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> Posted by Nate Gonzalez, Investment Officer, Accion Venture Lab
Last week this blog shared the news that Equity Bank applied for a mobile teleco operating license in Kenya, a development suggesting the bank’s interest in entering the country’s M-Pesa dominated mobile money market. In rapid succession, this weekend Kenya’s two largest telcos, Safaricom (who operates M-Pesa) and Airtel, announced that they are jointly buying-out yuMobile, the third-biggest telco in Kenya, and the most likely player to have partnered with Equity to enable it to enter the country’s telco-led mobile finance space.
> Posted by Center Staff
This edition of Top Picks features posts highlighting trends in identification technology and mobile money, as well as a post on new mobile money research targeting user-centered services design.
Innovations in identification technology, namely biometric identification, are discussed in a new Center for Global Development Blog post. The author indicates that key identification areas worth following are remote authentication, the identification of children, standardization and interoperability, and privacy. The post is framed in the context of identification conferences and events, whose content reflects the diversity of identification technology applications, such as in financial services.
There were 219 mobile money services across 84 countries at the end of 2013, with the number of active accounts growing from 37 million in June 2012 to 60 million in June 2013. Those are a few of the main findings from GSMA’s new MMU State of the Industry Report on Mobile Financial Services for the Unbanked. A new MMU Blog post highlights the report and its key insights. Expanding on MMU State of the Industry reports of previous years, this year’s report covers the new areas of mobile insurance, mobile credit, and mobile savings services.
> Posted by Center Staff
Equity Bank, Kenya’s largest bank by customer base, has applied for a license to operate a mobile telco business, a move that strongly suggests intent to enter the mobile money space. If realized, the bank and its 8 million customers could significantly disrupt M-Pesa’s current domination of the country’s market and help drive competition and innovation.
Given the type of license being sought, Equity Bank would not build a new telecommunications network, but would instead partner with one of the country’s prominent telcos and deploy services using this partner’s infrastructure.
Safaricom’s M-Pesa currently has a commanding hold on mobile money in Kenya with 21 million subscribers, covering roughly 75 percent of the country’s adult population. If Equity Bank’s customers were to subscribe to the in-house mobile money service in question, it would be positioned as the second largest in the country.
We look forward to the decision on Equity’s license and the action to follow.
Image credit: GSMA
> Posted by Richard Leftley, Chief Executive Officer, MicroEnsure
The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. This blog series spotlights financial inclusion efforts around the globe, shares insights from the FI2020 consultative process and highlights findings from “Mapping the Invisible Market.”
Last year a statistic was released claiming that there are 6 billion phones in circulation around the world. It is clear that mobile-based delivery channels are perhaps one of the greatest opportunities in working to achieve human and market development goals, including financial inclusion.
Microinsurance is one of the great beneficiaries of mobile-based payments and service delivery innovations, as shown by the rapid growth of mobile microinsurance (MMI) products from an estimated 20 in 2006 to 84 in 2013. Today much of the growth in microinsurance is through partnerships with mobile network operators that are keen to increase sales and retain customers. But demand side obstacles persist and pose a significant challenge to growth and sustainability. Many products are available that are sound and beneficial, but clients are not picking them up. Why is that?
Over the past nine years we have provided microinsurance to millions of clients via a range of distribution channels including banks and microfinance institutions, SACCOs, cooperatives, and even churches. However, our real breakthrough came when we realized that no one wakes up wanting to buy insurance, but people do wake up worried about the risks they face. Through our work with mobile network operators, we have demonstrated that the mass market will radically change their consumer behavior in return for free insurance that addresses their risk.
Recently I stopped a man in the street and asked him if he wanted to buy life insurance. However hard I tried I could not make the sale, but when I asked him how much money he sent home to his mother every month, he became excited about a product that would keep providing that remittance to his mother if he had an accident and died.
Our ability to provide great microinsurance products is driven by our capacity to consider the needs and attitudes of our clients and then integrate these types of insights about choice and value into each product.
> Posted by David Porteous, Managing Director, Bankable Frontier Associates
In Beth Rhyne’s recent blog post (“Base-of-the-Pyramid Savings Among Accion Partners: Some News Is Bad and Some News Is Good”), she argues for the need to stratify deposits by size to understand what is happening inside a bank’s portfolio of depositors. We agree. We have just completed the four year GAFIS project, sponsored by Rockefeller Philanthropy Associates and funded by the Bill and Melinda Gates Foundation. Through GAFIS, we worked with five large commercial banks around the world (shown in the map below) to promote the development of appropriate savings products directed at low income people.
These five banks, which typically rank as largest or second largest retail banks in their domestic markets, collectively report 77 million customers. They too suffer from high rates of dormancy, ranging from 20 to 90 percent in different account categories. Yet they were willing to embark on a peer journey of learning and support to seek to overcome the channel and product issues which had limited the success of their savings products. And they were willing at the end to disclose in the public report, available here, some indications of the underlying stratification of their deposit. The chart below, extracted from the GAFIS report, compared median with average balances in the account categories which GAFIS supported, underlining the message in Beth Rhyne’s blog about the need to stratify savings. Read the rest of this entry »
> Posted by Jeffrey Riecke, Communications Associate, CFI
Corporate social responsibility or profitability? Why are more and more financial services providers expanding their focus to include banking the unbanked? After all, many of those without formal financial services don’t have incomes to support big or frequently-used products, and their circumstances often present challenges for access, risk, and other services dimensions.
Industry activity in recent years, organizational objectives aside, has demonstrated the potential for sustainable and profitable investment in financial inclusion. Advancements in product design, technology, and risk management, and trends in demographics and incomes are making it increasingly possible for commercial financial services providers, as well as stakeholders in adjacent industries like telcos and technology providers, to support inclusion.
In the following video, global leaders discuss how financial inclusion is not only good for individuals, markets, and countries, but also good business.
The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”
This post is the second in a series of two posts from Pina on financial inclusion for persons with disabilities. Pina’s first post can be found here.
A study by the Martin Prosperity Institute in Canada estimates the buying power influenced by persons with disabilities (PWDs) is in excess of $US 26 billion in Canada. The same market is estimated to exceed $1 trillion in the United States by 2021. It is clear that PWDs represent a significant market in North America, but I believe they hold similar if not equal potential around the world. The World Health Organization estimates that 15 percent of the world’s population, over 1 billion people worldwide, live with a disability. This number is largely concentrated in developing economies, and is projected to increase considerably as the global population ages – a trend that has been highlighted in CFI’s demographic research. Engaging PWDs is essential when developing policies, standards, or products, or when selecting technologies for providing access to financial services. Otherwise, we risk excluding a population that can be viable consumers of financial products. Most importantly, culture needs to be shifted to embrace and recognize that PWDs have the ability to positively impact economic prosperity and that, along with the rest of society, must have equal access to education, employment, and financial independence.
How can financial services providers make a difference? It’s not rocket science. From including PWDs in the development of products and services, to the selection of technologies that are accessible to PWDs, financial services providers have a diversity of options for taking action and resources for understanding how to do so.
Engaging PWDs in Product Development
Financial services providers would not develop a product without getting input from their consumers. So why not include PWDs in the research conducted for product development or improvement? In Britain, Lloyds Banking Group convened a cross financial services sector focus group comprised of over 25 customer facing organizations and industry/regulatory bodies to discuss how to better respond to the needs of their customers suffering from dementia. After surveying caretakers and consumers, the consensus of the focus group, which included Business Disability Forum Partners: Allianz; Barclays; RBS; Santander; and Members: Aviva; HSBC; Legal and General; and Zurich, resulted in the creation of a charter on dementia-friendly financial services. This charter is intended to help financial services institutions recognize, understand, and respond to the needs of customers living with dementia and their caretakers and is an example of an institution that identified an obstacle in access by current and potential clients, conducted research within that client segment, and found a way to address it.
> Posted by Adam Brown, International Development Discourse Group (IDDG) Member
The following post was originally published on the IDDG Blog.
Since 2008, the Afghan mobile phone provider, Roshan, has worked to bring mobile money services to Afghanistan. With the support of USAID, all four of Afghanistan’s major mobile phone providers are currently developing mobile money capabilities. The highly successful rollout of Kenya’s mobile money and banking service, M-Pesa, has spurred a flurry of similar startup efforts – over 72 in 42 countries. Many countries, however, have failed to experience the kind of success that M-Pesa achieved, and Afghanistan is no exception.
While the mobile money program in Afghanistan is in its nascent stages, the factors that helped M-Pesa to succeed are generally lacking. The most important of these are, 1) a dominant mobile carrier; 2) an economy that depends on long distance money transfers; and 3) customer trust in the system. The Afghan mobile phone market is too divided to create the kind of widespread network required to attain the critical mass necessary for a sustainable customer base. Further complicating the issue is the fact that Afghans generally do not rely on remittances, limiting the utility that could draw future users. To fix that, mobile money providers should include banking mechanisms early in their programs instead of tacked on only once a money transfer system is in place. However, trust in banks, especially since the Kabul Bank scandal, may be too low for Afghans to put their money into another bank-like mechanism. While mobile money is not destined to fail in Afghanistan, proponents of mobile banking and USAID should adjust their expectations for success, or at least be ready to address the above issues.
> Posted by Center Staff
Expanding financial inclusion to the 2.5 billion unbanked individuals around the world is essential, but why does it matter, and is it possible in the next six years?
In recent years, the inclusion movement has achieved critical support and rapid progress. Last year universal financial access by 2020 was endorsed by World Bank President Jim Kim. Technology-enabled business models are catalyzing outreach, building on infrastructure like the mobile phones now accessible to six of the world’s seven billion people.
In the following video, global financial inclusion leaders explore the questions of whether financial inclusion is possible by 2020, and why we should work towards that goal.