Aníbal Bustillo, Armando Maldonado Mobile  Money for the Unbanked: New Business Model Adoption  Depto. Acad. de Sistemas D...
<ul><li>Introduction </li></ul><ul><li>Financial Inclusion in Mexico </li></ul><ul><li>New Business Model for Mobile Money...
<ul><li>Financial services Mexico reaches less than 25% of total population and have presense in less than 38% of municipa...
<ul><li>Total Population </li></ul><ul><ul><li>Saving accounts – 25% </li></ul></ul><ul><ul><li>Debit accounts – 36% </li>...
Source: CNBV, Reporte de Inclusión Financiera de diciembre 2009 <ul><ul><li>36% of total population is located in rural zo...
<ul><li>Until 1993 , banks could use agents to deliver a variety of services. The outsourcing was subject to CNBV’s superv...
Western Union Branch Travel (t,$) Buy goods Return(t,$) Final destination <ul><li>Very low economical activity </li></ul><...
<ul><li>A business model describes the rationale of how an organization creates, delivers, and captures  value . </li></ul...
The Business Model Canvas (1) (1) Business Model Generation. Alexander Osterwalder  & Yves Pigneur. 2009 Value  Propositio...
Regulation Rural  Communities Mobile Telephony  Technology Market  Trends Financial Inclusion of Unbanked People Business ...
Non-Bank Government Owned Business Model (Example Mexican Telegraph Company)  <ul><li>Government to People (G2P) Programs ...
Fuente: CNBV. Potential Coverage of Banking Agents Financial Inclusion Penetration Using Agents Notes: Large Retail Stores...
Target Customer Segment  Fuente: Telecomm y CNBV, Reporte de Inclusión Financiera de diciembre 2009 <ul><ul><li>58%  of  T...
Source: Telecomm & CNBV, Reporte de Inclusión Financiera de december 2009 <ul><ul><li>The new business model for the  non-...
<ul><li>Availability of Networks of Agents willing to have presence in the target municipalities (676). </li></ul><ul><li>...
<ul><li>Technology  could support financial inclusion intiatives, but it  is not the solution. </li></ul><ul><li>The Busin...
<ul><li>Thanks </li></ul><ul><li>Q&A </li></ul>
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Presentacion paris v2b

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Mobile Money for unbanked poor people.

Paris Dec 2010

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Presentacion paris v2b

  1. 1. Aníbal Bustillo, Armando Maldonado Mobile Money for the Unbanked: New Business Model Adoption Depto. Acad. de Sistemas Digitales - ITAM [email_address] December 9 th 2010 Cartes 2010 Payment in Emerging Countries C12 1 1 2 2 Technomadic Interactive SC [email_address]
  2. 2. <ul><li>Introduction </li></ul><ul><li>Financial Inclusion in Mexico </li></ul><ul><li>New Business Model for Mobile Money and Unbanked People </li></ul><ul><li>Conclusions </li></ul>Agenda
  3. 3. <ul><li>Financial services Mexico reaches less than 25% of total population and have presense in less than 38% of municipalities. </li></ul><ul><li>Despite of the crisis, banks in Mexico had profits US $4.9 B in 2009. 11% increase over 2008. </li></ul><ul><li>Traditional methods that focus on expanding banking infrastructure have proven to be insufficient. </li></ul><ul><li>The payment of US $20 B in international remittances and US $10.6 B in G2P, have significant costs that can be reduced through the introduction of new business models . </li></ul>Introduction
  4. 4. <ul><li>Total Population </li></ul><ul><ul><li>Saving accounts – 25% </li></ul></ul><ul><ul><li>Debit accounts – 36% </li></ul></ul><ul><ul><li>Credit card – 17% </li></ul></ul><ul><ul><li>Personal credit – 11% </li></ul></ul><ul><li>Economically Active Population </li></ul><ul><ul><li>Government Financial programs – 15% </li></ul></ul><ul><ul><li>Development banks – 13% </li></ul></ul><ul><ul><li>Lack any type of financial service – 35% </li></ul></ul><ul><li>The informal sector employs 30% of the available work force </li></ul>Financial Inclusion in Mexico
  5. 5. Source: CNBV, Reporte de Inclusión Financiera de diciembre 2009 <ul><ul><li>36% of total population is located in rural zones </li></ul></ul>Rural: <= 5,000 inhabitants Transition: > 5,000 <= 15,000 inhabitants Semi-urban: >15,000 <= 50,000 inhabitants Urban: >50,000 <= 300,000 Semi-metropoli: >300,000 < 1 million inhabitants Metropoli: >1 million inhabitants Financial Services Coverage Rural 732 705 96% 694 95% Transistion 678 537 79% 520 77% Semi-urban 662 317 48% 297 45% Urban 312 24 8% 35 11% Semi-metropoli 61 1 2% 1 2% Metropoli 11 0 0% 0 0% TOTAL 2,456 1,584 64% 1547 63% % Municipality type # of municipalities Municipalities w/o branches % Municipalities w/o ATMs
  6. 6. <ul><li>Until 1993 , banks could use agents to deliver a variety of services. The outsourcing was subject to CNBV’s supervision and the bank was held responsible for the agent’s acts . </li></ul><ul><li>From 1993 until early 2008 banks were prohibited from using agents. </li></ul><ul><li>In December 2008 , the CNBV amended the Basic Banking Circular to allow Credit Institutions (banks and other fully licensed institutions) to hire legal entities and individuals to deliver an array of services (including remittances). </li></ul><ul><li>Despite of the new regulation, financial Inclusion penetration rate has not been significantly increased since then . </li></ul><ul><li>A new business model is needed for the unbanked and inhabitants of municipalities without financial services coverage. </li></ul><ul><li>Non-bank branchless model, can play a key role in reducing the financial inclusion gap. </li></ul><ul><li>Government leaded strategy is needed to increase financial inclusion </li></ul>Use of Agents by Licensed Financial Institutions -- Outcomes Second Bank Privatization Period
  7. 7. Western Union Branch Travel (t,$) Buy goods Return(t,$) Final destination <ul><li>Very low economical activity </li></ul><ul><li>Emigration to US </li></ul><ul><li>Family desintegration </li></ul><ul><li>Ghost towns </li></ul>Investment in financially viable enterprises that maximize social returns Government leaded strategy to increase financial inclusion <ul><li>Incrementing Financial inclusion rate, will directly benefit municipalities with less than 50,000 inhabitants. </li></ul><ul><li>They no longer need to pay for transport costs to urban centers, where most of the money transfer services are located. </li></ul>
  8. 8. <ul><li>A business model describes the rationale of how an organization creates, delivers, and captures value . </li></ul>Business Model – Definition
  9. 9. The Business Model Canvas (1) (1) Business Model Generation. Alexander Osterwalder & Yves Pigneur. 2009 Value Propositions (2) Customer relationships (4) Customer Segments (1) Key activities (7) Key Partnership (8) Key Resources (6) Channels (3) Revenue Streams(5) Cost Structure(9) An organization serves one or several Customer Segments . Customer Relationships are established and maintained with each Customer Segment . Value propositions are delivered to customers through communication, distribution, and sales Channels . Result from value propositions successfully offered to customers . It seeks to solve customer problems and satisfy customer needs with value ´propositions . ..by performing a number of Key Activities . Are the assets required to offer and deliver the previously described elements… . Some activities are outsourced and some resources are acquired outside the enterprise The business model elements result in the cost structure Social Benefits Social Costs
  10. 10. Regulation Rural Communities Mobile Telephony Technology Market Trends Financial Inclusion of Unbanked People Business Model: Purpose and Restrictions
  11. 11. Non-Bank Government Owned Business Model (Example Mexican Telegraph Company) <ul><li>Government to People (G2P) Programs </li></ul><ul><li>Low Income inhabitants of urban and rural communities </li></ul><ul><li>Immigrants relatives living in Mexico </li></ul><ul><li>Deliver financial Services at Low Cost to Low Income inhabitants of urban and rural communities </li></ul><ul><li>Money Transfer </li></ul><ul><li>International Remittances </li></ul><ul><li>G2P </li></ul><ul><li>Bill Payment </li></ul><ul><li>Stored value Accounts (SVAs) </li></ul><ul><ul><li>Promotion </li></ul></ul><ul><ul><li>Service Provisioning </li></ul></ul><ul><ul><li>Core Platform Management </li></ul></ul>Social Benefits Social Costs <ul><ul><li>Skilled Personnel </li></ul></ul><ul><ul><li>Brand Telecomm </li></ul></ul><ul><ul><li>Commissions for : </li></ul></ul><ul><ul><li>Money Transfer Services </li></ul></ul><ul><ul><li>BPP Services </li></ul></ul><ul><ul><li>G2P </li></ul></ul><ul><ul><li>Regulatory Entities (CNBV & Bank of Mexico) </li></ul></ul><ul><ul><li>Treasury Minister (SHCP) </li></ul></ul><ul><ul><li>MNOs </li></ul></ul><ul><ul><li>Agents Network </li></ul></ul><ul><ul><li>Government Bank (Bansefi) </li></ul></ul><ul><ul><li>Fully Licensed Banks </li></ul></ul><ul><ul><li>Other Financial Institutions </li></ul></ul><ul><ul><li>Existing Networks of Agents (Branchless) </li></ul></ul><ul><ul><li>Telecomm Branches (1,570) </li></ul></ul><ul><ul><li>G2P temporary Branches (4,200) </li></ul></ul><ul><ul><li>Personalization of Services </li></ul></ul><ul><ul><li>Income Increase </li></ul></ul><ul><ul><li>Local Economy reactivation </li></ul></ul><ul><ul><li>Reduction in cost and time to collect money </li></ul></ul><ul><ul><li>Loyalty Program </li></ul></ul><ul><ul><li>IT &C Core Platform </li></ul></ul><ul><ul><li>Salaries </li></ul></ul><ul><ul><li>Physical and ITC Infrastructure </li></ul></ul><ul><ul><li>Commission to Agents </li></ul></ul><ul><ul><li>Ghost Towns </li></ul></ul><ul><ul><li>Immigration to US </li></ul></ul><ul><ul><li>Family disintegration </li></ul></ul>Value Proposition Channels Customer Relationship Customer Segments <ul><ul><li>Revenue Stream </li></ul></ul><ul><ul><li>Cost Structure </li></ul></ul>Key Partnership Key Resources Key Activities
  12. 12. Fuente: CNBV. Potential Coverage of Banking Agents Financial Inclusion Penetration Using Agents Notes: Large Retail Stores :: Wal-Mart, Soriana, Chedrahui, Comercial Mexicana, Sears, Samborns, Coppel. Small retail Stores Oxxo, 7 eleven, Farmacias Benavides, Farmacias del Ahorro, Farmacias Guadalajara, Waldos, Office Max, Mix Up, Muebles América, Pitico, Promujer. Diconsa: Only 25% of the stores have IT &Ccapabilities . Gas Stations (*) Not authorized as Banking Agent 11,066 2,775 9,324 568 1,570 1,692 5,801 8,578 32.9% 33.7% 37.5% 42.3% 44.4% 46.2% 74.9% 80.0% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% - 2,000 4,000 6,000 8,000 10,000 12,000 Commercial Banks Large Retail Stores Small Retail Stores Devel. Banks Telecomm S&L Thrifts Diconsa Gas Stations (*) # of Branches % Attended Municipalities Number of Municipalities Financial Services Penetration
  13. 13. Target Customer Segment Fuente: Telecomm y CNBV, Reporte de Inclusión Financiera de diciembre 2009 <ul><ul><li>58% of Telecomm branches are located in small cities with less than 20,000 inhabitants </li></ul></ul><ul><ul><li>Customer Segment Type 4 is the target market to increase financial inclusion using mobile technology </li></ul></ul>Coverage Customer Segments Municipalities Telecomm Bank Branches Mobile Coverage Type 1 535 - - - Type 2 705 705 705 705 Type 3 281 281 - 281 Type 4 676 - - 676 Type 5 92 92 - - Type 6 142 - 142 142 Type 7 25 14 25 - TOTAL 2,456 1,092 872 1,802
  14. 14. Source: Telecomm & CNBV, Reporte de Inclusión Financiera de december 2009 <ul><ul><li>The new business model for the non-bank branchless government agency, will cover a total of 1,921 municipalities out of 2,456 (78.2%). </li></ul></ul><ul><ul><li>The financial inclusion could be increased from 35.5% (banks branches only) to 78.2% using networks of agents in municipalities of category type 4. </li></ul></ul>Financial Inclusion Increment Mobile Money Services & Financial Inclusion 872 373 676 35.5% 50.7% 78.2% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% - 500 1,000 1,500 2,000 2,500 (Types: 2,6,7) (Types: 3,5) (Type: 4) Potential number of beneficiaries 6.2 millions Number of Municipalities Financial Services Penetration
  15. 15. <ul><li>Availability of Networks of Agents willing to have presence in the target municipalities (676). </li></ul><ul><li>Alliance between non-banks agent network and banks would allow new entrants to provide SVAs to target customers. Non-banks are excluded from the deposit-taking business . (1) </li></ul><ul><li>The Pure Payment is the only option available, and it represents an obstacle for the development of non-bank branchless agent networks. </li></ul><ul><li>Current regulation, allows mobile network operators to set up agent networks and manage mobile accounts on behalf of banks, based on outsourcing agreements. </li></ul><ul><ul><li>Largest MNO (Telcel-America Movil) and the bank which belongs to the same group (Inbursa), could become the dominant players in the mobile money services. </li></ul></ul>Challenges (1) The CNBV recently issued regulations establishing limited scope banks (subject to lighter prudential requirements and supervision) that will be permitted to issue e-money and offer a limited range of services
  16. 16. <ul><li>Technology could support financial inclusion intiatives, but it is not the solution. </li></ul><ul><li>The Business Model concept integrates all the elements involved in the creation, delivery, and capture of value. </li></ul><ul><li>Regulation could be an accelerator to increase financial inclusion rates….Regulatory actions should be informed by financial inclusion goals. </li></ul><ul><li>Key Performance Indicators ( KPIs ) are needed to measure both the profit made by new entrants (non-banks) in the financial services market and the social returns of such initiatives …social entrepreneurship </li></ul>Conclusions
  17. 17. <ul><li>Thanks </li></ul><ul><li>Q&A </li></ul>

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