1. Branchless Banking and Financial Inclusion Michael Tarazi FDIC June 2, 2011

2. Branchless banking may overcome these constraints What are the factors that limit access? Long distances & low pop density High bank costs relative to income Low education & illiteracy Poor product/ channel design

3. Bank Agent Client Branchless Banking: What do we mean? “… delivery of financial services outside conventional bank branches using information and communications technologies and nonbank retail agents.”

4. Bank Client Branchless Banking: Cash-in Client opens bank account (accessible by mobile phone) Agent opens bank account (accessible by mobile phone) 2 Cash-in 3 Electronic value sent 4 Agent account debited Client account credited 11 - + Agent

5. Bank Client Branchless Banking: Cash-out 1 Electronic value sent to agent 2 Cash-out 3 Agent account credited Client account debited - + Agent 3

6. The logic of branchless banking Use existing retail infastructure Use existing deployed technology

7. Any store can potentially be an agent

8. ~28m ~5.7bn ~1m 665k 500k 250k Western Union Bank branches Post offices ATMsPOS Mobile Phone Connections Worldwide points of presence The power of using existing infrastructure

9. Sources: CGAP, Wireless Intelligence 3.3 bil unique mobile owners 1.4 bil 9

10. 2x Sources: CGAP, Wireless Intelligence 10

11. Branch in store $50,000 ATM $10,000 No agent (cashless) $0 Agent with POS terminal $2,000 Agent with mobile $400 Reducing the cost of banking infrastructure Traditional branch $250,000 11

12. The Global Status of Branchless Banking 12 KENSafaricom M-Pesa13.1 TZAVodacom M-PESA6.4 PHLSmart Money4.5 GHAMTN Mobile Money1.8 PAKUBL Bank Omni1.6 SAFFNB1.5 UGAMTN Mobile Money1.5 GHAAirtel (Bharti Airtel) Money1.2 KENAirtel (Bharti Airtel)1.0 PHLGlobe G-Cash1.0 Branchless Banking Implementations 10 of the Largest Implementations

13. Reaching the Unbanked Weighted Average 37%

14. Bank Agent Client Mobile Network Operator Nonbank E-Money Issuers Bank ? Pooled Account

15. Regulatory Issues 1.AML/CFT: Can low-income users meet ID requirements? 2. Agents: Who, what services, who is liable for what? 3. Consumer Protection: Price transparency, recourse, education? 4. Moving beyond payments: interest-bearing, insured deposits?

16. Advancing financial access for the world’s poor www.cgap.org www.microfinancegateway.org