Innovation ICT applications

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• Innovation ICT applications
• for economic growth m-Banking,
• Dr. Simon Batchelor, Gamos

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Introduction

• The role of mobile phones for banking and
  transactions came out of a 6 country study on ICT
  trade and economic growth commissioned by ECA
  under the epol-net initiative.
• M-Banking was flagged in some countries as a way
  for the poor to use ICTs in their economic
  endeavours.
• Given the explosion of mobile telephony across
  the continent, this became an important area of
  study for the ECA, particularly with respect to
  getting a sense of the kind of policy
  requirements needed to sustain this phenomenan.
• The about to be published report focuses on the
  emergence, status and the future of m-commerce
  including mobile phone enabled banking. It draws
  together three country studies of Senegal, Kenya
  and South Africa.

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Contribution of ICTs to pro-poor economic growth
(OECD DAC Good Practice Guidelines on ICT and
Economic Growth
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• A mobile phone based banking solution would cover
  at least 60 of those currently without bank
  accounts. Such a service would be used for
  storing cash securely and for making money
  transfers people currently carry cash, use the
  post office services, and make use of airtime
  transfers. 15 to 20 rural households receive
  money from members living elsewhere
• An international remittances service would
  benefit a relatively small number of people but
  would bring in significant economic support. 15
  to 20 urban households receive international
  remittances. Africa receives 40 BILLION a year
  in international remittances.
• Banking the unbanked With 11 million Kenyans
  having access to a mobile phone, and only
  approximately 4.5 million banked, the new
  solution offers an avenue to push forward the
  access frontier in Kenya. This effort will bring
  more Kenyans into banking solutions. at launch
  of Equity Mobile Banking Sept 2008, Prof..
  Njuguna Ndungu Governor Central Bank of Kenya

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SWOT analysis for the convergence of the
Telecommunication and Financial sectors
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So what is happening
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But life moves rapidly when you have the right
solution

• Within the first month Safaricom had registered
  over 20,000 M-PESA customers, well ahead of the
  targeted business plan. Within the first 8
  months, 900,000 customers had registered, 1,200
  Agents had signed up nationwide and a cumulative
  KShs. 4 Billion had been transferred. The average
  amount of money sent per month was KShs. 41
  Million by October 2007. The average transaction
  value was below KShs. 5000 (US 80). By July
  2008, there were over 2.5 Million customers, over
  3000 Agents and Mpesa made a deal with PesaPoint
  which manages a network of some 140 ATMs thus
  moving closer to being integrated with the
  banking system.
• And by April 09 over 6 million users! 8000
  Agents!

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A conservative, additive approach. A secondary
survey of the 25 banks in Kenya showed that four
of them have introduced SMS-based services. The
most common SMS-based services are balance
inquiry, statement requests, and money transfer.
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Offering bank alerts as part of an information
service
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An innovative bank exploring frontiers Focuses on
the poor, by offering Kenyas poor people savings
accounts and microloans, has captured 50 percent
of the Kenyan bank market. It now has more than 3
million customers and opens 4,000 new accounts a
day. But despite launching mobile banking in
Sept 08 makes no mention of it at Shareholders
AGM in March 09?
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A Mobile Network operator enters the convergence
space. MTN Banking South Africa is a mobile
banking joint venture between MTN (Africas
largest mobile telecommunications company) and
Standard Bank (Africas largest banking group),
and offers an additive service.
The website states The mobile banking
application implemented is one of the most
advanced in the world today, offering a full
feature banking suite with many additional
innovative offerings. The service achieved
80,000 subscribers in its first year of
launching. The service now provides access to
about 200,000 subscribers.
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A microfinance institution adds mobile phone
access through Point of Sale. The leading
microfinance institutions in Kenya have also
introduced SMS-based services. This includes
Jamii Bora, K-REP bank and Faulu Kenya
microfinance institutions. The average loan size
in 2003 was Ksh 7,209 (US 90). The members are
organized in credit groups with five members in
each group. The group members guarantee each
others loans and provide important moral and
social support to each other.
Jamii Bora owns and manages the mobile
application. It has installed application servers
at its headquarters in Nairobi. The mobile
application was developed in order to cope with
the rapid growth that made it difficult for the
staff to provide acceptable customer service. The
services offered currently include checking
balances, mini statements, withdrawals and loan
repayment. There has been a tremendous
improvement in funds collection since the
adoption of the technology.
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Entrepreneurs take the lead. Wizzit is a startup
mobile banking provider in South Africa that
offers a transaction banking account accessible
via mobile phone and debit card. The company
operates as a division of the South African Bank
of Athens (which has almost no branches). Since
its launch in December 2004, Wizzit has acquired
more than 150,000 customers. Wizzit bills itself
as a virtual bank and has no branches of its
own. Customers can use their mobile phone to make
person-to-person payments, transfer money,
purchase prepaid electricity, and buy airtime
for a prepaid mobile phone subscription.
In April 09 Wizzit received funds from CGAP to
expand is this good news or bad. A good market
product tends to expand by itself?
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Zain has overcome regulatory hurdles in to launch
the Zap M-banking service Kenya, and will compete
with Safaricoms M-Pesa service which has six
million registered users
Zain announced plans in Feb 09 to bring its
mobile banking service Zap, to all of its 22
operations across Middle East and Africa, with
the initial programme being launched in Kenya,
Tanzania and Uganda.
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Africa ahead of the game?

• Safricom doing a quiet pilot UK Kenya
• Links being made with Western Union and GSMA
• What about elsewhere?
• Philippines the famous one Gcash, Smart
• Brazil, the agent network
• American not that into Mobile phones internet
• Europeans Eastern Europe it is happening, but
  mainland Europe......
• Of course Japan and Korea both have integrated
  systems now but additive.

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Where 2 nxt?

• As always on becomes increasingly popular we
  can move away from SMS.
• Always on will become broader and broader.

Near Field Communication technology is a key part
of the future mobile phone enabled payment
landscape. Nokia estimate that by 2012, 30 of
all phones will have NFC built in. While NFC may
seem to demand new infrastructure, it has many
peer to peer capabilities, and requires less
literacy than current USSD menu based
propositions..
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Regulatory issues

• Inclusion - Regulatory and policy prompts so
  that commercial propositions reach financial
  services to the poor
• Branchless Banking and Agents tied to the above,
  is the need for agents to act on behalf of the
  institution to cash in and cash out.
• Customer protection including regulating
  deposits, and tracking financial transactions
• Additional barriers, some of which relate simply
  to mobile communications
• high cost of calls, and IP and SMS services in
  particular
• revenue sharing for value added services
  balance in favour of operators tends to inhibit
  content development
• legal framework (and enforcement) need to
  refine laws related to intellectual property

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