Mobile Financial Services : Perspectives with Agent Networks

Transcription

1 Mobile Financial Services : Perspectives with Agent Networks

2 Discussion Leaders Jordan Weinstock, OpenRevolution Leo Tobias, Grameen Foundation

3 Session Information Introductions Approaching the Business Case Liquidity Management and Agent Incentives Agent Profiles

4 MFS Business Case : CARD Bank

5 CARD MRI Center for Agriculture and Rural Development Clients Served: 2,082,913 Persons Insured: 8,811,450 Branches and Offices: 1,449 Presence in 16 of 17 Regions in the Philippines

6 Nanay Violy

7 rural village

8 market center

9 Nanay Violy Center Meeting MBO CARD Bank Branch

10 Objectives for the Program Improve operational efficiency Improve access and convenience Demonstrate sustainable account and transaction volume

11 Objectives for the Pilot Recommend the manner of integrating mobile technology to CARD Bank s products and services through Matapat Identify an MFS business case including an operational model within the context of improving customer convenience and access to services.

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14 Business Case Operational Model Customer Acceptance Operational Efficiency / Reorganization Financial Model Rollout Schedule

15 Time and cost of making a withdrawal Travel & transaction cost (Php) Withdrawal cost Withdrawal time in Peso Declined aggregate cost MFS saves time: 103 min (116 minus 13) Member s earning capacity: P0.63/min Opportunity cost saving: P0.63 x 103min = P65 Financial cost decrease: P22 0 Control Treatment Total Cost Saving: P65 + P22 = P87 per withdrawal

16 Customer Acceptance 80% prefer MFS to manual system Almost 90% transacted at least monthly

17 Change in time allocation of Account Officers (AOs) No change in total time spent on center meetings Less time on re-loan activities (Client Interview, inventory validation, travel) in MFS centers compared to control centers After controlling for the # of clients processing loan renewals, this difference is statistically significant. Total time spent on field activities over one week, per center, average across AOs

18 Change in time allocation of AOs Composition of activities in center meetings is different between MFS and control centers Potential time saving (30+ min) for AOs in the long term Break down of center meeting activities, per center, average across AOs

19 in PHP Millions Global Projections 30,000 Growth 2,500,000 25,000 20,000 2,000,000 15,000 10,000 1,500,000 5,000 - (5,000) (10,000) ,000, ,000 (15,000) - Assets Deposits Clients

20 MFS Usage SUMMARY: KEY INDICATORS Total Bank customers 1,274,635 1,422,989 1,587,771 1,770,799 1,974,095 Active MM accounts 347,410 1,065,169 1,255,826 1,401,885 1,562,448 % 27% 75% 79% 79% 79% Total Agents 1,985 6,087 7,176 8,011 8,928 Txn per agent per day Txn per customer per month

21 in PHP Millions Mobile Channel P&L (100) (200) (300) (400) Mobile channel revenue Mobile channel fees OPEX Net Channel Income

22 in PHP millions Revenue and Expenses: MFS v NonMFS 5,000 4,500 4,000 3,500 Revenue and Expenses: MFS vs. Non-MFS 3,000 2,500 2,000 1,500 1, Revenue without MFS Expense without MFS Revenue with MFS Expense with MFS

23 Projected Personnel Costs 4,000 3,500 3,000 2,500 2,579 2,447 2,780 2,158 2,982 2,362 3,183 2,594 3,385 2,849 2,000 1,500 1, without MFS with MFS

24 Personnel with MFS 100% 90% 80% 70% 7% 9% 8% 7% 7% 18% 24% 24% 23% 23% 60% 50% 40% 75% 67% 68% 69% 70% 30% 20% 10% 0% MBO Staff Branch Staff Head Office Staff

25 Projected Cost to Income Ratio 100% 90% 80% 70% 76% 77% 78% 80% 76% 74% 74% 73% 81% 74% 60% 50% 40% 30% 20% 10% 0% Without MFS With MFS

26 Thank you.

27 Liquidity Management and Agent Incentives

28 Mobile Money Ecosystem AGENT Cash out via Agent Payment Products 1 Currency Inputs Salary Payment Spending + + P2P B2B B2C 2 3 AGENT Current Account Cash-in via Agent m-$ m-$ Network Effect 4 Loan Remittances Savings Ag Credit SME Savings Products

29 Role of the Agent Promotion and Education Localized advertising, typically through signage and on-premise materials Product education and demonstration Registration Technical capabilities to register new customers (e.g., terminal, handset applications, forms) Know your customer and other regulatory compliance Transactions Transaction assistance for full range of use cases Cash in transactions Cast out transactions

30 Why are agents important? Largest operating expense for an MNO Operating Expense Breakdown Promotions 6% Regulatory Compliance 1% Wages and Salaries (incl benefits) 11% Software Maintenance 2% Agent Network Support (Ongoing) 45% Commissions 24% Overhead 1% Agent Network Support (Initial) 10% Source: GSMA, CGAP, Benchmark data from other markets, OpenRevolution

31 Types of Agent Networks Proprietary Typically owned or franchised by the MNO or financial institution Represents a single mobile money service and product Often is provided technical and financial assistance by the MNO or financial institution Agent can be involved in the sale of other non-mobile money products and services Non-Exclusive Could be independently owned or part of a third-party network Can offer multiple mobile money products and services Often sell other non-mobile money products and services

32 Agent Hierarchy Super Agents Liquidity management e-money inventory Agents e-money inventory Full transaction set Sub Agents Limited transaction set

33 Agent Issues Liquidity Do I have enough cash on hand to meet customer cash out needs? Do I have the necessary resources to procure and maintain adequate e-money inventory? Incentives Are agent incentives and MNO/financial institution incentives align? (e.g., desired transaction types profitable for both agent and entity) Are commission payments timely and sufficient given the complexity and risk of mobile money operations?

34 Liquidity Management What entities in a country typically perform cash management functions? Banks Money transfer organizations Major retail networks What do they have to facilitate cash transfers? Centralized distribution hubs Daily reconciliation Cash requirement forecasts based on point of service history What supporting services do they use to reduce risk? Armored cars Insurance Security guards

35 Agent Liquidity Gap Logistics Management processes Access to cash Accurate transaction volume forecasts Security

36 Agent Incentives Registration Management processes Access to cash Accurate transaction volume forecasts Security

37 Incentives and Agent Behavior What behaviors is the organization trying to promote? Subscriber growth Intra-network transactions Savings What behaviors is the organization trying to discourage? Cash outs Cash ins Fraud

38 How do develop an effective incentive program Align incentives to desired behaviors Provide agents with the support needed to be successful Ensure transparency Pay commissions promptly Test programs to ensure agents cannot game the system