CGAP'S Recent Blogs

Mobile Financial Services in Bangladesh: The Market Begins to Gro
Mobiles – a mass-customizable financial tool?
INOVA: an Oasis of Innovation Tucked Away in the West African Des
Opportunities in the Ghanaian Payments Market
A New Meaning of “Community”: Use of Social Media In Financia
Can Digital Footprints Lead to Greater Financial Access?
Are Retailers Better Positioned to Offer Financial Services to th
From Protection to Inclusion: Making the Shift to Cashless Paymen
The Role of Organized Retailers in Financial Inclusion
Building India’s Model of Agent Banking

Breaking Mobile Financial News

Mobile Financial Services in Bangladesh: The Market Begins to Grow  September 10, 2012

In February 2010 we blogged  about the steps identified for mobile financial services to take off in Bangladesh. Bangladesh has moved partly down this path. A newly released overview report on Mobile Financial Services  by Bangladesh’s Central Bank highlights the progress achieved two years on.

The central bank issued guidelines on “Mobile Financial Services for Banks” in September 2011 clearly stating a choice to make the market bank-led. However, the central bank has advocated for mobile operators and microfinance organizations to be active partners. It has provided 10 licenses to banks to offer the full range of mobile financial services.

This regulatory certainty has allowed the market to move and by late 2011 and into 2012 two early leaders have emerged with the largest customer bases and agent networks. The bKash service is provided by BRAC Bank in cooperation with its subsidiary bKash. And Dutch Bangla Mobile is a new service from Dutch Bangla Bank. Combined these two providers made the largest contribution to the nearly 500,000 new mobile accounts and more than 9,000 new agents.

Overview of Market as of March 2012

The mobile financial services market is at an ...

Mobiles – a mass-customizable financial tool?  August 22, 2012

Do you really believe that simply providing cheap and efficient access will make poor, self- or informally employed people flock to banks? Can you honestly hope for a shortlist of silver bullet financial products that, once discovered, can unleash demand for formal financial services amongst hundreds of millions who presently don’t get how banks can help them?

We are not feeling very confident on either of these assertions – but there may be an exciting way forward. Our best hope is to develop a mass customization framework that allows users not only to choose but to construct their own bouquet of services based on their specific circumstances and needs. There is no easy answer to the relevance question, so put customers in the driving seat and let them lead you to whatever they find useful. As Amazon’s huge success in tackling the fat tail of the demand curve showed: manage diversity instead of delivering to some arbitrarily synthesized mean, and you may give each customer what she wants.

Diversity and customization can be devastating to any but the most efficient brick-and-mortar businesses. But digital technology opens up new possibilities, as services become mere parameters in a flexible service platform. What is common ...

INOVA: an Oasis of Innovation Tucked Away in the West African Desert  August 15, 2012

Please scroll down to read this article in French.

Today we continue our series on mobile financial services in francophone West Africa on the CGAP and Mobile Money for the Unbanked blogs.  A couple days ago, we blogged about the emerging ecosystem of branchless banking providers in Senegal and yesterday, our colleagues at GSMA highlighted Wari, a regional payments platform. Today we’d like to draw attention to one particular branchless banking provider, this time in another country in the WAEMU region. INOVA is an e-money issuer based in Burkina Faso. We’ve gotten to know this business over the last couple of years and we think you’ll enjoy a snapshot look into their work in a challenging market. I sat down with INOVA’s CEO Mahamoudou Ouedraogo to ask him the questions below.

Describe your product offering in the Burkina market and explain how INOVA is different from a branchless banking service offered by a bank or a mobile operator.

First of all, the Inovapay mobile wallet can be opened remotely by the customer from their mobile phone, on the Internet or in person at an INOVA location. The customer is spared all the red tape associated with opening a bank ...

Opportunities in the Ghanaian Payments Market  July 24, 2012

Adelaide is a young Ghanaian trader specializing in vegetables from neighboring Burkina Faso. As she sets out on her journey from Accra in the south to the dusty northern border to buy tomatoes that she can sell back in the city, she carries the equivalent of $6,500 in cash on her person. The problem, she explains, is that she has to leave so early the banks are not yet open. She is well aware of the risks: 65% of Ghanaians feel that carrying money when travelling has become more risky and Adelaide has heard of other traders being robbed. Like the vast majority of her countrymen, she owns a cell phone and is well aware of mobile money, but she doesn’t use it. Instead her main security precautions are to keep her travel dates secret, never journey during the night and go in a group with other traders.

Mobile money or other branchless banking services could ease the risk on people like Adelaide substantially. Yet despite there being three MNOs, one government institution and one independent branchless banking deployment in the market, with two dozen partner banks, thousands of agents and millions in sunk marketing spend between them since 2009, the ...

A New Meaning of “Community”: Use of Social Media In Financial Services  July 20, 2012

The second search result that shows up when I google the term “community-based lending” is the Wikipedia entry for microfinance. This isn’t very surprising since we all know that the innovation of the microfinance model was finding a way to sustainably extend credit based on the local community vouching for a new client. Even in the U.S., banking for much of its history was based on the local bank’s local knowledge about the people to whom it was lending.

Then automation entered the picture. People began being evaluated for loans based on an automatically-generated credit score that pulled specific data points into an algorithm and then spit out a number that was used to evaluate risk. No one can deny that this innovation was extremely useful in allowing banks to increase both the scale and the speed with which they offered products and services. Many banks began reaching far beyond their local communities to serve a global clientele.

The problem is that such data doesn’t exist for everyone. Automation, one could argue, has disproportionately hurt the unbanked and kept them excluded from financial services. Yet most people recognize the value of an automated credit analysis process. One of the weaknesses ...

Can Digital Footprints Lead to Greater Financial Access?  July 17, 2012

Data can become a useful way to reach unbanked poor with a range of financial services.

The last five years have seen an extraordinary number of poor people starting to use digital financial services via their cell phones in one way or another. My work in specific countries and with businesses makes me optimistic that this trend will continue. And, as we all now know well, in that same time period, even more people have acquired their first phone and SIM card and joined the ranks of the over five billion cell phone users.

All this cell phone use generates data – from basic call data records, to mobile money transactional data, to data from social media usage and so on — that leaves what can be called a ‘digital footprint.’

Whether we call it digital footprint or something else, the truth is that the existence of this data is quite extraordinary for those of us interested in developing services for the poor and people with little or no formal financial access. In fact, in a number of countries, basic cell phone usage data may be the only source ...

Are Retailers Better Positioned to Offer Financial Services to the BOP?  June 21, 2012

In our first post in this series on the role of consumer goods retailers in financial inclusion, we discussed how retailers are similar to MNOs in their ability to reach unbanked customers.  However, the opportunity for financial inclusion via organized retail, while significant, is not present in every country and not necessarily for every type of retailer. We expand on those points in this post.

According to a framework developed by McKinsey & Co., retail markets can be placed on a spectrum from “fragmented” to “mature.” We show a modified version of this framework in Figure 1.

Source: McKinsey&Co; CGAP analysis

The financial inclusion opportunity via consumer retail chains is biggest in countries that have both a growing consolidation in the retail market and still relatively high levels of unbanked people. Mexico, Brazil and South Africa are examples of such countries.

Mexico is a leading example, with at least ten retail networks involved in financial services.  Pharmacy chains like Super Farmacia and Farmacias Benavides offer remittances and bill payments and serve as transactional agents for some banks. Retailers like ...

From Protection to Inclusion: Making the Shift to Cashless Payments Meaningful  June 18, 2012

In Colombia, Luisa used to arrive before dawn to collect her monthly Familias en Accion payment in person. Now, she can go to any of over 700 Banco Agrario branches and 350 ATMs across 800 municipalities to withdraw whatever portion of her payment she desires whenever she likes. Maria in Brazil uses her MasterCard debit card, linked to her CAIXA Conta Facil account where she receives her monthly Bolsa Familia stipend, to pay bills and buy groceries, but she can keep a small amount stored for next month’s expenses.  Yaneth, a beneficiary of the social protection program Juntos in Peru, saved enough of her payment in her Banco de Peru account that she purchased a sewing machine for her microenterprise.

All around the world, social protection is evolving into much more than a safety net for the poor. It is becoming a tool for financial inclusion and economic opportunity. Interestingly, stories like these, and the trends behind them, were barely on the radar of the global financial inclusion field three years ago when CGAP published the first official estimate of financially-inclusive G2P payments. Since then, government, donor and NGO efforts to link financial access to government payments ...

The Role of Organized Retailers in Financial Inclusion  June 12, 2012

We have previously discussed on this blog how consumer goods retailers can be part of the financial inclusion landscape. Today, we start to expand on that theme, explaining briefly why retailers are an exciting opportunity for financial inclusion but how that opportunity is not present in every market and, where it is present, how certain types of retailers might be better placed to serve low-income consumers.

Oxxo retail outlet in Mexico

Organized retail chains bring similar advantages to the financial services space as mobile network operators with their widespread physical presence, underlying liquidity management systems and brand recognition.  In Mexico, for instance, the total organized retail footprint is approximately nine times the branch footprint, in a market where banks have made sizable investments in their retail networks. Further, Oxxo, the largest retailer has almost as many outlets as the total number of bank branches. In South Africa, the total number of organized retail outlets is roughly five times the total number of branches of the top five banks that dominate the retail banking market.

Where these retail chains exist, they may be well positioned to leverage their geographical footprint to offer financial services ...

Building India’s Model of Agent Banking  June 6, 2012

In a small town called Canning, about two hours away from Kolkata, India, I meet DK Sardar, a bank agent, and follow him to his village called Baheesh Shona on a dirt road that makes a journey of ten kilometers take thirty minutes. Sardar’s house is located on the arterial road within the village. Twenty-eight years old and a recent college graduate, he leads us inside his house where his father has just finished rolling hundreds of fresh bidis (small cigarettes) for sale. Along with small-scale farming, his family runs a bidi-making business. Sardar lays out a biometric device, a mobile phone, and his agent certification from the State Bank of India and explains that even though he enrolled a hundred people six months ago when he was first certified as an agent, the local bank branch has not yet made any of the accounts active.

DK Sardar’s house and customer service point

As a result the initial queues of people lining up outside his house to open accounts have dried up. He has invested Rs 50,000 (about $1,000) to buy materials to build an office, and for the deposit he ...

Name: CGAP Group
Title: Technology Program
Company: CGAP

CGAP is an independent policy and research center dedicated to advancing financial access for the world's poor. It is supported by over 30 development agencies and private foundations who share a common mission to alleviate poverty. Housed at the World Bank, CGAP provides market intelligence, promotes standards, develops innovative solutions and offers advisory services to governments, microfinance providers, donors, and investors.

The Technology Program at CGAP is co-funded by the Bill & Melinda Gates Foundation, CGAP, and the UK Department for International Development (DFID).

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