6 months + 200 technology and finance leaders from 30 countries = four scenarios of branchless banking for poor people in 2020.

In 2009, CGAP and DFID talked with over 200 technology and finance leaders from 30 countries to determine how branchless banking, including mobile banking, might look in the year 2020. The work culminated in the CGAP/DFID Branchless Banking Scenarios 2020 Focus Note. A video discussion with the authors and some of the leaders in mobile and branchless banking was held in Washington in December; you can watch the archived video here. To help frame the scenarios process, we identified four forces and four uncertainties that are shaping the industry.

Force 2. Governments will become more activist in this space by:

• extending the safety net through cash transfers or cash for work
• increasing the intensity of regulation on already regulated financial institutions
• encouraging availability of low-cost banking and financial infrastructure

Pushed by the crisis, governments will be increasingly active in three domains that affect the viability of branchless banking: extending the social safety net, regulating more intensively, and at the same time pushing for formal financial inclusion. However, government actions will likely be driven from a variety of motives and different agencies, not necessarily guided by a coherent strategy to support the extension of branchless banking. Some of these motives will be related to the desire of governments to serve (or be seen to serve) poorer citizens through redistribution to mitigate the most dire poverty; others to use the regulatory power of the state to manage risks in financial markets; and still others related to government interest in encouraging or requiring providers to make basic products and services widely available.

The continued rollout of new and expanded social programs will create strong demand from governments for branchless payment infrastructure that can safely pay funds cost effectively to recipients with less instances of fraud or corruption. But making these payments alone will not lead to broader financial inclusion. Governments may be persuaded that providing financial services to recipients can be a win–win–win strategy for governments, beneficiaries, and financial institutions.

Governments also function as regulators of the financial sector. The global financial crisis has been attributed in part to lax regulation and inadequate consumer protection, and it seems likely that regulators will be more wary about supporting, condoning, or approving new financial institutions and innovative products. The forms and extentof this backlash against financial liberalization will differ across countries, but both developing country regulators and regulated entities interviewed as part of the scenarios process expect the intensity of regulation to increase.

-Mark Pickens, David Porteous, and Sarah Rotman