nathan were, finca, uganda, research symposium, effective practices in microfinance and financial...
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Expanding Access to Finance the through Digital Channels: FINCA - MNO Partnership experience.
Nathan WereProgram Manager - Financial Inclussion, Africa
#18 MicroCredit Summit: [Abu Dhabi - UAE 14 – 17, March 2016]
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Video: 2 minutes
https://www.youtube.com/watch?v=P-yh4tTiwMI
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Our Global Presence
In 2015, we reached nearly 2 million clients across five continents and 23 countries.
Mexico
GuatemalaEl Salvador
EcuadorNicaragua
HondurasHaiti
AfghanistanJordan
PakistanNigeria
D. R. CongoUganda
Tanzania
MalawiZambia
Kyrgyzstan
Kosovo
Azerbaijan
GeorgiaArmenia
Russia
Tajikistan
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Case study: Tanzania
The Journey• Launched Mobile
Payments in 2012 with MNO Vodacom.
• 2014 Launched Agency Banking [FINCA Express] with own proprietary agents.
• 2015 engaged an aggregator [Selcom] and integrated with several MNOs [Tigo, Airtel, Vodacom] to launch Mobile Banking.
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Digital Channels - Uptake & Usage
% of Mobile to total # of Transactions
25%
% of Agents to total # of Transactions
35%
% of Tellers # of Transac-
tions to total transaction
39%
# of transactions as a % of total transactions :
January, 2016% of Mobile to
total # of Transactions
26%
% of Agents to total # of Trans-
actions43%
% of Tellers # of Transactions to total trans-
action31%
# of transactions as a % of total transactions : Febru-
ary, 2016
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Lessons learned
Developing partnerships that work
Implications of Digital channels on Cost
reduction
Impact on customer behavior
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1. Developing partnerships that
work
The reality
FIs are always at a negotiation disadvantage when it comes to partnering with MNOs, Aggregators given there sheer size & market power.
FIs may come under pressure to bend down to the demands of the MNO which may dictate the direction of the relationship.
Customer experience may be affected.
What we have learnt.
Do not relegate the management of the MNO-MFI relationship to IT/IS.
Nurture and cultivate the relationship management. Appoint a dedicated resource.
Enter into a Service level agreement with clear service level standards and penalties for non-compliance.
You need a working group of senior team members on both sides to constantly engage and address the issues that crop up.
Understand the decision making structure of the Telco and push for people that can make decisions on the table.
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2. Impact on customer behavior
The reality
Introduction of digital channels will change customer behavior. Typical with FIs that run group lending methodologies.
The channels will potentially impact group cohesion and that in some cases may drives dis-integration of solidarity groups.
What we have learnt
Be prepared for the trade-offs that arise from introduction of the digital channels.
Re-think the value for group meetings beyond payments and collections.
The industry needs to collectively think about the future OF group guaranteed lending methodologies in the wake of digital channels.
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3. Implications of Digital channels on
Cost reduction
Cost per TransactionTeller Feb'15 Nov'15Direct Cost per Txn $0.50 $0.80Indirect Cost per Txn $0.65 $1.03Total Cost per Txn $1.15 $1.83
Agents 11 Agents 46 AgentsDirect Cost per Txn $1.48 $0.43Indirect Cost per Txn $1.73 $0.65Total Cost per Txn $3.22 $1.08
MobileDirect Cost per Txn $0.16 $0.18Indirect Cost per Txn $0.33 $0.47Total Cost per Txn $0.49 $0.66
Weighted Average $1.02 $1.25
Teller, 62%
Agent, 5%
Mobile, 33%
Feb 2015 Channels Mix
Teller, 39%
Agent, 31%
Mobile, 29%
Nov 2015 Channels Mix
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Cost reduction implications: Our
learning
Digital channels only give you a lower cost per transaction when they achieves scale.
For MFIs not in high-growth mode, a strategic shift of transaction activity to branchless channels must be accompanied by a robust plan to decrease cost structure at the branch/teller, or more radically, a plan to cut down or close the branches/tellers completely
On a competition level, traditional brick-and-mortar MFIs must realize that the cost efficiencies from adding branchless channels are not as immediate or readily enjoyable as they may initially seem.
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You can access full case study here:http://www.microfinancegateway.org/library/expanding
-access-finance-through-mobile-payments-lessons-learned-mfi-mobile-network-operator