Mobile Money As An Enabler For Microfinance

MABSProgramTheMicroenterpriseAccesstoBanking

ServicesorMABSProgramprovidestechnicalassistanceandtrainingtoruralbanksin

microfinancebestprac;ces.

Theprogramisdesignedtodevelopthecapabilityofruralbankstoprofitablyprovidefinancialservices(loans,deposits,insurance,

moneytransfer,micropayments)tomicroenterprises.

•  Veryrapidexpansionoverthelast10years•  Morethan50%ofFilipinosaremobilephonesubscribers

MobilePhoneBankingPenetra;on

MobilePhoneSubscribers

(WorldProjec;ons)

2008(ITU):4Billion

2040(WorldBank):6Billion

2008(ITU):4Billion

2040(WorldBank):6Billion

MobilePhoneSubscribers(Philippines)

>68millionsubscribers>Projec;ons76M(2010)

>60%penetra;onrate>70millionsubscribers>Projec;ons76M(2010)

MobilePhoneSubscribersvs.BankAccts(Philippines)

1998BankAcct:>23MMphone:>1.7M

2008:BankAcct:>32MMphone:>68M

1998BankAcct:>23MMobilesub:>1.7M

2009:BankAcct:>32MMobilesub:>70M

Opportuni;esforMobilePhoneBanking

MobilePhoneIndustry

Subscriberbaseisgrowingrapidly.

S;ffcompe;;onamongtelcosisbringingcostsofservicedown(unlimitedtext,rebates,promos.)

MobilePhoneCostisge[ngcheaper.

Remi]anceBusiness

Growing($17Bin2009&expectedtogrowto$18Bin2010)

Transac;onsandtransfermethodsnowincreasinglyusingE‐Money(GCASH/SmartMoney)

RuralBanks

Morethan50%ofpopula;onislocatedintheruralareaswheremanyareunder‐bankedorunbankedduetohightransac;oncosts

Veryminimalinvestmentneededtooffermobilephonebankingservices.

Breakthroughs&Milestones:MobilePhoneBankingforRuralBank&theirClients

RBAPsignedanMOAwithGlobe(GXI)forLoanPaymentusingGcash

BSPapprovedpilotofText‐A‐Paymenttoselectedruralbanks

AutoloadmaxretailersasGcashoutletswaslaunched

StudyonCostSavingsconductedinselectedruralbanksontheuseofG‐Cashforloanpayment

2004

‐200

5 SomeRBsstartedpayingemployeessalariesorallowanceswithGcash

M‐commercewasusedbylocalmerchants

BSPapprovedCash‐in/Out(Text‐A‐Remi]ance)servicesforruralbanks

BSPapprovedText‐A‐Depositserviceforruralbanks

StrategicPlanningwasconductedwith5pilotbanks

2006

Salary disbursements (Text-A-Sweldo) expanded to other businesses in the community

Text-A-Bill Payment was initiated by a rural bank with local utility cooperative

Text-A-Withdrawal was approved by BSP

Mobile Phone Banking Specialist Program was launched

2007

Mobile phone banking specialist program generated more than 60,000 new users; more than 3,400 signed up as local merchants

Mobile Phone Marketing program launched

More than 40 rural banks with more than 400 branches are Gcash accredited outlets

RBAP and Globe (GXI) partnership renewed (Gcash)

RBAP signed an agreement with Nokia Philippines (Nokia phone financing and educational materials for mobile phone

RBAP Signed an agreement with Smart Communications (Smart Money)

2008

BSPapprovedSmartMoneyPilotin2RuralBanksinJuly.

55AccreditedRuralBankswith830branchesandotherbankingoffices

44%increaseinM‐BankingTransac;onsin2009

Cumula;veMobileBankingTransac;onsviatheGCASHplajormexceed$100million

2009

Prac;calIssuesbetweenMobileMoneyIssuersandMFIpartnerships

Flexible

ResponsivenessMarke;ngSupportTraining

✔✔✔✔

PreparingSmallFinancialIns;tu;onstoPromoteMobileMoneyandMobile

FinancialServices

EnvironmentforMobilePhoneBanking&MobileCommerce

•  Evolu:onoftheretailandfinancialsectors:–  Natureoffinancialandretailmarketisimportantfordetermining

func:onality

•  Leveloffinancial/electronicliteracy:–  Influencesnatureoftransac:ons

•  RegulatoryandPolicyEnvironment–  Needsuppor:veenvironmentformobilephonebanking&mobilecommerce–  Bringtheregulatorsonboard–early–  NewPhilippineE‐MoneyCircular

RegulatoryEnvironment•  BasleCommiJeeonBankingSupervision–importantroleofregulatorstobalancee‐bankingriskswhilesuppor:nginnova:on

•  Regulatoryframeworkgoverninge‐banking:– Underlyingsoundnessofthebankingins:tu:on

– Adequateriskmanagementsurroundinge‐bankingac:vity

•  PhilippineCentralBank(BSP)–seese‐bankingaswaytoimproveefficiency&increaseaccesstobankingservices

•  BSPremainsresponsivetotherapidlydevelopingtechnologiesrelatedtoelectronicbanking

•  BSPhasissuednumerouscircularstooversee&supporte‐banking

RegulatoryEnvironment

RegulatoryEnvironment

BSPCircular511(TechnologyRiskManagement)

– RiskManagement– Opera:onalissues– Compliance– Reputa:onandstrategicrisksassociatedwithtech‐relatedproducts

RegulatoryEnvironment

Circular542Series2006(ConsumerProtec:onforE‐Banking)

– BoardOversight–  InternalControls– Security– Authen:ca:on– Customerorigina:on/verifica:on– Monitoringandrepor:ng– Disclosureandcomplaintresolu:on

RegulatoryEnvironment•  BSPbuiltupitscapacitytorespond&supportthee‐bankingenvironmentinthePhilippines

•  Crea:onofaCoreInforma:onTechnologySupervisoryGroup(CITSG)– Centralgrouptomonitor&addresselectronicbankingissues

– IncludesMobileMoney&MobilePhoneBanking

RegulatoryEnvironment ProductApprovalProcess:

‐  ProposalforbanksusedasCashIn/CashOutoutletsallowedBSPtoevaluatetheGCASHproductandfeatures

– Keyareasreviewed:• KYC• An:MoneyLaunderingRequirements• RiskManagement•  Integrity• SecurityandConfiden:ality

RegulatoryEnvironment Measuresapproved:

• Transac:oncap– PhP40,000/day($1,000)– PhP100,000/month($2,500)

• Processflowwasdevisedformoreexpedi:ousproductapprovalsinthefuture– Banksinterestedinprovidingapprovedservicecanapplythroughtheirrespec:vebankingassocia:ons

– Associa:onaccreditsmemberbanksaaercomplyingwithrequirementsandtraining

– Associa:onsubmitstoBSPthelistofaccreditedbanks

RegulatoryIssuesConsidered

•  Keyareasofconfiden:ality,moneylaundering,riskmanagementshouldbeupheldevenwiththenewmodali:es

•  Consumerprotec:onisespeciallyimportantine‐banking

•  Riskandsecuritymanagementrequirementsaswellasregulatorycostsshouldbecommensuratetorisksinvolved

•  Responsivenesstoinnova:onandexperimenta:onisimportant

RegulatoryIssuesConsidered

•  Ins:tu:onalarrangementsareimportantespeciallyifthee‐bankingservicesoutsourcetonon‐bankins:tu:ons(i.e.E‐MoneyIssuers(EMI)/MobileNetworkOperators(MNOs).

•  Whenthirdparty,suchasEMIorMNO,handlesorsupportsbankingtransac:ons,BSPhastheauthoritytoinspectthedatabaseofthethirdparty.

•  Confidenceinindustryassocia:onandnetworks–keyissueforBSPinsuppor:ngexpansionofe‐bankingservices.

E‐moneyCircular•  DefinesElectronicMoney&E‐MoneyIssuers

•  UsesofElectronicMoney P2P Payroll Remi]ances Purchases Payments Disbursementofloans,etc.

•  LoadlimitofPhP100,000/month(accumulated)

TheBusinessModelforSmallFinancialIns;tu;onstoofferanduseMobileMoney:

TheBusinessModelforSmallFinancialIns;tu;onstoofferanduseMobileMoney:

ReduceInterestratesonMicroLoansClients(TAP)

Ac;vateMobileMoneyResellers(SourceofMobileMoneyofTAPClients)

IssuesandLessonsLearntfromPilotTests

Understandyourmarket

Importanceofregistra;on,training,andadop;onofservicebyclients/merchants

EcosystemDevelopment–mul;plesourcesanduses–m‐banking/m‐commerce

Acceptanceandfearoftheuseoftechnologyespeciallyamong

elderlyclients

IssuesandLessonsLearntfromPilotTests

 Convenience Reducestransac0on Reducesrisks Increasessales

ValueProposi;onforClients,Merchants&Customers

IssuesandLessonsLearntfromPilotTests

LackofMobileMoney

Outletsorsource

especiallyintheruralareas

Effec;vetrainingandeduca;ngLoanOfficersandFront‐linestaff

Releaseofemployee’spayrollorAllowancesviamobilemoney

Planforsufficientcash‐in/cash‐outpoints

IssuesandLessonsLearntfromPilotTests

Howtoreachclientsinremote

communi:es‐awareness

andinforma:oncampaign

Informa;onandProductAwarenessCampaignsthroughmediaprint,radio,TV,online

MobilePhoneBankingwebsiteh]p://mobilephonebanking.rbap.org

PromoteMobileMoneybybanksinkeyloca;ons/events(suchaslocalfes;vals)

IssuesandLessonsLearntfromPilotTests

Increasingofvolumeandusageofmobile

moneyintheruralareas

Incen;veprogramsforaccreditedruralbanks

MobilePhoneBankingconferences&workshopdialogueevents

IssuesandLessonsLearntfromPilotTests

WorkingwithMFIs–

Networksarekeyto

outreach

Crea;ngasenseofownershipamongbankpartners

RegularAccredita;ontraining

RuralBankersMembershipMee;ngs

Tes;monialsfromaccreditedruralbanks

GlobeGCASHpromo;on

OvercomingCash‐in/Cash‐outConstraintsinRuralCommuni;es

LarryBat‐ao,Can;lanBankMerchant‐DepositandproviderofGCASH

BankpartneredwithLocalMerchantstoactasresellersofmobilemoneyinruralareas.

OvercomingCash‐in/Cash‐outConstraintsinRuralCommuni;es

Bankestablishedkiosks,sub‐offices,andotherbusinessoffices(OBOs)toprovideCash‐InandCash‐Out

OvercomingCash‐in/Cash‐outConstraintsinRuralCommuni;es

BankcoordinateswithGXIforAutoLoadMaxDealerstoprovideCash‐Outfunc;ons

DevelopingMobileMoneyEcosystemsCommitmentofBankManagement

DevelopmentofMobileMoneyEcosystem

SufficientCash‐In/Cash‐OutAgents/Resellers

Crea;ngAwarenessoftheuseofMobileMoneyintheRuralCommunityPromotethevalueproposi;onforbusinesses,clients,andcustomers