Branchless Banking and Financial Inclusion
Michael TaraziFDICJune 2, 2011
Branchless banking may overcome these constraints
What are the factors that limit access?
Long distances & low pop density High bank costs relative to income
Low education & illiteracy Poor product/ channel design
Bank
Agen
t
Clie
nt
Branchless Banking: What do we mean?
“… delivery of financial services outside conventional bank branches using information and communications technologies and nonbank retail agents.”
Bank
Clie
nt
Branchless Banking: Cash-in
Client opens bank account(accessible by mobile phone)
Agent opens bank account (accessible by mobile phone)
2 Cash-in
3 Electronic value sent
4 Agent account debited
Client account credited
1 1
-+
Agen
t
Bank
Clie
nt
Branchless Banking: Cash-out
1 Electronic value sent to agent
2 Cash-out
3 Agent account credited
Client account debited-+
Agen
t
3
The logic of branchless banking
Use existing retail infastructure
Use existing deployed technology
Any store can potentially be an agent
~28m
~5.7bn
~1m665k500k250k
WesternUnion
Bankbranches
Postoffices
ATMs POS Mobile Phone
Connections
Worldwide points of presence
The power of using existing infrastructure
Sources: CGAP, Wireless Intelligence
3.3 bil unique
mobile owners
1.4 bil
9
2x
Sources: CGAP, Wireless Intelligence
10
Branchin store
$50,000
ATM
$10,000
No agent (cashless)
$0
Agent with POS terminal
$2,000
Agent with mobile
$400
Reducing the cost of banking infrastructure
Traditional branch
$250,000
11
The Global Status of Branchless Banking
12
KEN Safaricom M-Pesa 13.1
TZA Vodacom M-PESA 6.4
PHL Smart Money 4.5
GHA MTN Mobile Money 1.8
PAK UBL Bank Omni 1.6
SAF FNB 1.5
UGA MTN Mobile Money 1.5
GHA Airtel (Bharti Airtel) Money 1.2
KEN Airtel (Bharti Airtel) 1.0
PHL Globe G-Cash 1.0
Branchless Banking Implementations
10 of the Largest Implementations
Reaching the Unbanked
Weighted Average
37%
Bank Agent ClientMobile Network Operator
Nonbank E-Money Issuers
Bank ?
Pooled Account
Regulatory Issues
1. AML/CFT: Can low-income users meet ID requirements?
2. Agents: Who, what services, who is liable for what?
3. Consumer Protection: Price transparency, recourse, education?
4. Moving beyond payments: interest-bearing, insured deposits?
Advancing financial access for the world’s poor
www.cgap.org
www.microfinancegateway.org