Mark Pickens is a Microfinance Analyst with CGAP’s Technology Program. Prior to joining CGAP he consulted to Amret Microfinance, Bank of Africa, USAID, UNCDF and worked with Development Alternatives, Inc. , a consulting firm specializing in economic development solutions in emerging markets. Pickens has helped launch four institutions that successfully mix for-profit sensibility with social mission, including CGAP’s technology program, New York City’s largest business incubator for immigrant entrepreneurs, an award-winning internet news portal, and a public health non-profit in Madagascar. He has a Master’s degree in microfinance from Columbia University.
It turns out Secretary Clinton had a lot to say about mobile banking. I found three parts particularly relevant for the work we do on banking the unbanked.
Safaricom and Equity Bank announced a tie-up which enables M-PESA’s 8.5 million users to withdraw funds at Equity’s 550 ATMs (the largest ATM network in the country), which may help relieve some problems of agents not having cash.
Equity made a tie-up in Dec. with Essar, who bought the 4th mobile license in Kenya last year and recently launched the 3rd mobile banking service in the country. Equity’s branches will serve as agents for its service YU. However, this is all one way to withdraw from a mobile wallet at a bank’s ATMs. Bank customers can’t yet go to an agent and withdraw money from their bank account. But that’s coming soon….
It’s not just banks and telecom firms in the headlines. This week, the Central Bank of Kenya plans to distribute for comment draft regulations which will finally enable banks to use agents (about 3 years since Safaricom started using agents for its M-PESA service).
We don’t know half as much as we’d like to about how poor people use and perceive branchless banking. But more data is giving us progressively better insights. A survey in Kenya, funded by FSD Kenya, provides a window onto M-PESA. The survey was done with 3,000 randomly selected households (with a bias towards locations with more M-PESA agents, so its not nationally representative and probably undercounts what’s happening in more remote, poorer areas of the country).
The highlights confirm some of what we already thought was happening, but also points at several surprises.
Several years ago, regulation was the apparent barrier everyone spoke about in branchless banking. Today, it seems like everyone is on about agents. With good cause. Agents are the customer-facing element for providers, who rely on them to open accounts, do customer care, and (crucially) stock adequate amounts of cash and e-float to enable clients to deposit and withdrawal. Yet, there is no consensus on how to build a viable agent network.
Nokia, Microsoft, and PayPal have all taken fascinating steps in recent days to enable more financial services aimed at the poor and unbanked…someday.
Just today, Nokia announced it plans to launch a mobile financial service next year, to be called Nokia Money. It target consumers in emerging markets with a phone but no bank account. Nokia Money will be based on the Obopay platform.
India’s new government has promised big moves on poverty reduction. At the center is a plan to provide a new biometric ID card to every one of India’s one-billion plus citizens. To lead it, the government has tapped Nandan Nilekani, cofounder of Infosys, one of India’s biggest computer-services companies.
Part of the concept’s appeal is slashing widespread “leakage” (fraud, corruption, theft) in the government’s already prodigious subsidies intended for the poor. One in ten Rupees spent by the government are aimed at poor households - for example, India’s National Rural Employment Guarantee Scheme paid workfare wages to more than 35 million un-employed people last year.
We’re just two weeks from the Mobile Money Summit…where all will be revealed - the results of the CGAP-GSMA Mobile Money Market Sizing Study. The findings describe in detail how unbanked people use mobile money services, and also provide a framework based on industry best practices to help mobile operators drive initial adoption and progress towards more sophisticated offerings, such as savings and credit. Read the rest of this page »
It seems like every week there’s a new market study that comes out about mobile banking – but few of those (if any) focus exclusively on the opportunity to be found in serving poor, unbanked people in developing countries.
So, with our friends at the GSMA, we thought we’d share a preview of the upcoming results of the CGAP-GSMA Mobile Money Market Sizing Study, which includes:
a projection of the unbanked poor who could be reached globally by 2012;
an in-depth look at unbanked mobile money users in the Philippines today;
and a survey of more than 40 operators, vendors and other industry actors.
The aim is to help mobile operators drive initial adoption and progress towards more sophisticated offerings, such as savings and credit. Some highlights after the jump….
People working on social protection policy and financial inclusion don’t always find a lot of common ground. In fact, some would say they put out competing views of poverty alleviation: direct payments from the government to raise incomes, or increasing poor people’s access to financial services to help weather shocks and increase incomes. Of course, this is an over-simplification, and somewhat artificial. Both want the same end (poverty alleviation) and neither casts itself as the magic bullet. There’s a good 20+ years of thinking on how social protection and financial inclusion are mutually reinforcing, including somewhat famously the idea of Individual Development Accounts (IDAs) as created by Michael Sherraden.
There’s a new surge of interest, this time looking at how the impact of conditional cash transfers (CCTs) can be magnified by providing recipients with basic financial services.
I recently participated in a panel on the topic organized by The New America Foundation’s Jamie Zimmerman, who along with Yves Moury, have authored a paper on the topic. Here’s the video.
My take? If linking the poor to financial services helps them, why stop at CCTs? Let’s look at a wider world of government-to-person (G2P) payments, including other types of social welfare payments as well as wages and pensions. By CGAP’s estimate, more than 155 million of the world’s poor receive a regular payment from their government. But far less than 1/4 land in an account.
Those of us working on the financial inclusion need to line up the evidence to convince social policymakers that bolting on basic bank accounts for recipients will have benefits. And crucially, we need to boost the business case for banks to provide basic banking to poor G2P recipients on a profitable basis. One key will be deploying on more cost-effective delivery channels — such as point of sale terminals at existing merchants in the community rather than expensive bank branches.
Ten years ago, there was no active m-banking. Global cell phone penetration stood at 8% (0% among low income countries). The Central Bank of Brazil was promulgating the first set of regulations which would allow bank correspondents on a broader basis. Microfinance had caught the eye of some beyond its enthusiasts and practitioners, but the cause of financial access was considered a niche not a mainstream policy emphasis.
