Archive for: Highlighted Articles

Recently we spoke with Naushad Contractor about India’s mobile banking trends. A payments professional with over 12 years experience across geographies, Naushad heads marketing for mobile commerce at Vodafone Essar ltd., India. He is also on the regulatory committee of the Mobile Payments Forum of India.

Part of e-Businesses success stories, he has played a key role in launching India’s first eWallet and was a member of the core team that launched and made Remit2India.com the World’s No.1 Independent Money Transfer Portal for Non Resident Indians.

Q: Is mobile banking popular or hyped?
I think Mobile Banking is increasingly becoming popular but it is much more hyped than it is popular. Everyone says “I Do” but actually not many actually do as they say. However, the factor of sheer convenience for the customer and lower transaction costs for the banks is creating a conducive pull + push environment for increasing understanding and usage of this relatively new concept. As in the early days of internet banking, most people will tend to use mobile banking just as an information tool rather than conducting too many transactions on the mobile. Even the initial transactions will be much lower in value. Once trust in mobile banking increases as a result of good user experience, both usage and transaction values will begin to normalize.

Read the rest of this page »

I have been tracking the mobile banking/branchless banking space in India for a few years – since the business correspondent guidelines were issued. India drafted those guidelines in the spirit of significantly ramping-up access to finance for poor people. The guidelines put Indians in the lead on branchless banking regulation in the South Asia region. Two years have passed and we have yet to see those guidelines translate into a dramatic change in the access to financial services picture in India. There are new companies and more experimentation with correspondents and innovative solution providers but banks have simply not been aggressive about pursuing branchless channels.

The Reserve Bank of India issued final mobile banking guidelines on Wednesday and banks are again front and center. Should we expect these guidelines to dramatically alter the picture of financial access in India? Are the unbanked winners or losers? Well….

Read the rest of this page »

The promise of mobile web services, including WAP-based banking in developing countries is well established. Mobile banking, simply put, is transactions over a mobile network (via text message or connection to a data service) with a cash-in/cash-out agent (such as a local merchant or post office). This is a core piece of CGAP’s work. We share the belief that increased access to the online world can help transform the offline world (what some inelegantly call Meatspace). That has been true in wealthier nations and it is proving true in emerging markets. The need and the demand seem clear. Last month, Google and HSBC backed a plan to bring broadband backbone connectivity to telecoms and internet service providers in poor places. The venture is called O3b (“Other Three Billion”) and is easier said than done (remember Iridium, the failed satellite phone project?). As the Christian Science Monitor trimly puts it: “Are 16 satellites the answer to reaching 3 billion people?”

But…what if the entire way we get connected will be different in a few years time? Today’s telecom headlines include details of an effort to transmit wireless communications over visible light:

­Boston University’s College of Engineering is launching a program, under a National Science Foundation grant, to develop the next generation of wireless communications technology based on visible light instead of radio waves. Researchers expect to piggyback data communications capabilities on low-power light emitting diodes, or LEDs, to create “Smart Lighting” that would be faster and more secure than current network technology. (via Cellular News)

When it comes to getting connected, there is no shortage of mobile phones on this planet. The part of the UN that deals with telecom issues tells us that by the end of this year there will be some four billion mobile phone connections. Many of the handsets being sold around the world are still the basic, cheap models that do voice and text messaging. One of the more popular models in India even features a flashlight, which makes me think there’s a sales slogan in there somewhere (mobile phones can go where electricity cannot) or something silly like that.

The connectivity story in rural, poor places is changing fast. An increasing share of handset sales in Africa and Asia are capable of fast data speeds, enabling more robust services that are web-based. If O3b gets off the ground, it will enable millions of people to leapfrog copper wires and rudimentary mobile handsets, right to broadband web. If Boston University’s program succeeds, then that’s one more way to close that digital divide.

As promised, here is the video and presentation from today’s webinar that Kabir Kumar and Ignacio Mas lead, based on their recent paper: Banking on Mobiles: Why, How, for Whom?

Thanks to all of you who joined us in person or online.

Presentation: CGAP Mobile Banking Webinar (881kb pdf)

Video: CGAP Mobile Banking Webinar (requires RealPlayer)

Background
The promise of mobile banking is well known; harder to find are examples of solid implementation and mass roll out beyond payments and transfers. In Banking on Mobiles: Why, How, for Whom? CGAP examines the business case and deployment options for smaller banks and microfinance institutions. With effective partnerships and technical choices (which affect customer uptake), we believe there is a strong market opportunity to reach poor people with a broad range of financial services.

Right now, CGAP’s Kabir Kumar and Ignacio Mas are leading a discussion based on their recent paper: Banking on Mobiles: Why, How, for Whom?

Access the webcast at: http://webcast-ext.worldbank.org/streaming/live.ram

Submit your questions by commenting on this blog post or just write to me at jrosenberg@worldbank.org.

-Jim

Wed. Oct. 1 from 09:30 to 12:45 from Washington DC | all times US Eastern (GMT -5).

9:30 – 10:30
Why: The logic of branchless banking
How: Developing and managing branchless banking channels

11:00 – 12:45
For whom: choices for banks, operators’ role, customer adoption
The good, the bad, and the ugly of m-banking

Background
The promise of mobile banking is well known; harder to find are examples of solid implementation and mass roll out beyond payments and transfers. In Banking on Mobiles: Why, How, for Whom? CGAP examines the business case and deployment options for smaller banks and microfinance institutions. With effective partnerships and technical choices (which affect customer uptake), we believe there is a strong market opportunity to reach poor people with a broad range of financial services.

We will archive and share the video later.

This is an excerpt from a recent CGAP paper, Banking on Mobiles: Why, How, for Whom? In it, Kabir Kumar and Ignacio Mas examine the business case and deployment options around mobile banking for smaller banks and microfinance institutions. With effective partnerships and technical choices (which affect customer uptake), we believe there is a strong market opportunity to reach poor people with a broad range of financial services.

Mobile phones are ingenious devices, but one thing they cannot do by themselves is convert cash into electronic value or dispense cash. They can be used only to transfer or transform value electronically. A mobile banking platform therefore needs to be supported with a cash conversion platform—whether full-blown bank branches, ATM terminals, or third-party banking agents. Remember, the whole mobile proposition is based on choice and control: if I don’t have a choice of cashing in or out of my electronic wallet, I am not likely to think mobile banking is doing much for me.

Read the rest of this page »

This is an excerpt from a recent CGAP paper, Banking on Mobiles: Why, How, for Whom? In it, Kabir Kumar and Ignacio Mas examine the business case and deployment options around mobile banking for smaller banks and microfinance institutions. With effective partnerships and technical choices (which affect customer uptake), we believe there is a strong market opportunity to reach poor people with a broad range of financial services.

A mobile phone is, and always will be, more limited in its capabilities than either a connected personal computer or a specialized POS. But it has economics on its side. For instance, the high cost of the required dedicated broadband infrastructure and the devices themselves will hinder the spread of Internet banking in developing countries. In rural areas it is further hindered by a vicious circle: low device penetration does not warrant roll-out of appropriate broadband communications infrastructure, and while the infrastructure is not in place few customers will invest in personal computers.

Read the rest of this page »

I attended SWIFT’s SIBOS conference last week. This event couldn’t have been scheduled for a more exciting time – it opened with the fresh news of the turmoil on Wall Street. There was much talk about that.

As for the issues we are focused on, there was a panel discussion on mobile banking. A Western Union representative said that their average remittance size is $350. But in mobile trials (from Hawaii and UAE to the Philippines, using both Philippine telecom services Smart and G-Cash) the average remittance size was less than $100. So that’s evidence that there is demand to send lower amounts, if only the commission structure permits it. A Wells Fargo speaker said their average remittance size is closer to $500.

From India, ICICI explained their mobile remittance product. Essentially, the recipient gets notified by SMS, and then punches the code he gets on his SMS into a specially-enabled ATM to withdraw the cash. So the mobile is used purely for notification purposes, not for fulfillment.

As for some of the more cutting edge technologies, estimates on NFC-capable phones by 2011 or so ranged from 10% to 30% of installed base. So either way, it is not likely to reach poor people in developing markets in sufficient volumes any time soon.

SWIFT is creating a new messaging type especially for international remittances. Their main messaging business is related to inter-bank transactions, whereas they want to support person-to-person transfers. This was deemed by all banks to be essential to make it easier for each bank to set up bilateral relationships with other banks along remittance corridors, without having to agree a separate set of messaging syntax, rules and contracts. SWIFT would standardize all that and carry the messages too, in return for a commission. A dozen or so banks are now piloting this new product.

Last week a group of the world’s 25 leading medical doctors, public health professionals, development agency staff and analysts gathered in Bellagio, Italy to debate the future of mHealth, or the use of mobile phones in health systems.

This emerging field resembles mobile banking circa 2002. There are uncoordinated and relatively small pilot projects, regulators and policymakers have thought precious little about the topic, donors have no organized mechanisms for support, and there is scant public attention to the opportunities to deliver healthcare or track health information with mobiles. In a previous post, Jim Rosenberg characterized this state of play as the “technology trigger,” the first stage in the maturing of a new technology approach.

Mobile banking has clearly moved beyond that phase – indeed, with regular appearances in publications like the Financial Times, Economist, Wall Street Journal, New York Times, and trade press such as The Banker, mbanking is now farther along the lifecycle towards the “peak of inflated expectations.” (See Jim’s post)

What caused this maturing of mbanking during the past 5-6 years? For one, “mobile financial services” isn’t a new topic and has been hyped before, so we may just be following a pattern. But I’d like to share one theory that I discussed this week with the mHealth experts as they think through how to advance their field. My argument consists of six different reasons.

Read the rest of this page »

Jonathan Donner is a researcher in the Technology for Emerging Markets Group at Microsoft Research India in Bangalore, which is collaborating on research around customer adoption with CGAP. Jonathan’s primary research interests concern the economic and social implications of the spread of mobile telephony in the developing world.

Jonathan sends us this note about the forthcoming “Mobile banking and economic development: Linking adoption, impact, and use,” co-authored with London School of Economics and Political Science doctoral candidate Camilo Tellez.

We share many people’s enthusiasm about the potential of m-banking and m-payments to benefit communities not traditionally reached by banks. However, since m-banking is such a new phenomenon in the developing world, there are still relatively few studies exploring this potential.

In the paper, Camilo and I take a step back to look at the current state of three approaches to researching m-banking and m-payments. We find that while there are a growing number of academic studies focused on the drivers and barriers to adoption, there are only a few studies focused on impact (CGAP’s studies notwithstanding), and even fewer studies of how m-banking and m-payments technologies are used in daily life.

We argue that the adoption, impact and ‘use’ approaches need not be separate, as they often are, but can rather can be mutually reinforcing. For example, the things an ethnographic study might reveal about whether people view their m-banking account as a ‘wallet’ or a ‘post office’ should help other researchers design better (and very different) surveys to assess why an ‘adoption’ of the technology has occurred, or what impact the technology is having on households.

Of course, this adoption/impact/use distinction is not unique to m-banking, but instead is a fixture of the interdisciplinary field of ICTD (Information Technology and Development) more generally. So, we also detail how some big themes from ICTD are resurfacing in the current discussions about m-banking.

Finally, we use some illustrative data from fieldwork Camilo carried out with small enterprise owners in Bangalore. We explored what place SMS messages might have in the mediation of the informal credit relationships they have with customers. Would they “bill” or “remind” a customer about an outstanding unpaid balance using the SMS channel? 19 of the 20 interviewees expressed varying degrees of unease with the notion of an SMS used in this way. Mostly, we think, because of the ongoing need to maintain the relationship through carefully-managed face to face interactions. We cast these interviews as examples of a study of context and daily use which can inform the design and assessment of m-banking systems.

The paper will appear in December as part of a special issue 18(4) of the Asian Journal of Communication, called “New Perspectives on Development Communication: Emerging Technologies, Shifting Paradigms”, guest edited by Mark Levy (Professor, Michigan State University).