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Introduction to Digital Financial Services

2 billion people globally have no bank account, but 1 billion of them have a mobile phone. Markets for digital financial services are expanding worldwide.

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Introduction to Digital Financial Services

  1. 1. Digital Finance Greta Bull, CEO CGAP March 9, 2016
  2. 2. 2 billion people have no access to formal financial services
  3. 3. 1 billion of them have a mobile phone
  4. 4. A large number of providers have now understood this opportunity Source: GSMA State of the Industry 2015 Number of live DFS services by region
  5. 5. Markets exist worldwide and are getting deeper Source: GSMA State of the Industry 2015 72% of these markets have two or more providers 270+ providers of DFS across 93 countries Together they serve over 411 million customers Seven have interoperability
  6. 6. In Latin America, over 95% of DFS accounts are card based In South Asia, vast majority of DFS customers transact over the counter (OTC) In Sub-Saharan Africa, 90% of DFS accounts are mobile The sum total: A global transformation of financial services Source: GSMA State of the Industry 2015 Models vary depending on local context
  7. 7. Markets with more DFS than bank accounts 19 DFS transactions processed each day 33m Source: GSMA State of the Industry 2015 Actively used DFS accounts To give a sense of the scale… Markets with more DFS agents than bank branches
  8. 8. This is having a direct impact on financial inclusion Africa Continues to Make Remarkable Progress Findex reports adults with a mobile money account in SSA
  9. 9. Competition Pushes Traditional Players to Adapt 0 5 10 15 20 25 30 2007 '08 '09 '10 '11 '12 ''13 ''14 Mobile payment customers: 25.8m M-Shwari launches in 2012: In two years, 9.2m accounts, 20.6m loans for $277m, $1.5bln deposits mobilized, PAR(90) 2.2% Partnerships, own solutions and direct competition Bank Customers: 28.4m
  10. 10. • China moving rapidly towards full financial inclusion (64 → 79%), driven by state owned infrastructure and technological disruption • Favorable government policies expand access • Leveraging large state bank infrastructure (e.g. PSBC over 400 million clients and 36,000 retail outlets) • 800,000 agents in 400,000 villages power digital G2P payments • Alibaba gives people what they want, finance plays a supporting role Leading role of state, but Alibaba has shifted the goal posts China: Where Tradition and Technology Meet
  11. 11. India Stack provides digital infrastructure for full financial inclusion India: State Builds the Rails for Private Solutions • Important regulatory changes in 2014-15 • Open public infrastructure in key areas: ID (Aadhaar), Unified Payments Interface with open APIs, Digital Locker, eKYC, RuPay Card • Private banks licensed to focus on key segments: small business (10) and payments (11) • Low-threshold Jan Dhan accounts bring in 200m new customers in 2 years; layer on insurance and pensions through Jan Suraksha • Government drives volume with G2P payment for social programs (28 programs to be digitized)
  12. 12. • Mature microfinance industry; major player BRAC moves into agent network through bKash • 12 million new mobile money accounts added in 2014, 30 million at end of 2015 • Progress driven by large agent network. Over 500,000 agents nationally; 90% of adults live within 5 KM of an agent • Dominance of OTC means full potential of system yet to be realized • Banked adults moved from 5% to 9% from 2014-15 bKash drives tremendous growth in digital Bangladesh: Microfinance Player Drives Digital
  13. 13. Latin America: Access Enabled by Small and Large Retailers Active Banking Agents (2010-2015) 345,754 97,561 34,427 0 100,000 200,000 300,000 400,000 2010 2011 2012 2013 2014 2015 Brazil Colombia Peru Oxxo – a convenience store – is largest banking agent network Number of stores/branches, 2014 Banorte Santander 1,265 1,269 7-Eleven 1,506 Banamex 1,801 1,623 Bancomer 12,597Oxxo G2P and consumer purchases driving increased access to financial services
  14. 14. Advancing financial inclusion to improve the lives of the poor www.cgap.org

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  • adlmachado

    Jun. 3, 2016
  • Yannix

    Mar. 14, 2017
  • CrinklyGnome

    Oct. 2, 2018

2 billion people globally have no bank account, but 1 billion of them have a mobile phone. Markets for digital financial services are expanding worldwide.

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