Monday, August 10, 2015

A bank is a number one player in any sort of financing The out of 45million people, 27.9% leave in urban, 72.1% are in rural. The current banked community in the country, (13.9) %: 17.9% male, 10.1 % female (2013);  Only 6.8% rural community use banking services as compared to 27.6% urban  78.6% of formally employed people use banks, 4.9% subsistence farmers use banks  Sources of Income: Salary 7.2%, Own business 22.4%, Agriculture 36.4%, dependents = 22.9% Monday, August 10, 2015

 29.6%=Insufficient money (perception, fact: 28%, 84 % (rural) live below poverty line)  Minimum balance =21.0% (monthly fees: psychology of the poor keep, protect)  Banks are too far = 12.8%  Does not know how to open a bank account = 6.3% (illiteracy = (20-30)%)  Does not understand benefits =4.2% Monday, August 10, 2015

 Worry of failure to pay back = 37.5%  => Business models: when does a farmer default? Community banks know better!  No need to borrow money = 35.2%  (You borrow to grow – no growth in subsistence farming)  Don’t believe in borrowing = 8.0% Monday, August 10, 2015

 Scale down: the only way to get closer! But…business case?  Use Technology: Use of payment channels like ATMs, mobile and Agency banking is key….business case?  Share: Economies of scale & synergies….YES  Financial Education: Increase financial literacy levels  Community based financial institutions are very key to rural financing: Community Banks, MFIs, Village Community Banks (VICOBA), SACCOS Monday, August 10, 2015

 More than 70% of all payments are made through non bank instruments ◦ The right agent banking model must address the following challenges ◦ Increase the banked community ◦ Address agent liquidity challenges ◦ Keep the bank-customer relationship positive ◦ Help to raise both deposit and loan portfolios ◦ Increase bank footprint ◦ Have business proposition: both the bank and the agent Monday, August 10, 2015

 Infrastructure (road network, communication)  Illiteracy  Business challenges: ◦ Population Dispersion These make rural business propositions challenging Solution: Provide simple, shared solutions to create economies of scale. Monday, August 10, 2015

 The trend is towards convergence and sharing  Sharing infrastructure, reduces cost  Enriches product provision  Facilitate cross-institution payments  Creates numbers needed for rural business viability Monday, August 10, 2015

 To address all these challenges, in year 2006, six banks started a Consortium of banks in order to establish a shared infrastructure for provision of ATMs and related electronic payment services (POS, Mobile, etc)  The name Umoja, in this context stands for Unity, Togetherness  Ownership: Owned by member banks  Due to increase in number of members, The Consortium transformed its governance structure from Consortium to a Company, limited by shares. Monday, August 10, 2015

 Membership: 27 member banks (Community and commercial banks)  ATMs: Around 200 ATMs  Coverage: Country coverage across the mainland and Zanzibar (Unguja and Pemba)  Transaction channels Currently:ATMs, Mobile, Agency banking To be introduced: Internet All services (to be) introduced in a shared environment Monday, August 10, 2015

PHASE I Cash withdrawal Balance enquiry PIN change Mini statements Same card holder accounts transfers PHASE II  Inter-bank/Inter-card Transfer  Card-less withdraws  Shared Mobile banking  Shared Point of sales  Shared Agency banking  Cross -bank beneficiary payments  Online Airtime Recharge  Utility Payments  Subscription Services  Internet Banking  Regional and International Integrations Monday, August 10, 2015

 UmojaSwitch is owned by banks but it is not a bank  Banks within UmojaSwitch Compete while Cooperating  New banks have equal chances of becoming owners  Banks participate as shareholders or non shareholders Monday, August 10, 2015

UmojaSwitch has gone miles

Monday, August 10, 2015 UmojaSwitch is now an East African Network

Monday, August 10, 2015