Archive for: Malawi

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This conversation is moderated by Aleksandr-Alain Kalanda, Chief Executive Officer of Opportunity Bank of Malawi.  Daryl Skoog, Chief Technology Officer of the Opportunity International Network, will also be participating.

When my team at Opportunity Bank first started considering m-banking back in 2007, there was no other m-banking system in the country.  Some banks were considering it, but in a very limited way where current customers could just check balances over their mobile phones.  We were very excited about a much bigger vision – a vision to bring our services and products to unbanked people (especially in rural areas) via their phones.  We decided to create our own system that was successfully launched in May of this year.  We are happy with our system but it took longer and was more expensive and complicated to implement than we had expected.

I’ve spoken with many of my colleagues in microfinance around the world about this topic and many find themselves in the same position I was in a few years ago. They are very excited about the potential of m-banking but there is currently no service in their country that they can easily link into.  Based on my experience, I would recommend that MFIs make sure they have substantial financial, technical and human resources before going down this path.  Specifically, some of the pre-requisites should be:

•    Proven track record to implement complex technology-based projects
•    A strong core banking IT infrastructure that is able to handle large volumes of data flow
•    Substantial financial resources to pay not only for the technological solution but also for the human resources, the agent network and a significant marketing campaign.

In order to start the discussion, here are some questions I’m interested in hearing your thoughts on:

1.    For all those MFIs like us who are in countries without an existing m-banking service, what approaches are you considering?

2.    Have any other MFIs started building an m-banking service on their own?  What have your experiences been?

3.    The paper discussed some alternatives to MFIs building a service on their own, especially the option of working as a group with other MFIs to combine financial and technical resources to launch a service.  Is anyone interested in pursuing this approach?

4.    For those MFIs who have decided not to build an m-banking service on their own, are you considering other ways of using phones to improve customer service (e.g., for clients to receive information, loan officers to track info, etc.)?

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.

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Emergency aid used to be a short-term fix to a grim situation: handouts of food and other needed goods to alleviate the suffering of some of the world’s poorest beset by famine, drought or flood. Now, aid agencies increasingly deliver cash in continual social protection payments which help the poor build safety nets and avoid crises. And a few pioneering thinkers in the aid industry realize that cash + technology can also = infrastructure for financial services. Donors and governments can not only get social payments to the right people, but improve access to finance for entire communities historically off the radar screen of traditional banks.

Aid agencies are wising up to new ways of delivering help. They’ve realized that smaller amounts of aid, spread out over time and in the form of cash, can help poor people build there own safety nets, before a crisis hits. Cash is also much cheaper and more efficient way of delivering aid. Some 65% of America’s US$ 2 billion food aid program is eaten up by red tape and logistical costs, according to a US government report.

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