Expanding Outreach through Branchless Banking John Owens RBAP‐MABS 2010 RBAP‐MABS Regional Roundtable Conference Pan Paciﬁc Hotel, Malate, Manila November 23, 2010
Branchless banking is a distribu<on channel strategy used for delivering ﬁnancial services without relying on bank branches. While the strategy may complement an exis<ng bank branch network for giving customers a broader range of channels through which they can access ﬁnancial services, branchless banking can also be used as a separate channel strategy that en<rely forgoes bank branches.
Branchless Banking Some examples of branchless banking technologies include: • Automated teller machines (ATMs) • Third‐Party Merchants with Point of Sale (POS) devices • Mobile Phones (M‐Banking) • Mobile Money PlaOorms linked to banks
Bill Gates on Mobile Technology to FacilitateBanking for the Poor
Developing Merchant Partners for Mobile Phone Banking Key Lessons Learned in the RBAP‐MABS Channel Management IniWaWve
‘Channel management’ supports third parties (Merchants/CICOs) that are providing financial facilitation services to end customers. Bank Examples • Market research and development • Sign‐up, accreditaWon Support Services • Training of third party staﬀ • InformaWon, MIS • Liquidity Third party (Merchant-CICO) partner • Payment acceptance Financial Facilita<on • Sales and referral • MarkeWng support • Customer support Customer
Benefits to Rural Banks• What are the benefits to Rural Banks? • By working with merchant partners (CICOs), Rural Banks can offer m-banking services • This reduces transaction costs for the clients and the banks • Allows banks to serve more clients in more areas • Merchant-Partners can also be provided with liquidity services and credit opportunities • Word-of-mouth marketing support• What do Rural Banks need to do to get these benefits? • Train existing Merchant-Partners (CICOs) how to market the bank’s m-banking services • Process requests for cash and e-money liquidity • Manage the cross-sell – via relationship management
General Benefits of Mobile Phone Banking (along the Value Chain) Client Merchant Bank -Partners Leverage Merchants-Partners and Mobile Phone subscribers toConvenient & more secure Increase walk-in trafﬁc expand client base and maximizethan cash (cross-selling opportunities) revenue. Decrease cash-on hand, Increase efﬁciency and save onComfort of dealing with transaction costscorner merchant or minimize fraud/risksMerchant-Partner neighbors Increase deposit levels Revenue from fees,Reduced transaction costs for commissions and incentives Cross selling opportunities throughaccessing banking services (no Merchant- Partners’ referralslines, no travel time/costs) Signiﬁcant image building opportunity
What benefits can Merchant-Partners provide to banks ? • Expand geographic coverage without building additional infrastructure • Decongest branches • Refer new customer segmentsSESSION 6
Business Proposition and Model Design Phases • What is the business Determines how the bank Bank model for management of should operate internally the channel management and with its partners staﬀ and merchants? • What are the Determines the skills responsibili<es through the required and the allocaWon value‐chain? of tasks in the bank Third party partner • Which merchants are Determines how many staﬀ priori<es to be CICOs? are needed and how they should work • Which ‘use cases’ are Deﬁnes the demand level highest priority for Rural and nature of the end‐user Customer Banks? training needed
Determine MPB “Use Cases”• Kapitbahay Banking (“village banking”) – Access to ENCASH and other Banking ATMs (Text-A-Credit) – Human ATM (Text-A-Withdrawal) – Remote Deposit Taking (Text-A-Deposit)• Make Loan payments• Pay Employees Salaries• Pay Utility Bills via Mobile Phone• Pay Suppliers via GCASH (not Checks or Cash)• Send Money to Relatives (Remittance Services)• Provide Info for a fee (balance inquiry)
Business Design of MPB DevelopmentPre‐Sales MarkeWng Sales and Set‐up Servicing Training of Partners Liquidity AVer Sales Market Research & Merchant‐Partner on MPB and Bank’s Management Support Product Dev’t. Products Acquisi<on ProposiWon Dev’t Channel Management Telco’ Support Mobile Channel Officers (MCO) are engaged from the beginning of the process (Pre-Sales Marketing activities) up to ‘Sales and Set-up’ and then to servicing Merchants and Clients (such as Liquidity Management and After Sales Support).
How to succeed in MPB implementation through partners• Development of Strong ‘Use Case’ Proposition: • Use and implement the right ‘use cases’ (priority case) • Marketing must be consistent with the ‘use cases’ • Offer package of services as fee-based income for Merchant-Partners (CICO, bills payment, MPB services, referral incentives, remittance services, and loading business—if not offered yet)• Incorporate MPB into Bank’s Products and Services that will address the following: – Identify how MPB can help achieve bank’s goals – Design products with MPB components – Build partnerships and develop internal skills in handling the services – Implement quality standards in processing transactions – Design a good marketing plan for MPB