Using Mobile Money to Promote Financial Inclusion in Pakistan · In Pakistan, Branchless Banking is characterized by two mobile money 14 delivery models OVER THE COUNTER MOBILE WALLET

Using Mobile Money to Promote Financial Inclusion in Pakistan

Imran Khan and Naeha Rashid

www.karandaaz.com.pk© 2015 Karandaaz Pakistan. All Rights Reserved.

2

CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETS AGENTSOPPORUNITIES: INCREASING M-WALLET UPTAKE


3Pakistan’s Financial Inclusion numbers are improving according to most sources

8%

7%

2013 2014

InterMedian = 6000 (individuals)

Adults 15+Financial inclusion is defined as “having a

registered account with a financial institution that provides a full suite of

financial services.”

World Bankn = 1000 (individuals)

Adults 15+Financial Inclusion is defined as “having an account either by oneself or together with someone else, at a bank or another type of financial institution, or having personally

used MM in the past 12 months.”

State Bank of Pakistann = 10,000 (households)

Adults 18+“Formally served”

*To be released In 2015

10

%

13

%

2011 2012 2013 2014

ACCESS TO FINANCE

10

%

23

%

2008 2009 2010 2011 2012 2013 2014 2015

FINANCIAL INCLUSION INSIGHTS

FINDEX

4Variations in Financial Inclusion numbers can be explained by definitional differences

8%

1%

0.3%

5.7%

8.7%

5.8%

0%

2%

4%

6%

8%

10%

12%

14%

16%

FII 2014 FINDEX 2014

Bank account (registered) Non-bank Financial Institution Account (registered)

Mobile Money Account (used in the previous 90 days) OTC (used in the previous 90 days)

Financial Institution Account alone or with some else (registered) Mobile Money Service (personally used in the last 12 months)

*Numbers do not account for double counting

5

13%

31%34% 34%

53%

83%

14%

34%

46%51%

54%

62%

PAKISTAN BANGLADESH NEPAL BHUTAN INDIA SRI LANKA MIDDLE EAST SUB SAHARAN

AFRICA

SOUTH ASIA LATIN AMERICA & CARRIBEAN

DEVELOPING COUNTRIES

WORLD

Yet, despite significant progress, Financial Inclusion in Pakistan is low in comparison to regional and global standards

SHARE OF ADULTS WITH AN ACCOUNT – FINDEX 2014

SOUTH ASIA

23%

6

Some groups are more financially excluded than others

GENDER

LOCATION

%AGE OF POPULATION THAT IS FINANCIALY INCLUDED

7%

13%

23%

20%

Men are 3x more likely to be

financially included than women

Urban dwellers are 1.5x more likely to

be financially included than rural dwellers


7

While half of all adult Pakistanis took loans in the last year, only 5% borrowed from formal financial institutions

Family and friends

46%

Shopkeeper42%

Bank/MFI5%

Misc7%

SOURCE OF BORROWING FOR MOST RECENT LOAN

46 48 50 52

79

0

10

20

30

40

50

60

70

80

90

India Bangladesh Pakistan Low Income Kenya

BORROWED IN THE PAST YEAR (%)


8

Savings too, remain largely informal

In cash at home51%

Committees (ROSCA)

27%

Advance purchase/deposit With shopkeeper

6%

Buying Durable for Dowri

5%

With a family member

5%

Bank or MFI3%

Misc3%

TYPES OF SAVINGS

24

32

38

47

76

73

1410

30

0

10

20

30

40

50

60

70

80

Bangladesh Pakistan India Low Income Kenya

SAVINGS AND FORMAL SAVINGS %

Saved any money in the past year

Saved at a financial institution

Awareness and penetration of insurance remains low

Only 1% of respondents to the Financial Inclusion Insights 2013 survey had insurance. 90% of this group had life

insurance.

I do not need one35%

I do not know what it is

22%

I do not know how to get one

9%

I do not own anything valuable

7%

Misc27%

TOP REASONS FOR NOT HAVING INSURANCE


10

Compared to peer countries, incidence of domestic money transfer to relatives and friends is higher in Pakistan

9.814.1

24.8 25.6

61.0

9.9 10.415.7

18.3

53.0

0

10

20

30

40

50

60

70

India Bangladesh Pakistan Low Income Kenya

REMITTANCES %

Received domestic remittances in the past year

Sent domestic remittances in the past year

Personal delivery by self93%

Direct deposit to a bank4% Agent's m-money

account3%

METHODS FOR SENDING MONEY


11

Pakistanis don’t use formal financial services due to a lack of either awareness or income

15%

31%

41%

41%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Lack information about products/services

Not enough money to open an account

No regular income

Never thought about it

TOP REASONS FOR NOT USING FORMAL FINANCIAL SERVICES


12

CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETS AGENTSOPPORUNITIES: INCREASING M-WALLET UPTAKE


13

All adults (15+) 59%

Adult Males 80%

Adult Females38%

%AGE OF ADULTS WHO OWN A MOBILE PHONE

%AGE OF ADULTS WHO HAVE ACCESS TO MOBILE PHONES

All adults (15+) 79%

Adult Males89%

Adult Females70%

Branchless Banking provides an opportunity to kick start financial inclusion

The majority of Pakistanis have access to a mobile phone…

…which make these devices the most viable channel to enable financial outreach

93

,10

0

6.5 9.3 4

7.1

33

.9

12

.2

47

3.1

A TMS COMMERCIA L BA NK BRA NCHES

POS MOBILE PHONE SUBSCRIPTIONS

Pakistan Global

58

,49

9

INFRASTRUCTURE OF FINANCIAL SERVICES DELIVERY CHANNELS

14

In Pakistan, Branchless Banking is characterized by two mobile money delivery models

OVER THE COUNTER

MOBILE WALLET

Register Put money in account Conduct Transactions Directly

Register to provider’s

wallet via BVS.

Add money digitally or

through a CICO point

Conduct transactions from mobile

device without any 3rd party assistance

Convenient, secure,

integrated on- and

offline payments.


15

Currently, fewer than 1 in 10 Pakistanis have full service accounts that can be accessed digitally

39.3 % of adult Bangladeshis have

full-service financial accounts

6.8% of adults have digital bank accounts

0.3% of adults have mobile money accounts

7% have digital finance

accounts*

*Digital accounts are those that can be accessed through ATM/debt cards, online or through mobile phonesOverlap representing those who have multiple kinds of financial accounts is not shown.

Bank accounts are more likely to be digitally

accessible vs. non bank accounts

An additional 8% of adults are non-registered mobile

money users


16Pakistan’s Branchless Banking policy environment has come a long way

2006 2008 2010 2011 20122007 2009 2013

November 2006: First public discussions on branchless banking.

June 2007: SBP released Policy Paper on Regulatory Framework for Mobile Banking.

December 2009: SBP and PTA draft framework for Third Party Solution Provider system.

2014

2008 : CGAP invested in Easypaisa; catalytic impact on market

2010: CGAP coordinated an exchange between SBP and Mexican regulators on “level 0” accounts.

December 2012: At CGAP workshop, SBP and PTA assured no introduction of anti-market regulations.

N

E

X

T

?

2015

April 2008: Branchless Banking regulations issued.

2011: KYC requirements relaxed, Level 0 accounts introduced.

April 2015: Pakistan joins BTCA

2015: SBP gave limited permission for remote wallet opening (biometric verification)

2014: Daily limit for Level 0 transactions increased from Rs. 15,000 to Rs. 50,000

November 2014: NADRA lowered fees.

May 2015: NFIS launched


17

The market is competitive

4 different models: 3 telco-owned MFBs, 3 banks, 1 telco-bank partnership, 1 third-party

7 product types: Bill Payments, P2P Transfers, Airtime Top Ups, Bulk Payments, Loan Repayments, Merchant Payments, International Remittances

New product innovations in the market: Health Insurance Life Insurance Alternative energy financing

8 live mobile money services

To Date

October 2009

November 2012

September 2013

April 2013

January 2014

April 2010

December 2012

2009

2013

2010

2012

TIMELINE

2014

2011

1 Primary, and 1 Secondary Regulatory Body: SBP, and PTA

18

Within 5 years, the value of mobile money transactions have reached 3.5% of GDP

0.9

8%

2.4

5%

3.5

0%

PAKISTAN2011 2012 2013

VALUE OF MM TRANSACTIONS AS % OF GDP (reference year)

-

5

10

15

20

25

30

-

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Sep-11 Mar-12 Mar-13 Mar-14

Vo

lum

e (m

illion

s)

Bill Pmt Value P2P Value

Gment Pmts value Merchant pmts value

Top-up value Loan repmts value

Bill Pmt Volume P2P Volume

Top-up volume Gment pmts volume

Loan repmts volume Merchant pmts volume

Val

ue

(P

KR

mill

ion

s)

VOLUME AND VALUE OF KEY MM TRANSACTIONS


19

Use of mobile money seems to be increasing

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Dec-11 Dec-12 Dec-13 Dec-14

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

800,000

900,000

Av. Value per Transaction Deposits as of date (PKR in millions) Av. Volume of Transactions (per day)


20

While early entrants had first mover advantage, relative market share is shifting as new providers enter the market

59

%

27

%

6%

4%

3%

1%

0%

54

%

20

%

14

%

3% 4%

1% 5

%

EASYPAISA OMNI MOBICASH TIMEPEY UPAISA HBL EXPRESS MOBILE PAISA

MCB LITE

SHARE IN NUMBER OF TRANSACTIONS

Dec-13 Dec-14


21

CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETSAGENTSOPPORUNITIES: INCREASING M-WALLET UPTAKE


22

OTC dominates the market

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000


Number of Accounts Deposits as of date

PK

R in

Millio

ns

M-WALLETS

80%

14%

6%

TRANSACTION TYPE (VOLUME)

OTC M-Wallet Agent Liquidity


23

Pakistan lags behind leading countries in uptake of m-wallets in comparison to phone ownership

0

50

100

Kenya Tanzania Bangladesh Pakistan India

mobile phoneownership

mobile walletusage (transaction in last 90 days)


24

Many who do open m-wallets do not use the accounts

22 22

29

42 42 43

EAST ASIA AND

PACIFIC

MIDDLE EAST AND

NORTH AFRICA

SOUTH ASIA LATIN AMERICA AND THE

CARRIBEAN

SUB SAHARAN

AFRICA

PAKISTAN

ACTIVE ACCOUNTS AS A % OF TOTAL REGISTERED ACCOUNTS

This is a common trend, and is seen in mobile markets globally

0

1,000,000

2,000,000

3,000,000

4,000,000

5,000,000

6,000,000


Number of Inactive Accounts

Number of Active Accounts

ACTIVE VS. INACTIVE ACCOUNTS

25

GENERAL PROFILE OF MOBILE MONEY USERS

.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

15

.00

18

.00

21

.00

24

.00

27

.00

30

.00

33

.00

36

.00

39

.00

42

.00

45

.00

48

.00

51

.00

54

.00

57

.00

60

.00

64

.00

68

.00

73

.00

90

.00

%A

GE

AGE (YEARS)

AGE DISTRIBUTION OF MOBILE MONEY USERS

Who are the users of mobile money in Pakistan?

>35

77% are men

41% live in urban areas

70% have a primary education

20% already have a bank account

54% live above the poverty line

72% are aged 35 and under


26A TYPICAL MOBILE MONEY TRANSACTION

AMOUNT

DISTANCE TO AGENT

TRANSPORTATION COSTS

TRANSACTION TIME

TRANSACTION FEE

SUCCESS RATE

OTC Transaction

Mobile Wallet Transaction

Rs. 4214

0.75 km

Rs. 21

26 min

3%

89%

Rs. 5181

n/a

Rs. 0

n/a

0% - 5%

100%


27

OTC users are satisfied with the service

I can have all the services through

an agent, I do not need

31%

I do not need to, I do not make any transactions

15%I do not understand the purpose of this account12%

I never have money to make a

transaction12%

Using such account is

difficult8%

There is no point-of-

service/agent close by

6%

I do not see any additional

advantages to registration

4%

Misc12%

MAIN REASON FOR NOT HAVING AN M-WALLET

47

%

40

%

21

%

6%

RECEIVE MONEY SEND MONEY TO ANOTHER PERSON

SEND MONEY TO ORGANIZATION

OR AGENCY

MISC.

REASONS FOR STARTING TO USE MOBILE MONEY


28

CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETSAGENTSOPPORUNITIES: INCREASING M-WALLET UPTAKE


29

0

100

200

300

400

500

600

700

800

900

0

50,000

100,000

150,000

200,000

250,000


Number of Active Agent Outlets Number of Inactive Agent Outlets

Transactions/Active Agents (in a quarter)

The agent network is growing…

Kenya Bangladesh Pakistan

Exclusivity 87% 44% 34%

Dedication 36% 4% 23%

LOW LEVELS OF EXCLUSIVITY AND DEDICATION

66% of agents are non-exclusive and are shared by a median of 3 providers

58% of exclusive agents are in rural areas

Agents are profitable due to non exclusivity and low operating expenses, however, transactions per day remain low at a median of 8 in comparison to countries like Kenya (46) and Bangladesh (15)Number of Unique Active Agent Outlets (ANA 2014)

Total: 204, 073

97

, 64

2


30

Customer satisfaction with agents is high

52%

46%

1% 0%0%

10%

20%

30%

40%

50%

60%

Verysatisfied

Somewhatsatisfied

Somewhatdissatisfied

VeryDissatisfied

SATISFACTION WITH MM AGENTS (n=85)

40%

34%

32%

22%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45%

Agent was absent

GSM or mobile network was down

Agent system was down

I did not get a receipt

PROBLEMS WITH AGENTS

31

However, the agent network still lags behind regional and global counterparts

18

2

20

9

28 42

30

9

84 1

24

44

1

PAKISTAN BANGLADESH KENYA

ACTIVE AGENT OUTLETS PER 100,000 ADULTS

2011 2012 2013

27

20 89

42

34

7

13

5

13

1

1,0

47

19

9

PAKISTAN BANGLADESH KENYA

ACTIVE AGENT OUTLETS PER 1000 KM 2

2011 2012 2013


32

CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETS AGENTSOPPORTUNITIES: INCREASING M-WALLET UPTAKE


33

New regulations have made it increasingly easy to open a m-wallet account

LEVEL 0 LEVEL 1 LEVEL 2

HOW TO OPEN

ACCOUNT LIMIT

• BVS verified customers can open their MA by dialing string

• Non BVS customers have to visit Franchise

• Instant Registration

• Only CNIC required• No KYC fields are required for

account opening• Instant Registration

• CNIC along with other supporting documents required

• Transaction Limits defined according to customer needs and documentation

• KYC fields must be filled by the customer

• Account instantly registered with level-1 transaction limits, and upgraded within 3 days of document verification

• Day: 50,000 • Month: 80,000• Year: 800,000

• Day: 25,000 • Month: 60,000• Year: 500,000

• Day: 50,000 – 500,000 • Month: 100,000 – 1,000,000• Year: 600,000 – 6,000,000• Max Balance: 300,000 –

3,000,000


34

While only 1 in 4 agents are able to help customers open accounts…

25%

75%

ABILITY TO REGISTER CUSTOMERS FOR ACCOUNTS

Can register accounts Can not register accounts

Only 26% of those who don’t open accounts, view mobile wallets as a threat to their

business

84% of agents who are capable, do open accounts


35

…Biometric verification technology has overcome this hurdle for Level 0 account opening

In Q4 of CY 2014 701,510 new M-Wallet accounts were opened

95%

5%

NEW ACCOUNTS IN Q4

Level 0 Accounts Other Accounts

63%

37%

METHOD OF ACCOUNT OPENING

BVS Other

The Jan-April 2015 SIM re-verification

drive spurred providers to start

remote account sign ups; the results of this

push will be seen in the coming months


36

Opportunity 1: Improving Customer Awareness and Understanding

37

Brand awareness about MM providers is increasing but low, and few people have a full understanding of MM

41

%

36

%

16

%

12

%

6%

5%

5%

10

%

SEND MONEY

TO OTHER PEOPLE

RECEIVE MONEY FROM OTHER PEOPLE

PAY BILLS

BUY AIRTIME TOP-UPS

SAVING G2P P2G MISC

MOBILE MONEY AS PEOPLE SEE ITAWARENESS OF MOBILE MONEY BRANDS

61

%

32

%

30

%

22

%

22

%

13

%

0%

n/a

73

%

46

%

33

%

31

%

29

%

15

%

25

%

14

%EASY PAISA MOB IC ASH OMN I UPAISA T IMEPEY MC B L IT E MOB ILE

PAISAH B L

EX PR ESS

2013 2014

38

Generally banks are perceived as being more trustworthy than mobile money

37

%

19

%

16

%

10

%

9%

31

%

36

%

26

%

29

%

28

%

14

%

22

%

29

%

27

%

27

%

7%

13

%

18

% 19

%

20

%

10

%

10

%

11

%

15

% 17

%

STATE OWNED BANKS PRIVATE BANKS FOREIGN BANKS M-MONEY SERVICES M-MONEY AGENTS

Fully trust Rather trust Rather do not trust Do not trust at all Neither trust nor distrust


39

Being a subscriber to a provider’s parent company, doesn’t mean that people recognize its MM brand

EASYPAISA MOBICASH UPAISA MOBILE PAISA TIMEPEY

TELENOR89% 58% 43% 31% 36%

UPHONE85% 60% 52% 37% 42%

WARID89% 62% 53% 48% 50%

ZONG84% 63% 51% 44% 53%

MOBILINK85% 61% 37% 29% 32%

Most recognized MM service

CEL

L P

HO

NE

PR

OV

IDER

OF

CU

STO

MER

RECOGNITION OF DIFFERENT MM BRANDS

Second most recognized MM service


40

Even awareness levels of OTC users regarding product mix is low…9

6%

95

%

81

%

45

%

29

%

28

%

25

%

25

%

17

%

16

%

12

%

5%

1%

1%

PA Y B ILLS SA V E BUY A IRTIME TOP -UPS

RECEIV E MONEY FROM OTHER PEOPLE

P2G G2P SEND MONEY TO

OTHER PEOPLE

PA Y FOR GOOD S IN A

SHOP

MA KE PA YMENTS

ON CRED ITS A ND LOA NS

INSURA NCE RECEIV E WA GES

D ON' T KNOW

NONE NO RESPONSE

AWARENESS LEVELS OF OTC USERS

41

UnawareAwareness of

what m-wallet is

Understanding of how m-wallet could be useful

personally

Knowledge of how to conduct transactions via

m-wallet

Trial of m-wallet service

Regular use of m-wallet

TIGO IN DRC• Developed a song in partnership with a popular singer explaining MM, how it could be used in different

situations, and how to access the service• Drove up registration 50%

EASYPAISA IN PAKISTAN• Launched an ad campaign explaining mobile money

in 2010• Low uptake of wallets, but continued uptake of OTC

M-PESA IN KENYA• Launched a send money campaign• Only 3% of non-users did not recognize the campaign

after 21 months

TRUE MONEY IN THAILAND• Launched a national ad

attractive only to high income earners

• Alienated a number of potential low income customers

PR

OD

UC

T C

AM

PAIG

N

AW

AR

ENESS

CA

MPA

IGN

KN

OW

LEDG

E C

AM

PAIG

N

(UN

TAR

GETED

) U

SE CA

SE C

AM

PAIG

N

Communication is needed throughout the m-wallet adoption process

WALLET ADOPTION PROCESS


42

Opportunity 2: Circumventing Customer Skill Deficits


43

Mobile phone ownership and capabilities affect m-wallet uptake

80

%

9% 12

%

38

%

32

%

30

%

MOBILE OWNERS ACCESS TO SOMEONE ELSE'S

MOBILE

NO ACCESS

ACCESS TO MOBILE PHONES

Male Female

Make

Calls

Receive

Calls

Send/Receive

Text

Messages

Do everything myself 62% 63% 34%

Somebody helps me with part

of the activity4% 3% 2%

Somebody helps me with entire

activity3% 3% 1%

During FGDs, women revealed key details about mobile ownership: Most do not see their mobiles as personal devices; mobiles are shared with husbands and children

Women have to justify calls and messages to family members

ABILITY WITH MOBILE PHONES


44

0%

10%

20%

30%

40%

50%

60%

70%

80%

Dial a number Add contacts to phone Send a text

DO YOU NEED HELP IN DOING THESE TASKS?

I never do this on my phone Very poorly, always need help Somewhat poorly, often need help

Somewhat well, occasionally need help Very well, never need help

Sending a text message is a relatively more difficult task for individuals

45

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

Very Easy Easy Difficult Very difficult

UNDERSTANDING TEXT MESSAGES

Friends and Family Cellphone providers

Pakistanis find it relatively more difficult to understand messages from Cellphone Providers, vs. Family and Friends

During an HBL experiment with BISP beneficiaries, it became clear that the beneficiaries did not understand HBL

messages which contained both text and numeric information about their

transaction

This phone receipt was not understood

by recipients


46

Moving towards human centered design can circumvent the skills gap

Business Viability

TechnologyFeasibility

Business Viability

TechnologyFeasibility

People Desirability

PRODUCT CENTERED

HUMAN CENTERED

These are examples

of communication of

amount paid that are

more transparent

because illiterate BISP

recipients are more likely

to understand them.

One of the findings of the HBL HCD experiment, was that redesigning products like receipts, can significantly improve

illiterate people’s understanding

47

New User Interface Design innovations may revolutionize the mobile wallet experience and encourage uptake

76.0

28.4

3.3

2.2

Basic Phone

Feature Phone

Smart Phone

Don't Know/Refused

0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0

TYPES OF MOBILE PHONES USED IN PAKISTAN

Globally, smartphone penetration

will increase 1.7 fold by 2017

GRAPHICSUse icons or imagery to overcome

literacy barriers

CONVENIENCELeverage smartphone capabilities to move away from complicated USSD

menus

ENGAGEMENTLeverage social networks and/or gamification to keep customers

engaged, and minimize trust barriers

BEFORE AFTER Smartphone applications, and new products for MM are already present and can be adapted to the Pakistani context. Some key examples are: Globe’s Gcash

(application -Philippines)

Zuum (application -Brazil)

pesaDroid(product)

Mledger (product)

1 2 3

4

7

5 6

8 9

THE MOVE TO SMARTPHONES OPENS UP THE POSSIBILITY OF IMPROVED UI DESIGN BASED ON HCD


48

Opportunity 3: Diversifying Product Mix


49

More Pakistanis have borrowed and saved in the last year, than those who have received or sent remittances

50

%

32

%

25

%

16

%

BORROW SAVE RECEIVED REMITTANCES SENT REMITTANCES

%AGE OF PAKISTANIS WHO HAVE ENGAGED IN THIS FINANCIAL BEHAVIOUR (LAST 12 MONTHS)

50

Yet the product mix offered by all providers remains skewed towards payments

Bill Payments * * * * * * * *

Airtime Purchase * * * * * * *

Money Transfer through Agents * * * * * *

Formal Account * * * * *

Money Transfer to Bank Accounts * * * * *

Donations * * * * *

Salary Disbursement * * *

Life Insurance * * *

ATM Card * * *

Retail Payments * *

International Remittance Transfer *

Ticketing (Airlines, railway etc.) *

Savings Account *

Health Insurance *

Corporate Services other than Salary Disbursement *

Internet Banking *

USING WALLETS ALLOWS PEOPLE TO EFFICIENTLY ACCESS A WIDER PRODUCT MIX

OTC Product Mix

Mobile Wallet Product Mix

Bill Payments

Airtime Purchase

Money Transfer through Agents

International Remittance Transfer

Formal Account*

Money Transfer to Bank Accounts

Donations

Salary Disbursement

Life Insurance*

ATM Card

Retail Payments

Ticketing (Airlines, railway etc.)

Savings Account*

Health Insurance*

Corporate Services other than Salary

Disbursement

Internet Banking

AVERAGE COSTS

Rs. 21

26 min

3%

AVERAGE COSTS

Rs. 0

n/a

0% - 5%


52

Opportunity 4: Promoting Interoperability


53

Success in achieving interoperability remains limited across the globe

Interoperability is defined as “the possibility to transfer money between customer accounts at different mobile money schemes and between accounts at

mobile money schemes and accounts at banks”

- GSMA report on Implementing Mobile Money Interoperability, 2013

INTEROPERABILITY IN PAKISTAN OTC services are available to all customers Mobile accounts are “closed loops” meaning that they are restricted to customers of a particular mobile

operatoro IBFT (Inter Bank Funds Transfer) through 1-Link offers significant potential but is not yet live on all

mobile wallets

54

Recent developments prove that interoperability can spur mobile money use

• “Exponential increase post launch• Widespread acceptance and awareness• High visibility due to press release • Exponentially faster adoption than that of Voucher

transaction”

- GSMA report on Operator’s Journey, Nov 2014

2012 2013 2014

2011/2012: Tigo starts conversations about interoperability

Nov 2013: First bilateral interoperability agreement between Tigo and Airtel signed

Jun 2014: Tigo, Airtel and Zantel announce interoperability agreement

Aug 2014: Tigo and Airtel launch W2W interoperability using ATL campaigns

TIGO/AIRTEL: COMBINED VOLUME AND VALUE OF P2P TRANSACTIONS

2014: Tanzania becomes the “first country to successfully develop and implement standard

business rules for interoperable MFS transactions”

- IFC case study on Achieving Interoperability, 2015

In Tanzania…


55

The Tanzanian case reveals some key ingredients for achieving interoperability

Allow all industry players a voice in creating interoperability rules and

regulations

Have an industry champion

Identify a neutral broker to act as a facilitator

Ensure clarity of definitions across parties

Pilot the initiative prior to commercial launch

Market the new initiative to increases customer awareness

Successful execution based on foundation built in Phase I and II

PHASE I: COLLABORATION

PHASE II: DEVELOPMENT

PHASE III: IMPLEMENTATION


56

Opportunity 5: Digitizing Government to Person (G2P) Transfers

57

Global comparisons reveal the scope for G2P digitization“G2P payments have the most potential to accelerate financial inclusion in the short to medium term as it is easier for government to dictate how it pays recipients than to influence how other parties transact.”

- McKinsey & Company report on Government Payments in Nigeria, 2014

The Kenyan Government has been a huge

proponent of going “cash lite” since 2008. As

of 2013 the value of mobile money

transactions equaled

50.03% of Kenya’s

GDP in the same year.

0.4

%

1% 1

.8% 3.6

% 6.4

%

1.3

% 3.2

%

1.4

% 4%

18

%

BANGLADESH LOW INOCME PAKISTAN INDIA KENYA

USING ACCOUNTS FOR OFFICIAL TRANSFERS (%)

Used an account to receive government transfer

Used an account to receive wages

58

100%

70%

100% 100% 100% 100% 100% 100% 100%94%

30%

100% 100% 100%

6%

B U M U N I C E F B I S P C D C P A R M Y J A W A N S & J C O S S A L A R I E S

A G P R S A L A R I E S P U N J A B P R O V S A L A R I E S

A R M Y J A W A N S & J C O S P E N S I O N S

A G P R P E N S I O N S P U N J A B P R O V P E N S I O N S

N A V Y P E N S I O N S A I R F O R C E P E N S I O N S

F R O N T I E R C O N S T A B U L A R Y

P E N S I O N S

E O B I P E N S I O N S

Cash Digital

A large proportion of G2P payments in Pakistan can be digitized

LEVEL OF DIGITIZATION OF KEY GOVERNMENT PAYORS 2013

Social Protection Cash Transfer7 million beneficiaries

Government Payroll2 million beneficiaries

Government Pension2 million beneficiaries

59

The benefits of G2P digitalization include and extend beyond Financial Inclusion

A 2014 McKinsey study on G2P payments in Nigeria

revealed that 3 distinct

groups will benefit from G2P digitization

20 million direct beneficiaries

US$10-20 million p.a. in additional benefits

US$600-800 million p.a. in additional taxes

US$150-160 million p.a. in additional

revenue

BEN

EFIC

IAR

IES

GO

VER

NM

ENT

BA

NK

S

2important lessons for those using G2P digitization as a way to also spur digital account adoption i iiEnsure a value

proposition for customers

Communicate sufficiently with customers


60

THANK YOU

Documents

Using Mobile Money to Promote Financial Inclusion in Pakistan · In Pakistan, Branchless Banking is characterized by two mobile money 14 delivery models OVER THE COUNTER MOBILE WALLET