Branchless Banking and Financial Inclusion

1
Branchless Banking and Financial Inclusion

Michael Tarazi FDIC June 2, 2011
2
What are the factors that limit access?
Long distances low pop density
High bank costs relative to income
Low education illiteracy
Poor product/ channel design
Branchless banking may overcome these constraints
3
Branchless Banking What do we mean?
delivery of financial services outside
conventional bank branches using information and
communications technologies and nonbank retail
agents.
4
Branchless Banking Cash-in
Agent opens bank account (accessible by mobile
phone)
Client opens bank account (accessible by mobile
phone)
1
1
-
4
Agent account debited

Client account credited
2
Cash-in
Electronic value sent
3
5
Branchless Banking Cash-out
-
Agent account credited

Client account debited
3
3
Electronic value sent to agent
1
2
Cash-out
6
The logic of branchless banking
Use existing deployed technology
Use existing retail infastructure
7
Any store can potentially be an agent
8
The power of using existing infrastructure
5.7bn
28m
Worldwide points of presence
1m
665k
500k
250k
Mobile Phone Connections
Western
Bank
Post
ATMs
POS
Union
branches
offices
9
9
10
10
11
Reducing the cost of banking infrastructure
11
12
The Global Status of Branchless Banking

Branchless Banking Implementations
10 of the Largest Implementations
KEN Safaricom M-Pesa 13.1
TZA Vodacom M-PESA 6.4
PHL Smart Money 4.5
GHA MTN Mobile Money 1.8
PAK UBL Bank Omni 1.6
SAF FNB 1.5
UGA MTN Mobile Money 1.5
GHA Airtel (Bharti Airtel) Money 1.2
KEN Airtel (Bharti Airtel) 1.0
PHL Globe G-Cash 1.0
13
Reaching the Unbanked
Weighted Average 37
14
Nonbank E-Money Issuers
Pooled Account
Mobile Network Operator
Client
15
Regulatory Issues

• AML/CFT Can low-income users meet ID
  requirements?
• 2. Agents Who, what services, who is liable
  for what?
• 3. Consumer Protection Price transparency,
  recourse, education?
• 4. Moving beyond payments interest-bearing,
  insured deposits?

16
(No Transcript)