Biometric ATMs at Opportunity Bank Malawi - photo courtesy of Opportunity International.

Claudia McKay has recently joined CGAP from Opportunity International where she worked as Director of Product Development for the global network.  Prior to that, she spent four years in Malawi, Africa as Head of Microfinance Banking for the Opportunity International Bank of Malawi.  Claudia has also worked as a consultant for the Boston Consulting Group and holds a Master’s degree of Business Administration from Said Business School at Oxford University.

I have recently returned to the US after four years of living and working in Malawi, Africa, building a commercial microfinance bank with a great team of Malawian colleagues.  As Head of Microfinance Banking at Opportunity Bank of Malawi (part of the Opportunity International Network), one of my constant challenges was how to reach the 80% of Malawians living in rural areas that are difficult to reach and have little access to electricity in a way that satisfied shareholder demands for growth and profitability.  The traditional models of microfinance just wouldn’t work, so we tried various approaches to branchless banking.  We used biometric ATMs, POS devices with cash-back services at agent shops and trucks that brought banking services to remote areas.  All of this and more helped us achieve profitability and more than 200,000 customers in six years.

Getting used to the ever-changing latest technology can be challenging for all for us and many wonder how someone who has grown up without electricity reacts to modern technology.  While it was strange at first, Malawians did come to trust the bank and its technology (frequently after testing the system through many small deposits and withdrawals in a single day) and its consequences sometimes surprised me.  I remember encountering an elderly man arguing with a teller.  His son had died, leaving a widow and three children, and he wanted his daughter-in-law’s savings. It is tradition that all of the family’s possessions belong to the husband’s parents, regardless of the wife’s contribution.  The wife had accumulated about $150 in her savings account, but because her account required her fingerprint, the man was denied access. The next day the wife came to the bank, filled with gratitude that she still had the money she needed to support her children. 

This incident repeated itself many times and before long, standard marriage advice to brides included opening an Opportunity Bank account that offered ‘magic’ protection from drunken husbands and desperate in-laws. Others called the ATMs a tool of Satan that scanned your soul through your fingerprints.

In recent years, Opportunity Bank has wrestled with how and when to introduce mobile phone banking in conjunction with a widespread agent network.  M-banking would decongest branches for current customers and allow a continued high rate of expansion to remote areas.  However, neither of the two national mobile network operators (Zain and MTL) have concrete plans to introduce an m-banking service in the country.  So, Opportunity Bank is trying to develop a service itself but this is a time-consuming and expensive undertaking. The entire burden falls on the bank to develop the technological solution and link it with the existing MIS system as well as develop and manage an agent network – all in the absence of an appropriate regulatory framework.  Would it be better to wait until say Zain brings ZAP to Malawi and then piggyback off this system?

Opportunity Bank is not alone in this quandary.  Most MFIs are located in countries without a large-scale m-banking system and are struggling with how and whether to try and take advantage of mobile phone banking.

-Claudia McKay