Liquidity Management for MTN Mobile Money

Transcription

1 Liquidity Management for MTN Mobile Money

2 What is it? Also referred to as Float Management Float/Liquidity is the stock item that Mobile Money agents hold Liquidity (float) is in 2 forms, electronic form as e- value [e-money or Mobile Money] & cash referred to as cash float Liquidity Management for an agent is simply the process that entails having cash (float) and electronic money (float) when customers ask for it 2011 Mobile Telephone Networks. All rights reserved. 2

3 Objectives: Ensure sufficient stock of both cash & e-money in order to:- Effectively & efficiently serve all customers Improve customer experience & customer service at agent outlets Enable agents to see the value proposition of the business - grow profits for agents Increase revenue of MTN through facilitating value transactions 2011 Mobile Telephone Networks. All rights reserved. 3

4 Typical Agents day: At the start of the day, an agent will normally have e-money in the phone and cash for transactions: In the course of the day and having undertaken transactions (deposits & withdrawals), the e-money or cash balances will be depleted - diagram in next slide illustrates this 2011 Mobile Telephone Networks. All rights reserved. 4

5 Typical Agents Daily Transactions: Let s say you start the day with UGX 1m in cash & 1m in Mobile Money Cash Mobile Money Total Start 1,000,000 1,000,000 2,000,000 Pays out cash 50, ,000 1,050,000 2,000,000 Receive cash 60,000 from a customer 1,010, ,000 2,000,000 Receives cash 70,000 from a customer 1,080, ,000 2,000,000 Receives cash 800,000 1,880, ,000 2,000,000 Receives cash 200,000?????? In the above scenario, it will not be possible for the agent to take the 200,000 since he does not have sufficient mobile money (only has 120,000) to deposit into the customer phone, hence the need for liquidity management (float requisition or rebalancing) 2011 Mobile Telephone Networks. All rights reserved. 5

6 Components of Liquidity Management: Initial Float Requirements = Upfront capital Float Planning Rebalancing of Float Float Monitoring Evaluating Liquidity Levels Transaction Targets 2011 Mobile Telephone Networks. All rights reserved. 6

7 Initial Float Requirements: Entails upfront capital required to start the business Sufficient cash on hand and electronic money Pre-determined by MTNU = UGX 1m cash & 1m e- money Upfront capital requirement set based on (1) expected average number transactions & (2) expected average value of transactions The pre-determined value is only a minimum, agents encouraged to invest more Optimal amount of capital required depends on factors such as location of agent, population density, number of other agents, seasonal payments, etc 2011 Mobile Telephone Networks. All rights reserved. 7

8 Float Planning: Float Planning 1.5x stock rule A scientific & proven stock management tool Process used to pre-determine how much float one requires on a day-today basis in order to effectively serve customers What is the 1.5x stock rule? This works on the premise that an agent needs to have 1.5x (one & a half times) previous days outflows [cash or e-money], in stock, to effectively serve customers on the next working day Example: If today, Agent A pays out (withdrawals) a total of UGX1,000,000 & facilitates (deposits) worth UGX 2,000, 000; he will need to have cash=1,000,000 x 1.5 = 1,500,000 the next day in order to effectively serve customers - The same applies for e-money = 2,000,000 x 1.5 = 3,000,000. So he needs to ensure his phone has this 3m to enable trading the next day 2011 Mobile Telephone Networks. All rights reserved. 8

9 Float Planning: Case for the 1.5x stock rule Ensures float levels are maintained to handle any unexpected surge or demand for float Takes care of seasonality's like festive seasons Efficient use of resources by ensuring only the right type of float is maintained Helps reduce risk by ensuring there are no unwarranted excesses being held 2011 Mobile Telephone Networks. All rights reserved. 9

10 Float Rebalancing: Float Rebalancing Refers to the process of re-stocking either cash and/or e-money based on requirements Rebalancing requires one to sell or purchase electronic value; converting cash into e-money and/or e-money to cash Converting of cash & e-money is done either through Stanbic Bank or designated Super Agents Some Agents may require daily re-balancing Super Agents provide immediate conversion & charge a minimal fee; Stanbic Bank does not charge but it may take sometime for the transaction to be effected Proper rebalancing enhances levels of customer satisfaction Rebalancing may require physical transportation of cash by agents The less money agents have, the more frequently they will need to rotate (do rebalancing); and this may have a negative impact on their revenues Agents with multiple outlets can rebalance within each other (master agent model) 2011 Mobile Telephone Networks. All rights reserved. 10

11 Float Rebalancing Options: Float Rebalancing can be done via three channels:- Stanbic Bank holds the MTN escrow account for Mobile Money Super Agents organizations appointed by MTN to facilitate float purchase and includes mainly financial institutions and some dealers Master Agent an organization with a head office controlling a number of related outlets and hence have the ability to move float within outlets Channel Advantages Disadvantages Stanbic Bank No charges for buying mobile money Takes 24 hours to buy or sell float Limited number of branches countrywide Super Agent Instant purchase of float (both e-money & cash) Flexibility for rural agents that may not require bank account or head office intervention Reduced cost of accessing banking services A large network of Super agents (150+) Charged for float purchase Master Agent Efficient float management Occasional delays due to demand from numerous outlets (limited capital investment) 2011 Mobile Telephone Networks. All rights reserved. 11

12 Evaluating Liquidity Levels Agents must understand the varied liquidity needs in the markets they operate in MTN assists agents by evaluating the various markets to guide the team on the ground and agents accordingly It requires personnel in the office on the system to monitor and communicate to the team on the ground On the ground, the team also needs to physically verify and monitor both cash & e-money availability This is recorded using a monitoring tool to ensure agents adhere to set standards In rural areas mostly, more cash is required than e-money; however in some rural centers more e-money may be required as opposed to cash 2011 Mobile Telephone Networks. All rights reserved. 12

13 KPIs for Agents: Agents provided quarterly targets focusing on customer acquisition, number of transactions & transaction values Transaction values target derived from number of transactions vs. average value of transaction (e.g., if current average value of trx for entire MM is 30,000 UGX, multiply this by average number of trx (e.g. 40 tx per day per agent) to get transaction value, (40*30,000) = UGX 120,000 per day [multiply by 25 working days to get monthly target] Targets increased monthly/quarterly based on overall business %age growth (taking into consideration business projections too) Targets to be given to agents immediately they are recruited to focus them on the business 2011 Mobile Telephone Networks. All rights reserved. 13

14 Float Monitoring: Minimum float levels established & must be maintained Regular visits and checks by MTN staff to ensure desired float levels are maintained Online monitoring undertaken at the back office to compliment the above Daily/hourly/weekly exercise is required to raise red flags on underperforming agents It requires personnel in the office on the system to monitor and communicate to the team on the ground On the ground, the team also needs to physically verify and monitor both cash & e-money availability Use of float monitoring tools by the Sales team to effectively align agents 2011 Mobile Telephone Networks. All rights reserved. 14

15 Float Monitoring Tools 1. Liquidity Management Form Captures the monthly targets for agents, daily float requirements based on 1.5x rule Filled in by agent (handler) on a daily basis Reviewed by MTN sales staff on each visit Helps align agent to meeting the set targets and informs whether he s on track 2. On Premise Sheet Captures general business status Filled by MTN staff at every visitation Any issues raised captured and timelines for resolution agreed upon Document left at Agent s premises 3. Off Premise sheet Filled daily and submitted weekly; justifies provided route plan Captures general business status for a TDRs/Area Reps/RAMs area Additionally, captures specific issues regarding the region which is then captured on CKW toolkit 2011 Mobile Telephone Networks. All rights reserved. 15

16 Float Monitoring Tools 2011 Mobile Telephone Networks. All rights reserved. 16

17 Thank you.