Technical Innovation for Expanding

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Nov 12, 2013 (3 years and 9 months ago)

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Technical Innovation for Expanding
Outreach:

Mobile Phone Banking in the
Philippines



MELIZA H. AGABIN

Deputy Chief of Party, MABS Program

Presented at the 3
rd

African Microfinance Conference

Kampala, Uganda

August 20
-
24, 2007


Philippines Location:

Microenterprise Access to Banking
Services (MABS) Program

The program assists banks to
develop the capability to
profitably provide financial
services to microenterprises
through technical assistance and
training.


Rural Banks in the Philippines


Wide network coverage: 760 rural banks; over
2,000 branches


Over 50 year history


US$2 billion in assets


Over 5 million deposit accounts


Over 1 million borrowers

MABS Partner Rural Banks

As of June 2007


MABS works with
90

rural banks through
337

branches


Over 165,000 active microenterprise borrowers


Over 390,000 new micro borrowers served since
1998


Over 410,000 new micro deposit accounts


Challenges


Reaching deeper into rural areas without
costly investments in infrastructure


Reducing costs of servicing


Avoiding security risks from robbery,
holdup


Reducing costs to clients


Challenges for Rural Banks to
reach Rural Clients

High Transaction Costs


Transportation Cost


Loss of business opportunity


Security risk





Technology Solution:
Mobile Phone Banking

Technology Solution:

Mobile Phone Banking

To extend low
-
cost banking services to existing
clients and un
-
banked individuals especially in
rural areas.

WHY CHOOSE THIS TECHNOLOGY?

Why Choose this Technology?


External Drivers
:


Rapid expansion of mobile phone outreach


Nationwide coverage


Enhanced Mobile Phone Services


Falling cost of technology


Increased competition


Ability to offer banking services at very low cost

Why choose this technology?



High level of mobile phone literacy among clients



Affordable & widely used



Existence of Mobile Payment Platforms which

,,,



Are safe and secure



Recognized by the Philippine Central Bank



Address Anti
-
Money Laundering Requirements




MABS Partner:

Globe Telecom



Leading mobile phone operator in the Philippines


Increasing focus on the “bottom of the pyramid”;
willing and able to partner with MABS and rural
banks


Handles over 250 million messages/day


Developed
G
-
Cash platform

in 2004


More than 500,000 active users


More than 500 G
-
Cash partners


More than 4,900 outlets


Transactions in 2006 exceeded $700M

Globe Telecom

What is G
-
CASH?

G
-
Cash is the service of Globe telcom that turns a
mobile phone into an electronic wallet.


It is a reliable, accessible and easy way to:


Buy & sell goods and services


Send / Receive remittances locally or from abroad


Pay bills and taxes; school tuition fees


Load cell phone airtime credit


Transfer money from one person’s phone to another

Key Features


Reliable



recognized by BSP as a new payment
system


Secure
-

uses PIN


Safe
-

all transactions are recorded in an electronic
ledger in Globe


Convenient
-

all you need is your cell phone


Fast
-

moves at the speed of text messaging


Easy to Use
-

as easy as sending a text message


Meets AML (Anti
-
Money Laundering Law)
requirements

-

requires all users to register via text
with their personal details

An Opportunity to Use the Platform for
Microfinance


MABS Developed Products and Services riding
on the G
-
Cash Platform


Secured BSP approval of the services


Forged excellent partnership and cooperation
with a local telecom


The road map we followed in developing
Mobile Phone Banking Services for the Rural
Banks

Text
-
A
-
Remittance
(Cash
-
in/
Cash
-
out)

Text
-
A
-
Withdrawa
l (debit
system)

Text
-
A
-
Payment

(loan
collection)

Text
-
A
-
Deposit

Text
-
A
-
Sweldo

Text
-
A
-
Credit

Text
-
A
-
Bills

Payment

We are Here!

“Text
-
A
-
Payment”

Loan Collection

Loan Payment

Transactions clients can do without leaving their business


Text
-
A
-
Deposit”

(Deposit

Taking Service)

Pay Bills

Deposit Money

Bills Payment


Money
Transfer

(Remittance)

“Text
-
a
-
Withdrawal”

“Text
-
A
-
Credit”

Savings Withdrawal

Loan Disbursement

Payroll Services

“Text
-
a
-
Sweldo”

Payroll

Offer Payroll services to staff and

and business clients

WIRE

Text
-
A
-
Withdrawal

Text
-
A
-
Payment

Text
-
A
-
Deposit

Facilitating Mobile Commerce for
Micro and Small Businesses

RURAL BANK POWERED MOBILE PAYMENT ECOSYSTEM

BANK

Market vendor,
tricycle driver, gas
station, restaurant,
suppliers and repair
shops deposit daily
sales thru Text
-
A
-
Deposit

Individual pays
Utility company,
school etc. tru bill
-
pay facility offered
by rural bank

Bank credits utility
company's and school’s
accounts with the
corresponding amount
paid by individuals
through electronic
money

Individual receives
electronic money by
way of Text
-
A
-
Remittance or Text
-
A
-
Sweldo

Individual buys food, pays tricycle fare,
fuel and even buy from the market using
electronic money

Market vendor, tricycle driver, gas
station owner and restaurant pays
suppliers, repair shops etc. thru
electronic money

Utility
Companies

Suppliers


Farmers

Service
Centers

Transport
Operators

Gas
Station

Restaurants

Market
Vendors

Schools

Clients

Benefits:

Banks &

Clients


Increase outreach and client base


Retain clients


New value
-
added services



Capture remittance market


Reduce operating costs


Fast and efficient service


Increase loan officer
productivity

Benefits for Rural Banks

Benefits for Clients


Reduced travel time


Reduced costs


Reduced risk


Convenient


Time
-
saving


Increase sales





Case of Cantilan Bank

Profile

10
-
branch Rural Bank

Motivation

Reduce cost and increase efficiency of loan
collections

Mobile Banking
Solution

Text
-
A
-
Payment

Issue

Lack of Cash
-
In locations

Remedy

Create G
-
Cash resellers via Text
-
A
-
Withdrawal
service

Actual Benefits

For Bank


Time Saving; cost of collection
reduced

Case of Bangko Kabayan

Issue

Lack of Cash
-
In locations

Remedy

Create G
-
Cash resellers via
Text
-
A
-
Withdrawal service

Actual
Benefits

Expand outreach; Reduced
transaction costs; convenient
for clients

Profile

9
-
branch Rural Bank

Motivation

Expand outreach to rural areas

Mobile Banking
Solution

Text
-
A
-
Payment

Case of 1
st

Valley Bank

Profile

16
-
branch Rural Bank

Motivation

Increase deposit base and offer bill
collection services

Mobile
Banking
Solution

-
Partnered with an electric cooperative

-
Offering customers Text
-
A
-
BillPay service

-
M
-
Payment services for local merchants

Actual
Benefits

Able to remotely accept bills payment;
Increase Deposit Balance; Merchants
become new bank depositors

What Users Say






What Users Say






Main Challenges

Lack of Re
-
sellers (Cash
-
in outlets)


Introduced TEXT
-
A
-
SWELDO (salary) service


Banks pay employee salaries and bonuses with G
-
Cash.


Created a critical mass of people carrying G
-
Cash in their
mobile phones, using the technology, and familiar with
different services and benefits


Employees help with promotions.



Main Challenges

Still, rural re
-
sellers are lacking


Text
-
A
-
Withdrawal (TAW) service developed so bank
depositors can withdraw savings remotely, and be
G
-
Cash re
-
sellers.


Unique business benefits to re
-
seller

1% fee earned
is more than the interest rate on bank deposit; no
-
fee transaction with bank; no hassle withdrawal in
seconds


Main Challenges

Marketing to convince more people to embrace the
technology and use the services
.


Eco
-
system rollout
: MABS work with rural banks to train
and accredit merchants and shops to accept G
-
Cash in
payment for goods and services.


Telecom co
-
branding with partner rural banks

for
marketing materials


Telecom support for merchandizing materials
, like
tarpaulins and standees promoting G
-
Cash services.


Main Challenges

Training and reaching more users, overcoming
initial fear of USE technology and SECURITY of
their money.


Whether it is the bank, the merchant, the end
user, presenting the unique benefits helped.


Globe offered 10% discount on pre
-
paid airtime
load using G
-
cash; opportunity to earn; frequency
of use establishes G
-
Cash security, ease and
convenience.


Updates and Future
Direction

Volume of Transactions Through
Accredited Rural Banks (as of June 2007):

Accredited Rural Banks

37

Accredited Bank
-
Branches

287

# of Employees (
Receiving salaries & benefits
through Text
-
A
-
Sweldo (TAS)

2,484

# G
-
Cash Transactions (cumulative)

110,000

Amount G
-
Cash Transactions


in Pesos


-

in USD

PhP380 M

USD 7.6 M

Ecosystem Roll
-
out (# of merchants
-
accredited by rural banks)

145

New Developments and Future Directions of
Mobile Phone Banking and Mobile Commerce


Text
-
A
-
BillPay (through rural banks) has been piloted
and ready for rollout


Activating more G
-
Cash Resellers to serve Text
-
A
-
Payment clients


Continuous development of G
-
Cash Ecosystem in the
rural areas to increase the use of e
-
money especially
in commercial applications


Continuous Pilot testing of the other mobile banking
services to model cost effective ways of reaching
more and more people in areas farther away from the
bank.

New Developments and Future Directions of
Mobile Phone Banking and Mobile Commerce


Developed a Mobile Banking Website
(www.mobilephonebanking.rbap.org)

as information
portal particularly for rural banks, its clients, money
senders, and the cyberworld in general


Continuous Support and Training
-
Workshop on Mobile
Phone Banking


Text
-
A
-
Credit (line) manuals and procedures

development on
-
going


Development of mobile phone banking system to
automate G
-
Cash transactions


This is the road we’ve traveled so rural
banks can reach more people farther away,
faster, cheaper, and more efficiently.

Text
-
A
-
Remittance
(Cash
-
in/
Cash
-
out)

Text
-
A
-
Withdrawa
l (debit
system)

Text
-
A
-
Payment

(loan
collection)

Text
-
A
-
Deposit

Text
-
A
-
Sweldo

Text
-
A
-
Credit

(Line)

Text
-
A
-
Bills

Payment

We are Here!

TEXT A MONEY REMITTANCE

TEXT A SWELDO

TEXT A PAYMENT

TEXT A DEPOSIT

TEXT A WITHDRAWAL


And this is the roadmap a bank in a remote area

in Mindanao Region is following.

The goal is to turn the rural folks’ mobile

phones into a virtual ATM.


TEXT A LOAN PROCEEDS

Thank You


Email:

jowens@chemonics.com

apetalcorin@chemonics.com

m.agabin@rbapmabs.org


Websites:

www.rbapmabs.org

www.mobilephonebanking.rbap.org

www.youtube.com/RBAPMABS