Stefan Staschen works with CGAP’s technology and policy teams. He presented on CGAP’s behalf at the Third African Microfinance Conference in Kampala late in August, and shared with us his impressions of the conference.

Not one or two or three, but four presentations at the AMC in Kampala, Uganda, dealt with the use of technology for increasing access to financial services. Richard Ketley from Genesis Analytics talked about Alternative Service Delivery Mechanisms and the card and phone revolution in Africa. His main conclusion was that African microfinance institutions (MFIs) can leverage existing technology such as mobile phones, ATMs and the internet to counter the negative impact of operating in a high cost environment and more often than not using inefficient business models.

Meliza Agabin, working for the USAID-funded Microenterprise Access to Banking Services (MABS) Program in the Philippines, showed how rural banks have been able to serve customers better by making use of Globe Telecom’s G-Cash mobile banking solution. Customer comments such as “So easy to use,” “Very convenient,” and “I no longer waste my time” speak for themselves. Frankfurt School of Finance & Management’s Willemien Libois introduced some examples how cell phone technology is currently used by banks in Africa.

And finally, I presented on behalf of CGAP’s Technology Program on various business models in branchless banking we have looked at in seven countries around the globe, including Pakistan, and how regulators have responded to them. It was obvious that many participants were hearing about this for the first time, but that they also wanted to know much more. One participant summarized her impressions by saying “Technology is going faster than us.”

The subsequent discussion focused on a number of practical issues with branchless banking models: What are the costs and returns for operators? What is the experience with fraud and customer satisfaction? Which criteria can be used to select agents? What risk mitigation measures can be used by the bank or mobile operator? Who is best equipped to build up an agent network? How do you manage liquidity across the network of agents? To many of these questions there is no clear answer yet. But practical experience is growing fast, and if we try to keep up with the pace of technological and business innovation, we might be much better positioned to present answers at the next African Microfinance Conference in two years time.

I have never been approached by so many people at the end of a presentation before. The interest to learn more about this is immense. Branchless banking is regarded by many as a way to reduce the still huge gap in outreach. Yet it seems to be an open question where to start. Is the first step to create a policy and regulatory environment which opens up space for branchless banking while at the same time mitigating any new or increased risks? Or isn’t it much more important to encourage the banking and also nonbanking sector to experiment in the branchless banking sphere? What we can say so far is that this probably depends very much on the country context. Regulation can play a role in promoting the use of technology for financial inclusion, but without some creative entrepreneurs you won’t get anywhere.

presentation (pdf)