The document discusses mobile money and the regulatory environment surrounding it. It notes that mobile money is at a crossroads and regulators will determine how it progresses. It identifies the risks of mobile money like systemic, technological, financial, and consumer protection risks. Finally, it discusses the need for an enabling regulatory environment for anti-money laundering/combating terrorist financing and for electronic money and payments to encourage financial inclusion while managing risks.
6. Mitigating mobile money risks Systemic risk Technology & operations risk Prudential risk if float 100% in bank & segregated Financial risk Consumer Protection Anti Money Laundering February 11, 2011 6
7. Where will the operators land? Ambition Regulatory Situation Customer Adoption
8. Enabling regulatory environment: AML/CFT regulation Direct and indirect GSMA input Global standard setters Easy registration enables financial inclusion National level GSMA Methodology Commercial level Case Study
9. Enabling regulatory environment: e-money and payments Direct and indirect GSMA input Global standard setters Non-banks offer innovative mobile money services National level Positive examples & dialogue Commercial level Case Study
Storyline:Where will the operators land? It depends on their ambition, regulatory situation and on consumer adoption. In this context, where are we in terms of regulation? Regulation matters most at the outset when choosing to serve unbanked customers as it determines the scope of the activity of a mobile operator. And it matters when registering customers.So how does an enabling environment look like and what is the current situation.
The operators are at the cross-roads as well.What is their ambition? To be a financial service provider on one extreme or a conduit for an existing traditional service provider. The answer to this question decides the face of future MFS. The regulatory consequence of this decision is considerable. The operator is either happy to work within an existing regulatory environment just negotiating small elements or the operator is pushing for change which allows for entering the market and to compete with existing financial players.What is the regulatory scope for what can be done over time? Open? Restrictive? Does it change (for the better) over time? Independently of the global developments, are we faced with a regulatory situation on the national level which is characterised by an open and close dialogue with the regulator in view of creating future regulation that is allowing for new services to emerge. Or are we faced with a regulatory environment which is highly political and not transparent?Can we offer service to consumers that they actually want to use on a day to day basis?
Financial inclusion = customer adoptionThe implementation of AML/CFT rules can have a potential impact on customer adoption if not proportionate.Situation: Rules were not intended to support financial inclusion. Therefore strict implementation disproportionateWe influence on 3 levels:Global: direct input (formal/informal), input into other stakeholders (World Bank, CGAP, AFI)National: GSMA methodology which is favourable to industry (business provider implements controls on business level, proportionate regulation)Commercial: case study on how exactly disproportionate compared to proportionate KYC rules impact consumer experience and therefore adoption/financial inclusion