Technical Innovation for Expanding Outreach: Mobile Phone Banking in the Philippines

Transcription

1 Technical Innovation for Expanding Outreach: Mobile Phone Banking in the Philippines MELIZA H. AGABIN Deputy Chief of Party, MABS Program Presented at the 3 rd African Microfinance Conference Kampala, Uganda August 20-24, 24, 2007

2 Philippines Location:

3 Microenterprise Access to Banking Services (MABS) Program The program assists banks to develop the capability to profitably provide financial services to microenterprises through technical assistance and training.

4 Rural Banks in the Philippines Wide network coverage: 760 rural banks; over 2,000 branches Over 50 year history US$2 billion in assets Over 5 million deposit accounts Over 1 million borrowers

5 MABS Partner Rural Banks As of June 2007 MABS works with 90 rural banks through 337 branches Over 165,000 active microenterprise borrowers Over 390,000 new micro borrowers served since 1998 Over 410,000 new micro deposit accounts

6 Challenges Reaching deeper into rural areas without costly investments in infrastructure Reducing costs of servicing Avoiding security risks from robbery, holdup Reducing costs to clients

7 Challenges for Rural Banks to reach Rural Clients High Transaction Costs Transportation Cost Loss of business opportunity Security risk

8 Technology Solution: Mobile Phone Banking

9 Technology Solution: Mobile Phone Banking To extend low-cost banking services to existing clients and un-banked individuals especially in rural areas. WHY CHOOSE THIS TECHNOLOGY?

10 Why Choose this Technology? External Drivers: Rapid expansion of mobile phone outreach Nationwide coverage Enhanced Mobile Phone Services Falling cost of technology Increased competition Ability to offer banking services at very low cost

11 Why choose this technology? High level of mobile phone literacy among clients Affordable & widely used Existence of Mobile Payment Platforms which,,, Are safe and secure Recognized by the Philippine Central Bank Address Anti-Money Laundering Requirements

12 MABS Partner: Globe Telecom

13 Globe Telecom Leading mobile phone operator in the Philippines Increasing focus on the bottom of the pyramid ; willing and able to partner with MABS and rural banks Handles over 250 million messages/day Developed G-Cash platform in 2004 More than 500,000 active users More than 500 G-Cash partners More than 4,900 outlets Transactions in 2006 exceeded $700M

14 What is G-CASH? G-Cash is the service of Globe telcom that turns a mobile phone into an electronic wallet. It is a reliable, accessible and easy way to: Buy & sell goods and services Send / Receive remittances locally or from abroad Pay bills and taxes; school tuition fees Load cell phone airtime credit Transfer money from one person s phone to another

15 Key Features Reliable recognized by BSP as a new payment system Secure - uses PIN Safe - all transactions are recorded in an electronic ledger in Globe Convenient - all you need is your cell phone Fast - moves at the speed of text messaging Easy to Use - as easy as sending a text message Meets AML (Anti-Money Laundering Law) requirements - requires all users to register via text with their personal details

16 An Opportunity to Use the Platform for Microfinance MABS Developed Products and Services riding on the G-Cash Platform Secured BSP approval of the services Forged excellent partnership and cooperation with a local telecom

17 The road map we followed in developing Mobile Phone Banking Services for the Rural Banks Text-A- Payment (loan collection) Text-A- Remittance (Cash-in/ Cash-out) Text-A-Deposit Text-A-Sweldo Text-A- Withdrawal (debit system) Text-A-Bills Payment Text-A-Credit We are Here!

18 Bills Payment Money Transfer (Remittance) Transactions clients can do without leaving their business Text-A-Deposit (Deposit Taking Service) Pay Bills Deposit Money Loan Payment Savings Withdrawal Loan Disbursement Text-A-Payment Loan Collection Text-a-Withdrawal Text-A-Credit

19 Payroll Services WIRE Text-a-Sweldo Payroll Offer Payroll services to staff and and business clients

20 Facilitating Mobile Commerce for Micro and Small Businesses Text-A-Deposit Text-A- Withdrawal Text-A-Payment

21 RURAL BANK POWERED MOBILE PAYMENT ECOSYSTEM Market Vendors Transport Operators Individual buys food, pays tricycle fare, fuel and even buy from the market using electronic money Restaurants Gas Station Clients Individual pays Utility company, school etc. tru billpay facility offered by rural bank BANK Market vendor, tricycle driver, gas station, restaurant, suppliers and repair shops deposit daily sales thru Text-A- Deposit Individual receives electronic money by way of Text-A- Remittance or Text- A-Sweldo Bank credits utility company's and school s accounts with the corresponding amount paid by individuals through electronic money Utility Companies Schools Market vendor, tricycle driver, gas station owner and restaurant pays suppliers, repair shops etc. thru electronic money Service Centers Farmers Suppliers

22 Benefits: Banks & Clients

23 Benefits for Rural Banks Increase outreach and client base Retain clients New value-added services Capture remittance market Reduce operating costs Fast and efficient service Increase loan officer productivity

24 Benefits for Clients Reduced travel time Reduced costs Reduced risk Convenient Time-saving Increase sales

25 Case of Cantilan Bank Profile Motivation Mobile Banking Solution Issue Remedy Actual Benefits 10-branch Rural Bank Reduce cost and increase efficiency of loan collections Text-A-Payment Lack of Cash-In locations Create G-Cash resellers via Text-A-Withdrawal service For Bank Time Saving; cost of collection reduced

26 Case of Bangko Kabayan Profile Motivation Mobile Banking Solution 9-branch Rural Bank Expand outreach to rural areas Text-A-Payment Issue Remedy Actual Benefits Lack of Cash-In locations Create G-Cash resellers via Text-A-Withdrawal service Expand outreach; Reduced transaction costs; convenient for clients

27 Case of 1 st Valley Bank Profile Motivation Mobile Banking Solution 16-branch Rural Bank Increase deposit base and offer bill collection services -Partnered with an electric cooperative -Offering customers Text-A-BillPay service -M-Payment services for local merchants Actual Benefits Able to remotely accept bills payment; Increase Deposit Balance; Merchants become new bank depositors

28 What Users Say

29 What Users Say

30 Main Challenges Lack of Re-sellers (Cash-in outlets) Introduced TEXT-A-SWELDO (salary) service Banks pay employee salaries and bonuses with G- Cash. Created a critical mass of people carrying G-Cash in their mobile phones, using the technology, and familiar with different services and benefits Employees help with promotions.

31 Main Challenges Still, rural re-sellers are lacking Text-A-Withdrawal (TAW) service developed so bank depositors can withdraw savings remotely, and be G-Cash re-sellers. Unique business benefits to re-seller 1% fee earned is more than the interest rate on bank deposit; nofee transaction with bank; no hassle withdrawal in seconds

32 Main Challenges Marketing to convince more people to embrace the technology and use the services. Eco-system rollout: MABS work with rural banks to train and accredit merchants and shops to accept G-Cash in payment for goods and services. Telecom co-branding with partner rural banks for marketing materials Telecom support for merchandizing materials, like tarpaulins and standees promoting G-Cash services.

33 Main Challenges Training and reaching more users, overcoming initial fear of USE technology and SECURITY of their money. Whether it is the bank, the merchant, the end user, presenting the unique benefits helped. Globe offered 10% discount on pre-paid airtime load using G-cash; opportunity to earn; frequency of use establishes G-Cash security, ease and convenience.

34 Updates and Future Direction

35 Volume of Transactions Through Accredited Rural Banks (as of June 2007): Accredited Rural Banks Accredited Bank-Branches # of Employees (Receiving salaries & benefits through Text-A-Sweldo (TAS) # G-Cash Transactions (cumulative) Amount G-Cash Transactions in Pesos - in USD Ecosystem Roll-out (# of merchantsaccredited by rural banks) , ,000 PhP380 M USD 7.6 M 145

36 New Developments and Future Directions of Mobile Phone Banking and Mobile Commerce Text-A-BillPay (through rural banks) has been piloted and ready for rollout Activating more G-Cash Resellers to serve Text-A- Payment clients Continuous development of G-Cash Ecosystem in the rural areas to increase the use of e-money especially in commercial applications Continuous Pilot testing of the other mobile banking services to model cost effective ways of reaching more and more people in areas farther away from the bank.

37 New Developments and Future Directions of Mobile Phone Banking and Mobile Commerce Developed a Mobile Banking Website ( as information portal particularly for rural banks, its clients, money senders, and the cyberworld in general Continuous Support and Training-Workshop on Mobile Phone Banking Text-A-Credit (line) manuals and procedures development on-going Development of mobile phone banking system to automate G-Cash transactions

38 This is the road we ve traveled so rural banks can reach more people farther away, faster, cheaper, and more efficiently. Text-A- Payment (loan collection) Text-A- Remittance (Cash-in/ Cash-out) Text-A-Deposit Text-A-Sweldo Text-A- Withdrawal (debit system) Text-A-Bills Payment Text-A-Credit (Line) We are Here!

39 And this is the roadmap a bank in a remote area in Mindanao Region is following. The goal is to turn the rural folks mobile phones into a virtual ATM. TEXT A LOAN PROCEEDS TEXT A WITHDRAWAL TEXT A DEPOSIT TEXT A PAYMENT TEXT A SWELDO TEXT A MONEY REMITTANCE

40 VIDEO ON MOBILE PHONE BANKING Click here to play the Video

41 Thank You Websites: