
      There is a significant gender disparity in mobile ownership …
      … though mobile usage patterns are similar at the BOP1
      Call Purpose: Phones are used for identical purposes with almost three quarters of calls for relationship maintenance, and the rest for the attainment of an objective (e.g., business transactions, delivering messages)
      Call Frequency: Both sexes make approximately 46 calls per month (45% outgoing calls), and send & receive a similar number of SMS texts
      Call Duration: Average call lengths are similar at approximately 3 minutes (approximately 145 minutes/month)
      • BOP users benefit from mass market applications (e.g. mobile prepaid recharge)
      • Monetization ‘subsidizes’ BOP-specific apps
      Source: LIRNEasia, “Who’s Got the Phone: The Gendered Use of Telephones at the Bottom of the Pyramid”
      1 Previous literature in developed markets have found significant disparities in mobile phone usage between men and women. The difference between India and developed countries may reflect contrasting cultural norms or income-related effects.
    • Mobile payments enables more than just access to financial services
      Mobile services supplement and substitute livelihood expenditures
      mChek’s secure mobile channel and authorization technology will be valuable for delivering a host of informational and other livelihood services to the BOP
      Remote payments dramatically reduce transaction costs (e.g. especially reducing transportation and travel)
      • Mobile payments platform is critical as a foundation for delivering wide-ranging services to the BOP
      • mChek’s m-commerce and mobile POS creates entrepreneurial opportunities with no capital investment by the micro-entrepreneur
      Source: BCG study, 2007 “Ringing in the Next Billion Mobile Consumers”