Archive for: India
 Sahayata’s loan officers, or field credit officers (FCO), are able to spend the vast majority of their time working with clients rather than on data entry and other administrative tasks. Photo by Lauren Braniff A typical day in the life of a microfinance loan officer might look something like this:
Arrive at the branch and print your agenda and reports for the day, which will typically include several group meetings at which you’ll disburse loans or collect payments, and perhaps hold meetings with prospective clients. After preparing for the day, you depart the office for a day in the field.
After spending the day traveling around to meet clients, you return to the branch and begin data entry. You enter the amount of money disbursed or collected from each client, and perhaps enter information on new clients or loan applications.
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 What does mobile money cost for the unbanked and underbanked? CGAP releases pricing study across 16 providers in 10 countries
The conclusion: mobile banking and other forms of branchless banking are cheaper than traditional banking, but the gap between the two may not be as wide as some may think.
On average, branchless banking is 19% cheaper than banks. Why isn’t the pricing gap wider? Mobile money providers might be keeping profits for themselves and not passing them on in lower costs. There could be a good reason.
It is possible that establishing a successful, scaled branchless banking service could be more expensive than expected. Some branchless banking providers want to leave room to come down on prices as more competitors enter the market.
Other highlights:
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The lower the transaction value, the cheaper branchless banking is in comparison with banks. For example, at a transactional value of $23, branchless banking is on average 38% cheaper than commercial banks the study looked at.
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Branchless banking is 54% cheaper than informal options for money transfer.
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Customer usage is influenced not only by absolute prices but by the way a service is priced. For example, in order to encourage trial of money transfers, some services offer free deposits, which make branchless banking an affordable way to save.
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Average branchless banking price is $3.90 per month.
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Informal providers charge double the price for a money transfer than a branchless banking provider.
Services analyzed:
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Afghanistan: M‐Paisa
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Brazil: Bradesco and Caixa
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Cambodia: WING Money
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Cote d’Ivoire: MTN Mobile Money, Orange Money
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India: Eko
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Kenya: M‐PESA and Zap
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Pakistan: easypaisa
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Philippines: GCash and Smart Money
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Tanzania: M‐PESA, Zap
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South Africa: MTN Mobile Money, WIZZIT
The study found that by comparing 26 branchless banking pioneers and traditional banks with products aimed at the same kind of customers, on average, branchless banking is 19% cheaper across eight use cases:
1. Sending Money Transfer
2. Receiving Money Transfer
3. Short‐term safekeeping
4. Medium‐term saving for asset
5. Bill Payments
6. High Usage (as a proxy for financial inclusion)
7. Average monthly transactions per M‐PESA user in 2008
8. Average monthly transactions per Kenyan banking customer in 2008
-Jim Rosenberg
by Mark Pickens: Monday, May 17, 2010
 photo by Claudia McKay In the past few weeks, my colleagues have blogged about our study of agent networks in India. You can see our overall analysis of agents (called CSPs or Customer Service Points in India). The India research was one part of a three-country study (along with Brazil and Kenya) that highlights the critical role agents play as the key interface between branchless banking providers and customers.
In this post, we look closely at FINO. FINO has 10,000 agents, distributed across 25 different initiatives with nearly 40 financial institutions, with more than 13 million registered users accessing a range of products from no frills saving accounts to NREGA government benefits to microloans and insurance.
FINO started life as a firm focused on banking technology, but necessity has forced FINO to become skilled in agent network management as well. By some measures, FINO is the world’s largest agent manager. FINO is putting together some tools we’ve not seen in Brazil and Kenya, countries which get a lot more attention in branchless banking.
FINO’s solution starts with something deceptively simple. Every field staff member sends a SMS to headquarters when they leave home and head for the field each morning: almost like taking attendance. FINO then melds this with transaction data showing when and where field staff meet agents, and the transaction details of agents and customers, yielding a massively data-rich mash up which FINO color-coordinates, uses to generate scores for every staff member, and makes sortable. The end result converts tens of thousands of data points into an easily absorbed visual interface. And this is all online, easily accessible to FINO staff.
When I saw it, it comes across as a system designed to provide not perfect information, but “good enough.” For instance, a dishonest staff member could send a text from bed saying he was in the field. But as FINO’s Jatinder Handoo puts it, “You cannot lie forever.” Absences will appear. Other data will show that staff person’s agents do not perform as well, that clients don’t transact as often.
The key is pattern recognition. That’s where the color coding, scoring and sortability of FINO’s system comes into play. The worst performers slide to the bottom, and two staff in headquarters in Mumbai are able to follow up over the phone, typically on the same day. FINO can also single out the best agents to examine more closely. In the long run, this should provide a goldmine of data helping FINO improve its agent networks, and ultimately the quality of financial services it delivers for its partners.
-Mark Pickens
by Claudia McKay: Wednesday, May 12, 2010
In the past few weeks, my colleagues have blogged about our study of agent networks in India. You can see our overall analysis of agents (called CSPs or Customer Service Points in India) here. The India research was one part of a three-country study (along with Brazil and Kenya) that highlights the critical role agents play as the key interface between a branchless banking service and its customers.
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by Sarah Rotman: Wednesday, May 5, 2010
 I’ve been part of a CGAP team working on a three-country study of agent networks over the last several months. We blogged about our time in Brazil earlier this year, and you can download the deck with our analysis of agents here. We also did some analysis of M-PESA agents last year, and we will be updating this information in the coming weeks.
More recently, however, I was joined by colleagues Karuna Krishnaswamy, Claudia McKay, Mark Pickens in India talking to FINO and Eko, along with other companies involved in different forms of branchless banking. Over the next few weeks, we’ll be blogging about various aspects of our time there. You can see our overall analysis of agent networks in India in this deck.
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Continuing his stint as a guest blogger, Jan Chipchase noted that all mobile banking is personal while challenging the assumption that the unbanked need access to mobile money services:
This author’s position is that the introduction of mobile banking services is having, and will continue to have a disproportionately positive impact on the poor compared to their wealthier counterparts. What are the needs of the poor in this space? What does it mean to ‘design for inclusion’? And given that growth is largely driven by profit seeking corporations where do the needs of consumers, corporations and other stakeholders diverge?
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 This is part of a series of blog posts we are doing based on new research about business correspondents (agents) in India. The India research was one part of a three-country study (along with Brazil and Kenya).
A notable difference in the role of banking agents (also called Customer Service Providers or CSPs) in India compared to other countries is that the agents are responsible for customer acquisition in addition to processing transactions.
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by Mark Pickens: Monday, April 19, 2010
 photo by Claudia McKay The regulatory changes made in India last year have uncorked a stream of new branchless banking launches. Three new providers have or are just about to go to market.
They join three other firms who have been beavering away at branchless banking and are now gearing up for big growth: FINO, Eko, and A Little World.
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by Jim Rosenberg: Monday, April 19, 2010
Bindu Ananth is the President of IFMR Trust, which has a mission of ensuring that every individual and every enterprise in India has access to complete financial services. In pursuit of this, IFMR has made four key investments – IFMR Rural Finance (full service financial institutions for remote rural India), IFMR Capital (guarantee company for high-quality MFIs), IFMR Mezzanine (subordinated debt provider for emerging MFIs) and IFMR Ventures (debt access for rural enterprises). Through these investments as well as other initiatives , IFMR Trust is advocating for an inclusive financial system in India. Recently I interviewed Bindu about how the financial system in India might be configured to deliver complete financial service access.
What is the approach IFMR advocates for that is different from all the other models being used in India, such as scaling up microfinance institutions (MFIs), reforming the cooperatives, promoting the self help group/bank linkage model, or the current favorite of policymakers, the business correspondent model linked to the use of technology?
Our vision for the Indian financial system has three parts:
- An adequate number of local, high-quality financial providers that provide complete access to financial services. (We have borrowed heavily from Prof. Jonathan Morduch in defining complete access to be: reliability + continuity + convenience + flexibility + increasing financial well-being.)
- Orderly ways for systematic risk to be transferred from these local providers to risk aggregators. This would be done through mechanisms like reinsurance and securitization, among others.
- The presence of well-regulated and well-capitalized aggregators like commercial banks, mutual funds, and insurance companies.
Several of the initiatives you mention as models are in line with our vision that I just described. For example, a local microfinance institution that securitizes part of its portfolio to a mutual fund transfers systematic risk now to the mutual fund. This is a perfect partnership because the MFI is very good at customer origination and monitoring and the mutual fund has the ability to provide vast amounts of liquidity for the growing demand because of its size, capitalization, and diversification. Similarly, the banking correspondent (banking agent) that is providing savings services on behalf of a well capitalized bank would be consistent with our approach.
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by Mark Pickens: Tuesday, February 16, 2010
This week we’re blogging from Barcelona, site of the Mobile World Congress. Today is the second full day of focus on mobile money, where the GSMA’s Mobile Money for the Unbanked working group convenes market players to compare notes. CGAP Microfinance Specialist Mark Pickens is presenting the latest work we’ve been doing on agents.
Industry actors say their biggest unknown is how to build a viable network of branchless banking agents. Over the next 3 months, CGAP’s Technology Program will analyze agents in 3 reference countries (Brazil, India and Kenya). Because this area is so new, we will be out in the field ourselves talking to agents, network managers and banks.
We’ve already begun in Brazil, where CGAP is partnering with The Center for Microfinance Studies at FGV (Fundação Getulio Vargas), the leading Brazilian business school. Planet Finance Brazil is also a partner in the field research. Data was gathered on 295 agents, 49 of which were interviewed in-person. Read more about this collaboration.
-Mark Pickens
Next: A round-up of mobile banking developments from the Mobile World Congress.
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