Archive for: Technology

MTN Mobile Money continues its sweep of Africa, now launching services in Benin:

Mobile operator MTN Benin and Ecobank Benin have launched MTN Mobile Money, a prepaid money transfers service available throughout the country on mobile phones using the MTN network, reports L’Autre Quotidien. Mobile Money can handle account opening, money transfer, deposits and withdrawals, as reported here.

Interesting lessons from the success of South Africa’s Absa mobile banking initiatives were recently applied to the Egyptian market:

For mobile banking to prosper in an emerging market several criteria must be present, such as a low internet penetration rate combined with a high mobile phone penetration rate, Lana Strydom, manager of the Mobile Portal section of the Digital Channels Retail Banking division for Absa explained. For one, payment alternatives, such as credit cards must not be well established, which is indeed the case in Egypt. Furthermore, a significantly large segment of the population must be outside of the banking sector. In Egypt, where the population is 80 million, only around 10 million are banked. The geography of the country must be rather large, with a substantial rural population. Again, although 20 plus million live in Cairo, the remaining 60 million lie beyond the capital’s limits.

Africa seems to be the theme of the day and the Daily Monitor reports that Nokia, during the 2010 Mobile Africa Conference recently held in Helsinki, encouraged more European firms to invest in Africa, given the growing demand for mobile phone-driven services.

And sticking with the Nokia theme, Simon Rockman from the GSMA Mobile Money Exchange had an interesting article about how Nokia’s move into the mobile money space is quite a good fit for the company. He writes that the technology piece of mobile money is quite low-tech. So while technology might not be that important, two things really are: brand and distribution. And Nokia is great at both of these:

To a person who has never encountered any kind of payment that wasn’t cash or barter the idea of putting money into an account means you really have to trust the brand associated with it. According to Interbrand, Nokia is the number five brand in the world – one of only two non-American brands in the top 10. The highest financial services company is American Express at 20 and the top bank HSBC at 32. This is a global ranking; in developing markets Nokia is even stronger. It’s the top brand in India.

- Sarah Rotman

This blog post is co-authored by Sarah Rotman from CGAP and Mireya Almazan from the Bill & Melinda Gates Foundation.

Various mobile payment services are now available in Tanzania

About a year ago, Sarah blogged on the mobile money landscape in Tanzania, comparing many features of the three mobile money services. In particular, she looked at Vodacom’s M-PESA, Zain’s Zap and Zantel’s Z-PESA.  Many other people were analyzing the same market around this time, including Amrik Heyer and Daniel Laiser cited here, as well as Gunnar Camner, Emil Sjoblom and Caroline Pulver in this GSMA Case Study.

Mireya has been spending time in Tanzania getting a close-up view on this interesting market. In particular, she’s been there for the recent launch of the newest mobile money service in Tanzania, TigoPesa, which is the latest reminder of the massive potential in this country to expand financial services to the poor.

TigoPesa, created by Tanzania’s fastest-growing mobile network operator, Tigo, is the fourth mobile money service offered in Tanzania. Vodacom Tanzania, a subsidiary of the Vodafone Group, is the leading mobile network operator with a 37% market share. Its M-PESA mobile payment service, which launched in early 2008, is currently the most recognized and widespread in the country. But Tanzania’s other major mobile operators, Zain (with 30% market share), Zanzibar-focused Zantel (with 8% market share), and now Tigo (with 25% market share), are following Vodacom’s lead in offering mobile money services. Zantel launched Z-PESA at roughly the same time as M-PESA, Zain’s Zap mobile money service has been in the market since early 2009, and TigoPesa launched just a few weeks ago.

We estimate that, primarily driven by M-PESA, Tanzania’s overall mobile money market is now approaching 1 million active customers, an important milestone at which economies of scale may start to kick-in. With four operators now aggressively marketing their mobile money services and building up their agent networks, general awareness levels on how to access menus (all but Zap being USSD-based) and how to cash-in/out, as well as the overall benefits of such services, have grown significantly in the last few months.  

These are encouraging developments in a market that has been characterized by slow uptake and usage of mobile money, compared to the glaring success of Safaricom’s M-PESA in neighboring Kenya. Although the mobile banking sector is still at a relatively early stage of development in Tanzania, the potential to expand financial access to underserved populations is significant. The vast majority of Tanzania’s population lives under $2 per day and only 12% has a formal bank account, yet most has access to a mobile phone. Mobile network operators, facing intense competition in a highly fragmented market, have seized on this potential new market by rolling-out payment services and mobile wallets. In fact, the market structure of the mobile industry in Tanzania is one of the most important differentiating characteristics with that of neighboring Kenya. You can’t get much more of a contrast than a market where Safaricom had practically 80% market share when it launched M-PESA 3 years ago, a circumstance which is simply not there in most markets. 

It has been clear for some time that the quick success of mobile money in Kenya was not to be easily replicated next door, nor in the over 40 countries that have launched mobile money deployments since 2003. Yet Tanzania appears to be developing its mobile money market at a commendable rate, and can potentially yield multi-player models that we have yet to see elsewhere. This is the partnership model Ignacio Mas blogged about recently, where operators could potentially share the cash merchant network in order to consolidate their transaction volumes at the store level, which can also be leveraged by banks seeking to expand their footprint.

With four MNOs vying for the loyalty and attention of customers, and with less than 500 bank branches serving the entire country, neither MNOs nor banks have the luxury of ignoring mobile money offerings. 

- Sarah Rotman & Mireya Almazan

We started out September with a virtual conference on the topic of a new CGAP Focus Note Microfinance & Mobile Banking: The Story So Far. We invited guest bloggers from the MFIs featured in the paper to share their learnings from implementing mobile banking in their daily operations.  Here SMEP consultant George Kinyanjui explains how group dynamics have changed with the use of M-PESA:

We knew that allowing groups to repay via M-PESA would impact the group cohesion and we worked carefully to ensure this impact was positive. Although clients repay using M-PESA prior to the group meeting, the meetings themselves are still mandatory.  The meetings are much shorter than they used to be since the emphasis is not on collecting cash.  Instead, loan officers can focus immediately on any repayment issues or business problems the clients wish to discuss.  The officers can now accommodate more groups in one day. Clients are happy since they can make repayments whenever they want, group meetings are shorter and there is more security. 

Dan Radcliffe and Ignacio Mas from the Bill & Melinda Gates Foundation finished a paper on Scaling Mobile Money. The paper describes how mobile money systems require scale to get off the ground and struggle to grow incrementally, as they need to reap network effects, build trust, and overcome chicken-and-egg problems of acquiring both customers and merchants simultaneously.  Ignacio also shared 4 priorities for branchless banking via our blog:

It takes a considerably bold(er) person to predict how exactly (branchless banking) will happen and by when. Rather than speculate on that, perhaps it is more useful at this point in time to lay out what are the milestones –let’s call it priorities— that those of us who support the development of branchless banking would like to see happen. I’m talking here about outcomes –what kind of offers we’d like to see in the marketplace—rather than constituent elements of the puzzle (such as regulation, agent network management or technology bits).

Karina Baba and other CGAP Technology Team colleagues released the findings from a survey of mobile money managers to understand their expectations around profitability of the mobile money business:

Considering mobile money on its own as a source of revenue, about 70 percent of the managers who responded agree to a certain extent that this service will be a significant source of revenue for MNOs, making large profits over time. A majority of the respondents view mobile money more as a new source of revenue (63 percent) than as a strategy to acquire new customers (50 percent).

Chris Bold wrote about how branchless banking providers in Pakistan are facilitating both the mobilization of donations and the disbursements of cash to those that need it most following the floods:

CGAP’s partner in Pakistan, Tameer Microfinance Bank, and their parent company, Telenor Pakistan, have made it possible for people in Pakistan who may not have internet access to make donations to relief organizations using their EasyPaisa mobile banking platform and have removed the usual transfer fees. EasyPaisa account holders can make donations direct from their mobile wallets and anyone can walk into one of 6,000 agents to contribute to the work of organizations including the Pakistan Red Crescent Society and SOS Children’s villages. 

Archil Bakuradze guest blogged for us about enabling international remittances in Georgia.  And Mark Pickens closed out the month by writing about mobile money innovation.

Mobile money is mostly one size fits all. Here is your mobile wallet and P2P function – you figure out what you can use it for. What if providers turned this on its head, asked customers why they were using mobile money, and then tailored its features? Saving through your mobile to pay for school fees? Let us send you weekly reminders to help you remember to make a deposit. Would that be terribly expensive for the provider?

- Sarah Rotman

We’ve been pointing out the deficit of fresh thinking on mobile money products (see my blog post after the GSM World Congress, and more recently Bill Mauer and Olga Morawczynski’s take on the subject and my colleague Sarah Rotman’s opinion as well). The topic came back to mind when Gartner released its annual hype cycle for emerging technologies, and tech investor guru Ron Conway made his list of tech megatrends – few if any of them seem useful to the majority of humanity that is low-income and living in a developing economy. Location-aware electronic paper might be cool in Palo Alto, but who is it going to help in the Amazon, Ahmedabad or Abidjan? That’s why we loved the strong nods to the potential of mobile phones at last week’s Clinton Global Initiative (including mobile money in Haiti) and Nokia World earlier this month.

To some extent, falling hardware prices and mobile data transfer costs make it inevitable that we will see suddenly cheap technology applied to old problems. But isn’t there more we could be doing? Since CGAP focuses on financial inclusion, I’ll restrict my musings to mobile money, but these might be applicable to mobile health, education and a variety of other fields.

I can see three avenues we ought to be looking down.

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Archil Bakuradze is the chairman of the microfinance institution Crystal Fund. Here he discusses the “Reaching Georgia’s Rural Poor through Mobile Remittances” project, which is a joint effort of the Crystal Fund, Mobile Finance Eurasia and the microfinance organization Crystal and is funded by the Financial Facility for Remittances of the International Fund for Agriculture Development.

International remittances play an important role in the lives of people across the world, but in Georgia they are of major economic importance, accounting for 9% of the country’s GDP. According to various studies, about half of international remittances in Georgia go to rural areas.

Although it constitutes half of the country’s workforce, the rural population of Georgia generates only a small share of the country’s GDP and is poor and largely unbanked, despite the good overall progress of Georgia’s economy and the financial sector.. The aim of our project is to reduce the transaction costs of sending remittances to Georgia, especially to the country’s rural communities, thus enabling them to spend more money on productive activities.  

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Delivering aid in Pakistan

Every reader of this blog will have seen the heart-breaking pictures of the impact of the flood in Pakistan. Many of us will have also made donations to relief agencies that are doing what they can to help those that have been worst affected – probably by using our credit or debit card on line. In Pakistan, branchless banking providers are facilitating both the mobilization of donations and the disbursements of cash to those that need it most.

CGAP’s partner in Pakistan, Tameer Microfinance Bank, and their parent company, Telenor Pakistan, have made it possible for people in Pakistan who may not have internet access to make donations to relief organizations using their EasyPaisa mobile banking platform and have removed the usual transfer fees. EasyPaisa account holders can make donations direct from their mobile wallets and anyone can walk into one of 6,000 agents to contribute to the work of organizations including the Pakistan Red Crescent Society and SOS Children’s villages. They are also in discussion with a number of NGOs about using EasyPaisa to help them to distribute payments to people who have lost their homes or their livelihoods and Telenor themselves have pledged over Rs 213 million (USD 2.5 million) to flood relief efforts.

Read the rest of this page »

This post was written by Karina Baba, who just completed a summer fellowship with the CGAP Technology Program.

Is mobile money a viable business in its own right? Or will it only make a positive contribution to the bottom line through indirect benefits?

This past summer, we decided to ask mobile network operators (MNOs) directly what they expect from mobile money (defined here as remittances and other payment services via mobile) – Will it make money? When? And what does it mean for their core business? The results provide some of the first insights into how mobile money managers perceive the potential contribution of mobile money to their businesses and how they are selling the service internally.

We surveyed over 20 senior managers from some of the major mobile network operators in over 15 markets. 64 percent of the respondents launched mobile money in the past year. 70 percent claim to already reach over half-a-million customers each with transfers or bill payments or both.

Here are some of the highlights from the results:

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What range of financial products are being delivered?

Ignacio Mas is Deputy Director in the Financial Services for the Poor program at the Bill & Melinda Gates Foundation. Ignacio has been a Senior Adviser in the Technology Program at CGAP, Director of Global Business Strategy at Vodafone Group, Senior Manager Intel Capital, and visiting professor of International Business at the Graduate School of Business at the University of Chicago. He is the author of many articles on branchless banking, which are available here. 

Branchless banking is best conceived of as the construction of a network utility. In the third of three blog posts we’ve featured this week, Ignacio emphasizes the applications of this utility for poorer customers.

Priority #4: Delivering a range of financial services

The fourth priority, and from the point of view of the Bill & Melinda Gates Foundation the ultimate proof point, is the successful delivery of a range of financial services to currently unbanked poor people over these transactional platforms. Priorities #1-3 are about building efficient, ubiquitous transactional rails, which can shore up the business case for the widespread distribution of financial products on a mass scale. But still those financial products need to be appropriately designed, branded, marketed and loaded onto the rails.

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Ignacio Mas is Deputy Director in the Financial Services for the Poor program at the Bill & Melinda Gates Foundation. Ignacio has been a Senior Adviser in the Technology Program at CGAP, Director of Global Business Strategy at Vodafone Group, Senior Manager Intel Capital, and visiting professor of International Business at the Graduate School of Business at the University of Chicago. He is the author of many articles on branchless banking, which are available here.

In order for branchless banking to prove to be transformational, it needs to demonstrate not only that it can be scalable (priority #1), but also that it can work for a range of providers and for a range of customer segments – including the poor. These are the two next priorities for branchless banking.

Priority #2: Proving a range of partnership models
Going beyond the number of deployments, the second priority is to demonstrate a variety of models, and in particular a variety of scheme structures and partnership arrangements between banks, telcos and retail networks. The Kenyan M-PESA success is tempered by the 85% market share enjoyed by Safaricom in the mobile voice market. That circumstance is simply not there in most countries, and even where it is, it is by no means desirable to leave the market of financial services for the poor in the hands of a single player. There needs to be a level playing field where multiple players can reasonably contest the market, and where success is not premised on a single operator exerting its dominant position in the adjacent telco market to the exclusion of others.

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Ignacio Mas is Deputy Director in the Financial Services for the Poor program at the Bill & Melinda Gates Foundation. Ignacio has been a Senior Adviser in the Technology Program at CGAP, Director of Global Business Strategy at Vodafone Group, Senior Manager Intel Capital, and visiting professor of International Business at the Graduate School of Business at the University of Chicago. He is the author of many articles on branchless banking, which are available here.

It is easy to foresee that in the future normal neighborhood stores will be used by poor people everywhere to conduct basic financial transactions, that technology based on real-time communications will be used to make those transactions reliable and secure, and further that providers will increasingly rely on people’s own mobile phones rather than on deploying cards and dedicated point of sale terminals.

But it takes a considerably bolder person to predict how exactly it will happen and by when. Rather than speculate on that, perhaps it is more useful at this point in time to lay out what are the milestones –let’s call it priorities— that those of us who support the development of branchless banking would like to see happen. I’m talking here about outcomes –what kind of offers we’d like to see in the marketplace—rather than constituent elements of the puzzle (such as regulation, agent network management or technology bits).

Here’s my take on what I’d like to see happen in developing countries. Read the rest of this page »