End User benefits: enabled applications
to financial services
Regulatory policies on universal access to
broadband services
Sonia Arenaza
ACCION International, G-REX Advisor
8 September 2008, ITU, Geneva
Agenda
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Some facts
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Why Mobile Banking?
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m-payment
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m-banking
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Some experiences
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Challenges
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Conclusions
Some Facts
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Between 2007 and 2012, the number of mobile subscriptions will
increase from 3.3 billion to 4.7 billion. (Pyramid Research)
Africa, Middle East, and Asia
biggest subscriber gains
Western and Eastern Europe
subscriber base will shrink
Modern communications bring to an economy better
productivity performance. (Wold Bank)
A 10%
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in cell phone penetration gives a 0.6%
in GDP growth
Mobile payment is expected to reach 33 million users
in 2008 and growth 300% in 2011. (Gartner)
Some Facts
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The global migratory trend will increase; current remittances market
reaches $318bn, and close to $600bn with informal transactions. In
the next five years, it will reach at least $1 trillion. (Wold Bank)
The lack of copper wire to the home and challenging geography is
making wireless delivery of voice and data the most promising
option.
As teledensity grows voice is going to become a commodity.
Focus is over data; voice and data, along with all related and
converged devices.
VoIP is bringing down tariffs in those countries where
it has been legalized.
Why mobile banking?
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Cell phone penetration is growing faster than
traditional banking infrastructure such as
branches, ATMs, POS at stores, internet
penetration.
Banking via cell phones allows lower transaction
costs, people in rural and remote areas find it
more accessible and convenient than traveling
far or standing in line.
There is an opportunity to increase market share,
lower income and mass market clients.
BANKING the UN-BANKED => rural coverage, the extensive use of mobile phones,
and technology makes people more bankable (leapfrog to m-banking)
m-payment
m-payment; paying for a
product or service using
mobile technology, as for
example merchandise
purchase, monthly bills,
money tansfers.
Asia/Pacific has 85% of
m-payment users.
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Models on basis of payment: Bank Account
based, Credit Card based, and
Telecommunication Company billing based
Emerging mkts
Developed mkts
few payment options
extension of existing
services
Technologies
 GSM mobile phones send/receive information through SMS, USSD
(unstructured supplementary services delivery), WAP/GPRS (wireless
application protocol/ general packet radio service)
 Phone-based application developed in J2ME java for GSM and BREW
(binary runtime environment for wireless) for CDMA; SIM based application
 NFC (near field communication) as a fusion between RFID and a mobile
phone
Characteristics: simplicity and usability, universality, interoperability, security, privacy and trust,
cost, speed, cross border payments.
m-banking

Transformational branchless
banking
• Use of ICT and nonbank
retail channels to reduce cost
of delivering financial
services to clients beyond
the reach of traditional
banking
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• Besides mobile phones,
other approaches can be
‘correspondents banks’
• Customer could
deposit/withdraw cash
through a mobile operator’s
airtime-resale agent
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Types of branchless banking: additive or
transformative
Technologies: mobile phones and POS
devices
It can be combined with microfinance
loans, providing access to credit and
establishing a credit history
Allows to lower remittances transaction
costs (cross-border and domestic) by
sending money to other people via cell
phones
Use of mobile phone technology impacts microfinance improving productivity, efficiency, and
accessibility.
Some experiences
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M-PESA, Kenya
SMART money, Philippines
Globe G-cash, Philippines
MTN Banking, South Africa
Wizzit, South Africa
Paym8, South Africa
Xac Bank, Mongolia
CELPAY, Zambia and DR Congo
Text-n-pay, Ghana
Equity bank with EAZZY 24/7, Kenya
DoCoMo, Japan
Other
 Xam Marse (know your market), Senegal
 GSMA’s mobile money transfer program
Some experiences M-PESA
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Joint venture between Safaricom and Vodafone
Money transfer by SMS (buy/sell M-PESA e-money,
send money, and buy prepaid airtime)
Business model based upon high volumes of low value
transactions. Pay as you go charging model
Vodafone customers in UK can send money to Kenya
e-money backed by real money in a conventional bank
account, M-PESA records to whom money belongs
Some experiences CELPAY
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Financial Services Company operating in Zambia and DR
Congo. Partnership with banks and network operators
Money is taken from deposits accounts, no credit
e-access to a bank account through mobile phone, internet,
and POS
Real-time account update
Funds in the accounts belongs to Celpay-subscribers and
merchants, not to Celpay
Some experiences G-CASH
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Partnership with Globe Telecom (leading mobile
phone providers in Philippines)
Micropayments over a mobile phone. Text-based
transactions e.g. deposit/withdraw money, loan
payment/disbursement, send/receive money, pay
bills
All transactions are recorded in an electronic
ledger in Globe
Limits in amount of money transacted per period
Challenges
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Convergence of telecommunications and financial
services
Proportionate regulatory policy
Guarantee confidentiality, integrity, non-repudiation,
and authentication
Interoperability, ability for customers of competing
financial service providers to transact business with each
other
Customers’ receptive attitude and trust,
as well as illiteracy and remote location
¿ How to encourage
access to mobile banking
limiting money laundering,
credit exposure?
Challenges
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Develop cohesive standards
Partnership between financial institutions, regulatory
bodies, and mobile network operators
Build a business model around financial services
e.g. remittances, wage payments, government social
benefits that clients could use as history and fund to
access to other financial services such as savings,
transaction bank account and ultimately credits.
¿Telecom operators moving into
the data market and IT players
becoming phone operators”?
Conclusions
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The mobile handset is becoming the key enabler for financial
services. It allows financial inclusion
Financial inclusion will allow bringing people into the formal
economy and beginning to access to basic services
Mobile financial services brings opportunities for customers
(accessibility, convenience, security) and businesses (revenues,
more customers, low cost services)
Increasing demand for the provision of internet, voice, and
television, all in the same package (mobile broadband internet)
There will not be a one-size-fits-all solution
End User benefits: enabled applications
to financial services
Regulatory policies on universal access to
broadband services
Sonia Arenaza
sarenaza@accion.org
ACCION International, G-REX Advisor
8 September 2008, ITU, Geneva