September 9th, 2010 at 6:33 am, Claudia McKay ()

Thanks Veasna. What do the current customers think about WING? Has being an agent brought new clients to VisionFund? Are most of the customers who come into VisionFund branches to transact on their WING accounts current customers of VisionFund or new customers?

September 9th, 2010 at 6:44 am, Chum Sam Veasna ()

Customers trust in Wing now, but numbers are stable. I believe Wing is in better position to answer this first question.
We do not track records of where WING clients come from. But usually, our own staff recruit loan clients in a more remote areas.
Most of Wing clients are new to VisionFund.

September 9th, 2010 at 6:55 am, Kabir ()

It is exciting that WING and VisionFund linked up in this manner early on. But do MFIs make good agents? There are a number of reasons why MFIs might be good agents (access to physical cash, trained staff, remote locations) but I wonder if they are an ideal transactional network for payment services.

September 9th, 2010 at 7:03 am, John Owens ()

Kabir, Using the Philippines as an example, we have seen rural banks and their network as an ideal partner to support mobile money payments. The banks also find mobile money platforms as ideal to promote certain banking services that are not easy to offer via brick and mortar branches. This of course requires appropriate support for sufficient cash in and cash out outlets.

September 9th, 2010 at 7:06 am, Chum Sam Veasna ()

Hello John, VisionFund staff are not using Wing payroll facility at the moment. I think Wing may have further comments on this.

September 9th, 2010 at 7:09 am, Claudia McKay ()

Hi David/Joep, you’ve pointed out in your blog and here in the comments that the main attraction of the relationship is the longer-term strategic relationship, especially using WING for loan repayments and such. Do you (and Veasna) feel that the agent business in and of itself is not worth it for the MFI? Is this perhaps because commissions are very low compared to the normal yields they make on their loan portfolio? I’m just wondering if the agent business is viable as a stand-alone option for MFIs or only as a first step in a more integrated partnership.

September 9th, 2010 at 7:11 am, David Kleiman ()

John: As Veasna mentioned, WING does not provide payroll services to VisionFund. This is primarily due to the fact that at present WING operates only in Khmer Riel – while most payroll in Cambodia is in US Dollars. Effective August 25th the National Bank of Cambodia has executed a regulation which will lay out a clear process for WING to receive licensing to operate in multiple currencies.

September 9th, 2010 at 7:14 am, Abhishek Sinha ()

In Eko, as far as agents are concerned we have appointed close to 700 agents and these are largely grocers, pharmacies, stationery shops, small cyber cafes, telecom shops, etc. The reason for choosing retailers was because they are indeed the most effective last mile infrastructure already in place. Retailers, the most effective last mile for FMCG, Consumer durable and Telecom services. Customers walk into these retail outlets for other activities other than banking. Therefore, customers are able to adequately trust the retailers even for banking services. Retailer is running a viable business; therefore there isn’t any burden to make the business of the retailer viable. The need is to contribute margin income for the retailers so that they are interested in the business on a month on month basis. Retail outlets provide service to customers every day for atleast 10 hours. Therefore helps in higher percentage of active customers and customers with high balances. As these retailers are fixed entities and hence every similar to ATMs which are also fixed and hence customers can walk-in basis their convenience. While in case of moving agents the customer is dependent on the availability of the agent and cant access the agent on their own convenience. Hence they will have to budget in time and energy to access the agent and avail of banking services. In Eko’s case, we tend to choose more customer engaging retailers (pharmacy, stationary shop, grocer) in the initial phase and once we have enough customer and transactions start to build up then we get onboard transacting retailers (airtime and recharge selling telecom outlets).

September 9th, 2010 at 7:18 am, Claudia McKay ()

Hi Abhishek. I know that the regulations in India are very strict on who can be an agent. If you were able to use MFIs as agents, would you be attracted to this option? Why or why not?

September 9th, 2010 at 7:21 am, Chum Sam Veasna ()

To Gabriel:
Other MIFs have expressed intention to go on their own, some have not gone with Wing yet. I believe Wing is in better position to say more about this.
It’s too early to look at partnership with individual clients here in Cambodia although I think this has happened elsewhere.

September 9th, 2010 at 7:26 am, David Kleiman ()

The response from other MFIs varies. In several cases, the lack of multiple currencies presented a barrier. For others, such as AMK, the opportunity of deposit taking is more attractive and they skip the Agency “step” as it is perceived as easier – but with less immediate benefit. With Vision Fund our roadmap has been deliberate and we have been able to benefit initially through their branch network – now with other developments at WING we are well positioned to deliver more value back to Vision Fund.

September 9th, 2010 at 7:29 am, Abhishek Sinha ()

The advantage of partnering with MFIs is the ability to handle cash and the know-how of the customers. We definitely wish to leverage this. MFIs are really not agents they are “Network Managers of Agents” just as Eko is. The real agents incase of MFIs are the Field / Loan Officers. Eko is trying to tie-up with MFIs wherein the institution will be the Super-Agent while the Field / Loan Officers will be the real-agents. They are signed-up ensuring that the legalities are maintained. Though here again the “Human-ATM” is not available at the customer’s convenience. The advantage of such agents is to sell more complex products such as Insurance / credit rather than servicing cash-in/out needs.

September 9th, 2010 at 7:36 am, Anand Raman ()

To add to Abhishek’s point, while we would be very happy to have MFI field officers as agents, we are still to crack the 1st tier liquidity / cash infusion issue. Since our model depends on pre-funded accounts that serve to eliminate customer and bank risk of deposit collection, someone at the top of the food chain needs to bring in the liquidity. Right now Eko depends on the Super agent to manage this. With MFI’s that’s not yet been possible.

September 9th, 2010 at 7:40 am, Claudia McKay ()

Hi Anand, don’t MFIs need to manage cash in any case for loan disbursements and repayments? I thought that the MFI headquarters or regional offices would act similarly to superagents in managing liquidity. WING/VisionFund has this been a challenge for you or has VisionFund been able to have enough cash/e-float on hand as needed?

September 9th, 2010 at 7:42 am, David Kleiman ()

One of the obvious strengths for our relationship with Vision Fund is that they are more than capable of managing their own liquidity.

September 9th, 2010 at 7:44 am, John Owens ()

Last year I wrote a bit about strategic alliances between MFIs and Mobile Money Issuers at http://www.rbapmabs.org/blog/wp-content/uploads/2009/02/BN-68-Strategic-Partnerships-for-M-banking.pdf I agree that MFIs can help with liquidity management for cash in and cash out networks. Now that GCASH is rolling out their 15,000 cash in and cash out agents rural banks see opportunities to both coordinate with these mobile money agents to better promote mobile phone banking via mobile money as well as providing needed liquidity for these agents

September 9th, 2010 at 7:47 am, Chum Sam Veasna ()

TO Pranav: We don’t set up any separate business unit. We have been working with Wing toward next phases of collecting/disbursing loans and even savings. Without the current familiarizing stage, we can’t make a final decision to go or not. We’ll dedicate more resources once we’ve had the familiarization.

September 9th, 2010 at 7:50 am, Anand Raman ()

Claudia: Yes – MFI’s agents do manage cash. In fact, this is one of the pain areas that using a model like Eko’s, MFIs could solve for themselves. However, in order to partner with Eko, an MFI partnering with Eko must evaluate independently if the returns they make from the bank-led model makes sense for the capital they will deploy.

September 9th, 2010 at 7:52 am, John Owens ()

This involved targeting particular business owners/mobile money agents who were seen as connectors, mavens, and established salesmen in their own right. These included the heads of market vendor associations, popular pharmacies, travelling salesmen, and wholesale or large grocery shops. These key businesses were important since they are the ones that can create a tipping point where they actually advise other customers about the benefits and features of mobile financial services.

September 9th, 2010 at 7:59 am, John Owens ()

Here is the article we prepared last year on the issue of finding the right agents and creating a tipping point: http://www.rbapmabs.org/blog/wp-content/uploads/2009/02/BN-71-Creating-a-Tipping-Point-for-M-banking.pdf

We are now seeing traction in a few of the more remote communities where banks were able to really promote these services and create a value proposition that involved multiple use cases.

See the video on Cantilan Bank at http://www.youtube.com/watch?v=IMuWM6bSN7U

September 9th, 2010 at 8:05 am, John Owens ()

Rural banks also deployed people dedicated to promote mobile phone banking services in their respective communities. This intensive effort paid off but as the number of bank merchants who could act as cash in and cash out agents began to take off, banks changed their approach and are now more focussed on working with these agents to promote mobile banking services similar to the way third-party agents promote these services in places such as Colombia, Brazil, and Peru.

September 9th, 2010 at 8:13 am, Claudia McKay ()

Thank you for participating in the third session of this virtual conference. In this session, we discussed MFIs acting as agents on behalf of m-banking services. We heard from WING and VisionFund in Cambodia that MFIs do bring strengths to the m-banking service such as an instant nation-wide network and infrastructure for liquidity management. However, the business case for the MFI in the short-term is less clear. The main benefit will come in the longer-term once MFIs can use the service for loan repayments and other features. We also heard about agent management in India (where EKO is using independent retailers who are in fixed locations and trusted by customers) and the Philippines (where rural banks target connectors/established salesmen who can sell value-added products).

Our last session is starting in just 45 minutes! This session will discuss how MFIs can link into existing m-banking services for loan repayments and deposit mobilization. Our moderator is George Kinyanjui who assisted SMEP, the first MFI in Kenya to link into M-PESA for group loan repayments. See you there!

September 9th, 2010 at 8:21 am, Joep Roest ()

Hi John, thanks for the background and the reading, much appreciated. We have had problems with this but mainly because people would do a cash in transaction instead of a P2P transaction to circumvent the fee and then made a mistake. It is now policy that for every cash in transaction, a customer needs to show their WING card that they received as part of their starter-kit at registration. This has helped a lot.

The functionality for a P2P transaction actually retrieves the name connected to the WING number prior to the transaction going through. This also helps but not always as we live in a country with a non Roman script and high levels of illiteracy.

September 9th, 2010 at 9:56 am, Michael Asola ()

The terms m-banking, m-payments, m-transfers, m-payments, and m-finance, agent banking, refer collectively to a set of applications that enable people to use their mobile telephones to manipulate their bank accounts, store value in an account linked to their handsets, transfer funds, or even access credit or insurance products.

The use of the mobile phone is just unraveling its potential in Africa. Mobile phones not only break communication barriers but can also be seen as a mini-computer – with a mobile phone people are always on, always reachable and have a secure computing device in the palm of their hands. M-banking certainly offers many application opportunities, especially to developing countries, on the back of a technology culture which is already accepted.

The mobile phone is the one pervasive device which has fewer barriers to entry than most technologies, and it has penetrated some of the poorest economies due to the overwhelming demand for any form of telecommunications. A device that most citizens of developing countries no longer take for granted and it’s no longer a luxury but a necessity that they need for their day to day life activities. A device that has brought death to over 60 applications that in essence have been synched to a single device; the Mobile phone.

Mobile phones have presented a unique opportunity to individuals and even companies, and most importantly the Micro-Finance Institutions in countries like Kenya, India and South Africa, not only in the communications and data transfer environments, but the banking environment as well. The spread of mobile phones across the developing world is one of the most remarkable technology stories of the past decade and one that is going to be told this decade in ways a story has never been told.

A country like Kenya has the unique plateau of mobile phone users where the lower class users live in informal and/or cash ‘mwanachi’ economies, without access to financial services that others take for granted. In essence this provides a unique opportunity to true MFI’s to take advantage of the diverse uses of the mobile phone to bank this category that is unbanked. Indeed, across the developing world, there are probably more people with mobile handsets than with bank accounts.

Africa and other developing nations are in the supposedly unenviable position of having a great number of people outside of the realm of traditional financial services. Although this is viewed by many as a challenge, from an African context this presents an opportunity for exploring new avenues of bringing these people into the financial transactional environment through the world of mobile banking or m-banking. Financial institutions on the African continent have acknowledged that in order to achieve greater penetration and ultimately share of wallet, they need to explore new methods of banking and in essence bringing the people at the bottom of the pyramid to the banked foray. And this can be achieved very well by Micro-Finance institutions which are able to appreciate the value of collective groups and the power that comes with such in terms of financial mobilization.

Africa is a cash-based society, and while the Western world views m-banking as almost exclusively about credit card transactions – African companies are proving that it can better be used as a tool to facilitate virtually any form of payment, directly from a mobile phone. Such companies as KrossPay, whose product of Red-Cloud plans to revolutionize the aspect of micro-payments to the unbanked through MFI’s. To people unable to always make it to the nearest town or transaction point at the drop of a hat, m-banking offers banking to virtually all, M-banking has had its criticisms, one being security. The fact of the matter is that we are no longer playing with a fledgling technology. The platform has proven itself to be a secure form of transacting and diverse app developing companies are coming up with apps that enhance security on such devices.

Various initiatives use mobile phones to provide financial services to “the Unbanked.” These services take a variety of forms—including long-distance remittances, micropayments, and informal airtime bartering schemes—and go by various names, including mobile banking, mobile transfers, and mobile payments. Taken together, they are no longer merely pilots; in the Philippines, South Africa, Kenya, and elsewhere, these services are broadly available and increasingly popular. Which makes me ask, who is better placed to take advantage of this and truly harness the power that collective groups of the unbanked hold?
What applications can be used by MFI’s to truly harness this? To reduce cost of transactions, enhance security, create credibility and reference.

M-banking is gaining momentum throughout the continent and this brings us to the key question: – What benefits can MFIs expect to gain by using m-banking? I believe benefits to MFIs are unprecedented as far as M-banking is concerned. The challenge is whether these MFIs are ready for change and willing to adapt. Benefits such as reduced costs of operations, increased value additions to the MFI client, increased convenience of working, reduced time wastage, increased transactions and easy data storage for back up and or reference and easy credit reference aspects by various stake holders for vital data reference. I believe the benefits are immense and increasing, question is, are MFIs truly ready to embrace and implement such applications?

September 9th, 2010 at 4:33 pm, Virtual Conference Day 2, Session 3: When should an MFI consider … | Telecom Regulation ()

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