Mobile Microfinance: A Tool for Financial Inclusion &

Economic GrowthJohn V OwensMMT APAC

January 17-20, 2011

What is the MABS Program?

The Microenterprise Access to Banking Services (MABS) Program is an RBAP program supported by USAID that 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, and money transfers) for microenterprise clients.

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Bank Accounts Mobile Phone Subscriptions

Bank Accounts vs. Mobile Phone Subscrip-tions

Philippines (in Millions)

GCASH& SMART Padala Launch

Challenges for Banks to reach Rural Clients

High Transaction CostsTransportation CostTravel timeLoss of business opportunitySecurity risk

E-Money

E-Money

E-Money Creating Opportunities to meet the Challenge

Use of E-Money Reduces Transaction Costs

- No transportation cost- Reduce time- Fast and convenient- Secure no cash in transit

Today, Rural Banks Can Offer the Following Mobile Phone Banking Services…

Rural Bank M-Banking & M-Commerce Ecosystem via GCash

RURAL BANKS

Text-a-Payment / Int’l & Domestic Remco’s P

Text-A-Sweldo(Salary

Disbursement)

Text-A-RemittanceCash-in/Cash-out

(Face-to-Face Wallet Funding)

Text-A-Withdrawal(Withdrawal from Bank

Account to GCash Wallet)

Text-A-Credit(Loan / CreditDisbursement)

P2P(Domestic Remittance)

GCash2Load(Airtime Credit Purchase)

P2P(Purchase of Goods/Services)

Text-a-BillPay(Bills Payment)

Text-A-Deposit (Deposit to Bank Account)

Rural Bank

Mobile Phone Banking Accredited Rural Banks

68 accredited Rural Banks

979 branches & other banking offices

Nationwide coverage

Mobile Phone Banking Outreach

RBs registered over 160,000 clients Over PhP 8 Billion ($190 million) in mobile phone

banking transactions via GCASH

New Development Merchant Partners for Mobile Phone Banking

Key Lessons Learned in the RBAP-MABS Channel Management

Initiative

Channel management supports third parties (Merchants/CICOs) that are providing financial facilitation services to end customers.

RURAL BANK

Support Services

Financial Facilitation

Third party (Merchant-CICO) partner

CUSTOMER

What benefits can Merchant-Partners provide to banks ?

• Expand geographic coverage without building additional infrastructure

• Decongest branches• Refer new customer segments

SESSION 6

Determine MPB “Use Cases”• Kapitbahay Banking “village banking”

• Make loan payments

• Pay employees’ salaries

• Pay utility bills via mobile phone• Pay suppliers via GCASH (not checks or cash)• Send money to relatives

(remittance services)

• Provide info for a fee (balance inquiry)

Merchant-Partner Selection Criteria

Linking Mobile Money to ATM/POS Systems One of the important develops is the

deployment of solutions linked to ATM/POS

– Customers can now withdraw funds from their GCASH wallet through any ATM nationwide

– Smart Money provides access to ATMs as well as POS Systems via tie-up with MasterCard

– MPESA – PesaPoint System cardless ATM

Have you heard you

can bank via your

phone?

Social Networks

Voter’s IDDriver’s License

NBI Clearance

Identification Cards/KYC

ATMs

Rural BanksFace Card

ATMPowered by

GCASHGXI

Launch Services

– Customer

Adoption

Regulatory

Issues

Preparing Rural Banks to Promote Mobile Money and Mobile Financial Services

Customer

Perspective

Product

Development

EnvironmentInstitutional

Perspective

Product

Testing

The Business Model for Rural Banks to offer and use Mobile Money

Reduce Costs

Improving Outreach

Greater EfficiencyIncrease Deposits

Issues and Lessons Learnt from Pilot Tests

Acceptance and fear of the use of

technology especially among elderly clients

Focus on Value Proposition for Clients,

Merchants & Customers

Lack of Mobile Money Outlets or source

especially in the rural areas

Working with Rural Banks – Networks are

key to outreach

How to reach clients in remote communities -

awareness and information campaign

Increasing of volume and usage of mobile money in the rural

areas.

Example “Text-A-Payment”

TAP OTC Advantages of TAP

Direct Costs (assume P1,000 payment and min. fare)

P10 G-Cash In service fee + 2.5P SMS

P60 roundtrip

P47.5 savings

Opportunity Costs None P200 P200 additional earnings

Total Costs per transaction

P12.5 P260 P247.5 savings

Risks None Holdup No cash-in-transit risks

Speed of transactions“Money can be sent and received fast.”

Security or safety “Account is protected by PIN.”“No need to carry cash which might be lost or stolen.”“You are assured because there is confirmation.” 

Convenience “Can send money any time.”“Can do transaction without leaving one’s home.”“I do not need to fall in to get my salary.”“I can easily get the money at cash-in/cash-out

outlets.”“I can transact even at midnight.”

 Cost “Low charges.”“Can save on transportation cost.”“Can save on time.”

Market Research Findings: What clients like

Risk“If you lose your cell phone or if your

SIM is blocked, you will lose access to your e-money as well.”

 

Reliability “Technical glitches”“Technical support for problems”“Sending the e-money to the wrong

recipient”

Misconceptions Misconceptions on time limits of e-

money vs. airtime load

Market Research Findings: Clients Concerns

An Effective Financial Education Program can:

PROMOTE the benefits of shifting from traditional banking to mobile phone banking

ADDRESS the misconceptions that hinder uptake and usage

BE ANCHORED on merchants and re-sellers to teach clients and recruit potential clients

Tips for Mobile Money Issuers- Get money flowing through your system –

salaries, government payments, CCT- Build a system that is flexible for multiple

business use cases – think Apple iTunes- Make registration process simple and easy –

little or no cost & instant- Consider issuing/linking an optional debit/ATM

card to your Mobile Money Wallet- Listen to your customers and get out in the field

Ur comfort

Additional Materials

http://www.rbapmabs.org/blog/wp-content/uploads/2009/02 BN-68-Strategic-Partnerships-for-M-banking.pdf

http://www.rbapmabs.org/blog/wp-content/uploads/2009/02/BN-69-Incentivising-3rd-Party-Agents-for-M-banking.pdf

http://www.rbapmabs.org/blog/wp-content/uploads/2009/02/BN-70-Pilot-Rollout-Strategies-for-M-banking.pdf

http://www.rbapmabs.org/blog/wp-content/uploads/2009/02/BN-71-Creating-a-Tipping-Point-for-M-banking.pdf

Thank You

Email:jowens@rbapmabs.com

Websites:http://www.mobilephonebanking.rbap.org/

http://blog.mobilephonebanking.rbap.org/

LinkedIn: Twitter:John Owens jvowens