Archive for: Publications

This Focus Note presents an alternative, systemic approach to branchless banking in which there is no need for a bank to have a contractual relationship with any of the retail outlets through which it is absorbing deposits or meeting liquidity needs of its customers. We put forth a vision in which people are able to make small deposits into their bank account through a variety of cash handling outlets right in their neighborhood. With the appropriate mix of technology, business process, market conduct, and consumer protection regulations, trust may not need to be vested in the retail outlet by either depositors or their banks.

Mobile banking has gotten more than its fair share of adulatory press coverage this year. Most exciting perhaps was April’s Sunday New York Times magazine piece that looked at the broader opportunities of mobile phones and development through the lens of the work of Jan Chipchase of Nokia fame. Last week we saw the Financial Times consider the state of microfinance with a nod towards how mobile phones could reduce transaction costs and increase the reach of financial services.

This topic is only getting more interesting. Last week I had the opportunity to speak via videolink to a conference in Brazil on how the web could revolutionize – or is revolutionizing – life in developing countries – via cell phones. That was a great conversation, organized by our friends at the World Bank and linked up to the Workshop on the Role of Mobile Technologies in Fostering Social Development, organized by the people who brought you those three w’s in your web browser, W3C.

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Kenya is a world leader when it comes to fostering mobile phone banking and other “branchless” banking services. Officials there have an excellent opportunity to create regulations that will support the development of a variety of branchless banking models. The Government of Kenya and the Central Bank have shown a strong interest in branchless banking and have expressed their commitment to institute legal and regulatory changes that will support new technology-based products and services and enable increased outreach.

Read the full report at http://cgap.org/portal/site/Technology/policy/diagnostics/

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Great news…several of CGAP’s publications have been released in Chinese and are now available online. Here are two of our favorites:

Using Technology to Build Inclusive Financial Systems
Focus Note No. 32, January 2006 (Chinese, pdf)
Some of the innovations commercial banks need to service poor clients may be found in information and communications technologies (ICTs).This Focus Note addresses the following questions: Can banking technologies, applied innovatively in developing countries, make microfinance profitable for formal financial institutions? Will they reduce costs to such an extent that banks could profitably serve even those whom MFIs have mostly excluded to date, such as very poor and remote rural customers? Will these customers be comfortable using technology?

Use of Agents in Branchless Banking for the Poor: Rewards, Risks, and Regulation
Focus Note No. 38, October 2006 (Chinese, pdf)
Use of Agents in Branchless Banking for the Poor: Rewards, Risks, and Regulation
This Focus Note examines the experience of five pioneering countries–Brazil, India, South Africa, the Philippines, and Kenya–where agent-assisted branchless banking that targets poor customers is already a reality. It introduces the main issues involved in regulating branchless banking, particularly regarding the use of retail agents.

Pakistan’s government has made expanding access to finance a key policy priority. The Consultative Group to Assist the Poor (CGAP) found policy makers already attuned to some of the ways in which information and communications technology and new branchless banking models might be used to reach massive numbers of presently unserved poor people. Moreover, they are open to regulatory change to make this possible. Industry players, too, particularly mobile network operators, see the enormous potential of branchless banking as a profitable value added service.

But the challenges to branchless banking posed by current regulation in Pakistan are also formidable. To address these, while paying due regard to the new and enhanced risks that branchless banking can carry, a committee has been assembled involving financial system and telecommunications policy makers and industry representatives. Moreover, the central bank in close consultation with the industry has started exploring legal and regulatory adaptations to facilitate branchless banking. As a result of this work, some potentially viable paths are already emerging.

Notes on Regulation of Branchless Banking in Pakistan

This paper explores the extent to which formal, regulated financial institutions such as banks have been able to partner with correspondents, commercial entities whose primary objective and business is other than the provision of financial services. The paper illustrates the case of Brazil, where banks have recently developed extensive networks of such correspondents. It shows that such arrangements result in lower costs and shared risks for participating financial institutions, making these arrangements an attractive vehicle for outreach to the underserved especially for certain financial services such as payments and transactions. Correspondent banking required a supporting enabling environment to emerge, and poses some regulatory challenges and some increase in risk. The example from Brazil may be replicable elsewhere if appropriate regulatory adjustments are undertaken.

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The Consultative Group to Assist the Poor (CGAP), United Nations Foundation (UN Foundation) and The Vodafone Group Foundation (VGF) today released the first public findings on how low-income individuals in South Africa use mobile phone banking (m-banking). The findings confirm early optimism about the potential for mobile phones to bank the poor, in particular showing that m-banking can be up to a third cheaper for customers than the current banking alternatives.”Mobile phone ownership is exploding in developing countries, presenting a tremendous opportunity to deliver financial services cost effectively to the nearly three billion people who do not currently have bank accounts,” said Elizabeth Littlefield, CEO of CGAP. “And that matters because financial services can help poor people increase household incomes and build assets, making them less vulnerable to crises so that they can ultimately plot their own paths out of poverty.” Globally, there are more than 2.5 billion mobile phones, more than half owned by people in developing countries.

press release | download the report

Focus Note No. 38, October 2006
Use of Agents in Branchless Banking for the Poor: Rewards, Risks, and Regulation (pdf)
This Focus Note examines the experience of five pioneering countries–Brazil, India, South Africa, the Philippines, and Kenya–where agent-assisted branchless banking that targets poor customers is already a reality. It introduces the main issues involved in regulating branchless banking, particularly regarding the use of retail agents.

CGAP Brief, April 2006
Mobile Phones for Microfinance (pdf)
Mobile phones can be used for financial services in three different ways: for micropayments (m-commerce), as electronic money (e-money), and as a banking channel.

CGAP Brief, April 2006
Using Technology to Build Inclusive Financial Systems (pdf)
Innovative use of information and communications technologies to inexpensively process a large
volume of small transactions and deliver a wide range of financial services may help to make
microfinance institutions (MFIs) more efficient and commercial banks more interested in serving
poor people.