Innovative Financial Services that support Financial Inclusion in the Pacific Islands

Innovation of Financial Services in the Pacific Islands

John Owens, Senior Policy Advisor, AFIPIRI Meeting, Dili, Timor-Leste, May 2015

Benefits & Opportunities of Digital Financial Services

Source IFC Infographic: Bonny Jennings www.itldesign.co.za I

AFI | Alliance for Financial Inclusion

http://www.itldesign.co.za/


E-money Services

Mobile Financial Services

Use of Agents

Innovations in Cross Border Remittances

Key Innovative Financial Services in the Pacific Islands

E-Money Services in the Pacific Islands

• E-money being issued by banks and non-banks

• Opportunity to reach new clients via mobile phones

• Several value-added propositions

• Challenges and low-uptake

Use of Agents

Offered by Banks & Non-banks

Client registration

KYC outsourcing

Remote account opening

CICO

Payments/Basic Banking Services

AFI | Alliance for Financial Inclusion http://blog.microsave.net/wp-content/uploads/2014/03/mor-lks2.jpghttp://www.developmentoutlook.org/2012/11/analyzing-business-correspondent-model.html

Innovative Cross Border Remittance Services

• De-risking has had a direct impact on the costs of remittances to the Pacific Islands

• MTOs vs Banks & Traditional Players

• New technologies and players bringing promise to cross border remittances

Branchless Banking Alternatives• Technological innovations FX operator KlickEx, Abra

• Gift cards to particular stores (Regalii in the Dominican Republic) or to make bill payments for recipients (Willstream in Senegal)

• Online transfers using social media, through senders such as Azimo, Fastacash, Facebook

7

DRAFT – for discussion only

International Remittances through Branchless Banking Models Mobile cash-out models Card-based models

1 Bancolombia Colombia

2 Banglalink Bangladesh

3 bKash Bangladesh

4 Boom Financial Mexico

5 Digicel Fiji

6 Digicel Samoa

7 Digicel Tonga

8 GCASH Philippines

9 INOVAPAY Burkina Faso

10 Maroc Morocco

11 MB Mobile Money Vietnam

12 Mikemusa Zimbabwe

13 M-Paisa Afghanistan

14 MTN Ghana Ghana

15 MTN Cote d’Ivoire Cote d’Ivoire

16 MTN Rwanda Rwanda

17 Telma Mvola Madagascar

18 Orange Money Madagascar

19 Orange Money Mali

20 PLDT Smart Philippines

21 Safaricom M-PESA Kenya

22 Telenor EasyPaisa Pakistan

23 Tigo (El Salvador) El Salvador

24 Tigo (Guatemala) Guatemala

25 Tigo (Paraguay) Paraguay

26 Vcash Nigeria

27 VNPT iPay Vietnam

28 Vodacom M-Pesa Tanzania

29 Vodafone M-PAiSA Fiji

30 Wafacash Allocash Morocco

31 Wanda Argentina

32 XL Tunai Indonesia

1 iRemit Visa Card1 Philippines

2 Mango Money1 Global

3 Mastercard Moneysend1 Global

4 RegaloCard Central America

5 Transfercel Central America

1 iSend Central America

2 moWoza SSA

3 Regalii Dominican Republic

4 Willstream Senegal

Directed transfer models

1 2

3

1. Although these deployments enable branchless cash-out, research indicates that they require the recipient to have a bank account that is connected to the pre-paid card


Convergence & Interoperability: A driving force for Financial Inclusion

Financial

Inclusion


Mobile E-Money Driving Mobile Banking As Well

2012

2006 13%

29%20 Million

bank accounts4 Million

bank accounts24 Million

registered mobile money users

Percentage of adults using a bank account in Kenya

M-Shwari: Mobile Money & Banking

Terms of conditionPrimarily based on

data analysis of customer’s use of

M-PESA

Number of deposit accounts at CBA from 35,000 to 6 Million in a little over one year

Loan balance of

5.2 billion KES

CBK now

2nd

largest bank in terms of # of accounts

Collective deposits

26 billion KES

Small Value and Credit Savings

M-Shwari, a savings and credit product from Safaricom and

Commercial Bank of Africa (CBA) has registered a phenomenal

uptake. The product enables M-PESA subscribers registered for at least 6 months to get a loan,

anywhere from

$1.15 to $235 for a 30 day term

instantly into their e-wallets.


US$ 1.7 billion

1st largest bank in terms of accounts

US$ 322 million in

loans

35,000 to 10M in 2

years

Reporting requirements must be clear and focus on the information needed to:

Assess whether service providers are sound Risk management protocols are effective Consumer protection policies are adequate

Regulators should be careful to avoid excessively burdensome and overlapping requirements, which may stifle innovation and limit market competition.

Key Regulatory Policies For DFS


1) Risk management frameworks and resulting data for risks pertaining to operations, liquidity, money laundering, and terrorist financing

2) Consumer protection

3) Public disclosure of information

4) Outreach and financial inclusion

Four Key Areas in Digital Financial Services Reporting


Proportionate AML/CFT

– Tiered KYC Regulations

E-Money Operator Regulations

Remote Account Opening Rules

Agent Regulations

Interoperability

Key DFS Regulatory Options to Support Financial Inclusion


[email protected]

www.afi-global.org

Thank [email protected]

@jvowens

Innovative Financial Services that support Financial Inclusion in the Pacific Islands

Technology

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