Mobile 2
Mobile Banking
Nov 7, 2013
Alejandra
Aneeq
Michael
Rimpei
Key Terms
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
Unbanked
Financial inclusion
Branchless Banking
Remittance
Mobile banking
Adoption
DFID (Bilateral aid agency of UK)
Microfinance
E-Wallet
Over-the-Counter (OTC)
Agenda
 Key
Concepts
 Mobile
banking
 Case
Study: M-Pesa
 Case
Study: EasyPaisa
 Guest:
Tughral – Regional Mgr. North Pakistan
(EasyPaisa)
 Innovation
in development
Financial Inclusion
Key Concepts






Unbanked: population that does not access formal
and/or semi-formal banking services
Financial Inclusion: Providing financial services to the
unbanked
Remittances: Transfer of money by a foreign worker to
home country (we also use it in domestic terms)
Branchless Banking: Delivery of financial services
outside conventional bank branches using agents and
3rd party intermediaries & technologies
Mobile Banking: Branchless banking through mobile
phones (simplified)
Need:

“Access to finance facilitates entrepreneurial activity”

Large number of workers away from home
(international and domestic migrants)
– Nick Hughes (M-Pesa ideator)
Unbanked
Percentage of Unbanked
Remittance
Difficulty in Cash Transfer
 No
bank in a rural area
 No one has a bank account.
 Bring
cash by him/herself by bus  High cost
 Ask a bus driver to carry cash  High risk
Mobile banking
Cellphone use in Kenya
Source – Economics of M-Pesa
Mobile banking
US vs Developing World
Mobile banking
What is M-PESA
 Mobile
based money transfer and
microfinancing service in Kenya & Tanzania
(East Africa)
 “M” is for mobile &“Pesa” is the Swahili for cash
 Operated by Safaricom and owned by
Vodacom
 Started in 2007
Mobile banking
Kenya, a conducive
environment for mobile banking
 Large
market for domestic remittances with
high demand for transfer services
 High literacy levels
 Support of the Central Bank of Kenya
 High Mobile Penetration
 An entrepreneurial base of micro
entrepreneurs
Remittance
Solution: Mobile Banking
 Transfer
money without a bank account
 Transfer money safely and quickly
 Low remittance fee – 12% lower than banks*1
 No long bus journey – reduce cost and time
*1 Branchless Banking 2010: Who’s Served? At What Price? What’s Next?, CGAP, Sep., 2010
Remittance
Scheme of M-Pesa
Sender
Receiver
3
6: Withdrawal
operation
4: Buy m-money
2
M-Pesa
m-money Account
7
Rural
Agent
Urban
Agent
8: Withdraw cash
5: Transfer m-money
Link
Urban
M-Pesa
Agent
1
Urban
Agent
Rural
Agent
Bank Account
9
*1 M-PESA: Mobile Money for the “Unbanked” Turning Cellphones into 24-Hour Tellers In Kenya
Rural
M-Pesa
Agent
Over-the-Counter
Need for Over-The-Counter
Situation & Problem
 Neither a sender or a recipient have mobile banking
account but they want to send money.
Solution – Over-The-Counter
 A mobile banking agent of a sender transfers e-money
by mobile banking on behalf of the sender, charges
commission.
 A mobile banking agent of a recipient receives emoney on behalf of the recipient.
 The recipient gets money.
Benefit of Over-The-Counter
 Relieve of account opening requirements
 Eliminate technical limitations
*1 http://www.cgap.org/blog/mobile-money-otc-versus-wallets
e-Wallet
e-Wallet (account) vs Over-The-Counter
E-Wallet
Mobility
OTC

Customer retention

Company Revenue

Need
?
*1 http://www.cgap.org/blog/mobile-money-otc-versus-wallets
?
Remittance
M-PESA – urban to rural money transfer
http://www.economist.com/node/16319635
Financial Inclusion
Socioeconomic profile of users
2008
2009
Users
Nonusers
Users
Nonusers
Annual Household
Expenditure (USD)
3,600
2,000
2,900
1,400
Household with at
least one cell
phone
92%
52%
92%
39%
Unbanked
25%
75%
50%
50%
Rural Population
29%
71%
59%
41%
Urban Population
53%
47%
76%
24%
** Source: Jack, Willian & Suri Tavneet. Mobile Money: The economics of M-PESA
Change
Adoption
Socioeconomic profile of users
 Consumption
and Education Level
Early Adopters > Late Adopters > Non User
 Banked
Early Adopters > Late Adopters > Non User
 Earliest
 Over
users  Wealthier and most educated
time, M-PESA is being adopted by people
of more varied socioeconomic levels
Adoption
Individual’s reasons for not using
M-PESA
Reason
2008
2009
Don’t own a mobile phone
28%
60%
Don’t know about it
18%
3%
Don’t need it
14%
21%
Don’t understand it
5%
5%
Adoption
Success Factors

Built Trust by good Branding
-

User experience
-

Investing on a national marketing launch
Aggressive advertisement on television and radio
Road shows and tents that travelled around the
country
Offering a product that is simple to use
Building an extensive channel of retail agent
Robust network
-
Attracting customers and stores at the same time
Creating an attractive pricing scheme for customers
and stores
Financial inclusion
Factor in common
Kenya
Brazil
Pakistan
Great number of unbanked people
Use of informal means to get cash, send remittances, make
withdrawal, etc.
Low-income population
Many people that live on rural areas
Branchless Banking
** Source: McKay, Claudia & Pickens Marks. Branchless Banking 2010: Who’s served? At what price?
What’s next?
Mobile banking
 Started
in 2009 in Pakistan
 Telenor
(Mobile operator) bought 51% of
Tameer Microfinance Bank before launch
 Expected
to serve international remittances
 Over-the-counter
transaction main activity
Mobile banking
Challenges for EasyPaisa:
 Slow
adoption of mobile wallets / e-wallets
 E-wallets still require significant Know Your
Customer requirements which cannot be met
at the 30,000 agent level
 Businesses are also not accepting EasyPaisa
as mode of payment
Adoption
Adoption Comparison
Kenya
M-Pesa
Pakistan
EasyPaisa
Wallets
13 M
(Aug ’13)**
2.4 M (12%)
(Aug ‘13)
Transactions a day
6,000,000
~320,000*
Market Share
98%
50%
of all mobile
of all mobile
banking transaction banking transaction
*State Bank of Pakistan
http://www.sbp.org.pk/publications/acd/BranchlessBanking-Apr-Jun-2013.pdf
**DFID Kenya Blog