Mobile money and microfinanceEuropean Microfinance Week

Antonique KoningNovember 2, 2011

Bank

Agent ClientCredit/DebitClient

Account

Debit /Credit Agent

Account

Branchless Banking: What do we mean?

“… delivery of financial services outside conventional bank branches using information and communications technologies and nonbank retail agents.”

MNO

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The case of Brazil: bank-based model

Brazil has 150,000 Banking Correspondents

(BCs). Today, all of Brazil’s municipalities

have at least one correspondent (Brazil has

5,564 municipalities!)

The main banking agent networks in Brazil

processed approximately US$104 billion in

1.5 billion transactions in 2006 (Marques,

Sobrinho, 2007).

80 million adults in Brazil still lack access to

bank accounts…

Overview

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The case of Kenya: a nonbank-based model

M-PESA launched in March 2007

by mobile operator Safaricom, and now has:

• ~13 million customers

• 23,000 agents• ~$300 million transfers per month avg.

Customer satisfaction:

• Users say it is faster (98%), more convenient

(97%), and safer (98%) than alternatives

• 4 out of 5 say not having it would have a

“large negative impact” on their lives

• It is the main means of sending money for

50% of Kenyans

Overview

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20 percent of branchless banking implementations reaching scale

100% = 114 implementations

Top 15 implementations

CONTEXT:

ROLE OF MFI:

MFIs in countries with existing mobile banking infrastructureMFIs in countries with existing mobile banking infrastructure

MFIs in countries with no existing mobile banking infrastructure

MFIs in countries with no existing mobile banking infrastructure

Act as agent on behalf of bank

or MNO

Act as agent on behalf of bank

or MNO

Use m-banking system for loan disbursements/

repayments and/or deposits

Use m-banking system for loan disbursements/

repayments and/or deposits

Buildmobile banking system

Buildmobile banking system

Use phones for

data collection and other non-cash purposes

Use phones for

data collection and other non-cash purposes

Typology of MFIs in mobile banking

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Benefits for MFIs and their customers of using m-banking

• Serve Existing Customers Better: M-banking provides

existing customers with flexibility in when and where

they make loan payments and deposits, shorten group

meetings and decrease cases of theft and fraud.

• Reduce costs for MFIs and customers: M-banking can

reduce operational costs for MFIs and these can be

passed on to customers in the form of lower interest

rates.

• However, one commonly assumed benefit – reaching

new customer segments – will not be easily realized.

This is because microcredit methodology relies heavily

on human interactions.

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Emerging lessons for public funders in branchless banking

Advancing financial access for the world’s poor

www.cgap.org

www.microfinancegateway.org