Branchless Banking and MFS Global Data: A Survey of Funding Agency Indicators and

Definitions

March 2013

Agenda

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1. Project Scope

1. What is the universe of interest?

2. Publicly-available data on BB and MFS

3. Non-public data on BB and MFS (from funding agencies)

4. What levels of indicators are funding agencies tracking?

5. Focus: Provider-level indicators

Project Scope

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Initial scoping on global supply side indicators in branchless banking (BB): CGAP and other Mastercard Foundation grantees, including the IFC and UNCDF, and other partners such as the Bill and Melinda Gates Foundation and USAID are interested in identifying common supply side indicators -- core indicators to measure business-level progress across a range of models and across countries – and a mechanism to track them.

CGAP conducted an initial feasibility assessment as part of this effort. Specific tasks included: (1) Survey and summarize the definitions of key terms used by the industry and funding agencies for branchless banking and mobile money; (2) Survey and summarize the key indicators for branchless banking and mobile money including, how they are defined and calculated by the industry; (3) Identify which branchless banking and mobile money indicators are generally and reliably available from the industry; (4) Identify where there are significant differences in definitions of key terms or key indicators.

This is very much intended to be a descriptive rather than a prescriptive analysis. This presentation should be read alongside the excel sheet provided (which contains terms and indicators along with their definitions). The AFI MFSWG and CGAP published a basic terminology note for MFS in July 2012, attached as well.

What is the universe of interest?

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Branchless Banking (BB), agent bankingBranchless Banking (BB), agent banking

Mobile Financial Services (MFS)

Mobile Financial Services (MFS)

Digital Digital

• The delivery of financial services outside conventional bank branches, using agents and other third-party intermediaries as the principal interface with customers, and relying on technologies, such as card-reading point of-sale terminals and mobile phones, to transmit transaction details. (source: AFI MFSWG Guideline Note on Terminology)

• The use of a mobile phone to access financial services and execute financial transactions. This includes both transactional and non-transactional services, such as viewing financial information on a user's mobile phone. (source: AFI MFSWG Guideline Note on Terminology)

• A digital account is one where (i) value is stored in digital form (ii) there is no need for paperwork or face to face interaction to initiate some common transactional use cases associated with the product and (iii) in particular clients can initiate a transaction to pay or be paid by a wide range of counterparties without a face-to-face transaction or paperwork. (source: BMGF’s Common Indicators document)

Definition Who tracks what?

Note: BMGF currently will only track mobile enabled accounts as these are the only examples that meet the above definition of digital.

In the financial inclusion world, MFS is a subset of BB. In the financial inclusion world, MFS is a subset of BB.

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Supply Side Demand Side

Deep coverage

Broad coverage

Publicly-available data on the universe of interest: BB and MFS

• Global Findex

• Finscope HH Survey

•Gallup Payment Survey module• FI Tracking Survey (Intermedia)• RCTs

Note: This figure is a representation adapted from Financial Access 2011 and Bill & Melinda Gates Foundation “Measurement Challenge” note prepared for the 2010 Global Savings Forum. The list presented is not exhaustive.

• IMF Financial Access Survey• WB Global Payments Survey

• GSMA Global Mobile Money Adoption Survey (public at the

aggregate level only)

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Supply Side Demand Side

Deep coverage

Broad coverage

Non-public indicators on BB and MFS (funders included in research)

Note 1: This figure is a representation adapted from Financial Access 2011 and Bill & Melinda Gates Foundation “Measurement Challenge” note prepared for the 2010 Global Savings Forum.Note 2: Most of BMGF demand-side surveys are publicly available.

Tools analyzed for study:

• CGAP Monitoring Database (excel-based)

• GSMA deployment tracker and adoption survey

• IFC Advisory Services Operational Portal

• UNCDF Reporting Format and Quarterly reports (excel based)

• USAID Mobile Money indicators sheet (excel-based)

• BMGF-FSP Quarterly reports and Common country indicators (excel-based)

Conception of indicators: How did it happen? (some examples)

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• Industry/Market-level approach: Tracking the size and growth of the branchless banking industry since 2009 (194 BB deployments in CGAP‘s database as of Dec 2012). Indicators include: number of registered and active users, and savers.

• A business-model driven approach combined with a corporate-driven approach (in order to standardize indicators across regions). IFC’s previous and current work with deployments have further shaped indicators that are tracked.

• Developed a conceptual framework outlining a theory of how poor clients get the most benefit from digital financial services. A common set of indicators should address 3 key questions: i) What indicators measure success and positive progress towards our objectives?, ii) When we don’t see progress, what data will help us diagnose which barriers are blocking market growth?, and iii) Which data helps us test our assumptions and refine our strategy?

• Established “mobile money aims” for its program and indicators that help track these aims. Mobile money aims include: i) Increased usage of MFS, ii) increased demand for MFS, iii) conducive MFS system is in place, and iv) conducive legal and regulatory conditions.

What levels of indicators are funders tracking?

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Target for research

Public surveys

or central banks

Not relevant

for research

Limited to a small num of

countries

Observations

Provider and market level indicator categories

Market-level

Market-level

1. Outreach & access

2. Infrastructure

3. Other

Num of bank accounts, wallets, num of mobile subscribers

Num of bank branches, agents, ATMs, POS devices

% of FS providers connected to the platform

Provider-level

Provider-level

1. Outreach and Growth

2. Activity Levels

3. Service Points & Agent Economics

4. Business Health

5. Financial Performance

6. Other

ExamplesExamples

Registered users, OTC users

30-90 days active, balance levels

Num of agents, avg trnx/agent, agent training costs

Trnx volume, trnx segmentation, cost of trnxs

EBITDA margin, opex ratio, commission revenue

Num of FT MFS employees

CategoriesCategories

Note : I have created these categories in order to fit all of the different funding agency indicators into one single framework. All agencies had different categories depending on their objectives/goals.

Provider-level indicators: Outreach & Activity Levels Highlights

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Registered usersRegistered users• Cumulative number of customers that have

registered for the service, regardless of whether they are active. Consensus in that OTC customers should not be counted.

• The universe of deployments vary by funding agency (some only MFS, others all BB)

OTC users OTC users • Number of ppl who use the service without

having a registered account. BMGF and CGAP track this indicator.

• As BMGF only tracks digital, this translates to counting ppl doing money transfers (MT). CGAP counts bill payments in addition to MT.

Note: Exact definitions per agency are laid out in the accompanying excel document.

CUSTOMERSCUSTOMERS

Definition & Consensus Differences

Active users Active users • Number of customer accounts used to

perform at least one transaction in the last 30/60/90 days. Txn cannot be associated w/ registration, balance inquiries.

• BMGF: 30/90 days• IFC: 30 days• GSMA: 30/60/90 days• UNCDF: 90 days

Provider-level indicators: Outreach & Activity Levels (Additional Variations)

11Note: Exact indicators and definitions per agency are laid out in the accompanying excel document.(1) Still to be defined by funding agencies.

CUSTOMERSCUSTOMERS

Customer BalancesCustomer Balances

GenderGender

Rural (1)Rural (1)

UnbankedUnbanked

✓ ✓ ✓

✓ ✓ ✓ ✓ ✓

✓ ✓

✓

Provider-level indicators: Service Points and Agent Economics Highlights

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Service PointsService Points• The total num of physical locations where

subscribers are able to transact. Includes both human and electronic (ATMs) points of service. Tracked by UNCDF and BMGF.

• BMGF has a slighter variation of this: CICO points (cash-in, cash-out points) and disaggregates them by agent, branch, ATM.

AgentsAgents• Any third party acting on behalf of a bank

or other FS provider to deal directly with customers. All funding agencies track agents.

• UNCDF distinguishes between agents and retail agents. IFC distinguishes btw proprietary & non-proprietary agents.

Note : Exact definitions per agency are laid out in the accompanying excel document.

SERVICE POINTS / AGENTSSERVICE POINTS / AGENTS

Definition or Consensus Differences

Service Point or Agent

Commissions

Service Point or Agent

Commissions

• Commissions paid to service points (includes cash-in commissions). Different indicators tracked by BMGF, UNCDF and USAID.

• BMGF: 1) Avg commission earned per agent, 2) agent training cost

• UNCDF: 1) commissions paid (tot), 2) commissions paid to service points, avg.

• USAID: 1) ongoing agent costs/agent/mo, 2) agent acquisition costs

Service Point or Agent

Transactions

Service Point or Agent

Transactions

• Transactions conducted per service point or agent location. Directly tracked or calculated by BMGF and UNCDF.

• BMGF: Avg transactions per agent• UNCDF: 1) Transactions per service point,

2) Total service points balance, 3) Avg balance per service point

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Note: Exact indicators and definitions per agency are laid out in the accompanying excel document.

CUSTOMER TRANSACTIONSCUSTOMER TRANSACTIONS

Cash-outCash-out

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓ ✓

✓ ✓ ✓

✓ ✓ ✓

✓ ✓ ✓

✓ ✓

✓ ✓

Provider-level indicators: Business Health Highlights

P2P transferP2P transfer

International RemittanceInternational Remittance

Bill pmtsBill pmts

Airtime top-ups

Airtime top-ups

Bulk pmtsBulk pmts

Mobile micro-insurance

Mobile micro-insurance

Cash-inCash-in

(Number and value)

• Consensus: Registration, PIN renewals and balance inquiries are not counted as transactions.• BMGF actual indicator under each category is: Median num of txns/client/month

Merchant pmts

Merchant pmts

Includes them in total

trxn num

Includes them in total

trxn num

Includes them in total

trxn num

Includes them in total

trxn num

14Note: Exact indicators and definitions per agency are laid out in the accompanying excel document.

Other Indicator VariationsOther Indicator Variations

Provider-level indicators: Business Health Highlights – Transactions (continued)

• Avg. ratio of num of cash-in and out trnxs to digital trnxs from customer wallets• In-store sales paid from digital account (/value of all in-store sales)• Cost of transactions (USD10 value)• PRODUCTS: Adults w/ <USD2/day paying insurance premiums, with a savings

account and receiving or repaying a credit through a digital account (3 separate)

• PRODUCTS: Number of different products delivered by channel• Number of products used per client

• Cost saved per transaction (by the entity)

• Cost of P2P• Cost of cash-out

15Note: Exact indicators and definitions per agency are laid out in the accompanying excel document.(1) Expenditures to-date.

FINANCIAL PERFORMANCEFINANCIAL PERFORMANCE

Provider-level indicators: Financial Performance Highlights

• EBIDTA Margin

• Opex Ratio for Quarter

• Total ATL Marketing Expenditures(1)

• Total BTL Marketing Expenditures (1)

• Total Agent Commission Expenditures (1)

• Total Agent Training and Monitoring

Expenditures (1)

• Total IT Expenditures to-date

• Operating Income for Quarter

• Cash Reinvested during Quarter

• Operating efficiency (operating

costs/assets) – only for FIs

• Improvement in cost of funding (for

FIs)

• Sustainability of channel (operating

revenue/operating expenses)

To discuss: How should financial performance indicators vary depending on the type of provider (MNO vs bank vs MFI, etc)? To discuss: How should financial performance indicators vary depending on the type of provider (MNO vs bank vs MFI, etc)?

• Fee revenue received

• Sustainability of business (% fee rev

spent on commissions- incl sales to

agents)

• Sustainability of service points (% fee

rev spent on commissions to service

points)

Global Data

Appendix

Financial Inclusion Supply-side Data

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Initiative Description Coverage Frequency Public? (Y/N)

GSMA Global Mobile Money Adoption Survey

MNO-led mobile money implementations surveys. Data on: num of registered, active customers, agents, txn volume across tx types

Global. 52 out of 123 providers surveyed.

Annually Aggregated (Y).Disaggregated (N)

AFI Mobile Financial Services Working Group

Core set of indicators tracking MFS access and usage, perhaps quality. Not a survey. Applicable to MNO-,bank- or third-party-led models.

NA NA Public in Sep 2012 Global Policy Forum

IMF/CGAP/IFC Financial Access Survey

Survey w/ financial supervisors, collecting indicators on access to savings, credit, payment services in banks and regulated NBFIs.

Global. 151 economies.

Annually Y.

WB Global Payments Systems Survey

Survey w/ CB’s providing snapshot of payment/securities settlements. Includes outreach of pmt systems info (ATMs, POS)

Global. Bi-annual Y

Global Financial Inclusion Index (Findex) – WBG/Gallup

18 question (43 variables) survey w/ indicators measuring levels and patterns of use of different financial services. Q on use of mobile phone to send/receive money, or pay bills

Global. 150,000 respondents

Full survey (3 times over 10 yrs) 2 Qs on credit/bank accts yearly

Y

Financial-Inclusion Demand-side Data

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Initiative Description Coverage Frequency Public? (Y/N)

Global Financial Inclusion Index (Findex) – WBG/Gallup

18 question (43 variables) survey w/ indicators measuring levels and patterns of use of different financial services. Q on use of mobile phone to send/receive money, or pay bills

Global. 150,000 respondents

Full survey (3 times over 10 yrs) 2 Qs on credit/bank accts yearly

Y

Gallup Payments Survey module

30 questions attached to Gallup World Poll . Measuring payment behaviors (money transfer, remittances, gov and wage payments, utilities, bills). Qs on channels used (mobile, etc.)

DRC, Kenya, Nigeria, S. Africa, Tanzania, Uganda, Zambia.

Annually Y- email authors. Underlying data available later in 2012

Finscope Household Survey

Consumer survey. Landscape of access measuring transactions, savings, credit and insurance. No Qs on mobile/branchless.

17 countries. SSAfrica and Pakistan

Every 4 yrs? Y