Philippines: Mobile banking expands to include microfinance

By Ronnel W. Domingo, Inquirer Technology

MANILA, Philippines—Mobile banking in the Philippines is expanding into microfinance to serve the lower-income market outside of the country’s major urban centers.

Tricia Dizon, head of financial services at Smart Communications, said in a statement the telecommunications giant was helping launch mBank Philippines.

This planned mobile micronfinancing service provider is meant to deliver savings and loan products exclusively on a mobile platform to Filipinos with little or no access to the formal banking system.

Regarding this effort, Dizon said Smart was working with PLDT-Smart Foundation, mobile microfinance holding company mBank Holding, Finnish development finance company Finnfund and Dutch development bank FMO.

Dizon said pilot services were already being offered through mCompany, a nongovernment organization whose operations will spin off into mBank Philippines once regulators approve its application for a formal banking license.

“Seven out of 10 Filipinos do not have an account at a formal financial institution mainly because of steep deposit requirements and the absence of banks in remote areas, but almost all Filipinos have a mobile phone,” Dizon said.

“By offering simple and effective financial services, mCompany—and eventually mBank—seeks to increase financial inclusion and ensure that people have enough money at any given moment,” she added.

Dizon explained that once mBank is launched, Smart and Talk ’N Text subscribers will be able to open a savings account with the help of mBank field agents deployed in their communities.

Activated account holders can apply for a loan product that interests them, immediately get a response about their application, and select a weekly repayment schedule—all through their mobile phone.

“The process eliminates the need to travel far to deposit and withdraw money, apply for loans, and pay amortization,” Dizon said. “This is very convenient especially for those who cannot afford to be absent from work or leave their sari-sari stores.”

Further, mBank will operate a credit risk management capability delivered by Experian, which provides credit risk management automation services.

According to the Asian Development Bank, the Philippines is one of the more developed microfinance markets in the world.

An ADB study titled “Microfinance Development Strategy 2000” showed that six countries including the Philippines account for about a third of the world’s global microfinance portfolio. The other five are Cambodia, Pakistan, Papua New Guinea, Uzbekistan and Vietnam.

The study also showed that as of 2010, there were 45 microfinance institutions in the Philippines, accounting for $920 million in total assets and a gross loan portfolio of $632 million that covers some 3 million active borrowers.

India: SKS Microfinance hopes to increase customer base; offers mobile phone loans

By Vaibhav Aggarwal, Rupee Times

SKS Microfinance, has announced that it plans to increase the volume of loans it offers to customers to buy mobile phones. In addition to it, the NBFC would strenghten its ties with Sangam kiarana stores.

The company which offers loans to buy cheap and affordable mobile phones with easy repayment options plans to add 5.5 lakh more customers this fiscal. The company has so far given loans for 2.8 lakh mobile phones.

In addition to the above the company also plans to disburse loans to 15,000 Sangam kirana stores, from existing 14,742 stores. The loans would enable the kirana store owners to buy from wholesale and sell in their kirana stores. SKS Microfinance has also tied up with Metro Cash and Carry to assist the stores to increase their business volume and have sufficient working capital.

The NBFC has seen a reduction in its customer base, which went down from 77.2 lakh to 53.5 lakh in the last quarter of FY12. The company’s MD, and CEO Mr. MR Rao stated, “On the business front, consolidation of customer base, cross-selling initiatives and diversification have been the key focus areas.”

How mobile banking can help Asia’s poor

By William Pesek, Today Online

The iPhone has become a symbol of something Steve Jobs never envisioned: Chinese sweatshops.

Any of us (full disclosure: This includes me) who use one of Apple’s smartphones, iPads or iPods is, at least indirectly, supporting the exploitation of electronics factory workers in China.

Yet, what if the iPhone is a key to ending the poverty that forces so many Asians to toil in such abhorrent conditions?

The buzz phrase “financial inclusion” is getting increasing attention these days. It refers to the world’s unbanked masses, what bankers like to call “the other three billion”. That’s the estimated number who lack access to the most basic of financial services. In nations such as India and the Philippines, a key answer may be mobile phones. Poor Asians who lack bank accounts often have one.

That has banks turning to experts on mobile device networking systems, such as Mr Jay Collins. Working for Citigroup in New York, he is one of modern finance’s true alchemists, endeavouring to find ways for the poor to move, pay, collect and store money on mobile devices.

No more wasting an entire day at the bank. No more public officials skimming money off the top. No more turning to loan sharks.

CUTTING OUT MIDDLEMEN

That also goes for small and mid-size enterprises, which account for almost half of all employment in developing Asia. Owners and managers could make payments to suppliers and employees directly into accounts connected to mobile phone SIM cards, eliminating any number of middlemen all looking for their cut. The more cash and credit these businesses get their hands on, the more Asians they can hire.

“We view this as our killer app that could transform banking and reduce poverty and corruption at the same time,” Mr Collins says.

Citigroup isn’t an altruistic venture. It’s championing this revolution because of the potential profits: Loads of new customers, deposits and, of course, fee income. Just as George Soros’ Quantum, Goldman Sachs Group and Nomura Holdings invested in microfinance, Citigroup realises there’s money to be made even from those with little of it.

The potential of mobile banking deserves far more attention than it’s getting from governments. Asia’s poor would suddenly have a way to manage income, build assets, invest in the future and buy insurance to prepare for risks like health crises or natural disasters.

MOBILE FINANCE ECOSYSTEM

Political leaders should facilitate the technology’s growth with regulations and oversight to ensure security against hacking and scams. They should commit to distribute certain salaries, benefits and subsidies on mobile systems. They should step up efforts to raise financial literacy in the region.

“The perfect-world, mobile-finance ecosystem would sound like a symphony orchestra, where the various industry and government participants show up at the same time, with the same sheet of music, and play in harmony,” Mr Collins says. “Currently, players appear at different times and places, with their own music and tempo.”

There are big benefits here for governments. Phone transactions create a cyber-trail to give tax authorities and national-security officials greater insight and influence over the movement of money. It adds a level of transparency that Asia’s current cash-based environment doesn’t.

India’s potential is a great example. The Boston Consulting Group reckons increased mobile finance would be a boon to growth. In last year’s report, it predicted a 5-per-cent jump in gross domestic product, a US$50 billion (S$62.8 billion) increase in tax revenue annually and the creation of 600,000 new businesses by 2020. We’re not talking sweatshop jobs, but decent-paying ones in air-conditioned buildings.

NOT A QUICK FIX BUT …

The Asian Development Bank’s experience in Afghanistan also is instructive. The Manila-based lender has made more than US$100 million in loans to help mobile phone providers extend coverage to parts of the nation with no telecommunications infrastructure. The financing also supported the creation of mobile phone banking services.

It had a couple of unanticipated consequences, both for the better. First, fewer government soldiers were going AWOL. It was feared that they were conspiring with local tribal leaders who might be supporting terrorism. It turned out that they had been disappearing to take their pay back to their home villages. Second, soldiers suddenly were getting more money. Superiors could no longer pocket big chunks of their wages.

Mobile phones are hardly a quick fix. The causes of poverty, and the ways to address it, are as diverse as they are complicated.

For many, though, exclusion from the banking world is a formidable barrier to better lives. Imagine the ripple effects should mobile phone consumer finance take hold.

Banks once gave out toasters to new customers. Free iPhones, anyone?

Tokyo-based William Pesek won the 2010 Society of American Business Editors and Writers prize for commentary.

Uganda: Government rallies banks on mobile banking

By Walter Wafula, Daily Monitor

The Minister of Finance, Ms Maria Kiwanuka, has said local financial institutions have to offer mobile phone-based solutions to make financial services more accessible and affordable.

Speaking at the launch of the Interswitch in Kampala yesterday, Ms Kiwanuka said,“I urge Interswtich and other financial institutions to have products that will lead to financial inclusion and reduce the cost of doing business.

InterSwitch is a Nigerian company that recently acquired a 60 per cent stake in Bankom Uganda, a provider of inter-switching services to local commercial banks and microfinance institutions. Bankom entered the deal as it sought more capital to expand in East Africa.

The minister noted that despite the huge strides made in Uganda’s financial sector, there exists a “huge gap” in terms of the absence of mobile payments that can allow the government and companies to collect revenue efficiently. “With easier payment systems, we will see increased voluntary tax compliance and in return see improved tax collection,” she told guests at the event.

Local mobile telecommunication companies such as MTN, Airtel and Uganda Telecom have made attempts to fill the gap by introducing mobile banking solutions such as Airtel money, M-sente and MTN mobile money.

According to Mr Isaac Nsereko, the firm’s chief marketing officer, MTN moves up to about Shs240 billion ( $90 million) across its mobile network per month.

Ms Charlotte Kaheru, the chief executive officer of Interswitch East Africa, said the firm will start offering a set of new age payment services to customers in Uganda including mobile banking. “We want to give customers access to their accounts without the need for going to banks to transact,” she told Daily Monitor. “We are testing the service and it will be available in a couple of weeks.”

Mr Mitchell Elegbe, the chief executive officer of the Interswitch Group, explained that Interswitch will be in position to offer advanced payment services including; mobile and online payments and credit card services.

Nigeria: More Citizens Sign on Monetize Mobile Payments

By Comfort Ekeleme, Daily Champion

Determined to bring mobile banking services to more Nigerians especially those at the grass root, Monetize, a British technology company and a pilot scheme said it has sign up over 6,000 people in the country.

Managing Director of Monetize Africa, Prateek Shrivastava said the move indicates the huge potential for mobile financial services in the West African republic.

Speaking in Lagos as part of a British trade delegation to the country, he said “Mobile technology reaches parts of society that have historically been excluded from infrastructure that we take for granted in the UK. It is a hugely exciting time to be doing business in Africa.

Daily Champion gathered that Monetize, the British technology company has built a network of 160 agents in four cities across Nigeria, delivering services to 6,700 people since launching the pilot in March.

The success of the scheme, Daily Champion also gathered was a proof of the massive appetite for mobile banking and payments in Nigeria, particularly among the unbanked population and in rural areas where physical banking infrastructure is undeveloped, and the potential it has to help economic development.

According to Shrivastava “Our pilot has exceeded expectations since we launched, with a network of staff in corner shops, news-stands and market place kiosks helping Nigerians deposit cash and cheques, send money to each other and withdraw funds without the need for a bank account, but simply by using a mobile phone.

“Bringing people into the banking system through mobile financial services can make a huge difference to both individuals and families’ lives. There are 90 million adults in Nigeria but only about 20 million have access to financial services – but there are more than 100 million mobile phone subscribers. This is why the mobile is such a vitally important channel to reach out to a large population with trusted and secure bank-grade financial services, he said.

The Monetize pilot is currently operating in four cities, Lagos, Abuja, Port Harcourt and Ibadan. The company was awarded a provisional license to operate a mobile payments service by the Central Bank of Nigeria in December 2010 and a decision about granting a full license is expected shortly.

“Globally, around 5.3 billion people have a mobile but only 2.2 billion have a bank account this underscores why in many markets mobile is becoming the first way for people to interact with financial services. He added: “In Nigeria, this gap between the banked and unbanked is so much wider.

Monetize and its local partners are helping to build an interoperable shared services technology platform to lay the infrastructure for mobile banking, payments and commerce in Nigeria. This will help bring a greater choice across financial services to the banked and unbanked via the mobile phone.

“The cost of building a single bank branch in Nigeria is around US$300,000 and approximately $500,000 per year to run. The number of people who qualify for a bank account does not justify the building of bank branches across the country. Mobile banking and payments will increase the speed with which commerce is conducted in Nigeria whilst increasing transparency of the economy. Due to this, financial service providers will have to adapt to customers’ changed behaviour by either defending their role in the payments industry or extending their current position.

“We are delighted to be using our technology and proven partnership approach to help shape the industry and widen financial inclusion across the most populous country in Africa,” Shrivastava said.

Monetize has been supported by the Africa Enterprise Challenge Fund (AECF), which has provided grant funding to assist in the launch of its mobile banking and payments service.

Thousands sign up to Monitise mobile payments in Nigeria

From Monitise

A pilot scheme to bring mobile banking and payments services to Nigeria has signed up over 6,000 people, indicating the huge potential for mobile financial services in the west African republic.

Monitise, the British technology company behind the pilot, has built a network of 160 agents in four cities across Nigeria delivering services to 6,700 people since launching the pilot in March.

The success of the scheme is proof of the massive appetite for mobile banking and payments in Nigeria, particularly among the unbanked population and in rural areas where physical banking infrastructure is undeveloped – and the potential it has to help economic development.

Monitise Africa Managing Director Prateek Shrivastava said: “Our pilot has exceeded expectations since we launched, with a network of staff in corner shops, news-stands and market place kiosks helping Nigerians deposit cash and cheques, send money to each other and withdraw funds without the need for a bank account, but simply by using a mobile phone.

“Bringing people into the banking system through mobile financial services can make a huge difference to both individuals and families’ lives.”

Mr Shrivastava continued:  “There are 90 million adults in Nigeria but only about 20 million have access to financial services – but there are more than 100 million mobile phone subscribers. This is why the mobile is such a vitally important channel to reach out to a large population with trusted and secure bank-grade financial services.”

The Monitise pilot is operating in the four cities of Lagos, Abuja, Port Harcourt and Ibadan. The company was awarded a provisional license to operate a mobile payments service by the Central Bank of Nigeria in December 2010 and a decision about granting a full licence is expected shortly.

“Globally, around 5.3 billion people have a mobile but only 2.2 billion have a bank account,” Mr Shrivastava continued, “This underscores why in many markets mobile is becoming the first way for people to interact with financial services. He added: “In Nigeria, this gap between the banked and unbanked is so much wider.”

Monitise Chief Executive Alastair Lukies said:  “Mobile technology reaches parts of society that have historically been excluded from infrastructure that we take for granted in the UK. It is a hugely exciting time to be doing business in Africa.”

Shrivastava and Lukies were speaking in Lagos, Nigeria, as part of a British trade delegation to the country.  Mr Lukies was one of 25 British business leaders accompanying British Prime Minister David Cameron, International Development Secretary Andrew Mitchell and trade and investment minister Lord Green to Nigeria and South Africa on a trade mission to pursue new business opportunities between both countries.

Monitise and its local partners are helping to build an interoperable shared services technology platform to lay the infrastructure for mobile banking, payments and commerce in Nigeria. This will help bring a greater choice across financial services to the banked and unbanked via the mobile phone.

“The cost of building a single bank branch in Nigeria is around US$300,000 and approximately $500,000 per year to run. The number of people who qualify for a bank account does not justify the building of bank branches across the country,” Mr Shrivastava said.

“Mobile banking and payments will increase the speed with which commerce is conducted in Nigeria whilst increasing transparency of the economy. Due to this, financial service providers will have to adapt to customers’ changed behaviour by either defending their role in the payments industry or extending their current position.

“We are delighted to be using our technology and proven partnership approach to help shape the industry and widen financial inclusion across the most populous country in Africa,” Shrivastava said.

Monitise has been supported by the Africa Enterprise Challenge Fund (AECF), which has provided grant funding to assist in the launch of its mobile banking and payments service.

About Monitise

Monitise plc (LSE: MONI.L) is a technology company delivering mobile banking, payments and commerce networks worldwide with the proven technology and expertise to enable financial institutions and other service providers to offer a wide range of services to their customers in developed and emerging markets.

With live services in the UK, the US, India and Africa, the company is working with international partners to extend trusted and secure mobile banking, payment and commerce services in territories worldwide, including Europe, Asia Pacific and Latin America.  Monitise has a global alliance agreement with Visa Inc. and a strategic partnership with Visa Europe. Other leading partners and clients include FIS, RBS, NatWest, HSBC, Lloyds Banking Group, First Direct, U.S. Bank, Ulster Bank, Standard Chartered Bank, Travelex, Vocalink, Vodafone, Orange, O2, T-Mobile, 3 UK, Research In Motion, Best Buy Europe, The Carphone Warehouse, First Eastern, JETCO and PCCW mobile.

Monitise Group +44 (0) 20 7947 4300

Alastair Lukies, CEO

Gavin Haycock, Communications Director                                                                             +44(0) 20 7947 4156

Gavin.haycock@monitisegroup.com

Krissy Koslicki, Bell Pottinger Business & Brand

Direct dial: +44 (0) 20 7861 2849

Mobile:  +44 (0) 7717226297

kkoslicki@bell-pottinger.co.uk

Stuart Disbrey, Bell Pottinger Business & Brand

Direct dial: +44 (0) 20 7861 2495

Mobile: +44 (0) 7789 500465

sdisbrey@bell-pottinger.co.uk

Nigeria: How mobile banking can promote financial inclusion in Nigeria

By Ben Uzor Jr, Businessday Online

With about 67 percent of Nigeria’s adult population being unbanked, and a meagre 30 percent of the adult population with bank accounts, the pain still resides in the neck of financial experts to seek ways to foster financial inclusion and aid the unbanked.

Mobile banking through cell phones, however has been identified as a feasible tool to provide basic financial services to millions of the unbanked in urban and rural communities in Africa, and will become a booming industry, experts revealed at the recently concluded Unbanked Africa Summit held in Lagos last week.

Analysts said that the major obstacle to having a bank account include irregular income, unemployment and distance to the bank branch, especially to the rural population. Badewole Olufemi from GTBank said that mobile banking was a way of getting banking to the rural channels where banking services can not be reachable. Presently, there are only 22 million individuals who have a bank account out of the 150 million population but there are more than 80 million mobile phone users, which provide huge opportunity for the development of mobile banking.

“Telecommunication companies have wide reach so there are places where an operator can reach but a bank cannot. Mobile banking enables you do branchless banking. You can perform basic transactions with your mobile phone anywhere in Nigeria”, Oluwafemi said. This, he further added was the rationale behind GTBank partnering with MTN to roll out mobile money in Nigeria.

According to him, mobile banking will enable financial institutions get more customers in the country because MTN covers 70 percent of the Nigerian population. Nigerian Postal Service, which has outlets all across Nigeria, is also searching for partners to take advantage of the mobile banking to reposition the national postal network, the deputy postmaster general Yashim Isa Bitiyong revealed at the summit.

Moreover, low literacy, poor network coverage in remote villages, high cost of mobile printers and large number of people without cellphones are the challenges facing the mobile banking practitioners, Derick Kwaku Denkyi, chief executive officer, G-Life Financial Service in Ghana said. The firm aims to see banking delivered to the doorsteps of 70 percent of unbanked population in Ghana.

It is the first Micro Finance Institution in Ghana to deploy mobile phone banking services in the delivery of its Microfinance operations. Now over 15,000 people are trading on their platform, both depositing and withdrawing.
Security is however another concern for mobile banking across the globe but Ivan Komarov from the United States (US)-based mobile service provider Global USSD, is quite optimistic.

“Around the world we have about 100 mobile money implementation already working. I haven’t really heard about any major problem of someone for instance making a decision to shut down the service because it’s too insecure,” he said. The Central Bank of Nigeria (CBN) has been making efforts under the Payments System Vision 2020, to promote and entrench electronic payments, as the major channel for payment and settlement, by all economic agents, away from the current dominance of cash based transactions.

In this regard, mobile phone was identified as a channel for effecting electronic payment between person-to-person. The CBN has given approval-in-principle to about 20 mobile payments operators to enhance the person to person payments services in Nigeria to commence operations.

Tayo Oviosu, CEO, Pagatech, an electronic financial services firm and one of the firms given the approval in principle by the Central Bank, said given the poor number of Nigerians, electronic banking takes advantage of the wider coverage by mobile phones. “There are very few people that have formal access to financial services, only about 20 per cent of Nigerians have access to formal financial services and 90 per cent of the bank accounts have less than ₦5000 in their accounts.

This shows that majority of the money in Nigeria is outside the banking industry and this poses a very real challenge to banks today. They open bank branches everywhere, yet the issue remains unaddressed”.
“However, this is not the case with the number of mobile phone users.

About 60 percent of Nigerians are within the cell phone coverage. This is an opportunity and a way of bringing financial services to the unbanked, through their mobile phones”. The one-day Unbanked Africa Summit attracted about 100 experts from banks, mobile technology developers and mobile network operators from Nigeria, Ghana, Zimbabwe and the United States.

Interview: Mobile banking a promising industry in Africa: experts

By Cao Kai, Xinhua

LAGOS – Mobile banking through cell phones will provide basic financial services to millions of unbanked populations in urban and rural communities in Africa, and will become a booming industry, experts told Xinhua at the ongoing Unbanked Africa Summit on Thursday in Lagos.

Mobile banking is a way of getting banking to the rural channels where banking services can not be reachable, said Badewole Oluwafemi from Nigeria”s Guaranty Trust Bank.

In Nigeria, there are only 22 million individuals who have a bank account out of the 150 million population, but there are more than 80 million mobile phone users, which provides huge room for the development of mobile banking, a latest media report have said.

Telecommunication companies have wide reach so there are places where a telecommunication company can reach but a bank cannot. Mobile banking enables you do branchless banking. You can perform basic transactions with your mobile phone anywhere in Nigeria, Oluwafemi said.

Guaranty Trust Bank are currently working with MTN to roll out mobile money in Nigeria. Mobile banking will enable the bank get more customers in Nigeria because MTN Nigeria covers 70 percent of the population, he said.

Derick Kwaku Denkyi, CEO of G-Life Financial Service in Ghana, aims to see banking delivered to the doorstep of 70 percent of unbanked population in Ghana.

G-Life Financial Service is the first Micro Finance Institution in Ghana to deploy mobile phone banking services in the delivery of its Microfinance operations. Now over 15,000 people are trading on their platform, both depositing and withdrawing.

Denkyi took full fledge of his operations in 2010 and made close to about 20,000 U.S. dollars as profit in June this year. He is expected to see a monthly revenue of 50,000 dollars by the end of this year.

Nigerian Postal Service, which has outlets all across Nigeria, is also searching for partners to take advantage of the mobile banking to reposition the national postal network, the Deputy Postmaster General Yashim Isa Bitiyong told Xinhua.

Low literacy, poor network coverage in remote villages, high cost of mobile printers and large number of people without cellphones are the challenges facing the mobile banking practitioners, Denkyi said.

Security is another concern for mobile banking. Ivan Komarov from the U.S.-Based mobile service provider Global USSD, is quite optimistic.

“Around the world we have about 100 mobile money implementation already working. I haven”t really heard about any major problem of someone for instance making a decision to shut down the service because its too insecure,” he said.

The one-day Unbanked Africa Summit has attracted about 100 experts from banks, mobile technology developers and mobile network operators from Nigeria, Ghana, Zimbabwe and the United States.

India: Major role of technology in financial inclusion

By Oommen A. Ninan, The Hindu

Technology and financial inclusion are the popular coinage in banking parleys in the country. While technological upgradation and mobile banking are catching up so fast, financial inclusion is tardy.

Financial inclusion is a major agenda for the Reserve Bank of India (RBI). Without financial inclusion, banks cannot reach the un-banked. It is also a major step towards increasing savings and achieving balanced growth. Recently two conferences were held in Mumbai highlighting these issues; The Sixth Banking Tech Summit of Confederation of Indian Industry (CII) and another one organised by the Society for Worldwide Interbank Financial Telecommunication (SWIFT).

Of the 6.9 billion people on the planet, just 30 per cent (2.1 billion) have bank accounts while 75 per cent — 5.2 billion people — have mobile phones. “In India, only 200 million people have access to a bank account while 811 million have a mobile phone. For a population of 1.2 billion people, this translates into 68 per cent having a mobile phone and only 17 per cent having a bank account. The numbers speak for themselves: when it comes to reaching the ‘un-banked’ and extending financial inclusion for the larger population, mobile phone is the key,” said Wim Raymaekers, Head of Banking Market, SWIFT.

The reach the country is having with technological progress mobile banking has the potential to emerge as a game changer in terms of costs, convenience, and speed of reach. Business models of banks, telecom operators and other stakeholders need to converge.

However, the banking industry’s penetration to un-banked areas is still found sluggish. “The role of the Indian banker is challenging. At one end of his spectrum lies the demand to achieve financial inclusion as nearly 50 per cent of the population is yet to be covered under the formal system of banking and at the other end lies the task to fulfil the needs of the existing customer,” said RBI Deputy Governor K. C. Chakrabarty while speaking on ‘Connecting the dots’ at the CII conference.

“We need to remember that we should work towards bringing nearly 400 million citizens to the formal fold of the banking sector. It is not just about opening ‘no frill’ accounts. As of today, 75 million ‘no frill’ accounts have been opened but there are hardly any transactions in them. Banks need to work towards providing a full range of financial services and this would need a low cost, reliable, easy to use and secure technology backbone linking six lakh villages in the next four-five years”.

The first priority for banks is to adopt core banking solution (CBS), including all regional rural banks (RRBs). Next, a multi-channel approach using handheld devices, mobiles, cards, micro-ATMs, branches and kiosks can be used. However, it should be ensured that the transactions put through such front-end devices should be seamlessly integrated with the banks’ CBS.

SWIFT appreciates National Payments Council of India’s (NPCI) efforts to build a world-class payments system with global ambitions. The mission of the new NPCI is clear: “to build a state-of-the-art, world-class customer-friendly electronic retail payments system available and affordable to all round-the-clock”.

Today, banks are already offering services over mobile to communities that have been historically ‘unbanked’.

In rural areas, where accessibility is a problem, banks are using the microfinance network and business correspondents and facilitators to bring more people under the ambit of banking services, said a report of PwC prepared for the CII’s banking summit. Capitalising on the huge untapped potential in smaller towns and cities and rendering financial services to this segment of people poses a big challenge. “Few banks have explored technology solutions to increase the scale of their microfinance portfolios, with the use of smart cards and core banking solutions”.

Often a multitude of operational issues are quoted as reasons for lagging behind in financial inclusion targets. Till such time complete technology integration takes place on all fronts, there are bound to be areas where intermediate brick-and-mortar structures need to be in place. Even with Business Correspondents (BCs) issues arise regarding their supervision and customer grievance redressal. Certain accounting issues in this regard are also being addressed. All these operational issues and many more can be resolved if banks begin to look at financial inclusion as a business opportunity rather than an obligation to fulfil their corporate social responsibility (CSR) objective.

Banks have to realise that for Business Correspondent (BC) model to succeed the BCs who are the first level of contact for customers have to be compensated adequately so that they too see this as a business opportunity. Similarly, as regards MSPs (mobile service providers) acting as BCs reports reaching the central bank still suggest that the true spirit of cooperation is yet to stabilise with each still trying to destabilise the other.

Indonesia: Bank Andara launches world’s first mobile-enabled microfinance services network

From Asia Banking and Finance

AndaraLink offers 40mn Indonesians access to financial services via mobile terminals.

Bank Andara and Fundamo’s AndaraLink is the first of its kind in the world, enabling MFIs to provide 40 million financially excluded Indonesians with access to previously unavailable financial services via mobile terminals connected to a mobile network. The mobile terminal allows MFIs to take the ‘bank’ out of the branch, to its consumer or business customers.

The microfinance sector in Indonesia is one of the largest in the world with over 50,000 MFIs. MFIs are essential in enhancing financial inclusion by offering credit, loans and savings services to consumers and businesses that lack access to traditional banking services.

However, many MFIs in the region require access to traditional banking infrastructure to power services such as remittances and utility bill payments. Due to the low-income levels of the majority of the population, there has been little appetite to roll out expensive banking infrastructure in these regions.

“MFIs need a fast, flexible, secure and innovative technical infrastructure to deliver financial services to a disparate populace in a cost efficient and scalable way,” said Irianto Kusumadjaja, COO & CIO of Bank Andara. “Instead of trying to reinvent the wheel, Bank Andara has combined existing MFI infrastructure with mobile technology to deliver new and enhanced services. These services help MFIs to boost financial inclusion and grow market share. On average the service has increased participating MFI revenues by 5-10%.”

“AndaraLink has enabled simple and inexpensive mobile financial services between existing MFIs, providing businesses and consumers with remittance and utility payments. The network will also help us provide MFIs with quick and easy access to capital allowing them to offer credit at better rates,” continued Kusumadjaja.

“The Visa Fundamo platform underpinning the service is modular, application-driven and built on open APIs to enable easy development, integration and rollout of new services. This approach ensures that AndaraLink can evolve to meet the needs of consumers and businesses as they become more familiar with electronic financial services,” said Hannes van Rensburg, CEO at Fundamo.

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