business models in digital financial services
TRANSCRIPT
Business Models in DFSClaudia McKay, Greg Chen, and Peter Zetterli
9 March 2016
Agenda
1. Bank Business Model –Equity Bank
2. MNO Business Model –Airtel Money
3. Standalone Model – bKash4. Diversity of Business Models
2
Links in the DFS value chain
Data / VAS Digital Channel Physical Channel
What sections of the value chain does the business own or control?
Who is legally responsible for the user accounts?
Whose brand(s) do users see?
Who ’owns’ the user relationship?
Accounts
Who sees and controls user / transaction data?
Are these data being utilized to offer Value-Added Services?
Who controls the key comms channel (USSD, SIM, data) used?
Who controls the physical touch points (e.g. agents or ATMs), who controls these?
3
Differing levels of controls
Data / VAS Digital Channel Physical Channel
What sections of the value chain does the business own vs outsource to partners?
Accounts
Shared control
Full control
No control
Completely controls the value chain item. Not dependent on any partner.
Partly controls the value chain item and/or shares it with partners
Controls no part of the value chain item. Value chain item may or may not be important for the business model
4
Bank model: Equity Bank5
In 2011, Equity Bank saw 6% of its cash transactions take place in the agent channel. What is the share today?
A. 15%B. 25%C. 40%D. 50%
A. B. C. D.
6%
39%
45%
10%
6
Majority of cash transactions have been shifted to the agent channel
Source: Equity Bank Investor Briefing Q3 2015
0
10
20
30
40
3Q 2011 3Q 2012 3Q 2013 3Q 2014 3Q 2015
Number of transactions, in millions
ATM Branch Agency
Agency
51%
ATM27%
Branch22%
Percentage of transactions by channel,
as of Sept. 2015
7
Since 2004, Equity Bank has grown its deposit base by 40x and its total loan portfolio by 60x. How much has its branch footprint grown in the same period?
A. 0 – In fact, it’s shrunk by 5%
B. 5xC. 10xD. 20x
A. B. C. D.
26%
10%
23%
42%
8
Target customer
Mass-market consumers• Largest retail bank in Kenya• 8.5m customers (2014) • Half of all banked Kenyans are
Equity customers• 94% of accounts have <$100
balance
Small & medium enterprises• More recent focus of the bank• Now over 70% of total loan book• Over $1.8bn in SME lending
10
Digital Strategy has evolved in several phases
11
Equity 3.0: the next step in the evolution
• Licensed as Mobile Virtual Network Operator (MVNO)
• Rents space on the comms channel from Airtel
• Issues SIM cards and SIM overlay under Equitel brand
• Offers regular voice, SMS and data services alongside an integrated financial services product
• Free P2P between Equity customers and Orange Money wallets
• 30 day mobile loans up to $2,000 at 1.5% interest
• Free educational content
13
Client Accounts
Ownership of the value chain
Accounts Client Data / VAS Digital Channel Physical Channel
Customer accounts are fully fledged bank accounts
Equity Bank is the only brand visible to customers
Accounts
15
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
Customer accounts are fully fledged bank accounts
Equity Bank is the only brand visible to customers
Equity Bank owns the transactional data
No other actor has visibility on the data
Mobile loan is based on data
16
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
Customer accounts are fully fledged bank accounts
Equity Bank is the only brand visible to customers
Equity Bank owns the transactional data
No other actor has visibility on the data
Mobile loan is based on data
Equity Bank initially relied on MNOs for the channel
Paid Safaricom $0.06/USSD session
In 2015 launched Equitel MVNO
Digital Channel
17
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
Customer accounts are fully fledged bank accounts
Equity Bank is the only brand visible to customers
Equity Bank owns the transactional data
No other actor has visibility on the data
Mobile loan is based on data
Equity Bank initially relied on MNOs for the channel
Paid Safaricom $0.06/USSD session plus SMS fees
In 2015 launched Equitel MVNO
Owns a network of 22,000 agents across Kenya
Compared to 166 branches and less than 600 ATMs
Only network to rival Safaricom’s 89,000 M-PESA agents
18
Profit model: Digital lowers CAPEX and marginal costs to expand reach
Reduce infrastructure cost Lower transaction costs
• An agent transaction costs Equity $0.88 less than a branch tx
• Moving away from Safaricom USSD to Equitel MVNO saved Equity $0.06 per mobile tx
• Rapid scale up of agent network since 2010
150x
3000x19
Profit model: Digital channels drive deposit mobilization, revenue growth
Mass deposit mobilization New revenue sources
Transaction fees: • Total transaction fee revenue grew by
29% in 2015 to $166m• 8 million transactions per month on
Equitel channel (Aug 2015)• USSD users average 2 txs / month while
Equitel users now average 21
Total deposits now $3.1bn
Agents collected $285m in deposits in Aug 2015 alone
20
Equity has grown larger with ever lower reliance on expensive branches and branch staff
0
5
10
15
20
2005 2007 2010 2014
Access points to 10k / 100k customers
Staff /10k Branches /100k (G) Agents /10k ATMs /100k
Source: Equity Bank annual reports 21
Key takeaways on the bank business model for DFS
1. DFS drives significant reduction in the cost of physical infrastructure
2. DFS can generate significant cost of funds reduction
3. These adjacencies enable banks to offer cheaper transactions
4. Lack of control over the communications channel can be a major challenge (and cost)
22
MNO Model: Airtel Money 23
What is the average amount of time it takes for an MNO to break even on a mobile money service?
A. Less than one year –these guys are money making machines!
B. Between one and three years
C. Between three and five years
D. More than five years –it’s a tough business
A. B. C. D.
10%7%
31%
52%
24
What share of total revenue are the top quarter of Mobile Money deployments making for the network operator?
A. 2%B. 10%C. 25%D. 50%
A. B. C. D.
0%
8%
50%
42%
25
11%EcoCash
Zimbabwe
26%Mobile money is growing as share of total revenue for MNOs
MM share of total revenues for respondents to GSMA SOTIR 2015
Source: GSMA State of the Industry 2015
of MNO-led services earn more than 10% of total revenue from mobile money
22%M-PesaTanzania
20%M-PESA Kenya
26
Airtel Money in Africa
Established in August 2012– Live in 16 countries
– 12m active customers
– 250,000 active agents
– 7m txns per day
– $70m in txns value per day
27
Target customer and value proposition
Mass-market voice customers• DFS was devised primarily as a
loyalty play aimed at the existing mobile telephony user base
• Increasing competition has led to customer churn
• In addition, new voice customer growth is set to fall from 8% to 4% as markets near saturation
• So customer retention will grow further in importance
Target customer
0%
1%
2%
3%
4%
5%
Q12000
Q12002
Q12004
Q12006
Q12008
Q12010
Q12012
Q12014
Customer churn rates 2000-2015
World Developed
0%
2%
4%
6%
8%
Voice customer growth
2010-15 2016-20Source: GSMA Intelligence 2016
29
Target customer and value proposition
Value proposition
Low-barrier formal account• Lower KYC than bank account• Remote signup via agents or
directly on the mobile phone
Convenient access to services• Transact on phone 24/7• Cash transactions at tens of
thousands of agent locations
Rapidly expanding offering• Data driven credit and insurance• Evolving ecosystem of services
30
How are customers using mobile money?Customer Transactions on mobile money
Source: GSMA State of the Industry 2015
2%
43%
5%
5%
3%
1%
31%
20%
27%
15%
1%
1%
32%
15%
0% 25% 50% 75% 100%
Trx Value
Trx Count
Air Time Bill Pay Bulk Disbursement Cash In Cash Out Merchant Pay P2P Transfers
Active customers conduct an average of 11 transactions/month and maintain median account balance of $4.70
Ownership of the value chain
Accounts Client Data / VAS Digital Channel Physical Channel
Hosts all customer accounts on its own e-money platform
Airtel Money is the only brand visible to customers
All customer funds are held in pooled accounts at a bank
Accounts
32
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
Hosts all customer accounts on its own e-money platform
Airtel Money is the only brand visible to customers
All customer funds are held in pooled accounts at a bank
Airtel Money owns the transactional data
No other actor has visibility on most of the data
Airtel Timiza mobile loan is based on transactional data
33
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
Hosts all customer accounts on its own e-money platform
Airtel Money is the only brand visible to customers
All customer funds are held in pooled accounts at a bank
Airtel Money owns the transactional data
No other actor has visibility on most of the data
Airtel Timiza mobile loan is based on transactional data
Airtel owns the digital channel
Cross promotions with voice business are often used (e.g. free talk time equal to P2P amount sent)
Digital Channel
34
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
Hosts all customer accounts on its own e-money platform
Airtel Money is the only brand visible to customers
All customer funds are held in pooled accounts at a bank
Airtel Money owns the transactional data
No other actor has visibility on most of the data
Airtel Timiza mobile loan is based on transactional data
Airtel owns the digital channel
Cross promotions with voice business are often used (e.g. free talk time equal to P2P amount sent)
Owns a network of 22,000 agents in Kenya and 20,000 in Tanzania
35
• Most transactions (except cash-in) come at a fee
• 77% of MNOs derive most revenue from customer fees
• In LAC and South Asia, get more fees from businesses
Profit model - Revenues
Indirect Benefits – Reducing customer churn and cost of airtime distribution Direct Benefits – Transaction Fees
• High customer churn contributes to price wars and falling margins on the voice business
• Selling airtime and data bundles via MM can be at least 20% cheaper than through physical scratch cards
Transaction fee revenue
Source: GSMA (2014) and GSMA Intelligence (2016)
0%1%1%2%2%3%3%4%4%5%5%
Safaricom Telesom MTN Uganda
Churn before MM vs. today
Before After
36
Profit Model - Costs
• Relatively little capex needed to launch, but significant opex to run
• Upon launch, MNOs invest 6-8 times the revenue generated to drive scale of agents and users
1. Agent commissions2. Marketing 3. Personnel
Need time and resources to deploy robust agent network and acquire customers
54% of top 10 provider revenue goes to
agent commissions
Early investment pushes breakeven out past 36 monthsMobile money profitability over time (months)
Key takeaways on the MNO business model for DFS
1. Mobile money can be profitable but getting there can be painful
2. Heavy losses in early years to build agent network and acquire customers
3. Indirect benefits can be significant but not always directly reflected in P&L
4. Increasingly, significant revenue requires an ecosystem-based approach
43
Standalone model: bKash
44
A. B. C.
27%
37%37%
What is the split between transaction fees and interest income for bKash?
A. 15% transaction fees, 85% interest income
B. 50% transaction fees, 50% interest income
C. 85% transaction fees, 15% interest income
45
bKash: A brief history
2009 Two Partners Inspired by East Africa:
1. BRAC: world’s largest NGO – mass market social service delivery with two large retail financial services businesses
• BRAC Microfinance
• BRAC Bank
2. Money in Motion: Investment vehicle of Iqbal Qaudir(MIT), Kamal Qaudir (Cell Bazaar), and Arun Gore (Grey Ghost).
46
bKash: A brief history
BRAC Enterprise
1Enterprise
2BRAC Bank
bKashMinority Investors(49%)
47
BRAC: 3 distinct retail channels
48
bKash: A brief history
Regulatory conditions
• 2011 launch – license for Mobile Financial Services held by BRAC Bank
• bKash cannot lend: value of bKash mobile accounts deposited in full with commercial banks
Initial Capital and Investors
• BRAC Bank 51%; Money in Motion 49%
• $10m from Gates + TA from ShoreBank/Enclude
• 2013 IFC and Gates Foundation invest
49
bKash: A brief history
A standalone independent operation
• Hires its own staff,CEO and CTO (recruited outside BRAC and outside of Banking)
• BRAC assistance in year 1Seconded 4 staff
First 5,000 agents from BRAC borrowers
• By year 2 few links to BRAC or BRAC Bank"build it alone"
"if it relies on BRAC it will not succeed"
50
bKash: Scale
As of October 2015Accounts 21 millionActive Accounts 9 millionTransactions Per Month 90 millionValue of Transactions Per Month $1.4 billionAverage Transaction Size $16
51
Ownership of the value chain
Accounts Client Data / VAS Digital Channel Physical Channel
“Mobile accounts“ issued by bKash; redeemed by bKash.
Value of deposits sit in pooled accounts at commercial banks
bKash primary visible brand; BRAC Bank subordinate
Accounts
55
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
bKash owns the transactional data
bKash holds the customer identification
Data will be used to develop new services with bank, insurance and MFI partners
56
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
MNOs provide USSD access
bKash pays MNOs 7% of fee revenue for access to their USSD
bKash manages a call center
bKash will launch a smartphone application independent of MNOs
57
Ownership of the value chain
Accounts Data / VAS Digital Channel Physical Channel
Commissions 100+ distributors that oversee 100,000+ agents
bKash accounts can be serviced at BRAC Bank ATMs but not at BRAC Bank Branches or BRAC Branches
58
bKash: Profit model
Fees
Interest
2014 AuditMonths 30-42
REVENUE $84 Million
Agent Comm-issions
USSD
Corporate
COSTS$79 Million
PROFIT$5 Million
800 staff
110,000 agents
60
Key takeaways on the standalone business model for DFS
• Startup - neither MNO or Bank - can scale• Challenging profit model:
• No existing business lines to cut cost• No adjacencies or cross-sell• Profitability relies on transaction fees
• Strategy and sequencing key:• Early scale and profitability come from sharp
focus on basic payments• Medium term pivot towards broader array of
services; connected services61
Diversity of Business Models
62
• The digital channel is not in itself a business model
• It is a tool that enables innovation and diversity of models:• New ways to deliver existing services
• New services that weren’t possible in the past
• New partnerships based on specialization and interconnection
• A successful DFS ecosystem allows and even requires a diverse set of players and business models to succeed
• This session presents three quick cases just to give a flavor of the range of DFS business models that are possible
There are myriad potential DFS models
64
Value chainCustomer value proposition
Profit model
Introducing our analytical frameworkCapturing the key aspects of the business models
What cost or operational efficiency benefits does the service bring to the business?
Who is the target customer?
Who owns the customer relationship
and brand?
Data / VAS Digital channel
Physical channel
What is the value proposition for the target customer?
What sections of the value chain does the business own vs outsource to partners?
Accounts
What additional revenue or loyalty benefits does the service bring to the business?
• s
Shared control
Full control
No control
Completely owns the value chain item. Not dependent on any partner.
Partly owns the value chain item and/or shares it with partners
Owns no part of the value chain item. Value chain item may or may not be necessary to the business model
Color coding legend
65
Commercial Bank of AfricaPowering digital credit on the back-end
M-Shwari is a mobile-only deposit and credit account offered as a partnership between an MNO mobile money provider (Safaricom in Kenya) and a bank (Commercial Bank of Africa)
66
Value chainCustomer value proposition
Profit model
Value proposition:
Commercial Bank of AfricaPowering digital credit on the back-end
Target customer: Mass-market consumers
Issues full bank accounts
Holds regulatory compliance
Only accessed via M-PESA and this is the brand most customers know
Customer ownership: Safaricom M-PESA
• Brings mass market Kenyans (about 50% of which were previously unbanked) the full benefits of a banking product (interest, deposit insurance, access to credit) – using mobile money as a gateway.
Credit scoring on MNO data
Underwrites the loans on own books
Owns repayment history data, but MNO partner also has visibility
Owns and runs the credit scoring algorithm in-house
The M-Shwari account is only accessible via M-PESA wallet
Available to 15.7m active Safaricom users
Cash-in and cash-out services only accessible via 91k M-PESA agents (not via CBA branches)
Increase revenue through profitable digital credit
Exact nature of Safaricom-CBA profit sharing is not public
• Total value of loans disbursed since launch (as of Feb 2016): $782 million• Average loan size: $30• Loan facilitation fee or 7.5%
• Deposit balance (Feb 2016): $73 million• Average account balance (90 day active accounts): $5• Interest rate on M-Shwari deposits 2 – 5%, above the 1.5% weighted
average reported by CBK
• CBA has minimal retail presence/infrastructure as its traditional target market has been the corporate sector
• M-Shwari partnership allows access to a mass market retail customer base by outsourcing channels
Reduce costs through low cost deposits
Accounts Data/VAS Digital channel
Physical channel
Customer-facing digital and physical channels are owned by Safaricom
67
Value chainCustomer value proposition
Profit model
Value proposition:
Instaloan
E-money wallets belong to Globe (GCash)
Lending license also with Globe (Fuse)
Credit scoring on Globe (MNO and Gcash) data
Completely owns the repayment history data
Disbursement and repayment via Globe (GCash) wallets
Uses only Globe communications channels
Cash in/out takes place via Globe (GCash) agents
Accounts Data/VAS Digital channel
Physical channel
Similar model, except:• Controls entire value chain• Subsidiaries playing all the key
roles required by the model• MM (accounts + CICO)• MNO (comms)• Lender (scoring + credit)
68
Value chainCustomer value proposition
Profit model
Value proposition:
All accounts belong to MNO partner – just e-wallets, not bank accounts
Credit scoring on MNO data
Owns and runs the credit scoring algorithm
Underwrites the credit on own books
Owns repayment history data, but MNO partner also has visibility
Disbursement and repayment via MNO partner wallets
Relies on MNO partner comms channel for transactions
Reliant on MNO partner agents for cash in/out
Accounts Data/VAS Digital channel
Physical channel
Similar model, except:• Controls almost none of the
value chain• Highly specialized on only
• Analytics• Lending
• Reliant on MNO partner for accounts, CICO, comms and access to customer data
69
OxxoLeveraging retail infrastructure for financial services
Oxxo is Mexico’s largest retailer by number of outlets with high traffic, long opening hours, and many unbanked customers. They are now leveraging their retail infrastructure to offerSaldazo, a debit card linked to bank account, in partnership with Banamex bank.
1,506
1,623
1,801
12,597
7-Eleven
Banamex
Bancomer
Oxxo
# of retail outlets
Banking sector total: 11,000
70
Value chainCustomer value proposition
Profit model
Value proposition:
OxxoLeveraging retail infrastructure for financial services
Target customer: Mass-market retail consumers
Low KYC account at partner bank Banamex
Cards & ads co-branded Oxxo and Banamex
Customers think of it as an Oxxo card product
Customer ownership: Oxxo
• Low-barrier Saldazo “savings card” to store money safely• Special discount offers and loyalty bonuses for Oxxo stores• Better control of money with SMS alerts, digital statements• Use at any VISA enabled merchant
Banamex owns customer data, shares reports with Oxxo
Oxxo utilizes user data for loyalty rewards and improved marketing
Transactions happen at regular POS devices
Account may be linked to Telcelphone for mobile P2P, airtime and bill pay
CICO at 12,597 Oxxo stores
Oxxo has long opening hours (minimum 12h/7 days, some 24/7)
Retail payments at any VISA POS
Direct revenue from transaction fees
• Agency banking: 3.8m txs/mth• 41% of the national market share
• Remittances: 200,000 txs/mth after 6 months• Expecting to reach at least 1.5m
• Projected to generate 17% of total operating profit in 2-3 years
• Convenience stores are fairly commoditized, so Oxxo uses this as a competitive advantage• Gives people a reason to choose Oxxo
• Oxxo previously didn’t have much data on cash customers, but can now • Incentivize customers via loyalty rewards • Use data analytics to design better promos and marketing campaigns
• Aimed at mass market retail consumer base• Oxxo has 12m purchases daily (~1 per minute per store)• Mostly FMCGs with average ticket size ~$3 USD
• Leverages existing business for cost efficiencies• Large retail footprint already in place, staffed and equipped• Extensive cash handling processes
Generate traffic and data for core business
Accounts Data/VAS Digital channel
Physical channel
71
ZoonaThird party agent network with over-the-counter transfers
Zoona enables MSE businesses to offer over-the counter payments and remittance services, access working capital and purchase inventory through digital channels.
72
Value chainCustomer value proposition
Profit model
Value proposition:
ZoonaThird party agent network with over-the-counter transfers
Target customer: Micro and small enterprises
Hosts internal agent wallets
Float is held by a banking partner
Does NOT offer consumer wallets (yet)
Customer ownership: Zoona
• Consumers:• Instant money transfer, bill pay and MM deposit or withdrawal
over-the-counter (OTC) with no need to register an account• Agents:
• New transaction revenue and increased footfall• Access to working capital• Digital payment of inventory
Agent credit based on tx data to accelerate the growth of its physical channel
Credit scoring on basis of Zoona transaction data
Kiva.org provides lending capital
Relies on SMS and data services by MNOs for transactions
End customers do not interact directly with any digital channel, since service is over-the-counter
Zoona acquires, manages and owns all its agents
650 agents and 1,100 outlets in Zambia
Revenue is driven by transaction fees
• Consumer services• $9m in transactions per month• Domestic money transfer (5-10% of tx value, capped at $9)• Bill payments, airtime sales
• Agent services• Working capital loans to agents (21% APR)• Supply chain distributor payments (e.g. SABMiller)
• Fixed costs: • Agents finance the costs for rent and operating expenses• Loan capital for agents is provided by Kiva.org and it’s crowdsourcing
network• Zoona pays for staff, agent training, and marketing
• Marginal costs: • Most costs are marginal, reducing risk for Zoona• Agents receive between 20% - 60% of transaction fees
• As a startup with no existing infrastructure, Zoona has built its agent network through entrepreneurs and existing retailers• Pure agents (Zoona franchise)• Retail outlets with agency as a side business• Distributors who use Zoona for B2B (FCMG and airtime)
CAPEX is kept low by “outsourcing” to agents
Accounts Data/VAS Digital channel
Physical channel
73
Value chainCustomer value proposition
Profit model
Value proposition:
Kopo KopoValue added services for retail SMEs
Target customer: MSE retail merchants
Hosts internal merchant accounts
Float is held by a bank partner
Controls settlement of merchant funds, allowing for automated repayments of cash advance loans
Customer ownership: Kopo Kopo
• Merchants:• Reduce costs of cash handling (eg: leakage)• Electronic record of all transactions • Access to loans and other value added services
Partners (Mobile money providers) • Increase transaction revenue while outsourcing investment in
merchant focused ops and tech
Utilizes tx data to offer various VAS directly to merchants
Merchant credit based on KK txdata is a major revenue source
Owns and runs the credit scoring algorithm in-house
Kopo Kopo owns the merchant web platform for completing transactions, managing account, and accessing VAS
Safaricom controls the customer payments instrument (M-PESA)
Kopo Kopoacquires, runs and owns the relationship with all merchants on their platform
Total 10,000+ merchants
Consumer transaction fees
• Merchants in Kenya charged 1% of transactions received via M-PESA• Fee split evenly between Kopo Kopo and M-PESA
• Primary costs are: • acquisition and servicing of merchants • development and maintenance of technology platform
• Extends working capital loan to merchants based on transaction history• Loan has no maturity, but it repaid as an additional merchant fee on
transaction volume• This incentivizes merchants to push txs onto the channel so as to repay
quickly • Direct revenue from credit product has already surpassed transaction fee
revenue
• Kopo Kopo offers digital payment acceptance to a wide variety of merchants, from micro-enterprises up to large retailers
• Kopo Kopo aggregates merchants for mobile money systems like M-PESA, but the consumer relationship and experience remains with the MNO
Merchant credit product
Accounts Data/VAS Digital channel
Physical channel
Similar model, except:• Focused on merchants (not
agents) as immediate users• Stronger focus on credit product
in the core profit model
74
Accounts Data/VAS Digital channel Physical channel
Legend
Shared control
Full control
No control
Completely controls the value chain item. Not dependent on any partner.
Partly controls the value chain item and/or shares it with partners
Owns no part of the value chain item. Value chain item may or may not be necessary to the business model
Is moving partially into controlling the value chain item
Is moving significantly into controlling the value chain item
Accounts Data/VAS Digital channel Physical channel
Business models focused on company strengths and assetsRange of models that specialize in a narrow part of the DFS value chain
OXXOVast retailer offers agency banking and transactionalaccount
M-Shwari (CBA)MNO (Safaricom) brings channel, retail presence, and marketing expertise
Bank brings credit license, expertise
and capital
Zoona OTC agent aggregator that offers agents credit based on tx data
Globe InstaloanComprehensive play by MNO with subsidiaries
Digital channel from Globe, agents from MM arm GCash
JumoSpecialised lender that
brings credit license and scoring model
Relies on MM/MNO partners for everything else
Kopo KopoFirst outsourced, but now controls its credit business
Merchant aggregator that offers merchants credit b. on tx data
Equity Bank Bank that established its own agent network
Accounts Data/VAS Digital channel Physical channel
In a digital business, the physical channel is still important
OXXOVast retailer offers agency banking and transactionalaccount
M-Shwari (CBA)MNO (Safaricom) brings channel, retail presence, and marketing expertise
Bank brings credit license, expertise
and capital
Zoona OTC agent aggregator that offers agents credit based on tx data
Globe InstaloanComprehensive play by MNO with subsidiaries
Digital channel from Globe, agents from MM arm GCash
JumoSpecialised lender that
brings credit license and scoring model
Relies on MM/MNO partners for everything else
Kopo KopoFirst outsourced, but now controls its credit business
Merchant aggregator that offers merchants credit b. on tx data
Equity Bank Bank that established its own agent network
Accounts Data/VAS Digital channel Physical channel
DFS business models are not static but evolve (rapidly)
Tim
e
Equity 2.0
OXXO 1.0
Equity 3.0
OXXO 2.0
Offered retail network as agency provider for banks
Issuing card based accounts under joint brand, mining tx data for loyalty, analytics
Est. own agent network for cash in/out to accounts
Secured own MVNO license, mining transaction data for advanced products
Advancing financial inclusion to improve the lives of the poor
www.cgap.org