Microfinance and Technology
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
MNO
Debit /Credit
Agent
Account
Agent
Cash in/out
Receipt/
Cash
Client
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
Western
Union
500k
Bank
branches
~1m
665k
Post
offices
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:
ROLE OF
MFI:
MFIs in countries with no existing
mobile banking infrastructure
Build
mobile
banking
system
Use
phones for
data
collection
and other
non-cash
purposes
MFIs in countries with existing
mobile banking infrastructure
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