MBANKING

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M-BANKING REGIONAL FINANCIAL INTEGRATION IN
EAST AFRICA

• David Porteous
• Making Finance Work for Africa
• Nairobi 4-5 March 2007

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1. The promise of m-banking
97
97
mobile phone usage
45
Mobile penetration 2006 Uganda 5.3 Tanzania
5.2 But growing at CAGR 60-100
15
10
10
45
96
banked
Numbers GNIpc (Atlas) Current US 2005
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2. Categorizing m-banking approaches

• Additive m-banking
• Another channels for banked customers like
  internet. Becoming common in Nordics, Japan,
  Korea but also in many developing countries
• Transformational m-banking
• Targets unbanked, based on known needs
• Safe store of value
• Cash in and out easily and cheaply
• Ability to transfer P2P
• Few models emerging in Philippines (G-Cash,
  SmartMoney), Africa including M-Pesa launched in
  Kenya 5/03/07

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3. Regional policy and regulatory issues

• Common operators
• Celtel market integration plans
• Regional retail banks
• Labour mobility and growth of intra-regional
  remittances
• Social Protection Payments to most vulnerable
  require transfer mechanism
• e.g. Kenya SPP pilot

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Specific regulatory issues to address

• E-money
• Who may issue it? What risks to manage?
• 2. Non-bank agents for cash handling
• Who may handle cash and on what basis?
• Retail payment system interoperability
• Who may join and when?
• 4. AML/CFT
• Should there be exemptions for CDD/ KYC on low
  value accounts and provision for remote opening?

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Towards an enabling environment for m-banking
Kenyas recent move
2. Low certainty High Openness
1. High certainty High Openness
Openness
4. Low certainty Low Openness
3. High certainty Low Openness
Certainty
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Conclusions

• Challenge
• Rapid scaling possible, even likely, through
  grey and overlapping regulation domains in many
  countries
• Opportunity
• May introduce competitive more retail banking
  services, even to relatively remote areas
• However, it requires coordination and policy
  focus within country, and across country
• What can be learned from the 2 year pilot of
  M-Pesa in Kenya to date?
• M-banking provides a lens through which to focus
  on how to provide conditions which encourage
  growth of a competitive, inclusive retail banking
  sector

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• Thank you!