Building Operational Solutions for Microfinance and SME Projects
May 24, 2010

CGAP Technology Program
14 projects in 10 countries, 13 policy diagnostics
• Research, policy, advisory and grant funding
• Learning and knowledge sharing
• Co-funded by the Bill & Melinda Gates Foundation, CGAP and the UK Department for International Development
• Find us online at http://www.cgap.org/technology
What we do
• Demonstrate innovation and scale in branchless banking projects resulting from CGAP’s technical assistance and/or grant funding.
• Improve broad industry knowledge and practice in the areas of customers, agents, business models and regulatory frameworks.
• Harness existing government payments and remittance flows to provide banking services to large numbers of unbanked people.
• Help policymakers develop regulations that support effective use of mobile technologies for financial inclusion.

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

Branchless Banking: What do we mean?
“… delivery of financial services outside conventional bank branches using information and communications technologies and nonbank retail agents.”
Bank
Credit/Debit
Client
Account
Agent
Cash in/out
Client
MNO
Debit /Credit
Agent
Account
Receipt/
Cash

The logic of branchless banking
Use existing retail infrastructure
Use existing deployed technology

Huge potential
• 1.7 billion unbanked customers with mobile phones by 2012
• Case of India: 400 million SIMs, 15 million new mobile users added every month, 70% of population has access to mobile telephone networks
• Only 55 million bank accounts out of 1.15 billion population
Out of scope
No known deployments
1 known deployment
2 known deployments
3 known deployments
More than 3 known deployments
CGAP-GSMA Mobile Money Market Sizing Study

The power of using existing infrastructure
~3.5bn
~28m
Worldwide points of presence
250k
500k
665k
Western
Union
Bank branches
Post offices
~1m
ATMs POS Mobile
Phones

Options for reducing cost of banking infrastructure
$250,000
Traditional branch
$50,000
Branch in store
$10,000
ATM
$2,000
Agent with
POS terminal
$400
Agent with mobile $0
No agent
(cashless)

The case of Brazil: bank-based model
Overview

The case of Brazil: bank-based model
• Agents replaced branches as #1 service point of the banking sector

The case of Kenya: a nonbank-based model
Overview

Regulating agents: Who is permitted to act as an agent?

Regulating Agents: Approval needed to work as an agent

Regulating Agents: Who is liable for the agent?

Regulating Agents: Liability

MFIs and Mobile Banking
Typology of MFIs in mobile banking
CONTEXT:
MFIs in countries with no existing mobile banking infrastructure
MFIs in countries with existing mobile banking infrastructure
ROLE OF
MFI:
Build mobile banking system
Use phones for data collection and other non-cash purposes
Use m-banking system for loan disbursements/ repayments and/or deposits
Act as agent on behalf of bank or MNO

Advancing financial access for the world’s poor www.cgap.org
www.microfinancegateway.org