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Agriculture, Food Security & Rural Development, Areas of Expertise, Information and Communication Technology for Development, Mobile Money, Originally posted on the GBI Portal

Can this be an Opportunity for Mobile Banking in Ethiopia?

Photo Credit: The Economist

I participated in a very informative event this week in Washington DC where a researcher was sharing his experience on “Weather-Index based Crop Insurance for Smallholder Farmers in Ethiopia”. As I listened to the discussion as an agricultural information specialist, my concern was what is the role of mobile technologies in this?

According to the researcher, Dr. Shukri Ahmed a Senior Economist, Food and Agriculture Organization (FAO), the concept of crop insurance has a long history from Asia with the leadership of India. However, due to the challenges associated with insurance in general and access to credit to smallholder farmers, the idea somehow waned. But according to Index Insurance Innovation Initiative (I4), there is overwhelming evidence that uninsured risk can drive people into poverty and destitution, especially those in low-wealth agricultural and pastoralist households. There is therefore a re-emergence of insurance for smallholder farmers across the globe.

The speaker gave a detailed background to the study in Ethiopia and the importance of partnership in the design and implementation of the study. The difference, however, with this new approach to crop insurance for smallholder farmers is the use of index (indices) to support the insurance service, and intervention against emergency situation. But at the same time the study is targeting farmers that are relatively better off and who are already engaged in the market but are not investing in insurance due to the anticipated risks. The outcome of the pilot study is expected to help protect the livelihoods of smallholder farmers, who are vulnerable to severe and catastrophic weather risks particularly drought, enhance their access to agricultural inputs, and enable the development of ex-ante market based risk management mechanism which can be scalable in Ethiopia.

Dr. Shukri Ahmed, Senior Economist at the United Nations Food and Agriculture Organization (FAO)

Unbanked or Branchless Services

Adding another concept to an already very complex issue that tries to combine weather, insurance, credit/finance, and smallholder farming, should be carefully considered. But the key question is whether mobile technologies can play a catalytic role in this entire complex system?

Among the reasons for choosing a given area for the pilot study, include availability of Nyala Bank branches, the vulnerability of yields to drought, the availability of nearby weather stations, and the willingness of cooperatives in the area to purchase the new product. As the pilot study progresses, the possibility of scaling the project across the country is high. But what will be the implications for the absence of banks in the rural farming communities in a country that has an approximately one bank loan per 1000 adults? Can Mobile Banking help understand why smallholder farmers under-investment in agriculture?

A success story of mobile banking by the Dutch-Bangla Bank Limited (DBBL) in Bangladesh was recently highlighted by the GSMA Mobile Money for the Unbanked. Interestingly, the story pointed out how DBBL learnt from Kenya’s famous mobile money program M-PESA. Kilimo Salama (KS) is an innovative index-based insurance product that insures farmers’ inputs (seeds, fertilizer, pesticides), and outputs (crop harvests), in the event of drought or excessive rainfall. It uses weather stations to collect data and implements SMS-based mobile technologies to administer and distribute the payouts. Mobile technologies will not only help with the financial transactions such as seen in Kilimo Salama’s case but also in support of the weather stations for timely and accurate decision making for pay-outs.

My conversation with Dr Shukri about the possibility of integrating mobile money into the project to address the challenge of absence of banks in rural Ethiopia, revealed the huge untapped market for Mobile Banking in that country. However, the success of such services depends on a convincing business case for both the banks and Mobile Network Operators (MNOs). Most importantly, however, is the state of telecommunication infrastructure and regulation in the country. These need to be in place for services and applications to thrive. With this huge investment

Outside Ethiopia, I believe it is time for African countries to take advantage of the increasing mobile phone penetrations in the continent beyond social networking to general development applications such as for agriculture, health, education, and rural development.

To listen to the audio recording of the event, visit Center for Strategic and International Studies (CSIS).

August 25, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Payment Innovations Working Group Holds First Session

On Thursday, March 29th, The NetHope Payment Innovations Working Group held its first session. The theme focus of this session was a general overview of branchless banking 101. The working group was lead by Sarah Rotman of the Consultative Group for Assisting the Poor (CGAP). Sarah has worked with CGAP for nearly fours years, and has conducted extensive research on the impact of technology on financial access for the world’s poor. Sarah’s presentation covered the basic factors of branchless banking, and took a closer look at how it is helping more of the world’s poor achieve access to formal financial services without needing a traditional bank branch nearby. The presentation lead to an engaging question and answer session where the working group members asked questions and added commentary. Much of the conversation surrounded how NGOs could become more involved in the mobile money/branchless banking movement. This is a question the working group will continue to explore in the coming months as we discuss technology’s role in the supply of more formal financial services to the 2.5 billion adults that are still unbanked today. The Payment Innovation Working Group will convene every month, and breach themes that will garner a better understanding of electronic payment solutions for our members. We also hope to create relevant tools to help the NGO community more efficiently implement and deploy electronic payment solutions within their own programs. If you are interested in joining our next session, please contact hamilton.mcnutt@nethope.org

April 5, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Introduction of Microinsurance into Mobile Banking’s Product Suite

Banner for Telenor's mobile banking product

Photo Credit: CGAP

As written in this blog before, there has been continued innovation in the mobile banking sector in developing countries this year. But, as surmised by CGAP, there is a greater need to find a balance of products that meet the specific needs of those who traditionally have not had access to formal financial services. While mobile payments, transfers, credit and savings have all expanded using the branchless banking model, there has been a lack of products that provide insurance via mobile phones. That is not to say that microinsurance has not been available in the past. But its availability came from the social sector side, instead of the private side. But there has been a shift as the business case becomes more valuable to both insurers and mobile network providers alike.

Just over a year ago, Swiss Re, re-insurance company, stated that the market size for microinsurance for those making under $4 a day in developing countries totals $40 billion. For businesses, that is a tough opportunity to miss. But simply because the market is there does not make it a profitable opportunity. Many of the targeted customers live in rural regions and have never purchased insurance. With a lack of access and knowledge, the case for profitability would need to include a large upfront investment. But technology and innovation can help to fill in those access and knowledge gaps. According to a recent report by Accenture entitled “Succeeding at microinsurance through differentiation, innovation and partnership,” technology offers real-time connectivity, flexibility and scalability which will help insurance companies to reach new customers in emerging markets. With an estimation of 2.3 billion people who are low-income and need to protect their income and assets, Accenture argues that insurance companies need to view these potential customers as “tomorrow’s premium prospects.” A clear example of this is the millions of individuals who have rose out of poverty through the economic prosperity in China and India over the last decade. By providing products that fit the needs of low-income customers, companies can build brand loyalty and reputation in these regions and reap the benefits as their customers improve their economic state.

As stated in the report, the need to leverage technology in order to reach the customers will be key to creating the short and long term business cases. By permitting customers to purchase and/or manage their accounts via mobile phone, this allows for the business structure to be profitable in the short-term. At least that would have to be the rational thinking as MNO (mobile network operators) are partnering with banks and insurance providers to offer a suite of financial service products (including microinsurance) to their customers.

Two Recent Examples

As a part of a larger suite of products, Airtel Ghana has partnered with uniBank Ghana Limited and Star Microinsurance to provide insurance free-of-charge to Airtel’s subscribers using their mobile money product. As long as the customer maintains an average minimum balance of GHC 5 (roughly $2.84) at the end of every month, they, along with their direct family, will be covered by insurance. Airtel Ghana sees the partnership and new products leading to an improved return on assets, an increase in the customer base and the creation of a one-stop shop for uniBank clients. But one of the challenges will customers registration as an individual must have a valid photo ID and complete an application along with having an Airtel SIM card.

In Pakistan, the MNO Telenor also will be releasing a free microinsurance product through Easypaisa, a branchless banking services company. Easypaisa was created in 2009 by Telenor Pakistan and their Tameer Micro Finance Bank. The free life insurance will be provided through Easypaisa and in partnership with Adamjee Life Insurance Company Limited (also located in Pakistan).

As you can see, mobile technology and the focus of creating value-added service by MNOs has increased the access to microinsurance in developing nations. Even in Kenya, insurance associations are pushing their members to utilize mobile phones in order to reach clients in new and untapped markets. In the push to increase access to financial services, the business cases for microinsurance are being shaped around mobile technology. And amazingly enough the insurance is being provided for free.

April 3, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

The Future of Mobile Phone Banking in the Philippines: Global Trends for Rural Bankers to Consider (Part 3 of 3)

RBAP-MABS Chief of Party John V. Owens shares the future of mobile money in the Philippines during the Roundtable Conference on November 9, 2011.

During my presentation, I shared with the audience some of the latest relevant updates and trends that we are seeing from around the world in terms of the uses of mobile money and mobile banking services.

One interesting theme is the use of viral marketing to support the expanded use of mobile money and mobile banking services by focusing on key influencers in particular markets. The second major agent of change is referred to as the “Stickiness Factor” or the specific content of a message that makes it memorable and the third major agent of change is referred to as the “Power of Context.” This last factor points to the fact that human behavior is sensitive to and strongly influenced by the environment and the surrounding circumstances at a particular time and place.

Banks, MFI, and even agents are beginning to see the benefits of offering mobile money-enabled banking services in order to better address real client needs and use it as hooks to attract more banking clients as well as to cross sell additional banking services to their clients interested in a mobile wallet.

Read the complete article.

March 30, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Mobile Money Interoperability: A Solution or Just Expensive?

Photo Credit: Szymon Slupik

In a report released in February, GSMA examined the value generated to both consumers and mobile operators by developing interoperable mobile money systems. Entitled “The case for interoperability: Assessing the value that the interconnection of mobile money services would create for customers and operators” and co-authored by Neil Davidson and Paul Leishman, it was released through the Mobile Money for the Unbanked unit of GSMA.

The report focused on the idea that increasing the interoperability between mobile network operators (MNO) would be better for customers as it would allow greater ability to send money from a phone on one network to a phone on another network. With the understanding that a network’s value to a consumer depends on how many other people they can connect to, there is an obvious benefit to operators creating interoperability between each other. But the article finds that developing interoperability will not create the necessary value to customers in order for MNOs to profit off the investment. The authors came to this conclusion by examining it from both the consumer side and the producer side.

Value to Consumers

By researching the competitiveness of mobile money services, the authors found that there were only three markets in the world that could be labeled as competitive. Although 25 countries have multiple operators providing mobile money services, only three had adoption rates from multiple MNOs that would dictate a need for interoperability. They next turned their attention to discovering the specific problem that interoperability would solve. In viewing the habits of consumers in markets with mobile money, the research showed that they had figured out a workaround to transferring money between mobile networks. Since there is a low cost to purchase a SIM card from another MNO, consumers can “multi-SIM.” This means that depending on which operator the receiver is using, the sender can switch their SIM card in order to send the transfer. With the advent of dual-SIM phones (two ports for SIM cards), multi-SIMing is made easy with no need to switch out the cards manually. In Uganda, a survey from June 2010 showed that 43% of mobile money users multi-SIM. Along with the hardware workaround already available, the mobile operators have allowed unregistered accounts to send and receive money. Registered customers have the ability to send money to unregistered customers. Since all that is needed in order to collect the transfer is a secret code, an unregistered user can give the code to an agent and withdraw the cash. This is called an off-net transfer. The opposite transaction can occur as well as with an unregistered user sending a transfer to a registered customer. This is called an over-the-counter (OTC) transfer. While this does not completely kill the consumer value to interoperability, customers have already discovered and are using workarounds at no further cost to them or the mobile operators.

Value to MNOs

The author’s argument for why MNOs would invest into developing interoperable systems is a simple one – because it will create greater revenue. Mobile money is provided as a value-added service to create greater loyalty in the customer base as well as having them increase the amount of money they spend. But creating a system that works with other mobile operators is not free – nor cheap. The investments would include human resources and infrastructure. But the main question is how would this investment make more money, if at all? Value-added services are used for two reasons – keeping existing customers and enticing new customers. And one or both will have to pay for this service. But since it has already been shown that current customers are already willing to use a workaround to transfer between separate mobile providers, it is not clear that interconnecting systems will create greater loyalty or attract new customers.

Along with the unclear pain from customers about the need for interoperability, the authors made the argument that the investment in it could take away from other investments that could increase loyalty or simply pass the cost of directly onto customers. Unless a clear business reason is discovered, it seems like interoperability will not occur in the near future. But that does not mean it will never occur; just that it is too early for it now.

March 13, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

IFC’s Report on Mobile Money: A Framework to Analyze a Country’s Readiness for Mobile Money

Photo Credit: Bancore Mobile Financial Services

On February, as a part of the ICT Learning Days at the World Bank, Sonja Oestmann, the Director of Consulting and Partner of Intelecon, presented the findings from a report commissioned by the International Finance Corporation (IFC) about mobile money. Entitled “Mobile Money Study 2011,” the reports focused on the mobile money markets in four countries – Nigeria, Thailand, Sri Lanka, and Brazil.

The IFC has committed to further expanding financial inclusion by 2013 and see the potential in mobile money to help reach this goal. But while it has been successful in some countries, it has yet to take off in others. By focusing on vastly different countries in terms of region, socio-economic conditions, and financial infrastructure, the focus of the report was to show the different ways in which mobile money can be used as well as the business models that make them sustainable. It also used Kenya and Japan as examples of countries in which mobile money has succeeded.

Framework

The report included a framework to assess the sustainable viability of mobile money in a country as well as the most appropriate business model to utilize. This includes the partnership strategy, the necessary regulation environment, and the development tracks of mobile money products and services. By creating a structure of the market research that must be conducted, the report is aimed at providing this knowledge to regulators, mobile network operators, commercial banks, microfinance institutions, telecommunications manufacturers, and all others interested in expanding mobile money opportunities.

User Demand

The report also examined where the user demand of mobile money is based on the major money flows within each country. Based on these flows, the report listed the following as potential areas of demand:

Government-to-person (G2P) payments
P2P transfers
Payroll payments from small companies in the informal sector
Public transport payments
Bill payments to major utilities (e.g., electricity and water), postpaid mobile accounts, fixed phone subscribers, pay TV (cable and/or satellite)
Retail payments
Business-to-business (B2B) payments
Credit and microfinance
International remittances
Savings

Survey Findings

Surveys were conducted in order to further understand how and why individuals were using (or not using) mobile money in the four countries. One of the more interesting findings from the survey is the ability of marketing to increase the adoption of mobile money. Individuals using the service became aware of it directly from either the bank or the MNO. But the nonusers heard about the service indirectly from mass media. The conclusion in the report is that increasing adoption could be done more effectively through direct marketing with a personal touch. Another interesting finding is the state of the formal financial services effect on the perceived value of mobile money. In countries where the financial services sector is less extensive, mobile money is seen has a cheaper and faster alternative. But in countries with a strong financial services sector, cost and speed were not as important. Its perceived value was seen as an increased convenience.

Conclusions of Studies

The main conclusion from the report was that the value proposition for mobile money depends on the existing financial service infrastructure. When financial services are unavailable to a larger population, there is a higher demand for fast and cheap money transactions. But as the services improve, partnerships between banks and MNOs increase in significance. At the same time, the demand for mobile banking decreases as other e-payment services become competitors. In countries with an established and advance financial services sector, the demand for new services is based on performing at higher speeds, with greater frequency, and increased convenience.

March 6, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Social Investing in Mobile Money: Two Recent Investments in Expanding Mobile Financial Services to the Poor

Mobile Transactions Agent next to a store

Photo Credit: http://venture-zamtan.blogspot.com/

As the Mobile World Congress 2012 wraps up in Barcelona, there has been a flurry of news about social investments in mobile money. On Wednesday (February 29^th), Omidyar Network and ACCION International announced a $3.2 million investment in Mobile Transactions International, a Zambia-based organization with a technology platform and network of agents for mobile transactions. On Thursday (March 1), CGAP, Grameen Foundation, and MTN Uganda announced a partnership along with $1 million investment into an initiative to research and design mobile financial services for those living on under $2.50 per day.

Investment Details

As the first venture capital investment in a start-up technology company in Zambia, Omidyar and ACCION see Mobile Transactions as a leader of expanding access to financial services in the country. The money will be leveraged to build up its executive team, agent network, and further develop their platform in order companies and poor consumers both in Zambia and in new markets to make mobile transactions. The investment into Mobile Transactions includes $500,000 in convertible debt funding from Mennonite Economic Development Associates (MEDA), a nonprofit organization focused on alleviating poverty through market-based solutions and financial investments. This funding will eventually be convertible into shares of the Mobile Transactions. As typical with venture capital investments, Arjuna Costa, Director of Investments at Omidyar Network, and Monica Brand, Fund Manager for ACCION’s Frontier Investments Group, will serve on Mobile Transactions’ board.

Mobile Transactions’ business model combines their proprietary technology with an agent network with the goal of creating a “Cashless Africa.” This idea is that all businesses can transact through mobile phones with the unbanked as well as those without mobile connectivity. Their services offer customers the ability to transfer money, make and receive payments, and eVouchers. This business model was created based on the fact that in countries like Zambia over 80% of the adult population does not have access to formal financial services and roughly 50% of them do not have access to a mobile phone.

The focus of the investment by CGAP, Grameen, and MTN Uganda is to build on the success of mobile money providing access to financial services. The idea is to take it a step further by creating a suite of products and services that fit the needs of low-income consumers. The diverse partnership is aiming at combining the expertise of each organization to provide better access to mobile financial services. CGAP, as a part of the World Bank, focuses on expanding financial services to the poor through independent research, policy solutions, and advisory services to governments and financial service providers. Grameen Foundation, through its AppLab in Uganda, already has the knowledge and experience of expanding the reach of financial services to poor consumers by utilizing mobile technology. MTN Uganda also has had success with mobile money in Uganda which includes building the technical infrastructure and establishing a strong agent network.

Social Investing

Mobile money has been in the news lately as global corporations are becoming interested in its revenue possibilities. Visa and Mastercard recently partnered with mobile operators across Africa and the Middle East to start offering their own form of mobile money. Western Union continues to create partnerships in order for their international money transfer services to be used via mobile phones. While these examples are corporations looking to enter new markets and generate new revenue streams, the social investments have much different and hopefully more impactful focus.

Social investing is a necessary component for mobile technology to reach the unbanked. These social businesses have a clear idea of who their targeted consumers are. With this understanding, the products and services will be designed to meet the consumers’ needs. As mentioned, in Zambia, there is a low penetration rate of mobile phones so creating a system based solely for individuals with mobile phones would not reach all the unbanked. The beauty of Mobile Transactions’ services is that provides needed services that are accessible by all, whether they have a mobile phone or not. In Uganda, the AppLab has done extensive research on providing information services via mobile phones to rural communities. The testing and delivery of these services has allowed the AppLab understand the needs of the consumers in the country. This has helped to guide further development of current products as well as the future development of new products. Both of these social investments are exciting as they will create new products and services to expand financial services to the unbanked.

March 2, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Recent Innovations in Money Mobile: Moving Past the M-PESA Model

Photo Credit: TechCentral

Within the last month, there have been multiple new examples of mobile phones being leveraged to expand financial services in developing nations. With the popularity and quick success of M-PESA in Kenya, there was a push to copy the model in other developing countries. But it has been realized that the M-PESA model cannot be simply duplicated. The new mobile money products and services need to focus on solving a customer’s pain (or perceived pain) within the regional context (competition, policy environment, culture, infrastructure, etc). The examples below show how innovation in the market is occurring to meet the needs of customers. Mobile Network Operators (MNOs) are seeing the benefits of providing an expanded set of value-added services to differentiate themselves in the market. In a recent TECHTalk at USAID with Pamela Riley from Abt Associates, she explained that MNOs are most focused on increasing and keeping their customers. With greater competition in the mobile network market, the ability to create more value to a MNO’s service keeps the customers from jumping from one provider to another (usually easier because one MNO’s SIM card can be easily switched out for another’s). The MNOs’ desire to increase revenue creates an incentive for them to implement innovative solutions based on the needs of their customers but also within the region’s entire context.

Below are a few recent examples of innovation in the mobile money space:

RedCloud Technology recently completed Bolivia’s first mobile money platform. The product, Nube Roja, was created from a $1.2 million investment from BlueOrchard, CONFIE (Corporación de Fomento a Iniciativas Económicas S.L.), PROFIN (Fundación para el Desarrollo Productivo y Financiero), Iceni Mobile, and RedCloud. The goal of the product is to provide access to financial services to roughly 6.5 million people in Bolivia who do not have a bank account. A pilot of the service will begin in the near future with customers being able to cash in, cash out, top up their airtime, transfer money person-to-person, and send remittances.

A newly formed partnership between First National Bank (FNB) and retail store PEP allows customers in South Africa to use FNB’s eWallet for banking services at the retail store. As long as the individual has a bar-coded South African ID, he/she can deposit, withdraw, send, make payments, and purchase goods at any PEP store in South Africa. In the past, only FNB customers could use the product. But with this partnership, FNB is looking to reach the unbanked in the country. Partnering with PEP expands FNB financial services to 1,200 stores and gives greater access to those who have a mobile phone.

As a part of a strategy to expand financial services further into the rural areas of Mexico, the National Savings Bank and Financial Services (Bansefi) is going to use mobile technologies through the implementation of the Program of Technical Assistance to Rural Microfinance (Patmir). Their goal is to have over 15% of their new partners and customers be served with low-cost mobile technology. Bansefi will be hiring a consulting firm to provide technical assistance with the implementation of new technologies, innovations, and best practices.

Money Transfer Services

In partnership with one of the leading MNOs in India (BSNL), the Indian Post Office has begun its own mobile money service. The service allows money be transferred via text message and utilizes the physical post offices to act as cash in/cash out locations. It works by the sender providing the post office with the receiver’s information (number and address) along with the amount to be sent. Once the cash is deposited, both the sender and receiver are text messaged a unique code by the Post Office. In order to withdraw the money, the receiver shows the code to the Post Office. There is a service charge of 5% and is available to individuals across all networks.

Airtel has plans to establish mobile money transfer services in Kenya and Tanzania as it has already done in Uganda. The goal of the new services, as stated by Michael Okwiri, Vice President of Corporate Communivation at Airtel Africa, is eventually create a cross-border money transfer service between the three countries.

Western Union and Telma, a Malagasy telecomm company, have partnered to start an international mobile money transfer service. The new service allows citizens to transfer money via their mobile phones by using Western Union’s international transfer service. By combining Telma’s mobile money service (MVola) and Western Union’s service, individuals can receive money transfers from abroad via their mobile phone. The transfer will go directly into their MVola account. At this point, it is only a one-way service as Malagasy citizens can not send transfers outside the country. MVola, like other mobile money services, allows customers to purchase goods, make payments, and deposit/withdraw money.

ATM

As a part of Airtel’s new mobile money platform in Uganda, customers will be able to process transactions at ATMs. This includes paying bills, accessing their bank accounts, and withdrawing Airtel money using ATMs located country-wide. This service was made possible via partnerships with banks which include Standard Chartered, Post Bank, KCB, and Diamond Trust Centenary Bank.

Credit-Worthiness

A Cambridge start-up has created software in order to help determine an individual’s credit risk by looking at how the person uses their mobile phone. Cignifi has received $2 million in funding after piloting the product last year in Brazil. The software looks at multiple data points in order to further understand one’s lifestyle. It creates a score similar to the FICO score used in the United States. Since many developing countries do not have credit bureaus or limited ones, it is more difficult to calculate the credit risk of an individual person. This is innovative way to understand the riskiness of an potential borrower.

February 8, 2012/by actualize

Mobile Money, Originally posted on the GBI Portal

Financial services demonstrate the most proven sustainable business models within ICT4D

The following is a guest post we’re pleased to share by Hystra Consulting and Ashoka.

A recent study reveals how Information and Communication Technology (ICT) can viably provide access to education, healthcare, agro-services and financial services to the Base of the Pyramid (BoP). The study reviewed more than 280 initiatives set up by various types of actors (corporations, Citizen Sector Organizations, social entrepreneurs…) in Asia, Latin America and Africa which are using ICTs to provide services to the BoP. Hystra, a French consulting firm and its partner Ashoka evaluated the projects based on their ability to solve a problem, their scalability and their financial sustainability. The report presents 15 of the most ground breaking market-based business models, which have reached a significant level of scale and have improved the living standards of the BoP using ICTs.

Financial sustainability varies across sectors, financial services being the most mature of the four areas studied.

3 of the projects featured as financial services case studies in the report serve profitably more than 5 million customers each via different business models: M-PESA in Kenya with mobile money, Bradesco in Brazil with branchless banking via post offices and small retail shops, and FINO in India with a suite of POS-powered financial services available to over 40 million clients via door-to-door agents.[1]

Why are financial services the most developed area in terms of business model sustainability? One of the reasons cited is the willingness of clients to pay upfront for the service, because it offers them immediate savings compared to previous practices (such as cheaper money transfers). Moreover ICT-based financial services often go well beyond previous offerings, creating new practices for unbanked populations such as savings or insurance schemes that lower their vulnerability to adverse events. For example, some MNOs have developed innovative loyalty-based life insurance covers. These types of products help reduce churn and attract new customers for MNOs while providing a new valuable service to customers.

Establishing trust in the service is a key factor of success for ICT-based financial services, as they deal directly with people’s money. These services require robust and secured platforms, in addition to trusted agents who are able to sell the service, manage liquidity and provide a direct interface between the technology platform and end-users. Leveraging existing trusted networks such as Safaricom’s airtime resellers (in the case of M-PESA) or post office agents (in the case of Bradesco) appears as an effective way to create trust in these services.

The business models studied in the report tap into multiple revenue sources, getting commissions from governments for g2p payments, banks and insurance companies for the opening of new accounts, end-users for the transactions they perform, and MNOs which benefit from customer retention and higher end-users fees. Governments can actually play a large role in promoting such services: using them for their G2P payments, they can be a sufficiently large first client of ICT-based financial services to justify the initial investment in the technology that new companies entering this space need to make – one of the first services offered by FINO was G2P payments and state health insurance, for example. Many actors have tried – with mitigated success – to replicate M-PESA. However, the study points out to a wider range of models which can be just as effective in providing financial services using ICT. The key is to find which business model is suitable in each local context.

The study was sponsored by AFD, Ericsson, France Telecom-Orange, ICCO and TNO and conducted by Hystra and Ashoka. The full report is available for download in the MMU library.

[1] The number of FINO clients stood at “only” 28 million when the case study was done in February 2011, but FINO grows by over a million customers each month!

January 25, 2012/by actualize

Agriculture, Mobile, Mobile Money, Originally posted on the GBI Portal

Credit Agricole Egypt moves closer to mobile banking

Egyptian bank Credit Agricole Egypt launched has announced on Tuesday it had launched new banking that would allow both customers and non-customers to pay bills without a CAE debit or credit card. Analysts believe this is one step closer to full-on mobile banking in the country.

Analysts believe this is one step closer to full-on mobile banking in the country (image: stock.xchng)

The move is seen as a step toward making banking easier for customers in Egypt, long fraught with difficulties and red tape.

“It’s a wonderful endeavour that will hopefully push the country into the realm of great possibilities and personally, I am getting to use it already because I want to try it out and see if it will be successful,” securities and trade expert for CI Capital Mohamed Naguib said.

The move is in cooperation with Fawry and makes CAE the first such bank in the country to off the service to both customers and non-customers, which allows people to pay bills using cash or other bank cards.

“I see it as a move toward better technology within the banking sector and could be a jumping point for other IT related banking initiatives in the country,” added Naguib.

Customers can now pay at their leisure and has launched a new website to enable customers to do so online.

“Bill payment represents a more efficient, fast and reliable method of payment by allowing consumers to instantly pay their bills anytime at their convenience through Crédit Agricole Egypt’s nationwide network of ATMs,” the company said in a statement.

Currently, the new bill payment service is offered to all mobile subscribers, as well as Egypt Telecom, TE Data, Linkdotnet, Air Arabia, the Food Bank and CIL insurance payments, the statement said.

“Crédit Agricole Egypt is the first bank to offer the cardless ATM bill payment option. This new service does not require the possession of a CAE debit card. Thus, with our bill payment service, no one will have to worry about unpaid bills no matter where they are,” said Jean-Francois Drion, managing director, Crédit Agricole Egypt, in the same statement.

Desmond Shephard

January 18, 2012/by actualize