Mobile Financial Services: The Bank of Tanzania learns from the Bangko Sentral ng Pilipinas

January 6, 2012 By Leave a Comment

Alliance for Financial Inclusion - In December 2009, there were an estimated 15 million mobile phones in Tanzania, with 45% of the population having access to a mobile phone. This growth in phone penetration spurred mobile network operators (MNOs) to launch mobile financial services to serve this rapidly growing customer base. At the end of 2009, more than 2.5 million Tanzanians had become mobile payment (m-payment) customers.

Mobile money services in Tanzania developed in a regulatory
environment without a National Payment Systems Act and
existing guidelines for electronic payment schemes did not
provide adequate guidance on mobile financial services.
When MNOs first approached the Bank of Tanzania (BOT) with
proposals for providing m-payment services, the BOT advised
them to partner with commercial banks to deliver these
services.

Mobile money services in Tanzania developed in a regulatory environment without a National Payment Systems Act and existing guidelines for electronic payment schemes did not provide adequate guidance on mobile financial services. When MNOs first approached the Bank of Tanzania (BOT) with proposals for providing m-payment services, the BOT advised them to partner with commercial banks to deliver these services. The role of the partner commercial bank would be to house a trust account in which MNOs would deposit m-payment funds. In this arrangement, the commercial bank (an entity traditionally under the jurisdiction of the central bank) would seek a “letter of no objection” from the BOT that would allow the m-payment service to operate. A company would then be appointed to oversee the account and the BOT would reserve the right to audit or check the trust account.

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BSP raises ceiling on micro-credit

January 5, 2012 By Leave a Comment

Business World - THE BANGKO Sentral ng Pilipinas (BSP) has raised the existing cap on microfinance loans to allow banks to provide more financing to clients.

In Circular No. 744 dated Dec. 28 and posted on its Web site yesterday, the BSP added “microenterprise loan plus” or “microfinance plus” to the types of microfinance loans that banks may extend to their clients.

Whereas microfinance loans are capped at P150,000, the microenterprise loan plus or microfinance plus are capped at double that or at P300,000.

“We created the microfinance plus concept in recognition of the success of a growing number of microenterpreneurs,” said BSP Deputy Gov. Nestor A. Espenilla, Jr. in a text message yesterday. “They need bigger loans.”

Pia Roman-Tayag of the BSP’s Inclusive Finance Advocacy Staff, said the P300,000 limit is still less than what traditional banks offer.

She said those who need the bigger loans have been “largely unserved.”

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No Bank Nearby? No Problem. Cellphone Banking Booms in Developing World

December 14, 2011 By Leave a Comment

Worldcrunch – Mexico City – In the Philippines, a trip to the bank can sometimes take two days – and might require a boat to get there. Such is life in a country that’s made up of some 7,000 islands, not all of which have their own bank branches.

Those who are not willing or able to take an overnight ferry just to pay a telephone or electricity bill can turn instead to a “collector,” someone who makes it his business to go from island to island collecting bills and the money to pay them – all for a commission, of course.

In recent years, however, a third option has emerged: mobile banking. Since 2006, the dominant mobile phone company in the country have been converting cell phones into payment platforms, for the cost of a text message and without the necessity of opening a bank account. It could mean an end to “collectors.”

Filipinos make some 150 million mobile phone banking transactions annually, including money transfers, service payments and subsidy payments. There’s huge room for growth as well – particularly in rural areas. About 40% of the country’s municipalities are without a bank. But almost all Filipinos have a cell phone.

“Electronic money is an opportunity to include a large percentage of the population in a cost-effective way,” says Nestor Espenilla, deputy director of the Filipino Central Bank.

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Smarter than a smartphone?

November 29, 2011 By Leave a Comment

FinanceAsia – Mobile telephone capabilities may have come a long way since the days of the brick-size device, but how much can they really change banking?

Communicating through radio link has come a long way since World War II. With voice calls, text messages, mobile internet access and built-in cameras, today’s smartphone is already a remarkable all-in-one handheld computer — but its potential could be even greater in the developing world.

This is particularly true in banking. Asia’s fragmented payments infrastructure and large unbanked population mean that millions lack even limited access to branch-based banking, but rising mobile penetration is creating new options for person-to-person payments.

“Mobile banking works because the individuals and small businesses in the emerging markets have access to a mobile phone,” said Richard Davies, Asia-Pacific director of Logica’s global products business. “Similarly, in the more mature markets, it would be strange to see somebody who does not own a smartphone.”

Telecommunications service providers have been quick to pick up on this trend. Mobile banking and payments solutions, such as GCash in the Philippines and MPesa in Kenya, have been very successful in the emerging markets. “Banks in Southeast Asia are interested in mobile banking to get ahead of the game and provide additional services for their customers,” said Dean Young, vice president of product management at SunGard’s ambit retail banking business arm.

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The Role of Government in Supporting Mobile Financial Services

September 28, 2011 By Leave a Comment

How can governments effectively support mobile financial services (MFS) expansion?  Over the past ten years, the U.S. government (USG) has provided both direct and indirect support for MFS program development.  Here are some examples of how the USG has acted as an indirect catalyst to support program development and implementation.
USAID has worked closely with and through its host-country counterparts, missions, and implementing partners to establish the legal, regulatory, and political infrastructure upon which two successful branchless banking programs were established: the MABS program in the Philippines, and the MIDAS program in Colombia.
The Philippines’ MABS Rural Banking Program: The Microenterprise Access to Banking Services (MABS) program is a longstanding USAID-supported initiative designed to accelerate national economic transformation and increased financial inclusion by encouraging the Philippines’ rural banking industry to expand access to microfinance services, particularly in rural areas. To do so, the MABS Program assists a network of partner rural banks in the Philippines to expand the provision of financial services to microenterprises, small farmers, and low-income households by providing microfinance technical assistance and training. In turn, the banks develop and improve financial services – loans, deposits, money transfer services – designed for microenterprises, small farmers, and low-income households.
MABS assists rural banks in the development and introduction of innovative products, including mobile financial services.  To date, more than 90 MABS-supported rural banks now manage approximately 250,000 micro-loan borrowers with a total outstanding micro-loan portfolio of more than PhP2 billion (US$46.6 million) and approximately 1.5 million micro-savings accounts amounting to more than PhP 2 billion (US$47.4 million).  These banks have also registered more than 250,000 mobile phone banking clients and have processed more than PhP 12 billion (US$250 million) in mobile banking transactions.

Consultative Group to Assist the Poor -rHow can governments effectively support mobile financial services (MFS) expansion?  Over the past ten years, the U.S. government (USG) has provided both direct and indirect support for MFS program development.  Here are some examples of how the USG has acted as an indirect catalyst to support program development and implementation.

USAID has worked closely with and through its host-country counterparts, missions, and implementing partners to establish the legal, regulatory, and political infrastructure upon which two successful branchless banking programs were established: the MABS program in the Philippines, and the MIDAS program in Colombia.

The Philippines’ MABS Rural Banking Program: The Microenterprise Access to Banking Services (MABS) program is a longstanding USAID-supported initiative designed to accelerate national economic transformation and increased financial inclusion by encouraging the Philippines’ rural banking industry to expand access to microfinance services, particularly in rural areas. To do so, the MABS Program assists a network of partner rural banks in the Philippines to expand the provision of financial services to microenterprises, small farmers, and low-income households by providing microfinance technical assistance and training. In turn, the banks develop and improve financial services – loans, deposits, money transfer services – designed for microenterprises, small farmers, and low-income households.

MABS assists rural banks in the development and introduction of innovative products, including mobile financial services.  To date, more than 90 MABS-supported rural banks now manage approximately 250,000 micro-loan borrowers with a total outstanding micro-loan portfolio of more than PhP2 billion (US$46.6 million) and approximately 1.5 million micro-savings accounts amounting to more than PhP 2 billion (US$47.4 million).  These banks have also registered more than 250,000 mobile phone banking clients and have processed more than PhP 12 billion (US$250 million) in mobile banking transactions.

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