Microfinance moving forward in the Philippines
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This presentation was the opening presentation provided on November 9, 2011 during the RBAP-MABS Regional Roundtable Conference for participating rural bankers in the Philippines. It looks at some of the growing trends, opportunities, and challenges as rural banks explore ways to expand their microfinance operations in the coming year.
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Microfinance moving forward in the Philippines
- 1. Microfinance Moving Forward for Rural Banks November 9, 2011 Hyatt Hotel Manila
- 4. Multiple Borrowings & Over-indebtedness
- 5. More Discriminating Borrowers & Savers ATM Cards Microinsurance
- 8. Widespread Mobile Banking
- 10. Use of Card-based Banking
- 11. Lower Cost of Technology
- 12. Use of Third-Party Networks
- 13. Are you using Social Networking & Crowdsourcing to expand your market outreach?
- 19. Rural Bank Responses Market trend responses o Product diversification and improved customer retention programs o Introduce payment services Competitive responses o Use MBOs to reach new/underserved areas o Introduce micro-deposits & mobile money transfer as entry level product, ‘up-sell’ other products/services o Use third-party networks to outsource KYC, expand reach, and offer new services
- 20. Rural Bank Response New Technology Adoption Deploy Cash/Debit Card, Mobile Phone Banking, and “Agent” Channels Upgrade Core Banking Solutions Utilize the Power of Social Networks Inclusive Regulation Adaptation Review and Share Pricing Structure Incorporate Consumer Protection Principles
- 21. Things to watch out ... 1. Pricing Transparency – Tiered Pricing 2. Credit Bureaus 3. Leverage Technology 1. Outreach 2. Competition 3. Efficiency 4. Social Networks ‐ Crowdsourcing
- 24. Thank You Email: jowens@rbapmabs.com Websites: http://www.mobilephonebanking.rbap.org/ http://blog.mobilephonebanking.rbap.org/ Facebook: LinkedIn: Twitter: johnvowens John Owens jvowens
Editor's Notes
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- Today, rural banks are faced with a number of factors that affect their ability to expand their services. Markets are changing today more than ever before with new products and services and much greater access to information than ever before. Traditional and new players are now entering the market from all directions. New technologies provide banks and others with new ways to address market conditions. This is both a challenge and an opportunity for those who move quickly. New regulations are promoting greater financial inclusion than ever before.\n
- Clients today are no longer satisfied with simple deposit and credit services but want access to new products and services including micro insurance, access to ATMs, cash cards, prepaid debit cards, mobile banking and other services.\n
- We continue to see pockets of multiple borrowings and over-indebtedness among some clients in certain markets so banks will need to be increasingly careful to select new clients and retain old clients as well as to continue to monitor how indebted clients are becoming. The need for sharing credit references and access to credit bureaus are now more important than ever before.\n
- Clients also have greater access to information from friends and neighbors and are comparing the services you offer. Do you offer good customer support, are you able to be reached, do you offer access to an ATM or debit card? Microinsurance? Accessible via SMS or on the phone? Are you open late or on weekends? Do you have accessible OBOs or MBOs in areas which are accessible to clients? Do you have low minimum maintaining balances for deposits? Quick loan processing? \n
- More players in the market\nNGOs moving up in microfinance market\nCommercial banks moving down to microfinance clients\nEmergence of aggressive lending investors and finance companies\nCredit cooperatives also increasing outreach and offering ATM services and debit cards\n
- New technologies are now offering opportunities not dreamed possible 5-10 years ago. SMS services, POS systems, cash cards, ATM cards, and prepaid debit cards. New social networking sites to reach and interact with clients are becoming increasingly important.\n
- Mobile Banking services allow clients to access bank account information on the go. While sophisticated systems do exist, only the higher end versions are beyond the reach of rural banks. Today, low cost SMS Gateway systems such as MABS partner MyClick allow one way and two way messaging for clients. Mobile money enabled solutions are also becoming more popular.\n
- GCASH and Smart Money are offering tremendous opportunities to reach any client with a mobile phone in the Philippine market place.\n
- Cash cards offered by banks such as BDO or ATM cards like the co-branded GCASH Rural Bank FaceCard are now providing greater access and significantly lower fees than ever before. Smart Money MasterCards offer the convenience of not only accessing ATMs but also paying in over 50,000 MasterCard POS merchants nationwide.\n
- As I mentioned before, lower costs for MIS systems, SMS systems, and even POS systems like this one are making it easier and cheaper to invest in new technologies to expand outreach.\n
- The BSP has opened the doors to partnering and offering banking services that can be promoted through third party agents. BPI has lost no time setting up kiosks in different areas to promote micro savings using the Easy Savers Plan that provides new customers with an instant ATM card. BanKO is also offering any business who wants to partner with them to become a partner outlet like the ones pictured here. Cheaper POS systems and liberal agent banking regulations in countries such as Brazil mean that most banking transactions take place in shops rather than going to a bank where you can pay bills and support deposits and withdrawals. By using a mobile wallet, BanKO is a good example of how this is also now taking place in the Philippines.\n
- Social networking via SMS marketing or updates or sites such as Facebook and Twitter are changing the face of banking.\n
- Here is an example of one banks Facebook site\n
- Here is another which also provides updates not only about the bank but also information relevant to clients\n
- BanKO has done extremely well over a short time bringing some of the their clients together to provide information and even business opportunities. For those interested in partnering with the bank to become a BanKO Outlet and make money, the bank is also actively promoting these options via social network sites such as Facebook.\n
- Banks need to look at how to promote their services and get more viral adoption such as using the FaceCard concept to encourage others to open bank accounts. \n
- More financial inclusive regulations are both an opportunity as well as will challenge. On one hand those open doors to offer more services but on the other hand it will increase competition and demand banks provide greater transparency in dealing with the public\n
- Rural banks need to diversify their products and services to both reach new clients and retain existing customers. Now is the time to diversify your product and consider services such as microinsurance, offering a cash/debit/ATM card. Take advantage of new rules to offer payment services. In the future we see prepaid services such as light, water, or even cable as becoming opportunities to service new and existing clients. . The ability to open MBOs provides greater and faster ability of banks to reach new market niches as well as locations. Micro savings services and reduced KYC as well as the ability to outsource KYC to open small accounts will dramatically change the banking landscape and rural banks should take advantage of this as well or potentially loss clients to their competitors both new and old. Make sure to use micro deposits, mobile money transfer services, or payments as a way to “cross-sell” other services in the bank. Offer cheaper transfer or payment services for those who maintain accounts at the bank or are a borrower.\n
- Take advantage of cash/ATM and debit cards now being offered in the market. Mobile phone banking will only grow and now is the time to ensure you are an early mover. Utilizing merchant partners as “agent” channels is already happening and should be actively explored. At the end of the day, your success will be based not only on your efforts but also on building successful partnerships and strategic alliances in your community. Invest in core banking solutions and make sure to take advantage of low cost and powerful social networking as well as tapping influencers in your community.\nInclusive regulation will require quite a bit more focus on loan pricing in the coming year so take advantage of organizations such as MFTransparency. Also there will be increasing importance on consumer protection principles and responding to customer issues so make sure you consider your customer relationship management strategy.\n
- Pricing Transparency will force greater efficiency--- more strategies on tiered pricing\nNeed for expanded use of credit bureaus\nLeverage technology to address\nOutreach\nCompetition\nEfficiency\n(Examples: ATMs, cash cards, mobile money, and improved MIS)\n4. Make use of Social Networks - crowdsource\n
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- Before this presentation, I did my own crowdsourcing on twitter to ask what advice I could give to rural bankers in the Philippines about the future of microfinance and banking and here is one of the answers I received from the famous author of Bank 2.0 and the new CEO of one of first cardless bank in the US and UK, Brett King. Basically the important thing for banks to consider is about how to create a “utility” in the bank-client relationship to answer the important question of how does the bank help me get stuff done and simplify my financial concerns!\nSalamat!\n
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