Asia-Pacific Regional Forum on USO
Digital Finance Ecosystem:
Regional, National and Household
Level Snapshots
Yoonee Jeong,
Research Director, TRPC
26 March, 2015
BKK, Thailand
* KEY TAKEAWAYS
Understanding risk profile at different levels of
the digital payment value chain
Understanding the players involved, incentives
and trade-offs
Roles of international/regional players,
government, and the private sector
Why flexible and holistic framework approach
1. HH LEVEL: INCOME PROFILE
Sources of Income
# of Income Earners
Full time employment
64%
Selling of goods and services
Part time employment
Remittance (within Indonesia)
Others
3%
48%
9%
21%
9%
42%
3%
Agriculture/livestock
0.7%
Rent collection/Interest
0.6%
Remittance (from abroad)
0.3%
Inheritance
0.1%
46%
One
Two
Three
Four
1. HH LEVEL: EXPENDITURE PROFILE
Monthly Average Household Expenditure
IDR 900,000
IDR 800,000
IDR 700,000
IDR 600,000
IDR 500,000
IDR 400,000
IDR 300,000
IDR 200,000
IDR 100,000
IDR -
1. HH LEVEL: FINANCIAL RESILIENCE
Had to borrow to pay for monthly
expenditure?
Who did you borrow from?
4%
1%
6%
5%
9%
41%
43%
0%
58%
18%
14%
Yes
No
Family
Provident Fund
Employer
Bank
Money Lenders
Friends
Local Co-Op
Pawn broker
Neighbors
1. HH LEVEL: PERCEPTIONS
 Credit cards: higher association with negative images of
indebtedness (“wasteful”)
 Debit cards: generally positive images, but also associated with
the wealthier income brackets (“wealthy ”)
 m-Money: associated with fast and modern transactions (i.e. not
necessarily relevant to them)
45%
40%
35%
Wealthy
Risky
Wasteful
Convenient
Modern
Fast (transactions)
30%
25%
20%
15%
10%
5%
0%
M-Money
Debit Cards
Credit Cards
1. HH LEVEL: BARRIERS TO ADOPTION
Reasons for not having a bank account
Do not have enough money for min balance
8%
41%
Prefer to have physical savings 3%
Do not know how to open or manage an account
24%
5%
15%
20%
12%
5%
4%
5%2%
Do not want to pay additional charges (hidden or otherwise) 1% 7% 4%1%
1%
Bank facilities too far, hence inconvenient 1%4%2%
No experience with the bank 1% 1%
Previously had an account but the bank closed it
1%
Poor experience with banks
1%
Do not trust banks or other financial institutions
1%
Can’t open an account due to lack of required ID 0%
0%
<IDR1M
IDR1M-2M
IDR 2M-3M
10%
20%
IDR3M-5M
30%
40%
IDR5M-7.5M
50%
60%
70%
>IDR7.5M
80%
1. HH LEVEL: BARRIERS TO ADOPTION
64%
61%
M-Payment/Wallet
M-Banking
66%
50%
19%
13%
5%
21%
18%
Don’t know Prefer to Too difficult Don’t see
how to use use cash or or time any benefit
services
other
consuming from using
methods
to use
9%
8%
7%
4%
6%
6%
4%
4%
4%
2%
2%
3%
1%
Concerns
Phone
Don’t know Transaction Not offered Don’t trust Data fee is
doesn’t
any stores charges are by my bank the mobile too high
about
security support the that let you too high
or mobile technology
feature
pay with
operators
with my
mobile
money
phone
1. HH LEVEL - FINDINGS
 Cash is still King – a viable alternative has yet to emerge
 Spending needs are liquid, frequent and informal
 Use of mobiles is more central than ever – but no one has
made a compelling proposition for m-money (e.g. ease of
use - 61.9%, safety for money - 11.8%)
 Earners and Spenders within HH are often different –
current m-money offering target both audiences
simultaneously
 Network effects show some promises (e.g. 54% willing to
give m-money a try if a family/friend uses it. Higher
proportions of females, urban households and aged 21-30
willing to try.
2. NAT’L LEVEL - LANDSCAPE MAP (LK)
2. NAT’L LEVEL - LANDSCAPE MAP (LK)
FSI
TELCO/MNOs
Central Bank
1 REGULATE
Telco Regulatory Commission
M-MONEY
Financial
Coms
2 PROVIDE
3 PARTICIPATE
Banks
Spec
Leasing
Coms
M-Banking
• -
M-Wallet
Payment
MNOs
M-Wallet/Payment
Insurance
Companies
3RD Party Platform
Providers
Retailers
Utility Service
Providers
2. NAT’L LEVEL: INSTITUTIONAL CHECKLIST (MN)
 Policy Goals?
 Additive or Transformational?
 Bank-centric or Telco-centric or Hybrid or Market-driven?
 Risks?
 Regulatory Response?
 Regulatory – and Administrative – Responsibility? (e.g.
primary/2ndary)
 Temporary or Institutionalized?
 Legislation?
 What to legislate and what to leave to market forces?
 Whose rights are being protected and for what purpose?
2. NAT’L LEVEL: REGULATORY CHECKLIST (MN)
 Payment Systems
 Prudential Risk Management
 AML/ CFT/ KYC
 Agent Networks
 e-Money
 Telecommunications Regulation
 Competition
 Consumer Protection
 e-Commerce & e-Security
 Foreign Exchange
 Taxation
2.NAT’L LEVEL: RESPONSIBILIT Y MATRIX
Payment
Systems
Prudl Risk
Management
AML/
KYC
Agent
eMoney Telecom Compete
Networks
& IT Regs
Consumer
Protection
1 2 3
1
2
3
1 2 3 1 2
MoF
√ √ ~
~
~
~
√ √ √
BoM
√ √ √
√
√
√
√ √ √ √ √
~ ~ √ ~
FRC
√ √ √
√
√
√
√ √ √ √ √
√ √ √ √
NCP
√ √ √
~
~
~
~ ~ ~ √ √
NDIC
~ √ ~
~
√
~
~ ~ ~
MBA
~ √ ~
~
√
~
~ √ ~ ~ √
~ ~ √ ~
~ √ ~
~
3 1 2 3 1 2 3 1 2 3
eCommerce
Forex
Taxes
1
2 3
1
2
3 1 2 3 1 2 3
~
~ ~
~
√
~ √ √ √ √ ~ √
√ √ √
√
√ ~
~
~
~ √ √ √
√ √ √
√
√ √
~
~
~ √ √ √
~ √ √ √ ~ ~ ~ ~ √ ~
~
~ ~
~
~
~ √ √ ~
√
√
~
~ ~
~
~
~ ~ √ ~ ~ ~ ~
~ √ ~
~ √ ~ √ √ √
√
ICPTA
√ ~
~ ~ ~ √ √
√ ~ √ ~ √ √ √ ~ √ ~
√
√ ~
√
√
√
CRC
√ ~
~ ~ ~ ~ √
√ √ √ √ √ √ √ √ √ √
√
√ ~
√
√
~
UCRA
~ √ ~
~ √
~ √ √ ~ √ √ √ √ √ √
√
√ √
~
~
~
Tax
√ √ ~
~ ~ √ ~
√
√
~ √ √ √ √ √ √
~ √ √ ~
1 = Key regulatory or policy role to play currently √ = active role
2 = Information role or requirement
~ = role not clear
3 = Anticipated future regulatory role
Primary responsibility highlighted by boxed squares
Green = existing laws
Yellow = some laws
Red = No existing law
3. BEYOND-THE-BORDER ISSUES





Data localisation requirement
Local content requirements
Labelling requirement
Limitations in franchise and dealership
Negative Investment List, limitation in foreign
ownership, limitations to divestment
 Can lead to over-reach, over-regulation, and
counter-productive impact from an economic and
trade perspective.
COST OF COMPLIANCE
Telcom
Privacy
Commission
Implementation
& Enforcement
Compliance
Banking
Privacy
Law
COST OF COMPLIANCE
IMF
projections
W across-the
board
localisation
CN
7.7%
6.6%
IN
4.4%
3.6%
ID
5.8%
5.1%
KR
2.8%
1.7%
VN
5.4%
3.5%
Source: ECIPE, 2014, The Costs of Data Localisation: Friendly Fire on Economic Recovery
WEIGHING THE COST VS OPPORTUNITIES
Protect ‘national interests’
• balance of payment and tax base
• local industry growth and ecosystem
• personal data privacy
Promote opportunities for low-income
families and local companies to engage in
mainstream and global value chain
• e/m-commerce,
• e/m-payment,
• outsourcing
• regional economic integration
* FRAMEWORK APPROACH
 Understanding the transformational benefits of mobile money,
forumulate and state clear objectives  POLICY CLARITY
 Establishing a holistic view encompassing all players
 Clarifying gaps and overlaps in existing regulatory framework(s)
 Institutional + Activity-based approach
 Horizontal + Vertical perspectives
 Coordination across agencies in developing a regulatory roadmap
 Prioritising specific elements within policy and regulatory roadmap
– rather than trying to get everything right from the outset
 Adjust flexibility and rigor according to risks