Branchless Banking and Financial Inclusion
Michael Tarazi
FDIC
June 2, 2011
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
Branchless banking may
overcome these constraints
Branchless Banking: What do we mean?
“… delivery of financial services outside conventional bank branches using
information and communications technologies and nonbank retail agents.”
Agent
Client
Bank
Branchless Banking: Cash-in
Bank
Agent opens
Client opens
bank account
1 (accessible by 1 bank account
(accessible by
mobile phone)
mobile phone)
4 - Agent account debited
+ Client account credited
2 Cash-in
Agent
Client
Electronic
3 value sent
Branchless Banking: Cash-out
Agent account
-
Bank
Client account
3 + credited 3 debited
Electronic value
1 sent to agent
Agent
Client
2 Cash-out
The logic of branchless banking
Use existing retail Use existing deployed
infastructure technology
Any store can potentially be an agent
The power of using existing infrastructure
~5.7bn
~28m
Worldwide points of presence
~1m
500k 665k
250k
Western Bank Post ATMs POS Mobile
Union branches offices Phone
Connections
Mobile ownership has boomed
in poor countries since 2000
High-income countries Low-income countries
5.0
4.5
4.0
3.5
3.0
Billions
3.3 bil unique
2.5 mobile owners
2.0
1.5
1.0 1.4 bil
0.5
0.0
Sources: CGAP,
Wireless Intelligence
9
But emerging market consumers are still far from
well-connected financially
60%
50%
52%
40%
2x
30%
20% 26%
10%
Sources: CGAP,
0%
Wireless
Intelligence
People who have a mobile People with bank account
10
Reducing the cost of banking infrastructure
$250,000
Traditional
$50,000
branch
$10,000
Branch
in store ATM
$2,000
Agent with
POS terminal
$400
Agent with
mobile $0
No agent
(cashless)
11
The Global Status of Branchless Banking
Branchless Banking 10 of the Largest Implementations
Implementations
120
KEN Safaricom M-Pesa 13.1
100
TZA Vodacom M-PESA 6.4
80
PHL Smart Money 4.5
60
114
GHA MTN Mobile Money 1.8
40 PAK UBL Bank Omni 1.6
20 SAF FNB 1.5
22
0 UGA MTN Mobile Money 1.5
Live Branchless Banking Live Branchless Banking
Implementations Implementations with > 1
Mn registered users GHA Airtel (Bharti Airtel) Money 1.2
KEN Airtel (Bharti Airtel) 1.0
PHL Globe G-Cash 1.0
12
Reaching the Unbanked
Weighted
Average
37%
Nonbank E-Money Issuers
Bank ?
Pooled Account
Mobile Network
Bank Agent Client
Operator
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