m-BANKING: A KNOWLEDGE MAP - infoDev | World Bank · PDF filechannel in the wider domain of...

+ MAINSTREAMING

www.infoDev.org

Information for Development Program

www.infoDev.org

m-BANKING:A KNOWLEDGE MAP


www.infoDev.org

AN infoDev PUBLICATION PREPARED BY

David Porteous with Neville Wishart


Mobile Banking 2-27-07.indd Sec2:viiMobile Banking 2-27-07.indd Sec2:vii 2/27/07 10:17:14 AM2/27/07 10:17:14 AM

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 reservedManufactured in the United States of America

The fi ndings, interpretations and conclusions expressed herein are entirely those of the author(s) and do not necessarily refl ect the view of infoDev, the Donors of infoDev, the International Bank for Reconstruction and Development/The World Bank and its affi liated organizations, the Board of Executive Directors of the World Bank or the governments they represent. The World Bank cannot guarantee the accuracy of the data included in this work. The boundaries, colors, denominations, and other information shown on any map in this work do not imply on the part of the World Bank any judgement of the legal status of any territory or the endorsement or acceptance of such boundaries.

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

Mobile Banking 2-27-07.indd Sec2:viiiMobile Banking 2-27-07.indd Sec2:viii 2/27/07 10:17:15 AM2/27/07 10:17:15 AM

TABLE OF CONTENTSExecutive Summary 1

1. Introduction 3

2. Th e case for donor action 5 2.1 Th eoretical case 5 2.2 Evidence to date 6

3. Needs and gaps 9 3.1 Sectoral Needs 9 3.2 Sectoral Gaps 10 3.3 Conclusions 11

4. Donor strategies and possible projects 13 4.1 Choice criteria and strategies 13 4.2 Structures for implementation 16

5. Conclusions 17

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

Guiding Question 19 Current knowledge base 19

Mobile Banking 2-27-07.indd Sec2:ixMobile Banking 2-27-07.indd Sec2:ix 2/27/07 10:17:16 AM2/27/07 10:17:16 AM

. m-Banking: A Knowledge Mapx

Mobile Banking 2-27-07.indd Sec2:xMobile Banking 2-27-07.indd Sec2:x 2/27/07 10:17:16 AM2/27/07 10:17:16 AM

Executive Summary . 1

1. Th e use of a mobile phone to conduct payment and banking transactions (m-banking) is at an early stage in a number of developing countries. Because m-banking uses the existing rapidly ex-panding mobile phone infrastructure, it has the potential to be deployed rapidly and aff ordably to expand access to fi nancial services among un-banked people. Donors are increasing expressing an interest in whether, and if so, how they can support the realization of this potential.

2. Th e case for donors to support m-banking rests on the causal chain linking generally improved access to fi nancial services to the reduction of vulnerability and creation of opportunity for poor households. Although m-banking is one channel in the wider domain of e-banking, there are reasons to single it out for focus—especially because mobile phone usage has reached critical mass numbers in countries with few banked indi-viduals.

3. Th ere is little hard evidence yet of unbanked people being served on any scale by existing m-banking services, in part because most models are very recent; however, there is reason to believe that ‘transformational’ models have considerable potential for m-banking to broaden access.

4. While m-banking as an additional channel for banked 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 over speed and nature of customer adoption, and regu-latory barriers.

5. Th e sector as a whole has three main areas of need:a. More successful transformational models

which have reached fi nancial sustainability, to create a suitable demonstration eff ect.

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

EXECUTIVE SUMMARY

and policy makers by fi lling in the gaps identi-fi ed by the knowledge map in Annex A. Th e map refl ects a fi eld at an early stage—with ac-celerating volume of reports of launches and new technology, but little systematic knowl-edge and indeed, little credible or accessible knowledge 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 and grow.

6. Th ere are a range of current or prospective donor-supported programs with activities which may touch on m-banking from diff erent perspectives, and with diff ering geographic coverage (country-level, regional and international). None currently has an exclusive focus on knowledge creation in the area of transformational m-banking.

7. Th ere 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 be amenable to more of a ‘challenge fund’ ap-proach whereby grant funds are allocated competitively. Large telcos and banks are less likely to be fund constrained; but may be more amenable to indirect support which persuades them that there is a viable case to enter.

b. Indirect support, to create and disseminate useful knowledge about the sector to potential participants and to policy makers; and to im-prove the enabling environment through technical assistance and support to regulators.

8. Using the criteria of potential impact, additivity and short gestation period, the report proposes the strategy of indirect support and identifi es four potential projects for donor to support:a. Studies of customer adoption across diff erent

models;b. Establishment of a web portal as a resource

centre and dissemination point;c. Country environment reviews which may lead

to 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.

Mobile Banking 2-27-07.indd Sec1:1Mobile Banking 2-27-07.indd Sec1:1 2/27/07 10:17:16 AM2/27/07 10:17:16 AM

. m-Banking: A Knowledge Map2


Introduction . 3

Mobile banking (m-banking) involves the use of a mobile phone or another mobile device to undertake fi nancial transactions linked to a client’s account. M-banking is one of the newest approaches to the provi-sion of fi nancial services through ICT, made possible by the widespread adoption of mobile phones even in low income countries. Th e roll out of mobile tele-phony has been rapid, and has extended access well beyond already connected customers in developing countries. Th ere is mounting evidence of positive so-cial impact on poorer people and communities as a result.

Th ere are sound reasons for the hope that m-banking could have similar impact. A mobile network off ers a high technology platform onto which other services can be often provided at very low cost to deliver an eff ective result. Mobile data channels are often under-

1. INTRODUCTION used and therefore may be off ered at low cost by the network operator. M-banking services which use channels such as text messaging/ SMS can be carried at a cost of less than US1c per message. Th e low cost of using existing infrastructure makes such channels more amenable to use by low income customers.

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

theory and practice—the ‘why’ of donor interven-tion (Section 2);

2. Th e needs and gaps arising from the development of 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 in Section 4 to consider strategies and particular initia-tives which donors may take to respond concretely to the needs and gaps identifi ed.



The case for donor action . 5

2.1 THEORETICAL CASEM-banking is another channel for the provision and accessing of formal fi nancial services.

Th e underlying theory of change which links m-banking to the purpose of poverty reduction runs as follows:

While poor people, by defi nition, have little money, they are active managers of what they have. Holding cash comes at high price to poor people because of the risk of crime in many poor countries, but they often have few alternatives to cash based services. In particular, appropriate fi nancial services help poor people to access usefully large lump sums of money, which may either enable a pathway out of poverty through investment in income generating activities (such as microenterprises) or asset cre-ation (such as housing); or may reduce vulnerabil-ity to sudden shocks to cashfl ow, as a result for example of illness or climate conditions.In many countries, poor people are forced to rely on informal fi nancial services, which may be un-safe, or fringe formal fi nancial products which may be expensive as well as unsafe. In other words, their exclusion from formal fi nancial services has economic and social impacts which may exacer-bate their poverty.Th e cost effi cient provision of formal fi nancial services (payments/ remittances, savings, credit or insurance) is predicated on customers having ac-cess at least to a basic transactional account, from which electronic transfers can be made (for loan installments, for example) and cash withdrawn (or deposited) as necessary.M-banking holds the prospect of off ering a low cost, accessible transaction banking platform for currently unbanked and poorer customers. In addition, as mobile networks expand their cover-age, they off er the opportunity of bringing pay-ment and remittance services into areas without conventional banking services.

■

■

■

■

■

2. THE CASE FOR DONOR ACTION

However, not all m-banking products will be transformational in the sense of broadening ac-cess to fi nancial services substantially at fi rst or even at all. However, it is likely that even m-bank-ing services which start targeted at existing banked customers may over time extend to unbanked groups.

Th is 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 which may restrict its impact:

M-banking requires prior access to a mobile phone—however, initiatives are underway to re-duce the initial handset cost so that it is not an impediment. Mobile networks in many low income countries are still enjoying explosive growth in subscribers, and are focused on basic network rollout; even if the additional fi nancial investment required for m-banking is limited and the revenue positive, they may be less amenable to divert scarce human resources from this core business into other non-core projects.

Th ese features are more likely, however, to aff ect the speed of adoption, rather than limit the potential described.

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 the broader e-banking domain, which has already been receiving some donor attention. Clearly, many of the regulatory and infrastructural issues are com-mon to both; and channels other than mobile phones will also be necessary in any retail fi nancial system. However, there are several reasons for focus-ing on m-banking specifi cally at this time:

In low income countries, m-banking may enable leapfrogging in the sense of reducing the need for the rollout of higher cost fi nancial infrastructure, such as dedicated POS devices; M-banking potentially brings new players, telcos, to the table; in many LICs, these may be stronger than retail banks and better placed to reach out to unbanked customers; M-banking is still very new, whereas other forms of e-banking are quite well established; the poten-tial to infl uence the models adopted towards be-

■

■

■

■

■

■



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

2.2 EVIDENCE TO DATE Two recent donor-funded reports have reviewed ex-isting m-banking models in various developing countries. A report by infoDev entitled Micro-Payment Systems and their application to mobile networks (‘in-foDev report’ available via www.infodev.org) consid-ers the issues faced by new m-banking models particularly in the Philippines, where the concept appears most advanced among developing countries, and especially from a Telco perspective. A recent DFID report, Th e Enabling Environment for Mobile Banking 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, whether they have the potential to be transformational, in the sense of massively expanding access to fi nancial 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 in part because there are at present only a few models which are intentionally transformational. Most of these are very new with limited history, or else, as yet, little is known about their client bases. Th e case for m-banking therefore presently rests on the theoretical case outlined above, in the sense that there is a strong expectation that it may have desirable positive eff ects on the lives and livelihoods of poor people. Th is needs to be monitored over time.

Even when the case for m-banking is born out in practice, 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 which m-banking can be transformational will be decisively shaped by the extent to which the regulatory and policy environment is enabling. Enablement was de-fi ned as the appropriate balance between openness to the startup and growth of new and varied models; and certainty, both for providers investing capital and taking risk, as well as consumers entrusting funds to new m-banking providers, whether banks, telcos or other entities.

Th rough interviews with providers in Africa, the re-port identifi ed three main types of barriers to the emergence and growth of transformational m-bank-ing which may limit or restrict its ability to occur spontaneously. Th ese were similar to barriers reported by providers in other regions. Th ese 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 compounded by the relative lack of knowledge of the needs of unbanked people in many places, and the market potential. Consumer education may speed adop-tion; but more likely, adoption on scale will hap-pen as it has happened with mobile phones: by person to person transfer of the knowledge neces-sary to operate. Providers will be forced to adapt their off erings as they encounter feedback in the market place. Th erefore, it is necessary to have suffi cient providers in the market who can remain in the market long enough to ensure that to iden-tify the elements of a successful model. Hence, support to providers may assist in overcoming this barrier. Generally available research into the patterns and needs of the unbanked target market may also help.

2. Lack of interoperability with existing systems: in-teroperability of diff erent payment systems is primarily a question of market structure and regu-lation. It arises initially only in markets where there is an existing payment infrastructure with which new providers can inter-operate (and later on, once new infrastructure becomes the stan-dard). Without inter-operability, the fi xed costs of deploying fi nancial infrastructure may be much harder to recover, since usage per item of propri-etary infrastructure will fall. Clearly, one solution may be to give regulators the power to require interoperability; however, it may be suffi cient to encourage the identifi cation of appropriate stan-dard upfront. Th is could take place via support to regulators or industry bodies, where these exist.

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

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


The case for donor action . 7

likely that transformational models of m-banking will emerge at all, or at least, sooner; and that they will develop more rapidly than otherwise would be the case.



Needs and gaps . 9

3.1 SECTORAL NEEDSEven if there is a strong prima facie case for donor support to date, how can donors best intervene? Table 1 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. Needs

Need Why? How?

Ultimately, success means having a competi-tive, active m-banking sector which charges affordable prices and which is incentivized to innovate and seek new clients. While interest in the sector is strong from potential entrants (telcos, banks, payment providers), there are still few documented models with a clear busi-ness case which can generate a demonstration effect to others

This requires that at least some of the existing start-ups succeed by reaching profi tability and a critical mass of users, and that more entrants start up, using other models.

Donors could provide funds directly to early stage models, as was the case with microfi nance institu-tions and has been the case with the Financial Deepening Challenge Fund and M-Pesa in Kenya. However, the fact that many m-banking entrants are large, privately owned multinational telcos or banks makes the case for direct support harder.

1. Suffi cient successful m-banking models to encourage entry and competition

2. Systematic information collection and knowledge dis-semination

The state of knowledge in the sector (Annex A) is fragmented, with many gaps which affect providers and regulators alike. While propri-etary research analysts are active in the fi eld offering new trade publications and reports by subscription only, these are often not accessible or affordable especially to regulators or new entities in developing countries.

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

3. Enabling country environments

This should mean that more fi rms can and do enter this space; and that more are able to succeed with diverse models.

Primarily, this means creating suffi cient openness and suffi cient certainty in legal and regulatory frameworks where they do not exist. Underlying this, is building the knowledge and capacity of regula-tors and policy makers to address this sector in an enabling fashion.



3.2 SECTORAL GAPSAnnex B highlights a range of existing or proposed donor-funded programs which currently do or are

likely to touch on m-banking. Th e coverage of these is assessed against the main needs identifi ed above.

TABLE 2. Current Donor Initiatives

Need Assessment Programs

Likely to be somewhat covered While no major present program provides conces-sional direct funding, several new programs will or may. The new CGAP/ Gates Foundation technol-ogy program will provide matched grant funding support to m-banking models although unlikely to be able or willing to fund more than a couple of projects in the m-banking space. When started (potentially in mid ’07), the AECF may provide funding for m-banking projects in Africa only. UN’s GSB may facilitate or support particular models at country level. The IFC is increasingly interested supporting quasi-commercial investment.

1. Suffi cient successful m-banking models to encourage entry and competition

2. Systematic information collection and knowledge dis-semination

Likely to be somewhat covered – uncoordinated Limited work has been done to date by several donors (DFID, infoDev, CGAP). However, these and other donors plan to embark on further research initiatives in 2006/07, including CGAP, infoDev and Vodafone’s SIM Panel. These will all contribute to the knowledge base. However, not clear that the 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 specifi cally There are several new and existing programs which provide technical assistance to regulators and policy makers. FIRST is a general facility which provides funding for technical assistance to fi nancial regulators in developing countries; however, FIRST is nearing the end of its current life and capacity. The Investment Climate Facility (ICF) has recently been launched in early 2006, but covers Africa only. Country level FSD programmes of bi-lateral and multi-lateral donors will clearly address aspects of the enabling environment, but, given both the com-plexity and the commonality of some of the issues, there is likely to be benefi t in having centralized knowledge pools and frameworks to draw on.


Needs and gaps . 11

3.3 CONCLUSIONSWhile relatively new, m-banking is not entirely new to donors: Table 2 above indicates that the activities of some existing and certain prospective donor pro-grams either can or are likely to touch in some way on all the main areas of need identifi ed. Th is is at one level encouraging in that it suggests that these pro-grammes at least are generally responding to needs. However, no programmes currently focus on m-banking specifi cally; and there is limited coordination across many of the activities. Furthermore, some of the programmes have a limited regional focus, for example, Africa only. It is not the case, therefore, that existing programs will meet all needs required for the takeoff of transformational m-banking.

In a fi eld in its relative infancy, like m-banking, there is likely to be positive return to approaches which enable systematic learning to be accumulated and disseminated rapidly to encourage cycles of innova-tion which converge on successful models of provi-sion and regulation. In the absence of a suitable learning hub, as interest in the potential of this sector grows, the risk of duplication and waste of donor funds will grow too.

Note also, that addressing the enabling environment for mobile banking is likely to have positive exter-nalities for other areas of the broader fi nancial access agenda: indeed, m-banking may provide a focus around which to develop and advocate such changes.



Donor strategies and possible projects . 13

4.1 CHOICE CRITERIA AND STRATEGIESPreceding 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 impact on 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 which will shape their desired strategies of intervention In addition.

In addition, the state of the sector as young and rap-idly emerging suggests a further criterion, since longer term ‘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 (12-24 months) commitment of initial resources. Th is criterion creates a deliberate preference for smaller initiatives which can be tried out, then scaled up if successful or phased out if not, rather than longer term projects with a long gestation period.

Against these criteria, donors can evaluate the two main strategies available:

Provide direct support to providers to enable more models 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 eff ective. CGAP’s forthcom-ing initiative will take this approach; and will probably be able to fund a few m-banking type models which require funding as part of its learn-

■

4. DONOR STRATEGIES AND POSSIBLE PROJECTS

ing agenda. Th is strategy requires both relatively deep pockets (perhaps $1-3m per project) to be relevant and the expertise to choose which model/s to back. It also may not fi t well with criterion 3 above (time to start and run).

In addition, the most successful models are likely to require close collaboration with either a telco, a bank or both. On the whole, neither category is fund-con-strained; and both have strategic reasons for imple-menting m-banking—they will be vulnerable if suffi cient of their competitors do. For this reason, while there is a need for more entrants, direct support to achieve this may be costly, and even unnecessary, in most cases.

Provide indirect support through improving the in-formational, policy and regulatory environment so that the ground is more fertile for more models to emerge and succeed. Th is is more likely to fi t the criteria above, even though the period in which success can be judged may exceed the 12-24 month window. However, in that period, demand could at least be assessed. Th e argument for indi-rect donor support is therefore stronger than for direct support.

Initiatives in line with this strategy could include a programme of ‘basic’ research to fi ll knowledge gaps, especially research which is subject to large minimum fi xed cost such as surveys, and therefore not under-taken by individual providers in poorer or smaller markets. A research agenda to fi ll in identifi ed knowl-edge gaps would likely include:

1. Further and ongoing client survey work to monitor adoption, to understand the main drivers especially among unbanked and poorer people. Th is will likely involve 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 telcos and banks: as these roles evolve, and as existing pilots develop further, it will be useful to track client numbers, profi tability and pricing against expectations to the extent possible.

3. Wider scan for emerging models outside of well known places and relating this to the environmen-tal factors in each case: the existing knowledge base relies heavily on a relatively limited number of examples in a few countries. A more systematic scan would ensure that no material case is left unexplored. Th e GSM Association, which has al-

■



TABL

E 3.

Pos

sibl

e do

nor-s

uppo

rted

initi

ativ

es in

200

6/7

Act

ivity

O

bjec

tive

Clie

nts/

ben

efi c

iarie

s Ti

mef

ram

e/ P

ossi

ble

cost

Ri

sks

& is

sues

To u

nder

stand

the

driv

ers

of c

usto

mer

ado

ptio

n,

whi

ch m

odel

s ar

e su

cces

sful—

espe

cial

ly th

ose

whi

ch ta

rget

unb

anke

d pe

ople

; and

to d

efi n

e po

tent

ial t

arge

t mar

ket f

or tr

ansfo

rmat

iona

l m

-ban

king

Prov

ider

s an

d po

tent

ial p

rovi

ders

1. S

tudi

es o

f cus

tom

er

adop

tion

Wou

ld re

quire

rollin

g se

t of s

urve

ys

to m

onito

r ado

ptio

n an

d us

age

acro

ss c

hose

n se

t of s

ites.

Cos

t of s

urve

ys w

ould

dep

end

on

size

of s

ampl

es e

.g. 1

000

inte

r-vi

ews

at 5

pro

vide

rs p

a. @

$50

ph

=$25

0k p

.a. o

ver t

wo

year

s.

Ana

lysis

of m

arke

t pot

entia

l w

ould

bui

ld o

n th

ese

surv

eys,

but

co

st m

ore

(say,

furth

er $

50k

per

coun

try)

Prov

ider

s w

ould

hav

e to

be

pers

uad-

ed to

take

par

t in

an e

xerc

ise w

hich

m

ay e

rode

com

petit

ive

adva

ntag

e if

succ

essfu

l—ar

gum

ent w

ould

hav

e to

be

mad

e on

bas

is of

(i) c

ost s

harin

g ar

ound

thei

r ow

n m

arke

t res

earc

h;

and/

or (i

i) de

lay

in ti

min

g to

pub

lic

rele

ase

of s

urve

y in

form

atio

n.

How

ever

, suc

h stu

dies

cou

ld a

lso

info

rm th

e iss

ues

need

ed fo

r con

sum

er

educ

atio

n cu

rricu

la a

roun

d m

-ban

king

.

2. E

stabl

ishin

g w

eb

porta

l for

diss

emin

a-tio

n

To c

reat

e a

visib

le, r

ecog

nize

d re

sour

ce c

entre

th

roug

h w

hich

rese

arch

, ana

lysis

and

bes

t pr

actic

e ex

ampl

es c

ould

be

diss

emin

ated

Don

ors,

pol

icy

mak

ers,

pro

vide

rsSe

tup

of w

eb p

orta

l: $3

0k +

on

goin

g m

aint

enan

ce.

Act

ive

man

agem

ent o

f con

tent

lik

ely

to re

quire

$10

0k p

a pl

us

ongo

ing

fl ow

of g

ood

cont

ent

(e.g

. fro

m p

rogr

am 1

abo

ve),

whi

ch m

ay n

eces

sitat

e a

broa

der

rese

arch

fund

ing

com

pone

nt

($10

0-20

0k)

Shou

ld th

is po

rtal b

e se

para

tely

br

ande

d or

mer

ely

a re

sour

ce c

entre

w

ithin

a la

rger

por

tal?

Wha

t wou

ld it

s lo

ng te

rm fu

ture

be?

(d

onor

fund

ed a

s in

Mic

rofi n

ance

G

atew

ay o

r evo

lutio

n to

sub

scrib

er

basis

)

3. E

nviro

nmen

tal

scan

s of

cou

ntrie

s fo

r pot

entia

l for

m-

bank

ing

To e

valu

ate

the

leve

l of o

penn

ess

and

certa

inty

w

ithin

dom

estic

mar

kets

for m

-ban

king

mod

els

to s

tart

and

grow

to s

cale

, by

deve

lopi

ng a

n as

sess

men

t/ s

elf-a

sses

smen

t met

hodo

logy

to

test

for c

erta

inty

and

ope

nnes

s in

a p

artic

ular

co

untry

Polic

y m

aker

s an

d re

gula

tors

Ass

essm

ent m

etho

dolo

gy c

ould

pr

obab

ly b

e de

velo

ped

and

teste

d in

a fe

w c

ases

with

in 3

-6 m

onth

s fo

r $10

0k.

An

asse

ssm

ent c

ould

nat

ural

ly le

ad

to a

requ

est f

rom

cou

ntry

regu

la-

tors

for T

A to

add

ress

obs

tacl

es

enco

unte

red.

Dep

endi

ng o

n de

man

d, a

nd th

e ex

tent

to w

hich

cou

ntry

-leve

l pro

gram

s ca

n m

eet i

t, a

fund

cou

ld b

e cr

eate

d to

resp

ond

to d

eman

d fo

r par

ticul

ar

TA p

roje

cts

espe

cial

ly in

are

as w

ith

stron

g de

mon

strat

ion

effe

ct i.

e.

crea

ting

prec

eden

t-bui

ldin

g no

rms

or

regu

latio

ns.

TA w

ould

requ

ire a

ski

lled

corp

s of

pr

ovid

ers

who

are

abl

e to

app

ly

appr

opria

te le

arni

ng; t

his

corp

s m

ay

be li

mite

d to

day.

How

ever

, pro

visio

n of

fund

ing

may

gro

w d

eman

d an

d sti

mul

ate

mor

e to

ent

er

To p

rovi

de a

pla

tform

to s

how

case

em

ergi

ng

trans

form

atio

nal m

odel

s, a

nd d

issem

inat

e ot

her

rese

arch

in th

e fi e

ld

Ope

rato

rs a

nd p

olic

y m

aker

s4.

Hos

ting

conf

eren

ce

on tr

ansfo

rmat

iona

l m

odel

s of

m-b

anki

ng

Wou

ld d

epen

d on

the

natu

re

of th

e ev

ent i

.e. s

tand

alon

e or

in

corp

orat

ed a

s pa

rt of

a b

road

er

even

t (e.

g. G

SMA

Eve

nt—

Feb

07 in

Bar

celo

na);

and

exte

nt o

f sp

onso

rshi

p ne

cess

ary

A c

onfe

renc

e co

uld

prov

ide

a m

eans

of

focu

sing

vario

us re

sear

ch s

tream

s;

how

ever

, thi

s w

ould

mea

n co

ncer

ted

effo

rt to

wor

k to

war

ds th

is so

that

suf

-fi c

ient

ly u

sefu

l mod

els

are

on th

e ta

ble

to a

ttrac

t atte

ntio

n


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 to disseminate the knowledge adequately, especially to likely 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 diff erent enabling environments, a methodology could be developed to undertaken en-vironmental reviews which scan for suffi cient cer-tainty and openness for m-banking across a range of country environments. Like the World Bank Group’s Doing Business Surveys, this could call attention to relatively negative environments, and in the process incentivize change.

Th e indirect support strategy is therefore more likely to fi t the approach of most donors. Four possible projects following this strategy are identifi ed in Table 3 below.

4.2 STRUCTURES FOR IMPLEMENTATIONTh e projects in Table 3 above could be undertaken as independent projects, although there are clear syner-gies from keeping them together: for example, based on evidence of demand and potential (project 1 above), 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 be structured.

Th ere appear to be two possibilities:By creating and funding a new joint work pro-gramme of the multilateral bodies, CGAP and infoDev. Each is well placed to do this, since re-search, dissemination and coordination among donors are part of their core agenda and program. Furthermore, transactions costs for many donors would be reduced through contributing to an existing funding line with a nominated purpose. However, certain issues would have to be clari-fi ed: 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 on ICT space only, whereas the projects outlined about must necessarily also crossover into fi nan-cial needs and users as well. By funding a new multidonor program (e.g. FDCF or FIRST). Th ere would, however, be transaction costs for donors to set up such an en-tity which would limit the potential to be started quickly: presumably, there would have to be a tender call for managers to run the work pro-gramme. Th ese costs would probably not be worth incurring without a critical mass of in-tended funding (over $1m).

Th e benefi ts and costs of these diff erent approaches would require concrete discussions as to the scope and intent of funding, with the particular parties in-volved, which is beyond the scope of this initial re-port.

■

■



Conclusions . 17

Th ere is a strong donor case for accelerating the startup and rollout of transformational models of m-banking, especially in low income countries. Although m-banking is generally in its infancy, a growing num-ber of models is being piloted in diff erent parts of the world. Not surprisingly for a fi eld in its early stages, there remain important gaps in current knowledge—for example, about consumer attitudes and models which accommodate these.

Th ere 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 knowledge agenda, raising the risk of duplication and waste of eff ort in this area.

5. CONCLUSIONS As one strategy consistent with the needs and gaps, this report has proposed a structured program which would seek to fi ll in important knowledge gaps over the next 12-24 months, and disseminate the results widely. Th is will benefi t providers and regulators as well as inform donors seeking a way to support the development of this fi eld. If dissemination takes place widely, the knowledge agenda of such a program may also 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 generated during the next two years, further work may be planned; or if the sector shows every sign that trans-formational models are indeed taking off , then no further donor support will be necessary; and further knowledge initiatives may be left to private sector providers who will charge for accessing the knowl-edge.



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

GUIDING QUESTIONDoes mobile banking lead to broader access to appropri-ate fi nancial services among the unbanked, especially low income and rural people?

Answer: most mobile banking off erings in develop-ing countries are at too early a stage for this question to be answered; even in countries like the Philippines where the reported number of registered users is now signifi cant (4 million), there is insuffi cient evidence

ANNEX AKNOWLEDGE MAPPING: m-BANKING AND THE POOR

of the profi le of customers yet to answer this question defi nitively: 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 fi nancial services (most importantly cash in and 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 for supporting the unlocking of this potential.

CURRENT KNOWLEDGE BASEWhat we know, what we believe and what we don’t

Th is is captured in Table 4 which follows.



TABL

E 4.

CU

RREN

T KN

OW

LED

GE

BASE

Que

stio

ns

Ans

wer

s &

Sou

rce

Com

men

ts

We

don’

t kno

w: b

ut to

put

this

in p

ersp

ectiv

e, n

eith

er d

o w

e kn

ow a

ccur

atel

y ho

w m

any

m-b

anki

ng c

usto

mer

s th

ere

are

in to

tal g

loba

lly, n

or e

ven

how

man

y ba

nked

peo

ple

ther

e ar

e in

the

wor

ld: t

here

are

cur

rent

ly a

ccur

ate

hous

ehol

d su

rvey

s on

ly in

cer

tain

cou

ntrie

s (m

ainl

y de

velo

ped

coun

tries

and

Mid

dle

Inco

me

Cou

ntrie

s (M

ICs))

with

es

timat

es fo

r oth

ers.

How

ever

, sin

ce m

ost m

-ban

king

mod

els

are

quite

rece

nt (2

000

onw

ards

), th

e nu

mbe

r is

still

smal

l: if

one

adds

cu

rrent

usa

ge n

umbe

rs in

the

Asia

n co

untri

es w

ith la

rges

t upt

ake

(see

B1 b

elow

) onl

y, th

ere

are

arou

nd 2

5 m

illion

. O

utsid

e of

thes

e co

untri

es, a

bsol

ute

take

-up

has

been

qui

te lo

w.

A m

ajor

initi

ativ

e ha

s be

en la

unch

ed b

y W

orld

Ban

k an

d D

FID

-con

nect

ed e

ntiti

es to

fund

hou

seho

ld s

urve

ys in

a

num

ber o

f low

inco

me

coun

tries

(LIC

s) w

hich

will

give

muc

h be

tter i

nfor

mat

ion

on fi

nanc

ial s

ervi

ce u

se a

nd a

ttitu

des.

A.

Ove

rall:

D

efi n

itio

ns

and

conte

xt

A2.

How

man

y cu

rrent

m-b

anki

ng

custo

mer

s w

ere

prev

i-ou

sly u

nban

ked?

We

don’

t kno

w a

ccur

atel

y be

caus

e no

kno

wn

profi

les

yet e

xist

of m

-ban

king

cus

tom

ers.

How

ever

, bas

ed o

n th

e co

untri

es w

here

mos

t of t

he u

sers

are

(Jap

an, K

orea

), it

is lik

ely

that

mos

t cur

rent

use

rs b

y fa

r are

alre

ady

bank

ed.

CG

AP

has

initi

ated

fi el

d su

rvey

s of

m-b

anki

ng u

sers

whi

ch

will

help

to a

nsw

er th

is qu

estio

n fo

r Phi

lippi

nes

and

SA.

The

hous

ehol

d su

rvey

s in

A1

abov

e w

ill he

lp a

nsw

er th

is to

o, o

nce

the

m-b

anki

ng n

umbe

rs b

ecom

e sta

tistic

ally

sig

nifi c

ant e

noug

h to

be

relia

ble.

A3.

Wha

t is

the

size

of th

e po

tent

ial m

arke

t am

ong

curre

ntly

un

bank

ed p

eopl

e fo

r m

obile

ban

king

?

Giv

en a

nsw

ers

to A

1 &

A2,

this

is cl

early

not

kno

wn

with

any

acc

urac

y. H

owev

er, i

t is

a su

bset

of t

he n

umbe

r of

mob

ile p

hone

use

rs, c

urre

ntly

risin

g 1.

5 bi

llion.

Of p

artic

ular

inte

rest

are

studi

es s

uch

as F

inSc

ope

in S

outh

Afri

ca,

whi

ch h

as c

onsis

tent

ly fo

und

that

20-

25%

of u

nban

ked

peop

le in

the

coun

try u

se a

mob

ile p

hone

.

Apa

rt fro

m h

avin

g a

mob

ile p

hone

, the

mar

ket s

ize

will

be d

eter

min

ed b

y de

man

d an

d su

pply

sid

e ch

arac

teris

tics

whi

ch c

ould

lead

to s

ome

surp

rises

: e.g

. the

mar

ket m

ay

wel

l be

larg

er in

poo

rer c

ount

ries

whe

re c

usto

mer

s ha

ve fe

w

relia

ble

paym

ent o

ptio

ns, r

athe

r tha

n in

wea

lthie

r cou

ntrie

s w

here

, for

exa

mpl

e, in

tern

et a

cces

s is

perv

asiv

e

(con

tinue

d on

nex

t pag

e)

A1.

How

man

y pe

ople

use

m-b

anki

ng

glob

ally

?

B. M

odel

s em

ergin

g

B1. W

here

are

ther

e su

cces

sful m

odel

s of

m

-ban

king

?

Dep

ends

on

the

crite

ria fo

r suc

cess

—if

it is

num

ber o

f cus

tom

ers,

then

cou

ntrie

s in

dev

elop

ed w

orld

incl

ude:

Ja

pan,

Kor

ea; a

nd a

mon

g de

velo

ping

cou

ntrie

s: P

hilip

pine

s.

(Por

teou

s 20

06).

How

ever

, giv

en re

lativ

ely

low

ove

rall

usag

e to

dat

e, e

spec

ially

am

ong

unba

nked

, suc

-ce

ss p

roba

bly

mea

ns e

vide

nce

of a

ccel

erat

ing

adop

tion

and

grow

th.

How

ever

, the

re a

re o

ften

signi

fi can

t diff

eren

ces

in u

ptak

e of

new

tech

nolo

gy m

odel

s in

the

form

er to

o co

untri

es, s

o th

e us

eful

ness

of m

odel

s fro

m th

e fo

rmer

two

may

be

limite

d

Ther

e ha

s no

t bee

n a

publ

icly

ava

ilabl

e ex

tens

ive

scan

of

all c

ount

ries

to te

st w

heth

er th

ere

are

mod

els

in o

ther

LIC

s co

untri

es w

hich

hav

e no

t bee

n re

porte

d on

and

hen

ce a

re

less

wel

l kno

wn.

The

GSM

Ass

ocia

tion

of m

obile

ope

rato

rs

can

prob

ably

hel

p w

ith th

is as

they

ope

rate

in v

irtua

lly e

very

co

untry

of t

he w

orld

with

the

poss

ible

exc

eptio

n of

a fe

w

high

ly d

evel

oped

mar

kets

usin

g U

S-C

DM

A te

chno

logy



TABL

E 4.

CU

RREN

T KN

OW

LED

GE

BASE

(con

tinue

d)

Vario

us fa

ctor

s: in

Japa

n &

Kor

ea, v

ery

high

leve

ls of

usa

ge a

nd c

usto

mer

bas

e op

en to

new

tech

nolo

gy; a

lso

inte

grat

ed h

ardw

are

and

serv

ice

in Ja

pan

thro

ugh

DoC

oMo.

(Por

teou

s 20

06)

Phili

ppin

es: m

-ban

king

sta

rted

beca

use

netw

ork

oper

ator

SM

ART

, lat

e in

to th

e ce

llula

r mar

ket,

was

und

er p

ress

ure

to fi

nd in

nova

tive

way

s to

targ

et a

bro

ader

cus

tom

er b

ase.

Thi

s le

d th

em to

pio

neer

offe

ring

cred

it in

crem

ents

on

prep

aid

at v

ery

low

leve

ls. C

ompe

titor

GLO

BE th

en d

evel

oped

sim

ilar c

once

pts.

Thi

s le

d to

the

prov

ision

and

pro

-m

otio

n of

m-C

omm

erce

, a n

atur

al p

rogr

essio

n fro

m lo

w v

alue

pre

paid

tran

sact

ions

. (in

foD

ev 2

006)

In a

dditi

on, i

t ap

pear

s th

at C

entra

l Ban

k ha

s ad

opte

d an

acc

omm

odat

ing

appr

oach

to n

ew m

odel

s (Ly

man

et a

l 200

6).

Sinc

e m

-ban

king

was

fi rs

t int

rodu

ced

by S

MA

RT in

200

0,

and

GLO

BE fo

llow

ed o

nly

in 2

004,

it w

ould

be

inte

resti

ng

to k

now

the

rate

s of

ado

ptio

n ov

er ti

me,

and

how

the

m-

bank

ing

offe

ring

evol

ved

in re

spon

se to

mar

ket f

eedb

ack.

B3. W

hich

mod

els

are

mor

e ap

peal

ing

to p

oor p

eopl

e?

Linke

d to

A2

abov

e, th

is is

not y

et k

now

n de

fi nite

ly b

ut c

an b

e po

stula

ted

base

d on

feat

ures

kno

wn

to b

e de

-m

ande

d by

low

inco

me

custo

mer

s.

Acc

ordi

ng to

Mic

rosa

ve a

nd o

ther

rese

arch

, the

se c

hara

cter

istic

s in

clud

e:

• Sa

fety

of m

oney

• A

bilit

y to

dep

osit

and

with

draw

sm

all a

mou

nts

of c

ash

easil

y an

d af

ford

ably

• A

bilit

y to

tran

sfer s

mal

l am

ount

s of

mon

ey P

2P re

liabl

y an

d fa

st

Thes

e fe

atur

es c

hara

cter

ize

‘tran

sform

atio

nal’

m-b

anki

ng

prod

ucts

(Mic

rosa

ve 2

006,

Por

teou

s 20

06).

B4. H

ow to

cat

ego-

rize

the

emer

ging

m

odel

s?

Vario

us w

ays

poss

ible

—e.

g. b

y te

chno

logy

cha

nnel

or s

ecur

ity e

lem

ent i

n us

e; b

y w

heth

er p

ropr

ieta

ry to

one

ne

twor

k or

not

; by

role

s pl

ayed

by

bank

and

telc

o.

The

bigg

est r

egul

ator

y di

stinc

tion

is w

heth

er o

r not

ther

e is

e-m

oney

issu

ance

by

telc

o or

non

-ban

k (Ly

man

200

6).

Porte

ous

prop

oses

4 m

odel

s, ra

ngin

g fro

m b

ank

driv

en to

telc

o dr

iven

, sim

ilar t

o in

foD

ev (2

006

Ann

ex 3

)

(con

tinue

d on

nex

t pag

e)

B2. W

hy h

ave

the

mod

els

emer

ged

ther

e?

B5. W

hich

com

mu-

nica

tions

cha

nnel

s/

prot

ocol

s ar

e be

ing

used

and

wha

t are

th

e iss

ues

with

eac

h?

Que

stio

ns

Ans

wer

s &

Sou

rce

Com

men

ts

A v

arie

ty—

SMS,

USS

D, W

AP,

WIG

, IVR

. Mos

t pop

ular

em

ergi

ng m

odel

s us

e SM

S or

USS

D. T

he s

igni

fi can

t ad

vant

age

of th

e SM

S ap

proa

ch is

that

it h

as a

pre

senc

e in

alm

ost a

ll if

not a

ll ne

twor

ks, b

oth

US

and

GSM

sta

ndar

ds. A

ll ot

her p

roto

cols

are

in th

e “m

ay b

e av

aila

ble”

cat

egor

y as

far a

s ac

tual

ava

ilabi

lity

on a

ny g

iven

ne

twor

k.

Wou

ld b

e us

eful

to h

ave

an in

depe

nden

t rev

iew

of t

he

tech

nolo

gy a

spec

ts of

eac

h in

term

s of

sec

urity

, usa

bilit

y et

c

B6. W

hat a

re th

e ba

rrier

s en

coun

tere

d so

far?

A

rang

e,

incl

udin

g

1. U

ncer

tain

pac

e an

d fo

rm o

f cus

tom

er a

dopt

ion:

this

is co

mpo

unde

d by

cum

bers

ome

dow

nloa

d pr

oces

ses

for s

ome

SIM

-bas

ed m

odel

s an

d tim

e co

nsum

ing

orig

inat

ion

of a

ccou

nts

whe

re th

ere

is no

real

tim

e ab

ility

to

elec

troni

cally

ver

ify id

entit

y2.

Reg

ulat

ory

impe

dim

ents

from

the

fi nan

cial

regu

latio

n sid

e: th

ese

stem

from

the

com

plex

inte

ract

ion

of d

iffer

ent

regu

lato

ry d

omai

ns i.

e. A

ML/

CFT

, ban

k su

perv

isor,

paym

ent s

uper

viso

rs, c

onsu

mer

pro

tect

ors

3. L

ack

of in

tero

pera

bilit

y of

acq

uirin

g de

vice

s e.

g. A

TMs,

whe

re th

ere

are

exist

ing

paym

ents

netw

orks

(Por

teou

s 20

06)

Thes

e im

pedi

men

ts ar

e ba

sed

on re

ports

from

dev

elop

ed

coun

try p

rovi

der f

orum

s an

d in

terv

iew

s w

ith A

frica

n pr

ovid

ers.

Thi

s co

uld

do w

ith fu

rther

val

idat

ion

acro

ss o

ther

de

velo

ping

cou

ntrie

s



TABL

E 4.

CU

RREN

T KN

OW

LED

GE

BASE

(con

tinue

d)

Basic

cas

e (te

lco

as m

essa

ge c

arrie

r onl

y): e

xtra

dat

a tra

ffi c

on n

etw

ork.

Sin

ce d

ata

serv

ices

suc

h as

SM

S ar

e ve

ry lo

w c

ost a

nd o

ften

have

cap

acity

, as

long

as

netw

ork

rece

ives

fee

in e

xces

s of

this

cost,

m-b

anki

ng is

re

venu

e po

sitiv

e fo

r the

telc

o

Enha

nced

mod

els

(telc

o pl

ayin

g a

wid

er ro

le, s

uch

as b

rand

, sys

tem

, etc

): de

pend

s on

the

role

pla

yed

by th

e te

lco.

Ofte

n, th

is re

quire

s ex

tra in

vestm

ent i

n fi n

anci

al s

yste

ms

and

inte

rface

s, a

s w

ell a

s m

arke

ting

of b

rand

s, b

ut

they

gen

erat

e ne

w fe

e re

venu

e fo

r tel

co; a

nd re

duce

cus

tom

er c

hurn

, esp

ecia

lly if

num

ber p

orta

bilit

y is

in p

lace

or

likel

y

(info

Dev

200

6)

B8. W

hat i

s th

e bu

si-ne

ss c

ase

for b

anks

? Va

ries

depe

ndin

g on

role

of t

he b

ank

but i

nclu

des:

(i)

Reta

inin

g ex

istin

g cu

stom

ers

(a d

efen

sive

strat

egy

in fa

ce o

f riv

al o

fferin

gs) t

hrou

gh g

reat

er c

onve

nien

ce;

(ii)

Tipp

ing

trans

actio

ns to

war

ds lo

wer

cos

t e-c

hann

els

(alth

ough

sim

ilar t

o in

tern

et fo

r the

ban

k).

(iii)

Sellin

g ot

her s

ervi

ces

(esp

. cre

dit w

hich

ear

ns h

ighe

st m

argi

n) th

roug

h th

is ch

anne

l, ba

sed

on n

ew tr

ansa

ctio

n hi

story

(iv)

Add

ition

al c

ash

fl oat

from

dep

osits

(v

) Po

tent

ial f

or re

achi

ng n

ew c

lient

bas

e w

hile

mai

ntai

ning

a lo

w c

ost o

f pro

visio

n an

d on

-goi

ng m

anag

emen

t

Bank

s w

ith e

xisti

ng c

lient

bas

es fa

ce th

e ris

k of

can

niba

lizin

g th

is ba

se th

roug

h in

trodu

cing

low

cos

t offe

rings

. O

nly

bank

s w

ith th

e str

ateg

y, b

rand

and

cap

acity

to re

ach

out t

o un

bank

ed c

usto

mer

s ar

e lik

ely

to b

e m

ajor

pl

ayer

s in

tran

sform

atio

nal m

-ban

king

mod

els.

The

re a

re fe

w k

now

n tra

nsfo

rmat

iona

l ban

k-driv

en m

odel

s at

pre

s-en

t—ra

ther

JV-ty

pe s

uch

as S

mar

t/BD

O o

r MTN

/St

anda

rd B

ank.

Mor

e sy

stem

atic

sca

n of

oth

er m

arke

ts as

in B

1 m

ay y

ield

furth

er e

xam

ples

and

ther

efor

e dr

iver

s fo

r ban

ks

B9. W

ho a

re li

kely

to

be th

e do

min

ant p

lay-

ers

in m

-ban

king

?

Not

cle

ar y

et—

telc

os d

omin

ate

in Ja

pan

and

Phili

ppin

es; b

ut m

ix in

Afri

ca. T

ight

fi na

ncia

l reg

ulat

ory

regi

mes

fa

vour

ban

ks (M

ICs);

wea

k do

mes

tic b

anki

ng s

ecto

rs fa

vour

telc

os (L

ICs)

(con

tinue

d on

nex

t pag

e)

Que

stio

ns

Ans

wer

s &

Sou

rce

Com

men

ts

B7. W

hat i

s th

e bu

si-ne

ss c

ase

for t

elco

s to

pro

vide

m-b

anki

ng

serv

ices

?

This

is sp

ecul

ativ

e; a

nd c

an o

nly

be a

nsw

ered

by

track

ing

the

emer

ging

mod

els

C. Polic

y a

nd

regula

tory

issu

es

emer

gin

g

C1.

Ban

k re

gula

tors

An

enab

ling

envi

ronm

ent w

ith s

uffi c

ient

ope

nnes

s an

d ce

rtain

ty to

allo

w a

var

iety

of m

odel

s to

sta

rtup

and

deve

lop—

see

defi n

ition

and

prin

cipl

es a

pply

ing

it in

Por

teou

s (2

006)

. To

crea

te th

is en

viro

nmen

t in

the

mid

st of

com

plex

ove

rlapp

ing

legi

slatio

n us

ually

requ

ires

som

e pu

blic

pol

icy

prio

rity

or c

omm

itmen

t tow

ards

ext

end-

Wha

t doe

s it

requ

ire to

ge

t m-b

anki

ng s

tarte

d?



TABL

E 4.

CU

RREN

T KN

OW

LED

GE

BASE

(con

tinue

d)

ing

fi nan

cial

ser

vice

s. S

omet

imes

, thi

s m

ay c

ome

simpl

y fro

m th

e de

sire

for m

ore

effi c

ienc

y in

gov

ernm

ent p

ay-

men

ts to

em

ploy

ees

or c

itize

ns (G

2P);

or fr

om fi

ghtin

g cr

ime,

alth

ough

this

may

hav

e pe

rver

se c

onse

quen

ces—

see

C2,

C3

belo

w

C2.

Tel

co re

gula

tors

Non

e of

sig

nifi c

ance

, bec

ause

the

tele

com

mun

icat

ions

asp

ects

are

esse

ntia

lly b

usin

ess

as u

sual

info

Dev

(200

6)

If te

lcos

go

beyo

nd a

mes

sage

car

ryin

g ro

le, t

hey

usua

lly fa

ll un

der o

ne o

r mor

e of

the

fi nan

cial

and

com

mer

ce

sect

or re

gula

tors

as

belo

w.

Not

e ho

wev

er, m

oves

to re

quire

that

ID b

e pr

esen

ted

and

verifi

ed

for o

peni

ng p

re-p

aid

mob

ile p

hone

acc

ount

s as

pa

rt of

ant

i-crim

e str

ateg

ies

(sim

ilar t

o A

ML/

CFT

for b

ank

acco

unts

belo

w)

C3.

Oth

er re

gula

tors

M-b

anki

ng is

like

ly a

lso to

touc

h on

dom

ains

of:

• Fi

nanc

ial I

ntel

ligen

ce C

entre

: AM

L/C

FT re

gs

• Pa

ymen

t sys

tem

regu

lato

r•

Com

petit

ion

auth

ority

• C

onsu

mer

pro

tect

ion

auth

ority

For e

xpla

natio

n of

the

spec

ifi c

issue

s co

nnec

ted

to e

ach,

see

Sec

tion

4 of

Por

teou

s 20

06

Que

stio

ns

Ans

wer

s &

Sou

rce

Com

men

ts

D.

Know

ledge

base

s

Wha

t are

the

impl

ica-

tions

for t

elco

lice

ns-

ing

& re

gula

tion?

Ther

e m

ay b

e a

case

for i

nves

tigat

ing

(i) o

verla

p of

re

gula

tory

juris

dict

ions

if te

lco

issue

s e-

mon

ey; (

ii)

acco

untin

g an

d re

gula

tory

trea

tmen

t of p

re-p

aid

bal-

ance

out

stand

ing;

(iii)

sol

venc

y im

plic

atio

ns o

f gre

ater

re

volvi

ng b

alan

ces

Whi

ch o

ther

regu

lato

rs

are

pote

ntia

lly a

ffect

ed

by m

-ban

king

?

D1.

Are

ther

e pu

blic

ly

acce

ssib

le k

now

ledg

e ba

ses?

Few

web

sites

pro

vide

com

preh

ensiv

e or

targ

eted

cov

erag

e al

thou

gh c

erta

in p

ublic

web

por

tals

cove

r pay

men

t de

velo

pmen

ts in

gen

eral

: e.g

. Eur

opea

n Pa

ymen

t Sys

tem

Obs

erva

tory

ePS

O, w

hich

as

the

nam

e im

plie

s, h

as a

Eu

rope

an fo

cus.

Indu

stry

asso

ciat

ions

MPF

and

Mob

eyFo

rum

also

hav

e w

ebsit

es w

ith in

dustr

y w

hite

pape

rs a

vaila

ble.

Ther

e is

a lo

t of b

reak

ing

new

s, a

s ex

pect

ed in

a n

ew,

wid

ely

follo

wed

sec

tor,

but a

sho

rtage

of a

cces

sible

in

depe

nden

t ana

lysis

focu

sed

on d

evel

opin

g co

untri

es

Ther

e ar

e al

so a

num

ber o

f pro

prie

tary

ser

vice

s by

sub

scrip

tion

only

e.g

. Mob

ile B

anki

ng N

ews,

Mob

ile P

ay-

men

ts W

orld

, Mer

cato

r Rep

orts,

etc

In th

e U

S &

Eur

ope,

ther

e ar

e pa

ymen

t spe

cial

ist fi

rms

whi

ch in

clud

e a

mob

ile e

lem

ent.

Larg

e ca

rd a

ssoc

iatio

ns

also

hav

e te

chno

logy

ski

lls in

this

area

in-h

ouse

, but

not

ava

ilabl

e to

pro

vide

adv

ice.

D2.

Are

ther

e in

de-

pend

ent (

i.e. o

utsid

e of

pro

vide

rs) p

ools

of

skills

on

this

issue

?

As

dem

and

incr

ease

s in

dev

elop

ing

coun

tries

, the

se

fi rm

s an

d in

divi

dual

s ar

e lik

ely

to e

mer

ge, e

ither

ex-

porti

ng fr

om m

arke

ts w

ith g

row

ing

expe

rienc

e or

add

-in

g on

mob

ile e

xper

tise

to e

xisti

ng p

aym

ents

serv

ice




Several donor initiatives are already active in particular fi elds which touch on this fi eld 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 Bank group. infoDev has undertaken extensive research into the introduction of ICT strategies on the lives of poor people. infoDev has published a handbook for ICT regulators; and commissioned a useful recent report on m-commerce, which investigated the Philippino m-banking models in detail and others in Africa to some extent.1 infoDev is now developing a workplan in the area of m-banking, especially on the technology angles. http://www.infodev.org/

B2. CGAP(WWW.CGAP.ORG)

CGAP has already run a technology programme for several years, and has set up a web resource centre on the issue: http://www.microfi nancegateway.org/re-source_centers/technology. To date, the program has focused on understanding technology deployment especially at microfi nance entities, and especially in their choice of IT systems. One output has been the publication of donor guides on fi nancing technology adoption at MFIs. However, the program has ex-panded as the ambit of technology has evolved, and CGAP has recently published useful pieces of over-view research related to technology and fi nancial ser-vices more generally.2

ANNEX B OTHER RELEVANT DONOR INITIATIVES UNDERWAY

B3. FIRST(WWW.FIRSTINITIATIVE.ORG)

FIRST is a multi-donor facility which provides funding for technical assistance projects to policy makers, fi nancial regulators and trade bodies in de-veloping countries. Started in 2001, FIRST has funded a large number of projects to date. None have directly addressed the environment for mobile banking, although m-banking has featured recently within a broader project on payment system im-provement more generally. However, FIRST now has limited remaining funding, unless replenished, and focuses only on a set of agreed priority areas within low income countries, hence it is unlikely to be able to provide much, if any, support in this area. Among the FIRST panel of consultants, two are listed as having mobile banking relevant experience.

FIRST is currently funding extensive cross-country research into the eff ect of AML-CFT approaches on access to fi nancial services. Th e outcome of this re-search could assist greatly with arguing the case for enablement of transformational approaches to m-banking.

B4. UNDP GROWING SUSTAINABLE BUSINESS (GSB) PROGRAMME(WWW.UNDP.ORG/BUSINESS/GSB/ABOUT.HTM)

UNDP’s GSB programme aims to support enterprise models which address poverty in targeted developing countries. GSB largely achieves this through the pres-ence of an in-country broker responsible for facilitat-ing connections and new programs; and through co-funding market research and feasibility studies for new projects.

GSB prioritizes several sectors, including ICT and the fi nancial sector. In these sectors, GSB has links to major multinational providers. Th rough 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



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

B5. COUNTRY LEVEL FSD PROGRAMMES

A number of country-level fi nancial sector develop-ment programs have been started, especially in Africa, which focus on expanding access to broader fi nancial services. Th ese include: FinMark Trust (Southern Africa), FSD Kenya, FSDT (Tanzania). Th ese programs often have fl exible resources which can be applied to projects within their geographic focus, whether at provider or regulator level. For ex-ample, the country-specifi c work for the prior Enabling Environment for Mobile Banking Report was funded by FinMark Trust for SA and FSD Kenya. Th ese programs can be contributors to inter-national or regional programs which cross their boundaries, as long as they will specifi cally benefi t their own geography.

B6. AFRICA ENTERPRISE CHALLENGE FUND (AECF)

Th e AECF was proposed in the 2005 Report of the Commission for Africa as a way of supporting private sector development in Africa. AECF builds on DFID’s learning in using a challenge fund-type ap-proach through mechanisms such as the Financial Deepening Challenge Fund (FDCF). FDCF co-funded the M-Pesa mobile banking project underway in Kenya.

AECF is currently in design phase, and it is uncertain what the size of the fund will be or whether it will accommodate multiple sectors, such as the fi nancial sector. It is likely to be operational from 2007. If it does, it could be a source of matched funding for private sector m-banking projects in Africa.

B7. INVESTMENT CLIMATE FACILITY (ICF)(WWW.INVESTMENTCLIMATEFACILITY.ORG)

Th e ICF was recently launched as a private-public partnership, focused on improving the investment climate in Africa. ICF’s mission is “to make Africa an even better place to do business, by removing obstacles to domestic and foreign investment and by promot-ing Africa as an attractive investment destination”. Th e fi nancial sector is one of the eight priority areas for the ICF, and m-banking could fi t into this ap-proach. However, ICF support would be limited to initiatives in African countries which improve the investment climate such as designing new regulations or capacitating regulators.

B8. CITIGROUP FOUNDA-TION: FINANCIAL LITERACY(HTTP://WWW.CITIGROUP.COM/CITIGROUP/FINANCIALEDUCA-TION/HIGHLIGHTS060401.HTM)

CitiFoundation has funded the design of consumer fi nancial education materials for developing coun-tries, and recently announced a further commitment of $3.9m over 3 years for the roll out of fi nancial edu-cation for the poor, through training trainers at mi-crofi nance institutions (MFIs).

Th e work is to be undertaken through Microfi nance Opportunities, which has designed and researched curricula and approaches; and MFI Freedom from Hunger.



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 which oversees research funded by this large multinational network operator into the social impact of mobile phones. Research published to date has included major research reports on mobile phones in Africa, and on applications in health care. Th e Panel is com-missioning research around questions in the m-pay-ments and banking arena.

B10. OTHER TECHNOLOGY PROJECTSCorporate foundations have funded a range of initia-tives relevant to this sector: for example, HP (and others) supported through staff time and money a project to develop a Remote Transaction System in Uganda (see http://www.hp.com/e-inclusion/en/project/uganda.html). Th is project has now ended, however.



About infoDev

infoDev is a partnership of international development agencies, coordinated and served by an expert Secretariat housed at the World Bank, one of its key donors and founders. It acts as a neutral convener of dialogue, and as a coordinator of joint action among bilateral and multilateral donors—supporting global sharing of information on ICT for development (ICT4D), and helping to reduce duplication of efforts and investments. infoDev also forms partnerships with public and private-sector organizations who are innovators in the fi eld of ICT4D.

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


+ MAINSTREAMING

www.infoDev.org


www.infoDev.org


Date post:	20-Mar-2018
Category:	Documents
Upload:	hadien
View:	217 times
Download:	4 times

m-BANKING: A KNOWLEDGE MAP - infoDev | World Bank · PDF filechannel in the wider domain of...

Documents