Archive for: Telecom

What can we learn from recent acquisitions of banks by mobile network operators? Over the last year we have seen a number of mobile network operators (MNOs) buying stakes in banks or looking to acquire their own banking licenses. Are these isolated incidents or does this point to an industry trend?

On November 21, 2008 Telenor Pakistan entered into an agreement to acquire 51% of the shares in Tameer Microfinance Bank. A year later, in October 2009, Globe Telecom received permission from the Central Bank of the Philippines to acquire a 40% stake in Pilipinas Savings Bank with their parent company taking a further 20% stake. And, most recently, China Mobile confirmed earlier this month that they are in talks to buy a stake in Shanghai Pudong Development Bank in an explicit strategy to enter the m-payments market.

Read the rest of this page »

In 1968, a film titled “Planet of the Apes” captured the dystopian mood of the time by vividly telling the story of an astronaut who gets lost in space for many years, and eventually crashes on a strange world where apes, not men, are at the top of the food chain. The main plot twist comes when the astronaut finds the buried head of the Statue of Liberty, and realizes he is not on another planet, but rather, is on a post-nuclear-holocaust planet Earth - many years in the future. Everything mankind took for granted is gone. Humans are relegated to a life of servitude, subordinate to the super smart race of apes that has come to rule the planet.

This week at the Mobile World Congress has felt a bit like a live-action version of “Planet of the Apes,” with a few differences. Instead of apes, we have apps. The species rising to power goes by the ticker symbols of GOOG (Google), YHOO (Yahoo!), APPL (Apple), though some telecom wags seem to think these are simply four letter words.

On Planet of the Apps, the species running in fear are the mobile network operators.

Read the rest of this page »

Today, the CGAP Technology Blog comes to you from the Mobile World Congress in Barcelona. The MWC is the world’s biggest business show for all things mobile related. In recent years we’ve noticed how the focus on mobile banking has slowly grown on the agenda – both in the conference itself, as well as for the mobile network operators who comprise the membership of the GSMA.

Just two years ago, mobile money was relegated to a side session of a few hours. This week, there’s two full days of mobile money content – starting with Monday’s panel of the so-called “two billion club” – the handful of mobile operators who combined reach one third of humanity with their cell coverage.
Read the rest of this page »

6 months + 200 technology and finance leaders from 30 countries = four scenarios of branchless banking for poor people in 2020.

In 2009, CGAP and DFID talked with over 200 technology and finance leaders from 30 countries to determine how branchless banking, including mobile banking, might look in the year 2020. The work culminated in the CGAP/DFID Branchless Banking Scenarios 2020 Focus Note. A video discussion with the authors and some of the leaders in mobile and branchless banking was held in Washington in December; you can watch the archived video here. To help frame the scenarios process, we identified four forces and four uncertainties that are shaping the industry.

Force 4. Internet browsing via mobile phones will change the competitive landscape.

We have taken for granted that the rollout of mobile communications will continue, albeit at a declining pace as even low-income markets become saturated. It is likely that there will be few people outside the reach of wireless communications by 2020, and few who do not have connectivity to wireless communications in some form. Indeed, the lack of reliable and affordable energy sources is today increasingly a greater constraint on development in poor and remote areas than is communications. Devices like mobile phones, which require less energy than PCs and ATMs and which can be recharged by windup or solar power, are an increasingly important part of any rollout of branchless channels to off-grid areas.

This much seems obvious. So we have chosen instead to highlight a different force, which is yet not fully recognized by all of today’s branchless banking providers. Today’s successful payment services in developing countries have been built using certain mobile-specific channels that even basic handsets could support.

However, over the next 10 years, the spread of affordable data-enabled phones in developing countries will increasingly enable consumers to have direct access to the Internet. This is made possible by a dramatic fall in the price of mobile devices with basic Internet browsing and falling prices of data services, which are also available on a prepaid basis. Such “enhanced” phones are increasingly the basic handsets of tomorrow. They already make up half of all phones shipped to emerging markets in 2009. Faster speeds and falling prices of both data-enabled handsets and data-over- mobile networks will mean greater usage of data channels on these phones, effectively making Internet access via mobile pervasive in many developing countries during the next decade.

Few branchless banking services have been offered over mobile Internet in developing countries (yet), but social networking content is already driving uptake among segments such as youth. In South Africa, the mobile instant messaging service MXit has attracted more than 13 million users who send more than 250 million messages per day (in a country of 47 million) (Vecchiatto 2009 and Lombard 2009). Hardware barriers to Internet access are also decreasing.

Microsoft recently announced OneApp, an application that enables phones with slow processors and low memory to surf the Web like more powerful handsets. Users will be able to access a dozen sites initially, like Facebook and Twitter. In August 2009, Nokia announced its intention to provide widespread mobile payment services as part of its desire to promote pervasive Internet that “connects people” (Young 2009). In short, there is much work being done today to make Internet over mobile more widely available in developing countries.

What does this force mean for branchless banking? First, Web interfaces will improve the user experience compared to today’s services running over USSD or SMS bearer channels, which typically require customers to input alphanumeric sequences or navigate relatively unsophisticated menus. Improved usability could make branchless banking more accessible to a wider swathe of low-income consumers, for example by enabling more icon-based menus for low-literacy clients. Also, as Internet use expands in general, consumers will become more comfortable with using their handset for increasingly sophisticated purposes, which should also bolster adoption of electronic channels for financial services.

Second, access to the Internet will enable providers to offer solutions that do not depend on the security solutions offered using the chip (SIM card) in the phone. Applications resident on the SIM card can provide end-to-end security for messages but require the cooperation of the MNO. While there is some debate whether java applications can provide similar levels of security to applications resident on the SIM card, they are likely to provide higher security than today’s USSD and SMS-based services. This will reduce barriers to entry for new players who are not MNOs—whether banks or others. The growth of the mobile Internet may cause a boom in a new generation of branchless banking providers, raising substantial questions about risks to consumers, as well as the future shape of the competitive landscape.

-Mark Pickens, David Porteous, and Sarah Rotman

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.

Read the rest of this page »

We’ve been running an occasional podcast series with some of the voices we’re listening to this year as part of the CGAP/DFID Branchless Banking in 2020 scenarios work. The process is based on one driving question: How can government and private sector most affect the uptake and usage of branchless banking among the unserved majority by 2020? You can participate directly through this blog or posting discussions through our Mobile Banking and Microfinance LinkedIn Group. –Jim

Michèle Scanlon is Founder & Principal Consultant at Green Giraffe, an emerging market telecom & payment consultancy based in South Africa providing strategic advisory and project management services. Michèle has been covering global telecoms emerging markets for 12 years with a special focus on prepaid mobile commercial strategies evolving into other prepaid stored value applications such as prepaid electricity and mobile financial services.

I spoke with her a few months ago - to put mobile banking in context, as well as understand some of the factors that will affect how little or much mobile banking will grow in Africa based on what she sees around the continent.

Download the Podcast - Michèle Scanlon

There’s been a lot of talk recently comparing M-PESA in Kenya with that in neighboring Tanzania. I shared some of my initial impressions a few months ago after visiting both countries. While on the surface the countries appear to be similar, there are some important differences in geography, culture and market structure that have impacted the way M-PESA has fared in each place.

Read the rest of this page »

Olga Morawczynski is a doctoral candidate at the University of Edinburgh and has spent more than a year investigating customer adoption and usage in both urban and rural Kenya.  She is the author of a forthcoming CGAP brief on M-PESA and recently co-authored Designing Mobile Money Services:  Lessons from M-PESA with Ignacio Mas.

The story of M-PESA that most of us know usually goes as follows.  The two big players, Vodafone and Safaricom, got together to develop and launch M-PESA. They spent months testing, adjusting, and re-testing the system before it went live. The result—an immensely popular service offering that has radically changed both the financial and telecommunications sectors in developing countries and spawned a lucrative industry for mobile money.  This is not exactly how the story went, at least not in the early days. Vodafone, led by a powerful duo of Nick Hughes and Susie Lonie, was heavily involved from the beginning. While Nick was selling the service idea to the executive staff at Vodafone, Susie was getting her hands dirty, so to speak, and leading the pilot in Kenya.

Read the rest of this page »

When speaking of mobile payment services, the countries that are usually mentioned include Kenya, the Philippines, South Africa and a few others. Here at CGAP, our projects also focus on places such as Mongolia, Pakistan, the Maldives and India. Yet what about West Africa, and specifically francophone West Africa, as the next frontier of mobile banking?

I recently visited Cote d’Ivoire and Mali to learn more about what the banks and mobile network operators (MNOs) are doing in this region. Here are some of my initial observations. Read the rest of this page »

Mobile phones may have a huge role to play in expanding access to finance. But does the company that operates the mobile network need to actually provide financial services? Or should others offer financial services, with the mobile operator merely providing the underlying wireless connectivity? The fact that mobile phones can be used as transactional devices doesn’t necessarily mean that the mobile operator needs to “own” the financial service.

That’s the subject of a new CGAP brief authored by Ignacio Mas and me. Read it here.