From Payments to Electronic Banking

to Financial Inclusion Investment & Advisory Services Strategy

• Owned by 182 countries

• Additional joint special

programs with such

countries

• 50+ years of immaculate

brand

• Aligned with countries’

development agenda

• Benefit from WB brand

IFC at a glance …

Establish’d

Largest

emerging

markets

Investor

TRUSTED

Trusted by

gov’ts,

regulators

and

private

companies

alike

COMPLETE

Full suite

of

products

and

services,

patient

capital

PRESENT

Largest

Footprint

of any

Investment

House

100 offices in 86 countries 3,354 staff

• Preferred funder in

multiple industries

• Domain savvy investor

• Transparent

commercial and

development agenda

• Consistently good

commercial returns

• Proponent of good

governance, long

term thinking

Our three businesses fit together, adding value

to clients and helping shareholders achieve development

results

3

o Long-Term Debt

o Equity/Quasi-equity

o Short-term Finance

o Risk Management

o Mobilization

o Treasury Operations

•Investment

Services

o Investment Climate

o Access to Finance

o Sustainable Business

o Public-Private Partnerships

•Advisory

Services o Launched in 2009

o IFC Capitalization Fund

o Africa/ Latin America & Caribbean Fund

o Africa Capitalization Fund

o Others to come. . .

•Asset

Management

• IFC Advantages

o Global knowledge, local delivery (present in 82 countries)

o Combined focus on development impact and business results

o Strong network of clients, banks, and donor partners

o Commitment to monitoring and evaluation

Source: Mix Market, Safaricom and MFI websites.

Note: Top 10 LAC MFIs by clients: Compartamos, Crediscotia, CrediAmigo, MiBanco, FMM Popayan,

Bancamia, Financiera Edyficar, CAME, WWB Cali and CMAC Arequipa.

Note: CAGR (Compounded annual growth rate).

Why Do We Care?

CAGR

275%

115%

18%

0

5,000,000

10,000,000

15,000,000

20,000,000

25,000,000

2007 2008 2009 2010

Top 10 LAC MFIs MPESA FINO

IFC’s Objectives:

Development impact

Financial return

Environmental

sustainability

0.40 0.71

1.10 0.61

1.87

0.06

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

Bil

lio

ns

No. of people currently

affected Potential no. of people

affected

1.01

2.97

0.77

2007 Emerging Market Population = 5.5 billion

Credit Bureaus Remittances Domestic Payments

Our Vision is that people should have the

opportunity to escape poverty and improve

their lives

Application of technology can dramatically extend access to finance

5

E-Money Reduces The Costs That Impact Both Supply And Demand

Remittances: Cost of sending remittances to remitter’s home country.

Domestic payments: Cost of sending payments within country.

$0

$5

$10

$15

$20

$25

$30

Remittances Domestic

Payments

Co

st

pe

r $

10

0 le

nt

or

se

nt

Cost of least efficient system

Cost of most efficient system

Total potential reduction in costs

75%

90%

Fees for

transactions

can be

reduced

dramatically

Demand Constraints

•Affordability (fees)

•Availability &

Convenience (time &

cost to reach nearest

branch)

•Administrative

paperwork, lack of

ID, illiteracy, time

spend in queues

Significant potential

to reduce consumer

cost to transact

beyond fees charged

Supply Constraints

• Affordability (fees)

•Availability &

Convenience (days

to complete

transaction,

documents required,

physical proximity)

•Quality (price

transparency, fair

disclosure, risk

management

E-Payment Ecosystems

• Banking/cash point

infrastructure

• Credit bureaus/public

registries

• Collateral/movable

registries

• Biometrics

• Payment system

platforms

INFRASTRUCTURE

• Branchless banking:

• ATMs

• POS

• Internet banking

• Prepaid cards

• Debit Cards

• Credit Cards

• Smart Cards

• Mobile Phone Banking

Technologies that can

enable access to the

unbanked / underserved

Value added

technology services

• Credit scoring

• MIS upgrades for MFIs

• KYC (Know Your

Customer) software

identification tools

CLIENTS

Base of the pyramid

INFRASTRUCTURE PROVIDERS

Commercial banks/lending institutions

Microfinance Institutions (MFIs)

Mobile operators

A B C

Technology Is Not The Key Constraint, But Greater Reach Does Require

Technology As An Enabler

Greater

reach

Increased

A2F

TECHNOLOGY

Legal & Regulatory: Enabling Framework

7

8

The Ability To Integrate Many Components Is Key To Developing A Healthy And

Scalable Ecosystem. This Ecosystem Is Not Well Developed In Many Countries

Regulation

Regulatory framework

drives what is permissible

and possible in terms of

players and products

these players offer in a

given market. Drives

ability to build out agent

networks. Key success

factor: Risk proportionate

regulation

Payment Instruments

Critical to identify one

product that will attract

customers, meeting their

greatest need and build

other services onto that.

Key success factor:

Anchor Product

SVA with

Card

Cash

Linked

Bank Account

Debit, Credit

or Charge Card

Stored Value

Account (SVA)

Access Points/Network

A closely knit and well managed agent network is a

critical success factor as it provides many access /

acceptance points = 10 * branch network. Agents are

key interphase to customers and must have minimum

of 50 transactions/ day and must be within 2km of

user. Key success factor: Scalability

Retail

Outlet Phones ATM

PSP MNO Bank

POS Online

Branding & Operating Model

Branch

Integration of the different players and choice of

operating model will influenced product offering in

market. Need business justification and market strategy. Key success factor: Trust

E Money Platform/ Switch: focus of

Payment Practice

9

An E-wallet, provided by MNOs or PSPs, Can Be An Important Intermediate

Step In Bringing E-Money Acceptance To The Poor Fin

ancia

l In

frast

ructu

re

Financial Integration low high

high Differentiation

(Alternative

Infrastructure)

Cost Leadership Segmentation

Deposit

Account

Insurance

Loan

E-Wallet

E-Payment

Fund

transfer, bill

payment

simple

payment

processing

Cash

Cash

management:

holding

funds,

remittance,

cash-in &

cash-out

Holding

funds &

paying

interest.

Debit

card

Lending

Funds &

charging

fees &

interest:

overdrafts

(negative

deposit),

ST and

installment

loan Irregular

savings,

informal

credit

Likely Future Evolution

11

Markets Will Evolve Based On Their Eco-system Characteristics -- These

Will Allow Certain Players To Dominate In Certain Conditions

Mobile

banking

MNO

dominance

Regulation Market Demand Financial

Infrastructure Mobile

Infrastructure

Disables

Enables

Banks

MNOs

Met

Unmet

ATMs,

Switches

Financial Inst

fragmentation

Fragmented

Single player

dominates

PSP Inter-

operable

systems

Ecosystem Characteristics

Dominate

Model:

Dominate

Players:

13

A Scale PSP Can Provide Value To The Banks & Foster Inclusion

R

E

G

U

L

A

T

O

R

Y

F

R

A

M

E

W

O

R

K

PSP/ Switch

E-Wallet

Contract For Switching, Products Supported, Brand & Agents

Agents & Merchants network build out, management & training

Brand development and marketing

Contracts with MNOs to provide mobile channel

Loans

Loans

BANK

Loans

RELATIONSHIPS CUSTOMER

14

Mobile Phone Enabled E-payment Emergence Can Be Steep & Fast In

Underdeveloped Markets (& Slow In Developed Markets)

Demand driven by

appropriateness and availability

of services and agent network

in combination with consumer

education

Customer adoption evolves

from more urban and educated

to rural and unbanked if

product offering is right

Unbanked customers attracted

through product push, i.e.

government payments and

salary disbursements

Extensive agent infrastructure

required to encourage savings

and routine transacting

Business models dependent on

transaction volumes and

relative size rather than

customer numbers

Success requires value add for

all participants

# o

f C

usto

me

rs

high

low

low high Market Opportunity / Increased Segmentation

Mobile Money Adoption Curve

Undeveloped Emerging Developed

Once all technology & eco-systems

are in place, we see rapid up-take if

product is right

Growth is driven by product

innovation

IFC Focus

IFC Focus Areas are based on Critical Success Factors

16

Transformational electronic banking

Global Expertise in

Business Model Design, Testing and Refinement

Market Research and Product Design

Performance-Based Grants, Convertible Grants, Equity

Agent Network Build-Out, Economics and Management

Customer Education and Uptake

Impact Assessment

Identify potential customer

segments and money flow

Identify anchor and priority

products

Identify Bank, MFI and MNO

partners

Develop strategy for

technology up-take per

segment

Partner

Identification

& Coalition

Building &

Product

Development

Cash-in, cash-out

Payroll transfer

Utility bills payment

C2B, B2B payment (remote)

C2B, B2B payment (on site)

Remittance (domestic)

Remittance (international)

Pension fund payment

Interoperable platform design

Business Modeling and Testing

Develop value proposition

Financial modeling of revenue

and cost streams

Valuation for business building/

spin-offs

Equity

Building the

Business Case

Support to agent network development

− Business modeling

− Training of agents, master agents and agent managers

Provide risk share or liquidity facility for agent financing

Market Research

& Strategy

Design

Agent build-out strategy tailored to market needs

Cell phone penetration

Projected cell phone growth

Retail networks

Retailer support needs

Agent value proposition

Agent segment and suitability survey

Geographical areas to service

Cash-in / out, AML, KYC requirements

Basic conditions of adoption

Float & cash reserve requirement

Training needs assessment

Operation flow, terms and conditions

Network Build out, Economics and Management

Payment Currency & Volume

Location

Spending

Conduct needs and demand assessment

− Product design

Market Research

& Strategy

Design

Identify customer pain point and design product

Cell phone penetration

Projected cell phone growth

Customer behavior

Segmentation

Customer value proposition

Retail networks

Market Research and Product Design

Develop financial awareness campaign via agents and

focusing on customer care as part of correspondent

training:

− The role of the banking services

− The benefits of using mobile banking services

− The descriptions of mobile phone banking transaction

Market

Research &

Campaign

Design

Awareness raising campaign and adapted training modules

Customer behavior & preferences

Retail networks

Understanding of financial services

Appropriate tools & channels

train agents to educate clients,

TV and radio spots

Print ads/ comics

Podcast

Plays

Customer Uptake and Education

In-house data analysis capacity

Access to baseline data

Ability to establish experimental or semi experimental assessment

Develop and verify model

Define indicators of success for respective market

Collect baseline data

Conduct data for assessment

Evaluate and interpret data

Recommendations for business model adjustment

Design &

Data Analysis

Impact Assessment

E-Banking-Portfolio

• Global Innovative Retail Payments Facility −Knowledge management, specialists, seed grants

• Market Development − Latin America, South Asia, China

• Regulatory Reform −Cambodia, Laos, Indonesia, Tunisia, Egypt, Nepal, Papua

New Guinea, Pacific Region, South Asia Region

Mobile

Transactions

• Current Pipeline

• Portfolio

Advisory Services Portfolio Investment Services Portfolio & Pipeline

THANK YOU

23