Tag Archives: mbanking

Mobile Banking and the Dictator’s Dilemma: The Piggy Bank Theory of Digital Activism

The term “mobile banking” was not something I expected to hear during Berkeley’s recent Technology and Human Rights conference. But in his closing speech, Eric Brewer briefly mentioned mbanking in the context of repressive regimes shutting down cell phone networks. More specifically, as mobile banking services continue to grow in developing countries, so do the opportunity costs of interrupting access to mobile phone networks. While Eric didn’t refer to the “Dictator’s Dilemma” or Ethan Zuckerman’s “Cute Cat Theory”, he was describing those dynamics.

The Dictator’s Dilemma suggests that repressive regimes are incurring increasing opportunity costs when they decide to cut access to the Internet and/or cell phone networks. The theory suggests that doing so incurs financial and ultimately political costs. The term was coined by Christopher Kedzie who wrote that an increase in the relevance of digital/networked technologies will force repressive regimes to face a dilemma, where they will have to choose between open communications, which encourage economic development, and closed communication, which may help control ‘dangerous’ ideas but may hinder access to the information economy.

Ethan’s “Cute Cat Theory” relates to the notion that most web (and mobile phone) users access online content for entertainment purposes, e.g., to look at pictures of cute cats. If repressive regimes block access to socially entertaining sites like Flickr, YouTube, Facebook, etc, this may backfire by possibly politicizing a large user base that until then was largely apolitical. In his recent talk at the Share Conference, Sami Gharbia described a related dynamic. The regime’s decision to block social media sites drove a large number of new users to Facebook as this remained one of the only non-censored social networking platforms available to Tunisians. This in turn made it near impossible for the regime to shut access to Facebook without serious blowback.

So how does this relate to mobile banking? As our favorite online encyclopedia states, “mobile banking is a term used for performing balance checks, account transactions, payments, credit applications and other banking transactions through a mobile device. […] Mobile banking has until recently (2010) most often been performed via SMS or the Mobile Web.” In a recent article entitled “4 Trends Shaping the Emerging ‘Superfluid Economy,'” CNN noted that “within a few short years, we may see billions more people connected to the Internet and capable of participating in economic transactions.” For example, “the ‘unbanked’ are being brought into financial inclusion through innovative services like M-PESA [in Kenya] that enable transfer of money via mobile phones.”

I was surprised to learn that several banks in Iran, such as Parsian, Tejarat, Mellat, Saderat, Sepah, Edbi, and Bankmelli offer mobile banking services. Such services also exist in Bahrain (2008), China (2008), Egypt (2010), Pakistan (2009) and Thailand (2005), for example. Kenya’s M-PESA service was launched in 2007 and now includes more than 12 million users. According to a colleague of mine at the World Bank, the compound annual growth rate in mobile banking over the past four years has been over 90%. So while user figures may be low for some of the more recent initiatives, they may very well increase significantly in just a few years. This may thus increase the opportunity costs of shutting off access to SMS. I call this the “Piggy Bank Theory of Digital Activism” to piggy back on Ethan’s “Cute Cat Theory”.

As noted earlier, however, new mobile banking systems don’t use SMS. Instead, they increasingly use a mobile phone’s USSD functionality, which is more secure. So shutting down SMS would not necessarily impact mbanking transactions. Only if cell phone networks are completely blocked would this impact mobile financial services. That said, it is still unclear whether doing so would necessarily create a dilemma for our hypothetical dictator, even in a country with a relatively large mbanking sector. The financial cost may still be negligible in the grand scheme of things. On the other hand, preventing access to mbanking services could backfire if millions of low-income households find their livelihoods at greater risk. We’ve seen that raising taxes on staple goods has prompted serious riots against governments in various countries, for example. So perhaps blocking access to mbanking could create a similar response.

Still, it remains to be seen whether the “Piggy Bank Theory of Digital Activism” is actually valid. On a slightly different note, however, writing about this did prompt the following thought: since USSD functionality is not interrupted when SMS is shut down, could digital activists communicate by exchanging money using mbanking services? For example, transferring $2.3 could be code for meet at location 2 at 3 o’clock. Communicating via numbers does certainly limit the type of information exchanged but the advantage of USSD transactions is that they are secure and encrypted. They also allow for mobility, which is important for digital activism.

ps. many thanks to Fletcher alumni for helping me with the mbanking research!

Ushahidi for Mobile Banking

I just participated in a high-level mobile banking (mBanking) conference in Nairobi, which I co-organized with colleagues from The Fletcher School.

Participants included the Governor of Kenya’s Central Bank, Kenya’s Finance Minister, the directors/CEO’s of Safaricom, Equity Bank, Bankable Frontier Associates, Iris Wireless, etc, and senior representatives from the Central Banks of Tanzania, Rwanda and Burundi as well as CGAP, Google, DAI, etc.


The conference blog is available here and the Twitter feed I set up is here. The extensive work that went into organizing this international conference explains my relative absence from iRevolution; that and my three days off the grid in Lamu with Fletcher colleagues and Erik Hersman.

I have already blogged about mBanking here so thought I’d combine  my interest in the subject with my ongoing work with Ushahidi.

One of the issues that keeps cropping up when discussing mBanking (and branchless banking) is the challenge of agent reliability and customer service. How does one ensure the trustworthiness of a growing network of agents and simultaneously handle customer complaints?

A number of speakers at Fletcher’s recent conference highlighted these challenges and warned they would become more pressing with time. So this got me thinking about an Ushahidi-for-mBanking platform.

Since mBanking customers by definition own a mobile phone, a service like M-Pesa or Zap could provide customers with a dedicated short code which they could use to text in concerns or report complaints along with location information. These messages could then be mapped in quasi real-time on an Ushahidi platform. This would provide companies like Safaricom and Zain with a crowdsourced approach to monitoring their growing agent network.

A basic spatial analysis of these customer reports over time would enable Safaricom and Zain to identify trends in customer complaints. The geo-referenced data could also provide the companies with a way to monitor agent-reliability by location. Safaricom could then offer incentives to M-Pesa agents to improve agent compliance and reward them accordingly.

In other words, the “balance of power” would shift from the agent to the customer since the latter would now be in position to report on quality of service.

But why wait for Safaricom and Zain to kick this off? Why not simply launch two public parallel platforms, one for M-Pesa and the other for Zap to determine which of the two companies receive more complaints and how quickly they respond to them?

To make the sites sustainable, one could easily come up with a number of business plan models. One idea might be to provide advertising space on the Ushahidi-mBanking site. In addition, the platform would provide a way to collect the mobile phone numbers of individual clients; this information could then be used to broadcast ads-by-SMS on a weekly basis, for example.

If successful, this approach could be replicated with Wizzit and MTN in South Africa and gCash in the Philippines. I wish I had several more weeks in Nairobi to spearhead this but I’m heading back to the Sudan to continue my consulting work with the UN’s Threat and Risk Mapping Analysis (TRMA).

Patrick Philippe Meier

mBanking Panel 3 – Creating and Taking Advantage of Regulatory Regimes

The third and final panel of CGAP’s roundtable on mobile banking for the bottom billion figured Rizza Maniego-Eala of Globe Telecom, Philippines and Ali Abbas Sikander of Tameer Bank, Pakistan. The panelists represent two different approaches to mobile banking: a nonbank-based model and a bank-based model. At the same time, they share two features in common: engaged, pro-access regulators and dynamic, outside-the-box-thinking industry actors.


The purpose of the panel was to ask how to create or take advantage of regulatory space? Is the space already there? As we know, existing regulation on branchless banking was not created with mobile banking in mind. There are important gaps in regulation, with claims that Safaricom sprung out of a regulation vacuum.

The moderator posed the following questions to the panelists vis-a-vis their branchless banking projects:

  1. Which regulatory issues loomed largest at outset?
  2. Which seem most significant now? what accounts for change if there has been one?
  3. Looking ahead, how would you rank the following challenges (in order of importance) and why (for all actors involved):
  • Regulatory space
  • Business care
  • Client uptake

Rizza spoke about her gCash initiative. They decided upfront that a partnership with the Central Bank was needed. This posed a big challenge and took many meetings to convince the bank about the viability and security of mBanking in the Philippines. They also engaged IFI’s in parallel. The conversations took over 10 months.

Today, the challenge in the Philippines is to continue that engagement with the regulators. “It’s not over, lots more conversations need to be had and many questions remain unanswered,” said Rizza.

In her opinion, the regulatory space is most important of the three challenges identified by the moderator. Money supply was the first major stumbling block put forward b the Central Bank and regulators. The solution was to ensure 100% backfunds. The second challenge was Know Your Customer (KYC) requirements and anti-money laundering measures.

Cash in/out requires presentation of ID in the gCash system. Regulators were quite impressed with the telco’s ability to track transfers, monitor, tracing, etc. Indeed, the head of Philippine’s anti-money laundering unit, said gCash was notably better than cash because cash leaves not traces while mobile transfers do. The moderator added that the Philippines was taken off the US black list thanks in large part to gCash.

Ali Abbas of Tameer Bank addressed the issue of regulation as a context between the banking led model versus the telco led model. The outcome of the competition depends on which side is stronger and more influential in policy circles.

Pakistan regulators are struggling with commercial banking expansion in rural areas. In fact, there is less than 3% penetration in rural areas which comprises 83% of the country’s population. Pakistan’s mBanking regulation had financial inclusion as underlying tone; they named the telco’s and any agents/distribution networks, e.g., grocery stores, as legal agents.

This led to a partnership based model but with banks bearing the responsibility at end of day. The stumbling block, according to Ali Abbas, is deciding between the bank-led model and telco model. There is a lack of clarity vis-a-vis the end to end ecosystem and  concern about pricing regulations or product restrictions.”If someone reads through Pakistani regulations on branchless banking, they will notice that the language is very focused on technology, which means that regulations don’t jive with what existing business models,” he added.

Regulators are fond of focusing on the security transaction but this almost exclusive obsession with secure banking platforms leaves other fundamental issues such as education at the agent end unanswered. In contrast to bank-led regulations, telco guidelines focus more on the required infrastructure.

In terms of priority areas, Ali Abbas would points to the “business case” as biggest challenge for any institution trying to do mobile banking in Pakistan.

Compliance departments dictate what the banking model will look like; they are an independent entity within the financial institution set up. If they place a limit on the value of transactions per day, then this will drive customers away since business starts and stops at first point of contact. This means that agent uptake is important. Transparency, liquidity, cash management issues need to resolved and scalable manner in order to move  mBanking forward.

The moderator asked the first question of the Q&A session: “Regulators in the Philippines and Pakistan appear to be very concerned with consumer protection; are these issues specific to mBanking?”

Rizza noted that gCash is being treated by regulators as a bank even though they don’t have a banking license; so customer protection in mBanking has always been consistent with banking laws. In Pakistan, Ali Abbas pointed out that regulators are concerned about the potential growth in agents and the issue of cash out. They want to be convinced that there is sufficient liquidity at any given time so clients can be assured they have access to their cash at any given time.

Ali Abbas thus stressed the need for a more flexible complaint handling system since this is right now done at branches. Financial institutions want to monitor whether complaints are getting to the regulators. So the regulatory regime in Pakistan deals more with processes where the driving concern is the potential trade-off between scalability and consumer protection.

The remaining questions focused on gCash. Rizza added the following details in response:

  • gCash imposes a daily limit $800/day and $2000/month;
  • gCash is not allowed to go into lending, interest, etc.;
  • gCash is audited twice a day to ensure transactions;

One participant expressed his skepticism about the business case for gCash, since the service requires 100% backfunds. Rizza pointed out that the gCash business model does is not based at the account level but rather on micro-transactions.

In conclusion, the moderator highlighted that as far as CGAP policy is concerned, “if mobile operators are sufficiently and proportionately regulated, they should be allowed to play in the space.”

Patrick Philippe Meier

mBanking Panel 2 – Building a Viable Agent Network

The second panel of the CGAP roundtable on mobile banking for the bottom billion included three panelists: Nick Hughes with Vodafone (the architect of Mpesa), Carl Johan with the Maldives Monetary Authority (MMA) and Sam Kamiti of Equity Bank, Kenya.


The key interface between the electronic world and cash-based world is the agent network which is responsible for handling the cash. Branchless banking (aka mobile banking) requires the outsourcing of cash transfers to these distributed networks of agents such as small shops. One important question is how to make the compensation model viable for these agents?

The moderator of the panel, Mark Pickens of CGAP showed the results of a small study carried out on Mpesa agents. While I believe this is exactly the kind of study necessary to better understand the cost benefit analysis (CBA) of agent participation, the study in question only drew on a sample of 20 Mpesa agents (!).

The study suggests that the number of transactions follows a Gaussian (or normal) distribution with a mean of 105 transactions per day providing an average of $10.7 daily commission. At -1 standard deviation, there are 58 transactions with $6.6 in daily commission, which is 2-3 times the daily wage. At +1 standard deviation, there are 152 transactions with $14.7 in daily commission.

Mark emphasized the point that an agent can only maintain so much money in float; about $250 for one Mpesa agent he spoke with. The agent therefore needs to visit his closest bank several times a day, which presents additional costs of doing mBanking. Partly as a result, the agent receives more profit by selling non-mobile products. In other words, one of the biggest challenges that an agent faces is getting liquidity, which is why the agent in question does not see Mpesa as the main driver of his sales and profit.

To provide a comparative analysis of Mpesa, Equity and mBanking in the Maldives, Mark Pickens compared the following variables for each initiative respectively: Agents, Transactions/Day, Value/Day, Number of Clients, Agent Networks.


The first panelist, Nick Hughes from Vodafone, played an instrumental role in the design of Mpesa. It was interesting to note that Mpesa never positioned itself as mobile banking:

All we did is ask, do you need to send money home? To move money around? If you try to introduce customers to mobile banking, don’t talk about banking, talk about need and address need, ie, the functions of mobile banking. We got 4.5 million subscribers not because we asked asked, ‘do you want to do mobile banking?’

Agents are critical because they serve as for cash-in, cash-out points. It is important to make it as convenient as possible for customers to take cash in/out. So Mpesa’s 4,000 agents basically act as human ATMs. In setting up mBanking, one should first concentrate on getting that agent network set up. The business case should not just be transfer of stock; one needs to think more broadly. For example, by offering Mpesa in a shop, the owner consequently gets more customers coming to the shop, potentially purchasing more items as a result.

The second panelist, Carl John from the Maldives Central Bank, noted that the average island dweller has no access to banking. There are no bank branches on islands with less 500 people and  only one bank that goes around once a month. There are only 41 ATMs in all of the Maldives and only 38 banking branches agents. Mobile banking thus provides some important opportunities for the country.

Carl pointed out that the endgame for the mBanking initiative in the Maldives is a cashless society. This means identifying new agents, such as small stores or basically anyone accepted and trusted by the local population. The agent network in the Maldives will also need to  handle checks and the Central Bank will treat ATMs as part of the agent network.

There are 3 types of agents according to Carl:

  1. Mobile/handset only agent (boat operator, fisherman), can download statement from website;
  2. Working level agent (printing statements services, provide cash in/out);
  3. Check-enabled agent (using scanners to submit images to central bank for clearing);

In closing, Carl emphasized that the Maldives’ mBanking system is not e-money, but a banking system.

Sam Kamiti of Equity Bank, Kenya, emphasized the need to focus on the Bottom of the Pyramid and to demystify banking. Equity’s approach is to only charge clients for transactions. They invested heavily in ATMs which is why Equity’s is the largest ATM network in Kenya. Equity also introduced points of service (POS) to provide services beyond payments of goods and services. The POS also charge a smaller transaction fee for cash back than ATMs.

During the Q&A session, one question addressed how best to extend agent networks further, and how to make it worthwhile for all agents along the value chain?

Nick of Vodafone replied as follows:

We need to give aggregators the ability to move funds around without having to go to a bank; the more you can avoid having to go a bank the better. We need to follow the money; if you can remove cash entirely from the marketplace, then you don’t need agents. For example, Vodafone provided a school in Kenya with a Mpesa account so parents could pay directly when they noticed that parents would take out large sums from their mBanking accounts several times in a row just to pay school feels. The take-home point? Follow the money.

Carl emphasized the need to for banks to be responsible for nominating agents and for providing sufficient revolving credits to these agents. Attracting more ATM deployers is also key to further extend agent networks.

Sam pointed out that petrol stations and marketplaces prefer to use less cash; handling large amounts of cash presents problems for these existing networks. To this end, creating synergies with pre-exisitng networks for the purposes of mBanking can provide mutual benefits.

Another participant during the Q&A session asked whether Vodafone had any plans to extend Mpesa to countries where Vodafone is not presently operating?

Nick replied yes since any phone operator can take Mpesa without needing the Vodafone footprint or infrastructure, such as Roshan in Afghanistan. Vodafone provides the platform, Roshan recruits the customers. In the past, mobile operators would go at mBanking alone. The new trend sees mobile operators forming partnerships with banks and other groups. One of the consequences, or necessary conditions, of such partnerships is that systems must be made fully interoperable.

Nick also pointed to worrying developments on the regulatory side of the equation. He gave an example in India that will almost certainly hamper possible partnerships between mobile operators, banks, etc: “A new regulation in India stipulates that no agents can be further than 5km from a bank branch.” In another example, the India Reserve Bank now requires inter-operatbility within 6 months of operation. “This completely stifles innovation and discourages start-ups with new ideas from taking any risks. The key to the future is interoperability, it’s how we survive, but regulation can seriously set us back.”

The problem is that it is particularly difficult if not impossible to scale up mBanking without partnerships between telecom companies and banks. The enabler (such as Vodafone) and the core finance provider (banks), need to find a way to share the profits/costs. Any regulation about what kinds of agents can be used forces a change in strategy from mobile operators.

In response to a question on improving agent training and financial literacy for end users, Nick emphasized the critical need to employ third parties to train agents. “It is vital that agents do their job well in order to establish trust with customers. We also need to move very quickly if we see agent behavior that is not sanctioned; this is absolutely essential.” In conclusion, Nick pointed out that the variation in in-country economic growth and mBanking is less a matter of technology and education and training.

Another Q&A question addressed the issue of tight regulatory control slowing down innovation and contrasted this with the current response to the global financial meltdown which calls for increasing regulations. Where does one draw the line? How does regulation effect agents, their business, Know Your Customer (KYC) procedures, customer protection issues, business models/cases?

Nick took the first shot at the question. It is important a contracts are in place with agents. Mpesa does not charge a fee for registration, but does require ID verification in order to check for fraud, terrorism finances, money laundering, etc. Agents need to collect the KYC data very carefully, “this is something that the Central Bank of Kenya is doing very well.” Agents should be awarded commissions when they bring on a new client, but the initial KYC must be carried out by these agents, with the full KYC done by Vodafone.

According to John, KYC procedures are rather limited in the Maldives because of the hundreds of islands. Agents try and check person ID cards. A client that supplies the most basic KYC data is allowed to get the first basic level of mBanking service. They can upgrade to additional services if they provide additional KYC data. Further upgrades require that they be issued a card.

Other services provided (with additional KYC verification) include Islamic banking. On this note, the Maldives Central Bank allows banks to define their own products/services. It is then up to individual banks to establish the degree of differentiation they want to spur competition.

Sam of Equity Bank concluded the panel discussion by noting that the cost of compliance is generally rather high, which means that expanding to marginal agents is rather difficult. Agents need to be provided with a business model that clearly identifies high returns.

Patrick Philippe Meier

mBanking Panel 1 – Driving Mass Market Customer Adoption

The first panel of the roundtable on mobile banking for the bottom billion included two panelists, Brian Richardson from WIZZIT, South Africa and Bold Magvan from XacBank, Mongolia. The panel sought to identify ways to move beyond early adopters, who are generally characterized as young, migrant labor males comfortable with technology. The moderator of the panel asked the panelists to describe how their service work and what they are banking.


WIZZIT is in the business of banking the unbanked, ie, of bringing the bank to the bottom billion rather than the other way around. In this sense, WIZZIT is both a model and methodology. The company’s mission is to make economic citizens since “one can’t be an economic citizen of any country less one has access to a bank account.”

Relying on cash is very expensive for the bottom billion. Some conventional banks in South Africa (SA) charge customers monthly fees to keep their money in an account. Some 24% of a deposit’s original value is lost after just one year. Another factor that makes reliance on cash expensive is crime, which is widespread in SA.

Brian gave an example of person who was mugged four times in one year while bringing his pay back home. At the Bottom of the Pyramid (BoP), one by definition has little to no savings, most income is spent just to survive. So banking the unbanked provides the latter with more financial security (in more than one sense of the word).

To this end, WIZZIT provides the unbanked with fully functioning bank accounts on mobile phones. Brian emphasized the security aspect of mobile banking, “a safe place to keep money,” as an important incentive for early adopters. WIZZIT allows customers to make remote payments and pay bills. Account holders can also use visa cards but the necessary infrastructure to support this service remains be completed. In the future, WIZZIT plans to additional transactional services.

Bold Magvan from XacBank highlighted the geographical and climatic challenges that a country like Mongolia poses for mobile banking (mBanking). Mongolia has a population of 2 million and a surface area comparable to that of the United States. Temperatures drop to -20 degrees C in Winter and rise above 30 in the summer. These factors present important barriers to mobility.

Bold argues that the introduction of mBanking services will bring unlimited opportunities for poor people. In the near future, branchless banking services will include micro-insurance, which will increase the financial resilience of the bottom billion.

Says Bold, “mobile banking is all about cost effectiveness, efficiency and speed.” At the end of the day, however, people still need access to their cash, so a network of agents, (aka, points of service, or POS), is necessary. This is why XacBank creates synergies with pre-existing networks of suppliers such as gas stations and post offices instead of building new banking branches. In the future, XacBank plans to provide additional services to facilitate remittances, allow withdrawal services, transfer between accounts, micro-loans and micro-insurance policies.

The moderator asked the two panelists to identify the top 2 factors that drive mass customer adoption and the winning formula.

Brian of WIZZIT identified building trust/credibility in the brand and improving brand awareness (get the poor to trust mobile banking is not a scam) as the two most important drivers of mass adoption. This requires untraditional marketing. For Brian, the winning formula depends on what success looks like. In his opinion, “success is growing commercially viable sustainable business that is replicable and scalable; increased frequency and value of transactions via mobile phones.”

Bold of XacBank emphasized the need to find common interests and incentives with existing distribution networks and the involvement of youth (70% of Mongolia’s population) as the top 2 factors necessary to drive mass market adoption. As for the winning formula, Bold believes mBanking is already a winner vis-a-vis environmental impact: “mobile banking is environmentally friendly.” In addition, by using off-the-shelf applications, mBanking is more effective, flexible and rapid than depending on an external provider. Recall the “three A’s” of mBanking: “affordability, accessibility and availability.”

One of the first questions posed during the Q&A session addressed the issue of building trust, i.e., how to convince new customers that mBanking is not a scam.

Brian pointed out that being able to purchase airtime/credits using mobile phones is already creating trust. Customers are also reassured by the ability to check their balance from their mobile phones as often as they desire. According to Brian, “customers will gain confidence by starting with small transactions, i.e., low risk, low value transactions. This will create trust which will ensure customers that they can also safely transfer larger sums more frequently.” The key in all of this, however, is technology; the technology has to work every time or else trust in the system flies out the window.

Another question posed focused on why rates of uptakes (initial customer adoption) are often higher than continuing usage.

Brian addressed the question by explaining why WIZZIT chose to charge a token amount for opening an account. “The decision was made to render value to the service. If we allowed for accounts to be opened freely, customers would simply not place as much value in the service.” WIZZIT charges $4 to open an account. Yet people are still voluntarily opening accounts without ever using the services they offer. “This is one of the biggest mysteries of the universe,” said Brian. The key to addressing this issue, however, is improving financial literacy at the Bottom of the Pyramid (BoP).

One of the questions posed to the panelists was from a participant from the European Commission who was following the roundtable online: “what should larger donors do to support mobile banking?”

The panelists agreed that there is a great need from donors to provide assistance on the regulatory side of this issue; regulatory bodies in developing countries lack knowledge on this, they need support, guidance, and assistance to better understand the issues at play.

For example, regulatory bodies need to understand the difference between telecom- and bank-led approaches. In addition, according to one statistic some 30% of mBanking customers do not own a mobile phone. Donors could help change this.

Nick Hughes of Vodafone (one of the panelists on the second panel) expressed caution. “Donors can help build the framework regulations; the UK government, for example, gave Vodafone GBP 1 million, which was key to Vodafone’s contribution to mBanking. However, these projects need to be able to stand on their own two feet, so we ought to discourage large donor donations and think about more sustainable entrepreneurship models.

Patrick Philippe Meier

Mobile Banking for the Bottom Billion: An iRevolution?


I chose iRevolution as the title of this blog because of my interest in the revolutionary potential of technology vis-a-vis the empowerment of the individual. I see the information revolution as having a multiplier effect on individual power, enabling the individual to make more informed and calculated decisions.

While the topic of my blog entries have ranged from conflict early warning and crisis mapping issues to civil resistance and digital activism, the subject of mobile banking is one that I am particularly interested in terms of iRevolutions in the making.

This explains why I just participated in a half-day roundtable on mobile banking for the poor, which was organized by the Consultative Group to Assist the Poor (CGAP) and hosted at the World Bank (WB) headquarters in Washington DC. This blog entry comprises a summary of the introductory remarks. (A detailed summary of the 3-panels that followed are available below).

The poor are bound to be affected by today’s synchronized global recession. Two processes in particular are at work: 1) decline in demand; and 2) contracting remittance flows, down -12% to -14% in some developing countries. However, micro finance banks are immune to economic downturns. To this end, mobile banking, also referred to as branchless banking, may provide one way to increase the financial resilience of the bottom billion.

Of the 140 million poor people employed who receive social payments (aka G2P), less then 1/4th receive their payments via bank accounts. There are multiple benefits of moving away from a cash-based system to a debit system. Argentina recently introduced a debit system which saw fraud decrease 12 fold. One limitation of Argentina’s approach, however, is that only the government can issue load cards.

The three panels that comprised the roundtable moderated by CGAP included:

  1. Driving Mass Market Customer Adoption
  2. Building a Viable Agent Network
  3. Creating and Taking Advantage of Regulatory Regimes

Please click on the above links for detailed summaries of the three panels.

Patrick Philippe Meier