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Mobile Banking Services- Financial Regulatory Issues<br />Retail Banking/Payments Innovation May 2011<br />Louise Malady<b...
Overview<br />Financial Regulatory Issues<br />Regional and International Efforts<br />Regulator’s Viewpoint<br />Explaini...
1a. Regional Efforts <br />Developed Economies – focus on payment system efficiency<br />Emerging and Frontier Economies –...
1b. International Efforts<br />Alliance for Financial Inclusion<br />CGAP Technology Group<br />GSMA Development Fund<br /...
2a. Financial Regulator’s View<br />See opportunities for inclusion<br />See benefits for greater safety and efficiency in...
2b. Regulatory Viewpoint<br />Financial protection alongside financial inclusion<br />Need to understand the business mode...
3a. Business Model<br />By player<br />By function<br />Transaction process by function sourced from: Alexandre, C., Mas, ...
 3b. Regulations will Influence...<br />How business models are structured <br />How agents are used in the model<br />How...
 4a. Regulatory Focus - Safety<br />Issuance and Management of the Float<br />Operational/Security Risks <br />AML/CFT and...
 Issuance / Management of Float<br />Fund Safeguarding<br />Fund Isolation<br />
 Fund Safeguarding<br />Funds must be available when required by the customer<br />Maintain “unencumbered liquid assets”<b...
 Fund Isolation<br />Who owns the funds deposited with the bank?<br />Is the stored value “pooled” and placed on deposit?<...
 Operational/Security Risks<br />Payments processing, clearing and settlement arrangements<br />Security - type and levels...
 AML/CFT and KYC<br />Financial Action Taskforce (FATF) requirement<br />Tiered KYC (Philippines, Singapore, EU)<br />Dial...
 Agency Arrangements<br />Are non-bank entities allowed to handle cash-in and cash-out transactions<br />Are banks and non...
Consumer Protection<br />Important where stored value is not a “deposit”<br />Framework can include:<br />Disclosure requi...
 4b. Regulatory Focus - Efficiency<br />Interoperability<br />Integration<br />Competition<br />http://mmublog.org/blog/mo...
Emerging Themes for Regulators<br />Stored value as a savings mechanism<br />Interoperability and integration<br />Engage ...
Emerging Themes for Industry<br />Involve the financial regulator early<br />Cooperation between regulators and industry p...
Further Resources<br />The Mobile Financial Services Development Report 2011 – World Economic Forum (in collaboration with...
Thank You lmalady@skybroadband.com.ph<br />
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Mobile Banking Financial Regulatory Issues May 2011

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Mobile Banking Financial Regulatory Issues May 2011

  1. 1. Mobile Banking Services- Financial Regulatory Issues<br />Retail Banking/Payments Innovation May 2011<br />Louise Malady<br />
  2. 2. Overview<br />Financial Regulatory Issues<br />Regional and International Efforts<br />Regulator’s Viewpoint<br />Explaining the Business Model<br />Regulatory Focus – Safety and Efficiency<br />Emerging Themes in Regulation<br />
  3. 3. 1a. Regional Efforts <br />Developed Economies – focus on payment system efficiency<br />Emerging and Frontier Economies – additional focus on the unbanked and underbanked<br />
  4. 4. 1b. International Efforts<br />Alliance for Financial Inclusion<br />CGAP Technology Group<br />GSMA Development Fund<br />UK Dept for International Development<br />Bill & Melinda Gates Foundation<br />
  5. 5. 2a. Financial Regulator’s View<br />See opportunities for inclusion<br />See benefits for greater safety and efficiency in payment systems<br />Post GFC - regulators are more conservative<br />Concern when non-banks are proposing to be the issuers of the stored value<br />
  6. 6. 2b. Regulatory Viewpoint<br />Financial protection alongside financial inclusion<br />Need to understand the business models<br />Implications of different models<br />End-users<br />Market players<br />Regulators<br />
  7. 7. 3a. Business Model<br />By player<br />By function<br />Transaction process by function sourced from: Alexandre, C., Mas, I. and Radcliffe, D. (Bill & Melinda Gates Foundation) August 2010Regulating New Banking Models that can Bring Financial Services to All<br />
  8. 8. 3b. Regulations will Influence...<br />How business models are structured <br />How agents are used in the model<br />How customers are able to register for accounts and do cash-in and cash-out transactions<br />
  9. 9. 4a. Regulatory Focus - Safety<br />Issuance and Management of the Float<br />Operational/Security Risks <br />AML/CFT and KYC<br />The Role of Agents<br />Consumer Protection<br />
  10. 10. Issuance / Management of Float<br />Fund Safeguarding<br />Fund Isolation<br />
  11. 11. Fund Safeguarding<br />Funds must be available when required by the customer<br />Maintain “unencumbered liquid assets”<br />Examples – Philippines, Indonesia, Malaysia, Cambodia<br />M-Pesa (Kenya) –interim agreement to store funds with a regulated bank<br />
  12. 12. Fund Isolation<br />Who owns the funds deposited with the bank?<br />Is the stored value “pooled” and placed on deposit?<br />Does the jurisdiction have trust account set-up (e.g. Singapore, Malaysia)<br />
  13. 13. Operational/Security Risks<br />Payments processing, clearing and settlement arrangements<br />Security - type and levels<br />E-crime or fraud<br />
  14. 14. AML/CFT and KYC<br />Financial Action Taskforce (FATF) requirement<br />Tiered KYC (Philippines, Singapore, EU)<br />Dialogue between financial and telco regulators (e.g. Fiji and South Africa – two different approaches)<br />Build KYC requirements into system design – role of agents very important<br />
  15. 15. Agency Arrangements<br />Are non-bank entities allowed to handle cash-in and cash-out transactions<br />Are banks and non-banks both held liable for their agents’ activities<br />Clearing and settlement arrangements can reduce the liquidity and credit risk<br />Consumer protection risk - disclosure and redress mechanisms<br />
  16. 16. Consumer Protection<br />Important where stored value is not a “deposit”<br />Framework can include:<br />Disclosure requirements<br />Redress mechanisms<br />Clear identification of users for KYC purposes<br />Consumer education<br />
  17. 17. 4b. Regulatory Focus - Efficiency<br />Interoperability<br />Integration<br />Competition<br />http://mmublog.org/blog/mobile-money-interoperability-at-mwc-2011/<br />mService in Vietnam<br />
  18. 18. Emerging Themes for Regulators<br />Stored value as a savings mechanism<br />Interoperability and integration<br />Engage the telcos and other non-bank players<br />Regulatory proportionality<br />
  19. 19. Emerging Themes for Industry<br />Involve the financial regulator early<br />Cooperation between regulators and industry players<br />Industry players working together<br />Beneficial partnership solutions<br />
  20. 20. Further Resources<br />The Mobile Financial Services Development Report 2011 – World Economic Forum (in collaboration with The Boston Consulting Group)<br />GSMA Mobile Money for the Unbanked survey on regulations<br />http://www.mobilemoneyexchange.org/wiki/Regulation<br />
  21. 21. Thank You lmalady@skybroadband.com.ph<br />

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