Key Trends in Digital Financial Services for Financial Inclusion

29
CONFERENCIA CENTROAMERICANA Y DEL CARIBE DE MICROFINANZAS Tecnología: Competitividad e Inclusión Financiera VI I

Transcript of Key Trends in Digital Financial Services for Financial Inclusion

Presentacin de PowerPoint

CONFERENCIA CENTROAMERICANAY DEL CARIBE DE MICROFINANZASTecnologa: Competitividad e Inclusin FinancieraVII

Key Trends in Digital Financial Services for MicrofinanceJohn V OwensSenior Digital Financial Services Advisor

Digital Financial ServicesThree ways digital technology is facilitating access to financial services:ProductsDistributionBack-Office Operations

Leveraging mobile payments infrastructure and machine-to-machine connectivityMobile on-demand micro-credit Mobile & index-based micro-insurance Big data enabling new credit productsProducts offered by financial players riding on top of the e-money platforms

4Product Innovations

Innovations in Distribution

Apps and tools to digitize and speed up the account opening process Biometrics as additional options for customer authenticationTokenizationOptimizing distribution field-force management tools to track field staff, agents, and/or merchants Emergence of third-party agent aggregators offering access to provider-agnostic agent networks

5

Back-office Innovations

Integrating with e-money platforms Technology companies enabling merchant acceptance of digital payments in-storePayment aggregators enabling online payments and e-commerceLeveraging alternative data sources for credit decisions

6

Key Digital Financial Services ModelsE-money ServicesMobile Financial ServicesUse of Agents Payment OperatorsNew Fintech PlayersOther New Players

E-Money Providers

E-money is a payment instrument that contains monetary value that has been paid in advance by the user. E-money users can use their e-money to purchase goods and services from merchants. When users pay using e-money, the amount will be automatically deducted from their e-money balance. E-money comes in different forms and can be broadly categorized as card-based and network-based, which are currently accessible via the internet and mobile phones.

9

Mobile E-Money Accounts by Region

GSMA MMU 2016

AFI | Alliance for Financial InclusionBanks Integrating with E-Money

20 Million bank accounts4 Million bank accounts24 Million registered mobile money users

Percentage of adults using a bank account in Kenya

Terms of conditionPrimarily based on data analysis of customers use of M-PESANumber of deposit accounts at CBA from 35,000 to 6 Million in a little over one yearLoan balance of 5.2 billion KESCBK now 2nd largest bank in terms of # of accountsCollective deposits26 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 to $1,000for a 30 day term instantly into their e-wallets. M-Shwari: Mobile E-Money Supported Banking

CBK increased # of accounts from 35,000 to 9.2 MM-Shwari deposits total $1.7 BM-Shwari loans disbursed in 2015 total $322M

Financial Service Agents

3rd parties acting on behalf of a bank or other financial services provider to deal directly with customers

AFI | Alliance for Financial Inclusion

Why agents are important?

Using existing retail outlets as agents, particularly those near low-income populations, can help drive down the delivery costs of financial services for underserved populations.

13

Agent Banking Services: BangladeshCollection of small value cash deposits and cash withdrawalsInward foreign remittance disbursementFacilitating small value loan disbursement and paymentsFacilitating utility bill paymentsCash payment under social safety net programmeFacilitating fund transferBalance inquiryCollection and processing of forms for account openingLoan application, credit and debit card applicationsMonitoring of loans and advances and follow up of loan recoveryReceiving of clearing chequesOther functions like collection of insurance premiums AFI | Alliance for Financial Inclusion

https://www.upsides.com/2013/03/25/banking-beyond-branches/

Above is an example of services allowed by agents under the guidelines issued by the Bangladesh Bank14

Payment Service Providers

A full-service PSP can offer risk management for card and bank based payments, transaction payment matching, reporting, fund remittance, multicurrency functionality. Some PSPs provide services to process next generation payment systems including wallets, prepaid cards, vouchers or even check cashing.

15

Payment Service Provider AliPay

New FinTech PlayersFinancial technology players are now providing a range of financial services, either directly as non-bank financial service providers or in partnership with traditional players.

New FinTech Players & ModelsP2P lendersOnline balance sheet lendersLoan aggregator portalsThird-party analytic, data, and lending platform providersInvoice, supply chain platforms and trade financeMobile-data based lending modelsSME value added services and SME financing

New Financial Players Driving Financial InclusionE-Commerce & M-Commerce Providers Driving Financial Inclusion via a compelling value proposition

19

AlibabaMatahari Mall

Kaskus Blibli

OLX Tropedia Lazada Bukalapak

19

New Financial Players Driving Financial Inclusion Social Networks & Payments

20

WeChat payment app

20

Customer Adoption, Usage, Quality

Regulatory Issues

Customer Perspective

DFS Product/Service/Distribution Model

Environment

Institutional Perspective

Product DevelopmentAnalyzing DFS Opportunities

DFS Policy, Regulatory and Oversight Proportionate AML/CFT (FATF Compliance)Tiered KYC RegulationsE-Money Operator RegulationsRemote Account Opening RulesAgent RegulationsInteroperabilityFair Access to ICTCompetition PoliciesSecurity and Fraud MitigationConsumer Protection Issues

What are the biggest digital financial service developments for MFIs in Central America & the Caribbean?

Engaging Customers via SMSMobile phones now make it easier to stay in touch with customers

Juntos Finanzas has partnered with financial institutions to provide better customized support for two-way SMS conversations with customers

This improves uptake of existing products as well as cross selling new services

Digitizing the ROSCA (Savings Groups)

New technologies can help mimic informal savings products like Rotating Savings and Credit Associations (Tandas)

FinTech providers like AhorroLibre are now offering automated services that allow people to create their own tandas via their mobile phone

Financial EducationFinTech providers not only access but also improves the quality of financial services

New digital financial education tools can cost effectively teach and incentivize customers to use new products and services

Alternative Data for Credit ScoringDigital Tools + Online Footprints=Credit Scoring OpportunitiesNew platforms like Lenddo are providing alternative credit scoring tools

Potential PartnersE-Money OperatorsNon-Bank Financial Institutions (EMIs & PSPs)FinTechs (SMS Gateways, Alternative Data, P2P)E-Commerce PlayersLarge Social Media Network Payment Providers

Gracias!

[email protected]: @jvowens