Infodev M-banking a Knowledge Map(Web)

8/8/2019 Infodev M-banking a Knowledge Map(Web)

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+ MAINSTREAMING

Information forDevelopment Program

www.infoDev.org

m-BANKING:

A KNOWLEDGE MAP


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m-BANKING:A KNOWLEDGE MAP

www.infoDev.org

AN infoDev PUBLICATION PREPARED BY

David Porteous with Neville Wishart

Information forDevelopment Program


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To cite this publication:

Porteous, David with Neville Wishart. 2006. m-Banking: A Knowledge Map. Washington, DC: infoDev /World Bank. Available at: http://www.infodev.org/en/Publication.169.html

2006The International Bank for Reconstruction and Development/The World Bank1818 H Street, N.W.Washington, D.C. 20433U.S.A.

All rights reserved

Manufactured in the United States of AmericaThe findings, interpretations and conclusions expressed herein are entirely those of the author(s) and do not necessarily refl ectthe view of infoDev, the Donors of infoDev, the International Bank for Reconstruction and Development/The World Bank andits affiliated organizations, the Board of Executive Directors of the World Bank or the governments they represent. The WorldBank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and otherinformation shown on any map in this work do not imply on the part of the World Bank any judgement of the legal status ofany territory or the endorsement or acceptance of such boundaries.

The material in this publicat ion is copyrighted. Copying or transmitting portions of this work may be a violation of applicablelaw. The World Bank encourages dissemination of its work and normally will promptly grant permission for use. For permissionto copy or reprint any part of this work, please contact [email protected].


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. m-Banking: A Knowledge Mapx


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Executive Summary . 1

1. Te use of a mobile phone to conduct paymentand banking transactions (m-banking) is at anearly stage in a number of developing countries.Because m-banking uses the existing rapidly ex-panding mobile phone infrastructure, it has thepotential to be deployed rapidly and affordably to

expand access to financial services among un-banked people. Donors are increasing expressingan interest in whether, and if so, how they cansupport the realization of this potential.

2. Te case for donors to support m-banking restson the causal chain linking generally improvedaccess to financial services to the reduction ofvulnerability and creation of opportunity forpoor households. Although m-banking is onechannel in the wider domain of e-banking, thereare reasons to single it out for focusespeciallybecause mobile phone usage has reached critical

mass numbers in countries with few banked indi-viduals.3. Tere is little hard evidence yet of unbanked

people being served on any scale by existing m-banking services, in part because most models arevery recent; however, there is reason to believethat transformational models have considerablepotential for m-banking to broaden access.

4. While m-banking as an additional channel forbanked customers is likely to be rolled out any-

way, transformational models which target un-banked customers face particular obstacles. In

Africa, current pioneers of m-banking report bar-

riers to rollout in areas such as uncertainties overspeed and nature of customer adoption, and regu-latory barriers.

5. Te sector as a whole has three main areas ofneed:a. More successful transformational models

which have reached financial sustainability, tocreate a suitable demonstration effect.

b. Systematic information collection and knowl-edge dissemination to guide potential entrants

EXECUTIVESUMMARY

and policy makers by filling in the gaps identi-fied by the knowledge map in Annex A. Temap reflects a field at an early stagewith ac-celerating volume of reports of launches andnew technology, but little systematic knowl-edge and indeed, little credible or accessibleknowledge at all outside of a few chosen mod-els or countries.

c. An enabling policy and regulatory environ-ment which has suffi cient openness and cer-tainty to allow new models to startup andgrow.

6. Tere are a range of current or prospective donor-supported programs with activities which maytouch on m-banking from different perspectives,and with differing geographic coverage (country-level, regional and international). None currentlyhas an exclusive focus on knowledge creation inthe area of transformational m-banking.

7. Tere are two broad donor strategies to take:a. Direct support to new transformational mod-

els: this requires substantial funding and ex-pertise to assess which to support; and may beamenable to more of a challenge fund ap-proach whereby grant funds are allocatedcompetitively. Large telcos and banks are lesslikely to be fund constrained; but may be moreamenable to indirect support which persuadesthem that there is a viable case to enter.

b. Indirect support, to create and disseminateuseful knowledge about the sector to potentialparticipants and to policy makers; and to im-prove the enabling environment throughtechnical assistance and support to regulators.

8. Using the criteria of potential impact, additivityand short gestation period, the report proposesthe strategy of indirect support and identifies four

potential projects for donor to support:a. Studies of customer adoption across differentmodels;

b. Establishment of a web portal as a resourcecentre and dissemination point;

c. Country environment reviews which may leadto requests from regulators for technical assis-tance to bring about changes;

d. Sponsoring a commercial conference to pro-vide focus for dissemination of work done.


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. m-Banking: A Knowledge Map2


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Introduction . 3

Mobile banking (m-banking) involves the use of amobile phone or another mobile device to undertakefinancial transactions linked to a clients account. M-banking is one of the newest approaches to the provi-sion of financial services through IC, made possibleby the widespread adoption of mobile phones even inlow income countries. Te roll out of mobile tele-phony has been rapid, and has extended access wellbeyond already connected customers in developingcountries. Tere is mounting evidence of positive so-cial impact on poorer people and communities as aresult.

Tere are sound reasons for the hope that m-bankingcould have similar impact. A mobile network offers ahigh technology platform onto which other servicescan be often provided at very low cost to deliver aneffective result. Mobile data channels are often under-

1. INTRODUCTION used and therefore may be offered at low cost by thenetwork operator. M-banking services which usechannels such as text messaging/ SMS can be carriedat a cost of less than US1c per message. Te low costof using existing infrastructure makes such channelsmore amenable to use by low income customers.

M-banking is new in most countries, and there hasbeen limited donor support in the sector to date. Tisreport considers the case for donors to support m-banking as a sector, by assessing:1. Te likely impact on the lives of poor people in

theory and practicethe why of donor interven-tion (Section 2);

2. Te needs and gaps arising from the developmentof the sector to date, in the light of what donor-funded programs are already doing (Section 3).

In the light of this assessment, the report goes on inSection 4 to consider strategies and particular initia-tives which donors may take to respond concretely tothe needs and gaps identified.


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The case for donor action . 5

2.1 THEORETICAL CASE

M-banking is another channel for the provision andaccessing of formal financial services.

Te underlying theory of change which links m-banking to the purpose of poverty reduction runs asfollows:

While poor people, by definition, have littlemoney, they are active managers of what theyhave. Holding cash comes at high price to poorpeople because of the risk of crime in many poorcountries, but they often have few alternatives tocash based services.In particular, appropriate financial services helppoor people to access usefully large lump sums ofmoney, which may either enable a pathway out ofpoverty through investment in income generatingactivities (such as microenterprises) or asset cre-ation (such as housing); or may reduce vulnerabil-ity to sudden shocks to cashflow, as a result forexample of illness or climate conditions.

In many countries, poor people are forced to relyon informal financial services, which may be un-safe, or fringe formal financial products whichmay be expensive as well as unsafe. In other words,their exclusion from formal financial services haseconomic and social impacts which may exacer-bate their poverty.Te cost effi cient provision of formal financialservices (payments/ remittances, savings, credit orinsurance) is predicated on customers having ac-cess at least to a basic transactional account, from

which electronic transfers can be made (for loaninstallments, for example) and cash withdrawn

(or deposited) as necessary.M-banking holds the prospect of offering a lowcost, accessible transaction banking platform forcurrently unbanked and poorer customers. Inaddition, as mobile networks expand their cover-age, they offer the opportunity of bringing pay-ment and remittance services into areas withoutconventional banking services.

2. THE CASE FORDONOR ACTION

However, not all m-banking products will betransformational in the sense of broadening ac-cess to financial services substantially at first oreven at all. However, it is likely that even m-bank-ing services which start targeted at existing bankedcustomers may over time extend to unbankedgroups.

Tis causal chain motivates the potential for m-bank-ing to increase access to better, safer and cheaper fi-nancial services, and as a result, to reduce poverty.However, m-banking also has several features whichmay restrict its impact:

M-banking requires prior access to a mobilephonehowever, initiatives are underway to re-duce the initial handset cost so that it is not animpediment.

Mobile networks in many low income countriesare still enjoying explosive growth in subscribers,and are focused on basic network rollout; even ifthe additional financial investment required form-banking is limited and the revenue positive,they may be less amenable to divert scarce humanresources from this core business into other non-core projects.

Tese features are more likely, however, to affect thespeed of adoption, rather than limit the potentialdescribed.

A question remains about the relative case and tim-ing of support for m-banking; that is, the extent to

which m-banking should be singled out from thebroader e-banking domain, which has already beenreceiving some donor attention. Clearly, many ofthe regulatory and infrastructural issues are com-mon to both; and channels other than mobilephones will also be necessary in any retail financialsystem. However, there are several reasons for focus-ing on m-banking specifically at this time:

In low income countries, m-banking may enableleapfrogging in the sense of reducing the need forthe rollout of higher cost financial infrastructure,such as dedicated POS devices;M-banking potentially brings new players, telcos,to the table; in many LICs, these may be strongerthan retail banks and better placed to reach out tounbanked customers;M-banking is still very new, whereas other formsof e-banking are quite well established; the poten-tial to influence the models adopted towards be-


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ing transformational (i.e. targeting new markets)may be higher.

2.2 EVIDENCE TO DATE

wo recent donor-funded reports have reviewed ex-isting m-banking models in various developingcountries. A report byinfoDev entitledMicro-PaymentSystems and their application to mobile networks(in-

foDev report available via www.infodev.org) consid-ers the issues faced by new m-banking modelsparticularly in the Philippines, where the conceptappears most advanced among developing countries,and especially from a elco perspective. A recentDFID report, Te Enabling Environment for MobileBanking in Africa (EE Mobile report available via

www.bankablefrontier.com/publications), explores

emerging models of m-banking in Africa in the con-text of global models; and asked in particular, whetherthey have the potential to be transformational, in thesense of massively expanding access to financial ser-vices by poor people.

Both reports conclude that there is as yet little evi-dence that m-banking has yet been transformational.

As the knowledge map in Annex A shows, this is inpart because there are at present only a few models

which are intentionally transformational. Most ofthese are very new with limited history, or else, as yet,little is known about their client bases. Te case form-banking therefore presently rests on the theoreticalcase outlined above, in the sense that there is a strongexpectation that it may have desirable positive effectson the lives and livelihoods of poor people. Tis needsto be monitored over time.

Even when the case for m-banking is born out inpractice, this does not in itself justify donor support,since it may emerge spontaneously with any support.On this key question of whether support is necessary,the EE Mobile report concluded that, while m-bank-ing by already banked customers (additive m-bank-

ing) is likely to grow anyway, the extent to whichm-banking can be transformational will be decisivelyshaped by the extent to which the regulatory andpolicy environment is enabling. Enablement was de-fined as the appropriate balance between openness tothe startup and growth of new and varied models;and certainty, both for providers investing capital andtaking risk, as well as consumers entrusting funds tonew m-banking providers, whether banks, telcos orother entities.

Trough interviews with providers in Africa, the re-port identified three main types of barriers to theemergence and growth of transformational m-bank-ing which may limit or restrict its ability to occurspontaneously. Tese were similar to barriers reportedby providers in other regions. Tese were:1. Uncertainties over the speed and nature of customer

adoption: this is to be expected with any new of-fering, although the uncertainty is compoundedby the relative lack of knowledge of the needs ofunbanked people in many places, and the marketpotential. Consumer education may speed adop-tion; but more likely, adoption on scale will hap-pen as it has happened with mobile phones: byperson to person transfer of the knowledge neces-sary to operate. Providers will be forced to adapttheir offerings as they encounter feedback in the

market place. Terefore, it is necessary to havesuffi cient providers in the market who can remainin the market long enough to ensure that to iden-tify the elements of a successful model. Hence,support to providers may assist in overcomingthis barrier. Generally available research into thepatterns and needs of the unbanked target marketmay also help.

2. Lack of interoperability with existing systems: in-teroperability of different payment systems isprimarily a question of market structure and regu-lation. It arises initially only in markets wherethere is an existing payment infrastructure with

which new providers can inter-operate (and lateron, once new infrastructure becomes the stan-dard). Without inter-operability, the fixed costsof deploying financial infrastructure may be muchharder to recover, since usage per item of propri-etary infrastructure will fall. Clearly, one solutionmay be to give regulators the power to requireinteroperability; however, it may be suffi cient toencourage the identification of appropriate stan-dard upfront. Tis could take place via support toregulators or industry bodies, where these exist.

3. Regulatory barriers: specific regulatory impedi-ments vary by market; but in general, a lack ofopenness to new models of provision and a lack ofpolicy certainty limit the potential of new models.Increasing openness and certainty may requiresupport to regulators to outline high level policy,as well as to amend existing regulations or draftnew ones where and when required.

Te case for donor support therefore rests on remov-ing barriers such as these, thereby making it more


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The case for donor action . 7

likely that transformational models of m-bankingwill emerge at all, or at least, sooner; and that theywill develop more rapidly than otherwise would bethe case.


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Needs and gaps . 9

3.1 SECTORAL NEEDSEven if there is a strong prima faciecase for donorsupport to date, how can donors best intervene? able1 below lists three main areas of need, based on

3. NEEDS AND GAPS

analysis in the reports described and from interac-tions compiling the knowledge map.

TABLE 1.NeedsNeed Why? How?

Ultimately, success means having a competi-tive, active m-banking sector which chargesaffordable prices and which is incentivized toinnovate and seek new clients. While interestin the sector is strong from potential entrants(telcos, banks, payment providers), there arestill few documented models with a clear busi-ness case which can generate a demonstrationeffect to others

This requires that at least some of the existing start-ups succeed by reaching profitability and a criticalmass of users, and that more entrants start up, usingother models.

Donors could provide funds directly to early stagemodels, as was the case with microfinance institu-tions and has been the case with the FinancialDeepening Challenge Fund and M-Pesa in Kenya.However, the fact that many m-banking entrants arelarge, privately owned multinational telcos or banksmakes the case for direct support harder.

1. Sufficient successfulm-banking models toencourage entry andcompetition

2. Systematicinformation collectionand knowledge dis-

semination

The state of knowledge in the sector (Annex A)is fragmented, with many gaps which affectproviders and regulators alike. While propri-

etary research analysts are active in the fieldoffering new trade publications and reports bysubscription only, these are often not accessibleor affordable especially to regulators or newentities in developing countries.

A systematic research program, or coordinationamong existing programs undertaking research,which targets the gaps in the knowledge map

3. Enabling countryenvironments

This should mean that more firms can and doenter this space; and that more are able tosucceed with diverse models.

Primarily, this means creating sufficient opennessand sufficient certainty in legal and regulatoryframeworks where they do not exist. Underlying this,is building the knowledge and capacity of regula-tors and policy makers to address this sector in anenabling fashion.


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3.2 SECTORAL GAPS

Annex B highlights a range of existing or proposeddonor-funded programs which currently do or are

likely to touch on m-banking. Te coverage of theseis assessed against the main needs identified above.

TABLE 2.Current Donor InitiativesNeed Assessment Programs

Likely to be somewhat covered While no major present program provides conces-sional direct funding, several new programs will ormay. The new CGAP/ Gates Foundation technol-ogy program will provide matched grant fundingsupport to m-banking models although unlikely tobe able or willing to fund more than a couple ofprojects in the m-banking space. When started

(potentially in mid 07), the AECF may providefunding for m-banking projects in Africa only. UNsGSB may facilitate or support particular modelsat country level. The IFC is increasingly interestedsupporting quasi-commercial investment.

1. Sufficient successfulm-banking models toencourage entry andcompetition

2. Systematicinformation collectionand knowledge dis-semination

Likely to be somewhat covered uncoordinated Limited work has been done to date by severaldonors (DFID, infoDev, CGAP). However, these andother donors plan to embark on further researchinitiatives in 2006/07, including CGAP, infoDevand Vodafones SIM Panel. These will all contributeto the knowledge base. However, not clear thatthe knowledge is yet reaching the key people (i.e.decision makers within potential entrants and regula-tors/ policy makers)

3. Enabling country

environments

Somewhat covered in general- but not specifically There are several new and existing programs

which provide technical assistance to regulatorsand policy makers. FIRST is a general facility whichprovides funding for technical assistance to financialregulators in developing countries; however, FIRST isnearing the end of its current life and capacity. TheInvestment Climate Facility (ICF) has recently beenlaunched in early 2006, but covers Africa only.Country level FSD programmes of bi-lateral andmulti-lateral donors will clearly address aspects ofthe enabling environment, but, given both the com-plexity and the commonality of some of the issues,there is likely to be benefit in having centralizedknowledge pools and frameworks to draw on.


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Needs and gaps . 11

3.3 CONCLUSIONS

While relatively new, m-banking is not entirely newto donors: able 2 above indicates that the activities

of some existing and certain prospective donor pro-grams either can or are likely to touch in some wayon all the main areas of need identified. Tis is at onelevel encouraging in that it suggests that these pro-grammes at least are generally responding to needs.However, no programmes currently focus on m-banking specifically; and there is limited coordinationacross many of the activities. Furthermore, some ofthe programmes have a limited regional focus, forexample, Africa only. It is not the case, therefore, thatexisting programs will meet all needs required for thetakeoff of transformational m-banking.

In a field in its relative infancy, like m-banking, thereis likely to be positive return to approaches whichenable systematic learning to be accumulated anddisseminated rapidly to encourage cycles of innova-tion which converge on successful models of provi-sion and regulation. In the absence of a suitablelearning hub, as interest in the potential of this sectorgrows, the risk of duplication and waste of donorfunds will grow too.

Note also, that addressing the enabling environmentfor mobile banking is likely to have positive exter-nalities for other areas of the broader financial accessagenda: indeed, m-banking may provide a focusaround which to develop and advocate suchchanges.


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Donor strategies and possible projects . 13

4.1 CHOICE CRITERIA ANDSTRATEGIES

Preceding sections have addressed the following crite-ria in considering new forms of donor support for the

m-banking sector:(i) Is there a clear potential impacton unbanked and

poor people? (Yes: Section 2);(ii) Is the support additive and non-duplicative? i.e.

unlikely to be undertaken by someone else(Section 3).

Donors will have additional individual criteria whichwill shape their desired strategies of intervention Inaddition.

In addition, the state of the sector as young and rap-idly emerging suggests a further criterion, since longerterm big bets may be premature and even unneces-sary:

(iii) Short gestation time, meaning able to start quickly(3-6 months), with relatively short term (12-24months) commitment of initial resources. Tiscriterion creates a deliberate preference forsmaller initiatives which can be tried out, thenscaled up if successful or phased out if not, ratherthan longer term projects with a long gestationperiod.

Against these criteria, donors can evaluate the twomain strategies available:

Provide direct support to providersto enable moremodels to start and some pioneers to reach suc-cess: In this space, challenge-fund type models,

which invite applications, and support the best,are more likely to be effective. CGAPs forthcom-ing initiative will take this approach; and willprobably be able to fund a few m-banking typemodels which require funding as part of its learn-

4. DONORSTRATEGIES AND

POSSIBLEPROJECTS

ing agenda. Tis strategy requires both relativelydeep pockets (perhaps $1-3m per project) to berelevant and the expertise to choose which model/s to back. It also may not fit well with criterion 3above (time to start and run).

In addition, the most successful models are likely torequire close collaboration with either a telco, a bankor both. On the whole, neither category is fund-con-strained; and both have strategic reasons for imple-menting m-bankingthey will be vulnerable ifsuffi cient of their competitors do. For this reason,

while there is a need for more entrants, direct supportto achieve this may be costly, and even unnecessary,in most cases.

Provide indirect support through improving the in-formational, policy and regulatory environmentso

that the ground is more fertile for more models toemerge and succeed. Tis is more likely to fit thecriteria above, even though the period in whichsuccess can be judged may exceed the 12-24month window. However, in that period, demandcould at least be assessed. Te argument for indi-rect donor support is therefore stronger than fordirect support.

Initiatives in line with this strategy could include aprogramme of basic research to fill knowledge gaps,especially research which is subject to large minimumfixed cost such as surveys, and therefore not under-

taken by individual providers in poorer or smallermarkets. A research agenda to fill in identified knowl-edge gaps would likely include:

1. Further and ongoing client survey work to monitoradoption, to understand the main drivers especiallyamong unbanked and poorer people. Tis will likelyinvolve systematic surveying across global regions

where early m-banking models are underway.2. Better systematic analysis of the emerging models,

and especially of the roles and business case for telcosand banks: as these roles evolve, and as existingpilots develop further, it will be useful to trackclient numbers, profitability and pricing againstexpectations to the extent possible.

3. Wider scan for emerging models outside of wellknown placesand relating this to the environmen-tal factors in each case: the existing knowledgebase relies heavily on a relatively limited numberof examples in a few countries. A more systematicscan would ensure that no material case is leftunexplored. Te GSM Association, which has al-


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Donor strategies and possible projects . 15

ready cooperated in the recent infoDev report,may be well placed to assist this process.

In addition to undertaking research, it is necessary todisseminate the knowledge adequately, especially tolikely providers who may enter and to regulators/policy makers who can impede or facilitate this en-try.

Furthermore, as a means of increasing focus on com-parative merits of different enabling environments, amethodology could be developed to undertaken en-vironmental reviews which scan for suffi cient cer-tainty and openness for m-banking across a range ofcountry environments. Like the World Bank GroupsDoing BusinessSurveys, this could call attention torelatively negative environments, and in the process

incentivize change.

Te indirect support strategy is therefore more likelyto fit the approach of most donors. Four possibleprojects following this strategy are identified in able3 below.

4.2 STRUCTURES FORIMPLEMENTATION

Te projects in able 3 above could be undertaken as

independent projects, although there are clear syner-gies from keeping them together: for example, basedon evidence of demand and potential (project 1above), environmental scans could be prioritized (3),

which could be disseminated through a web portal(2) and a conference (4).

Since there is additional value in a coordinated pro-gram in the short to medium term at least, an impor-tant question is therefore how it may best bestructured.

Tere appear to be two possibilities:By creating and funding a new joint work pro-gramme of the multilateral bodies, CGAP andinfoDev. Each is well placed to do this, since re-search, dissemination and coordination amongdonors are part of their core agenda and program.Furthermore, transactions costs for many donors

would be reduced through contributing to anexisting funding line with a nominated purpose.However, certain issues would have to be clari-fied: CGAP has indicated that its own new tech-nology program is likely to be its main focus in

this area going forward since it has limited capac-ity to take on more; and infoDev is focused onIC space only, whereas the projects outlinedabout must necessarily also crossover into finan-cial needs and users as well.By funding a new multidonor program (e.g.FDCF or FIRS). Tere would, however, betransaction costs for donors to set up such an en-tity which would limit the potential to be startedquickly: presumably, there would have to be atender call for managers to run the work pro-gramme. Tese costs would probably not be

worth incurring without a critical mass of in-

tended funding (over $1m).

Te benefits and costs of these different approaches would require concrete discussions as to the scopeand intent of funding, with the particular parties in-volved, which is beyond the scope of this initial re-port.


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Conclusions . 17

Tere is a strong donor case for accelerating thestartup and rollout of transformational models of m-banking, especially in low income countries. Althoughm-banking is generally in its infancy, a growing num-ber of models is being piloted in different parts of the

world. Not surprisingly for a field in its early stages,there remain important gaps in current knowledgefor example, about consumer attitudes and models

which accommodate these.

Tere are also an increasing number of donor-sup-ported entities interested in researching the sector.However, there is little evidence of coordination

among them at present around an overall knowledgeagenda, raising the risk of duplication and waste ofeffort in this area.

5. CONCLUSIONS As one strategy consistent with the needs and gaps,this report has proposed a structured program whichwould seek to fill in important knowledge gaps overthe next 12-24 months, and disseminate the results

widely. Tis will benefit providers and regulators aswell as inform donors seeking a way to support thedevelopment of this field. If dissemination takes place

widely, the knowledge agenda of such a program mayalso help to guide new funders to complete and ex-tend the knowledge base. On the basis of this foun-dation and the take-up of the knowledge generatedduring the next two years, further work may beplanned; or if the sector shows every sign that trans-formational models are indeed taking off, then nofurther donor support will be necessary; and furtherknowledge initiatives may be left to private sectorproviders who will charge for accessing the knowl-

edge.


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Annex A: Knowledge Mapping: M-banking and the Poor . 19

GUIDING QUESTION

Does mobile banking lead to broader access to appropri-ate financial services among the unbanked, especiallylow income and rural people?

Answer: most mobile banking offerings in develop-ing countries are at too early a stage for this questionto be answered; even in countries like the Philippines

where the reported number of registered users is nowsignificant (4 million), there is insuffi cient evidence

ANNEX AKNOWLEDGE MAPPING:

m-BANKING AND

THE POOR

of the profile of customers yet to answer this questiondefinitively: there is some reason to believe that rela-tively few may be previously unbanked.

M-banking certainly has the potential to be transfor-mational because it enables new players, like telcos,to enter the payment services business, and also en-ables new relationships to be formed for the distribu-tion of financial services (most importantly cash inand cash back).

However, potential is not the same as proven capac-ity: barriers stand in the way of the realization of this.Nonetheless, this answer based on available knowl-edge provides the starting point for further investiga-tion of the knowledge base; and of the case forsupporting the unlocking of this potential.

CURRENT KNOWLEDGEBASE

What we know, what we believe and what we dont

Tis is captured in able 4 which follows.


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Several donor initiatives are already active in particularfields which touch on this field directly or indirectly.

B1.INFODEV

(WWW.INFODEV.ORG/M-BANKING)

Similar to CGAP, infoDev is supported by a multido-nor syndicate and is housed within the World Bankgroup. infoDev has undertaken extensive researchinto the introduction of IC strategies on the lives ofpoor people. infoDev has published a handbook forIC regulators; and commissioned a useful recentreport on m-commerce, which investigated thePhilippino m-banking models in detail and others in

Africa to some extent.1

infoDev is now developing aworkplan in the area of m-banking, especially on thetechnology angles. http://www.infodev.org/

B2. CGAP

(WWW.CGAP.ORG)

CGAP has already run a technology programme forseveral years, and has set up a web resource centre onthe issue: http://www.microfinancegateway.org/re-source_centers/technology. o date, the program hasfocused on understanding technology deploymentespecially at microfinance entities, and especially intheir choice of I systems. One output has been thepublication of donor guides on financing technologyadoption at MFIs. However, the program has ex-panded as the ambit of technology has evolved, andCGAP has recently published useful pieces of over-view research related to technology and financial ser-vices more generally.2

ANNEX BOTHER RELEVANT

DONOR INITIATIVES

UNDERWAY

B3. FIRST

(WWW.FIRSTINITIATIVE.ORG)

FIRS is a multi-donor facility which providesfunding for technical assistance projects to policymakers, financial regulators and trade bodies in de-veloping countries. Started in 2001, FIRS hasfunded a large number of projects to date. Nonehave directly addressed the environment for mobilebanking, although m-banking has featured recently

within a broader project on payment system im-provement more generally. However, FIRS nowhas limited remaining funding, unless replenished,and focuses only on a set of agreed priority areas

within low income countries, hence it is unlikely tobe able to provide much, if any, support in this area.

Among the FIRS panel of consultants, two arelisted as having mobile banking relevant experience.

FIRS is currently funding extensive cross-countryresearch into the effect of AML-CF approaches onaccess to financial services. Te outcome of this re-search could assist greatly with arguing the case forenablement of transformational approaches to m-banking.

B4. UNDP GROWINGSUSTAINABLE BUSINESS

(GSB) PROGRAMME(WWW.UNDP.ORG/BUSINESS/GSB/ABOUT.HTM)

UNDPs GSB programme aims to support enterprisemodels which address poverty in targeted developingcountries. GSB largely achieves this through the pres-ence of an in-country broker responsible for facilitat-ing connections and new programs; and throughco-funding market research and feasibility studies fornew projects.

GSB prioritizes several sectors, including IC andthe financial sector. In these sectors, GSB has links tomajor multinational providers. Trough the UNDP,GSB has in-country convening power to assemble

1 Available via http://www.infodev.org/content/highlights/detail/30132 CGAP Focus Note No32, available via http://www.cgap.org/docs/Focus-Note_32.pdf; and Occasional Paper on Branchless Distribution, forthcoming


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regulators and providers for round table-type discus-sions, and may be able to undertake country-levelsurveys or mappings.

B5. COUNTRY LEVEL FSDPROGRAMMES

A number of country-level financial sector develop-ment programs have been started, especially in

Africa, which focus on expanding access to broaderfinancial services. Tese include: FinMark rust(Southern Africa), FSD Kenya, FSD (anzania).Tese programs often have flexible resources whichcan be applied to projects within their geographicfocus, whether at provider or regulator level. For ex-ample, the country-specific work for the priorEnabling Environment for Mobile Banking Report

was funded by FinMark rust for SA and FSDKenya. Tese programs can be contributors to inter-national or regional programs which cross theirboundaries, as long as they will specifically benefittheir own geography.

B6. AFRICA ENTERPRISECHALLENGE FUND (AECF)

Te AECF was proposed in the 2005 Report of theCommission for Africa as a way of supporting privatesector development in Africa. AECF builds onDFIDs learning in using a challenge fund-type ap-proach through mechanisms such as the FinancialDeepening Challenge Fund (FDCF). FDCF co-funded the M-Pesa mobile banking project underwayin Kenya.

AECF is currently in design phase, and it is uncertainwhat the size of the fund will be or whether it willaccommodate multiple sectors, such as the financialsector. It is likely to be operational from 2007. If itdoes, it could be a source of matched funding forprivate sector m-banking projects in Africa.

B7. INVESTMENT CLIMATEFACILITY (ICF)

(WWW.INVESTMENTCLIMATE

FACILITY.ORG)

Te ICF was recently launched as a private-publicpartnership, focused on improving the investmentclimate in Africa. ICFs missionis to make Africa aneven better place to do business, by removing obstaclesto domestic and foreign investment and by promot-ing Africa as an attractive investment destination.Te financial sector is one of the eight priority areasfor the ICF, and m-banking could fit into this ap-proach. However, ICF support would be limited toinitiatives in African countries which improve theinvestment climate such as designing new regulationsor capacitating regulators.

B8. CITIGROUP FOUNDA-TION: FINANCIAL LITERACY

(HTTP://WWW.CITIGROUP.COM/CITIGROUP/FINANCIALEDUCA-TION/HIGHLIGHTS060401.HTM)

CitiFoundation has funded the design of consumerfinancial education materials for developing coun-

tries, and recently announced a further commitmentof $3.9m over 3 years for the roll out of financial edu-cation for the poor, through training trainers at mi-crofinance institutions (MFIs).

Te work is to be undertaken through MicrofinanceOpportunities, which has designed and researchedcurricula and approaches; and MFI Freedom fromHunger.


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B9. VODAFONE SIM PANEL

(HTTP://WWW.VODAFONE.COM/SECTION_ARTICLE/

0,3035,CATEGORY_ID%253D3040302%2526LANGUAGE_ID%253D0%2526CONTENT_ID%253D265416,00.HTML)

Vodafone has established an advisory panel whichoversees research funded by this large multinationalnetwork operator into the social impact of mobilephones. Research published to date has includedmajor research reports on mobile phones in Africa,and on applications in health care. Te Panel is com-missioning research around questions in the m-pay-

ments and banking arena.

B10. OTHER TECHNOLOGYPROJECTS

Corporate foundations have funded a range of initia-

tives relevant to this sector: for example, HP (andothers) supported through staff time and money aproject to develop a Remote ransaction System inUganda (see http://www.hp.com/e-inclusion/en/project/uganda.html). Tis project has now ended, however.


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About infoDev

infoDev is a partnership of international development agencies, coordinated and served by an expert Secretariathoused at the World Bank, one of its key donors and founders. It acts as a neutral convener of dialogue, and as acoordinator of joint action among bilateral and multilateral donorssupporting global sharing of information on ICT fordevelopment (ICT4D), and helping to reduce duplication of efforts and investments. infoDev also forms partnerships withpublic and private-sector organizations who are innovators in the field of ICT4D.

For more information visit www.infoDev.org or send an email [email protected]


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