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MMT Roadmap for Microfinance

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This presentation was made with the Presidents from five leading rural banks in the Philippines making use of mobile money transfer to facilitate greater access to banking services.

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MMT Roadmap for Microfinance

  1. 1. Your Roadmap for establishing partnerships with mobile money issuers for microfinance: The Business Case of Rural Banks in the Philippines
  2. 2. MABS Program The Microenterprise Access to Banking Services or MABS Program provides technical assistance and training to rural banks in microfinance best practices. The program is designed to develop the capability of rural banks to profitably provide financial services (loans, deposits, insurance, money transfer, micropayments) to microenterprises.
  3. 3. Mobile Phone Banking Penetration <ul><li>Very rapid expansion over the last 10 years </li></ul><ul><li>More than 50% of Filipinos are mobile phone subscribers </li></ul>Mobile Phone Subscribers (World Projections) 2008 (ITU): 4 Billion 2040 (World Bank): 6 Billion 2008 (ITU): 4 Billion 2040 (World Bank): 6 Billion Mobile Phone Subscribers (Philippines) > 68 million subscribers > Projections 76 M (2010) > 50% penetration rate > 70 million subscribers > Projections 76 M (2010) Mobile Phone Subscribers vs. Bank Accts (Philippines) 1998 Bank Acct: > 23 M Mphone: > 1.7 M 2008: Bank Acct: > 32 M Mphone: > 68 M 1998 Bank Acct: > 23 M Mobile sub: > 1.7 M 2008: Bank Acct: > 32 M Mobile sub: > 70 M
  4. 4. Opportunities for Mobile Phone Banking Mobile Phone Industry <ul><ul><li>Subscriber base is growing rapidly. </li></ul></ul><ul><ul><li>Stiff competition among telcos is bringing costs of service down (unlimited text, rebates, promos.) </li></ul></ul><ul><ul><li>Mobile Phone Cost is getting cheaper. </li></ul></ul>Remittance Business Growing ($17B in 2009 & expected to grow in 2010) Transactions and transfer methods now increasingly using E-Money (GCASH/Smart Money) Rural Banks More than 50% of population is located in the rural areas where many are under-banked or unbanked due to high transaction costs Very minimal investment needed to offer mobile phone banking services.
  5. 5. Breakthroughs & Milestones: Mobile Phone Banking for Rural Banks & their Clients RBAP signed an MOA with Globe (GXI) for Loan Payment using Gcash BSP approved pilot of Text-A-Payment to selected rural banks Autoloadmax retailers as Gcash outlets was launched Study on Cost Savings conducted in selected rural banks on the use of G-Cash for loan payment 2004-2005
  6. 6. Breakthroughs & Milestones: Mobile Phone Banking for Rural Banks & their Clients RBAP signed an MOA with Globe (GXI) for Loan Payment using Gcash BSP approved pilot of Text-A-Payment to selected rural banks Autoloadmax retailers as Gcash outlets was launched Study on Cost Savings conducted in selected rural banks on the use of G-Cash for loan payment 2004-2005 Some RBs started paying employees salaries or allowances with Gcash M-commerce was used by local merchants BSP approved Cash-in/Out (Text-A-Remittance) services for rural banks BSP approved Text-A-Deposit service for rural banks Strategic Planning was conducted with 5 pilot banks 2006
  7. 7. Breakthroughs & Milestones: Mobile Phone Banking for Rural Banks & their Clients RBAP signed an MOA with Globe (GXI) for Loan Payment using Gcash BSP approved pilot of Text-A-Payment to selected rural banks Autoloadmax retailers as Gcash outlets was launched Study on Cost Savings conducted in selected rural banks on the use of G-Cash for loan payment 2004-2005 Some RBs started paying employees salaries or allowances with Gcash M-commerce was used by local merchants BSP approved Cash-in/Out (Text-A-Remittance) services for rural banks BSP approved Text-A-Deposit service for rural banks Strategic Planning was conducted with 5 pilot banks 2006 Salary disbursements (Text-A-Sweldo) expanded to other businesses in the community Text-A-Bill Payment was initiated by a rural bank with local utility cooperative Text-A-Withdrawal was approved by BSP Mobile Phone Banking Specialist Program was launched 2007
  8. 8. Breakthroughs & Milestones: Mobile Phone Banking for Rural Banks & their Clients RBAP signed an MOA with Globe (GXI) for Loan Payment using Gcash BSP approved pilot of Text-A-Payment to selected rural banks Autoloadmax retailers as Gcash outlets was launched Study on Cost Savings conducted in selected rural banks on the use of G-Cash for loan payment 2004-2005 Some RBs started paying employees salaries or allowances with Gcash M-commerce was used by local merchants BSP approved Cash-in/Out (Text-A-Remittance) services for rural banks BSP approved Text-A-Deposit service for rural banks Strategic Planning was conducted with 5 pilot banks 2006 Salary disbursements (Text-A-Sweldo) expanded to other businesses in the community Text-A-Bill Payment was initiated by a rural bank with local utility cooperative Text-A-Withdrawal was approved by BSP Mobile Phone Banking Specialist Program was launched 2007 Mobile phone banking specialist program generated more than 60,000 new users; more than 3,400 signed up as local merchants Mobile Phone Marketing program launched More than 40 rural banks with more than 400 branches are Gcash accredited outlets RBAP and Globe (GXI) partnership renewed (Gcash) RBAP signed an agreement with Nokia Philippines (Nokia phone financing and educational materials for mobile phone RBAP Signed an agreement with Smart Communications (Smart Money) 2008
  9. 9. Breakthroughs & Milestones: Mobile Phone Banking for Rural Banks & their Clients RBAP signed an MOA with Globe (GXI) for Loan Payment using Gcash BSP approved pilot of Text-A-Payment to selected rural banks Autoloadmax retailers as Gcash outlets was launched Study on Cost Savings conducted in selected rural banks on the use of G-Cash for loan payment 2004-2005 Some RBs started paying employees salaries or allowances with Gcash M-commerce was used by local merchants BSP approved Cash-in/Out (Text-A-Remittance) services for rural banks BSP approved Text-A-Deposit service for rural banks Strategic Planning was conducted with 5 pilot banks 2006 Salary disbursements (Text-A-Sweldo) expanded to other businesses in the community Text-A-Bill Payment was initiated by a rural bank with local utility cooperative Text-A-Withdrawal was approved by BSP Mobile Phone Banking Specialist Program was launched 2007 Mobile phone banking specialist program generated more than 60,000 new users; more than 3,400 signed up as local merchants Mobile Phone Marketing program launched More than 40 rural banks with more than 400 branches are Gcash accredited outlets RBAP and Globe (GXI) partnership renewed (Gcash) RBAP signed an agreement with Nokia Philippines (Nokia phone financing and educational materials for mobile phone RBAP Signed an agreement with Smart Communications (Smart Money) 2008 BSP approved Smart Money Pilot in 2 Rural Banks in July. 55 Accredited Rural Banks with 830 branches and other banking offices 44% increase in M-Banking Transactions in 2009 Cumulative Mobile Banking Transactions via the GCASH platform exceed $100 million 2009
  10. 10. MPB Rural Banks 1 st Valley Bank Green Bank GM Bank PR Bank Cantilan Bank
  11. 11. Practical Issues between Mobile Money Issuers and MFI partnerships <ul><li>Flexible </li></ul><ul><li>Responsiveness </li></ul><ul><li>Marketing Support </li></ul><ul><li>Training </li></ul>✔ ✔ ✔ ✔
  12. 12. Preparing Small Financial Institutions to Promote Mobile Money and Mobile Financial Services Launch Services – Customer Adoption Regulatory Issues Customer Perspective Product Development Environment Institutional Perspective Product Testing
  13. 13. The Business Model for Small Financial Institutions to offer and use Mobile Money: Reduce Costs Improving Outreach Efficiency Increase Deposits
  14. 14. The Business Model for Small Financial Institutions to offer and use Mobile Money: Reduce Interest rates on Micro Loans Clients (TAP) Activate Mobile Money Resellers (Source of Mobile Money of TAP Clients)
  15. 15. Issues and Lessons Learnt from Pilot Tests <ul><ul><li>Understand your market </li></ul></ul><ul><ul><li>Importance of registration, training, and adoption of service by clients/merchants </li></ul></ul><ul><ul><li>Ecosystem Development – multiple sources and uses – m-banking/m-commerce </li></ul></ul>Acceptance and fear of the use of technology especially among elderly clients
  16. 16. Issues and Lessons Learnt from Pilot Tests <ul><li>Convenience </li></ul><ul><li>Reduces transaction </li></ul><ul><li>Reduces risks </li></ul><ul><li>Increases sales </li></ul>Value Proposition for Clients, Merchants & Customers
  17. 17. Issues and Lessons Learnt from Pilot Tests Lack of Mobile Money Outlets or source especially in the rural areas <ul><ul><li>Effective training and educating Loan Officers and Front-line staff </li></ul></ul><ul><ul><li>Release of employee’s payroll or </li></ul></ul><ul><ul><li>Allowances via mobile money </li></ul></ul><ul><ul><li>Plan for sufficient cash-in/cash-out points </li></ul></ul>
  18. 18. Issues and Lessons Learnt from Pilot Tests How to reach clients in remote communities - awareness and information campaign <ul><ul><li>Information and Product Awareness Campaigns through media print, radio, TV, online </li></ul></ul><ul><ul><li>Mobile Phone Banking website </li></ul></ul><ul><ul><li>http://mobilephonebanking.rbap.org </li></ul></ul><ul><ul><li>Promote Mobile Money by banks in key locations/events (such as local festivals) </li></ul></ul>
  19. 19. Issues and Lessons Learnt from Pilot Tests Increasing of volume and usage of mobile money in the rural areas <ul><ul><li>Incentive programs for accredited rural banks </li></ul></ul><ul><ul><li>Mobile Phone Banking conferences & workshop dialogue events </li></ul></ul>
  20. 20. Issues and Lessons Learnt from Pilot Tests Working with MFIs – Networks are key to outreach <ul><ul><li>Creating a sense of ownership among bank partners </li></ul></ul><ul><ul><li>Regular Accreditation training </li></ul></ul><ul><ul><li>Rural Bankers Membership Meetings </li></ul></ul><ul><ul><li>Testimonials from accredited rural banks </li></ul></ul><ul><ul><li>Globe GCASH promotion </li></ul></ul>
  21. 21. Overcoming Cash-in/Cash-out Constraints in Rural Community Larry Bat-ao, Cantilan Bank Merchant-Deposit and provider of GCASH Bank partnered with Local Merchants to act as resellers of mobile money in rural areas.
  22. 22. Overcoming Cash-in/Cash-out Constraints in Rural Community Bank established kiosks, sub-offices, and other business offices (OBOs) to provide Cash-In and Cash-Out
  23. 23. Overcoming Cash-in/Cash-out Constraints in Rural Community Bank coordinates with GXI for AutoLoadMax Dealers to provide Cash-Out functions
  24. 24. Developing Mobile Money Ecosystems <ul><li>Commitment of Rural Bank Management </li></ul><ul><li>Development of Mobile Money Ecosystem </li></ul><ul><li>Sufficient Cash-In/Cash-Out </li></ul><ul><li>Creating Awareness on Mobile Money in the Rural Community </li></ul><ul><li>Promote the value proposition for businesses, clients, and customers </li></ul>

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