Beyond Branch Banking with Mobile Phones Sanjay Poudyal Chief Financial Officer (CFO) Kumari Bank...
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Transcript of Beyond Branch Banking with Mobile Phones Sanjay Poudyal Chief Financial Officer (CFO) Kumari Bank...
Beyond Branch Banking with Mobile Phones
Sanjay PoudyalChief Financial Officer (CFO)
Kumari Bank Limited
“The biggest challenge for developing
economies is to get the banks to the unbanked,
rather than to get the unbanked to the banks.”
- ADB Special Studies
Core Issue
Who are the BOP population?Earnings less than $2 per dayDo not have access to financial resourcesIgnored by formal banking sectorMost vulnerable population – high cost of capital, susceptible to
predatory lending, exposed to risks of carrying cash
BOP Focus
Bank Branches (Per 100,000 People) 4.12
ATMs (Per 100,000 People) 3.40
Credit/Debit Card (Per 100,000 People) 2,000
Mobile Phones (Per 100,000 People) 35,000
Our Inspiration to Launch
Bottom line: Banking services through traditional means have not met the demand
Nepal has one of the lowest formal financial services penetration rates, compared to other countries even in South Asia
In around 75 years of formal banking era, today less than 30% of Nepali population ( population is 28 million) has access to formal financial services
Our Inspiration to Launch• Our continued focus on technology enabled delivery
channel • Empowers us to solve burning issues
Mobile phones are rapidly growing – YoY Growth > 40%
2006 2007 2008 2009 2010 2011 2012 2013 2014
2% 5%15%
21% 25% 35%40%
45%52%
Mobile Phone Users in Nepal
Year
18 million users
10 million users
% of Populatio
n
Our Inspiration to Launch
Why Should we Cater to the Unbanked?It is good for the country Improves access to sustainable financial resources vital for socio-economic
progress
Contributes towards Millennium Development Goals of reducing poverty by half by 2015
It is good for business 70% of the population yet to be tapped into formal banking – growth
opportunity
Brings informal remittance, domestic and international, into the formal sector
It is a good social initiative Services the most vulnerable population – high cost of capital, susceptible to
predatory lending, exposed to risks of carrying cash
Kumari Bank Limited
Leading commercial bank in Nepal
Leapfrog Technology
US based software company with a development center in Nepal
Institutions Behind Mobile Cash
Our sincere belief is that our service carries the promise to change Nepal’s financial services landscape by drastically improving the formal financial services penetration rate
Supports any phone Structured SMS for lowest common denominator J2ME application for java enabled phones allows greater usability
Features Fund Transfer using mobile phones Microcredit disbursements and payments using mobile phones Cash withdrawal and deposit at agent and branch locations Merchant Payment Link to bank accounts
Transfer money to and from bank accounts Transfer from one bank account to another
Prepaid airtime top-up and Utilities Bill Payments Flexible tariff rates Robust and flexible reporting system
Our Offered Solution Features
Successfully launched in 2010 Contractual agreement with two of the largest telecom providers:
Nepal Telecom and Ncell (95% of in country market)
Total users over 16,000 till date Close to 50% of registered members are non-bank customers 200 transactions per day and increasing
What have we achieved?
Total transaction volume till date US$ 900,000Total Deposits US$ 140,000Total Withdrawals US$ 134,000Total Mobile to Mobile Remittance US$ 91,000Bank account to mobile transfer US$ 252,000Mobile to bank account transfer US$ 175,000Utility bill payments US$ 28,000Total Airtime Recharge US$ 43,000
Launch Event on August 2010 First ever Mobile Wallet Launch in the Country
Our Success Story
Payment Solution at the Largest Departmental Store Chain Across Nepal
Our Success Story
VPN Connectivity between the bank and the store makes for an instant transaction experience
Disbursement and repayment of microfinance loans by villagers in Surkhet district through a cooperative In coordination with Oxfam, a British INGO
Our Success Story
Airtime Recharge in remote district of Salyan One of the most poorest districts located in western Nepal Villagers saved from having to walk over 4 hours to top-up prepaid airtime
Our Success Story
Our Success Story
The mBillionth Award 2011 was held in New Delhi, India in July 2011, to honor innovative applications and services excellence in the field of mobile communications.
The summit was sponsored by internationally acclaimed telecommunications giant Vodafone
Of more than 200 applicants from Afghanistan, Bangladesh, Bhutan, India, the Maldives, Nepal, Pakistan and Sri Lanka, 21 were selected as winners in 11 core categories, with Kumari Bank, the sole winner representing Nepal
Won award under the m-Business & Commerce/Banking category
Our Success Story
Won the Manthan Award South Asia 2011 –at an International Summit 2011 held in New Delhi 2 weeks ago
The award was won in the e-business and enterprise category
Out of more than 481 applications from across Afghanistan, Bangladesh, Bhutan, India, Maldives, Nepal, Pakistan and Sri Lanka, 38 were selected as winners in 30 different core categories, with Kumari Bank, the sole winner representing Nepal
We’re only 1% of where we want to be
But….
1%
• We understand that paradigm shifts do not occur overnight• Any strategic view requires a long term commitment
Future of Retail Banking in Nepal Banking 2.0
Low cost mechanism to bring greater access to finance Banks & FIs save on branch costs
Pension, government subsidy and social security disbursement through mobile phones More secure Reduces Fraud Saves tax payers from inefficiency costs
Increases the velocity of money More economic activities with a given money supply circulating at a faster pace
Enhance Population Productivity: 5-30% rise in income for people in countries where mobile wallet has been launched
How can Mobile Banking Help Nepal?
Studies by LBS, the WB, and Deloitte found that every additional 10%
mobile phone penetration adds 0.6%-1.2% increase
to the GDP
Challenges in Mobile Banking“Cash is king” society
Nationwide awareness campaign and training programs is capital intensive
Developing pervasive distribution channel throughout Nepal
Illiteracy (conventional & digital) and resistance to change
The solution has to be rural friendly
Setting up a regulatory framework that allows co-existence of social benefit along with profit potential to the solution providers
Need cooperation not competition among providers to achieve scaleo Joint efforto Interoperability (e.g. ATM Network)
It cannot be a one-way traffic
i.e. bringing rural savings for urban
loans
Customers
Merchants
Agents
Bank
Mobile Banking Ecosystem
Agents are crucial to the success of Mobile Banking.
They are the first interface to customers and they need to be
incentivized accordingly
Agents Key to the Ecosystem
21
Source: CGAP Five Business Case Insights for Mobile Money. April 2011.
How it is likely to evolve
Mostly P2P remittances and pre-paid value
storage
Merchant payments. Payroll, utility bills, P2P,
etc.
Any type of payments and
financial services
1st Year 2nd Year 3rd Year
Service Maturity
•Purchase Air/Bus/Movie Tickets•Disbursement of government pensions and subsidies•Payment of School Fees•Payment of Doctor & Hospital Services•International Remittance•Utility bills Payment – Electricity, Water, Waste
Boundless Opportunities
23
G2P
P2P
Payroll
International and
Domestic Remittance
s
B2B
23
Toward Interoperability
24
Single Player
Initial StrategyOperator or bank ledUsually proprietaryLimited customer reach
One-to-Many
Increased OpportunitiesLarger customer poolIncreasing product diversity
Many-to-Many
InteroperabilityGreatest benefit to customersAny carrier, any bankReminiscent of VISA modelS
ca
lab
ilit
y
Today Future
Low
High
Source: Sevak Solutions. 2008.
The promise is real and achievable Growth is not explosive, at least not until critical mass is obtained Training and awareness drive to increase consumer knowledge and
confidence is crucial Agents are the most important piece of the puzzle Ultimately what drives adoption is how useful your product is to
the people Localization Greater network for the network effect to take hold
From the Trenches
Thank You