<p>Jennifer Frydrych is a digital financial services enthusiast and an independent consultant on DFS research and strategy projects in francophone West Africa.</p>


Independent Consultant

Jenny  Frydrych

Djitaba Sackho-Patel

Nancy Kiarie

<h2>Why is the Agent SIM Black Market a Concern?</h2>
<h4>Agent, provider, and consumer risks</h4>
<p>When agents begin operations without vetting from the DFS provider, the quality of service is affected, the brand of the DFS provider is compromised, and customers are at risk from unscrupulous agents who are not registered or identifiable in the DFS provider database. When agents obtain SIMs illegally, they do not undergo provider KYC checks, contracting, or training. Nor are they monitored and supported by the provider. KYC checks are required by the Central Bank of the Congo DRC, as an essential practice to ensure exposure to <a href="https://www.microsave.net/files/pdf/RP151_Fraud_in_Mobile_Financial_Services_JMudiri.pdf">risk and fraud are kept to a minimum</a>. The gaps reduce agent (and provider) profitability and add a multitude of<a href="http://www.helix-institute.com/data-and-insights/measuring-risk-agent-networks-what-risks-are-inherent-agency-business-and-how"> risks to the DFS business</a>. As the agent SIM black market grows, the DFS provider loses more and more visibility over the identity of its individual agents, making it harder for providers to ensure the quality of the entire network.</p>
<p>The black market is a phenomenon that must be curtailed.</p>
<h4><strong>Agent sustainability</strong></h4>
<p>An agent who has not been through the official contracting process is unlikely to have a clear overview of responsibilities and duties. An agent who has <a href="http://blog.microsave.net/2015/10/13/training-monitoring-support-necessary-or-an-opportunity-to-cut-costs/">not received official training will struggle</a> to serve clients to the high level of quality that DFS providers require, thus damaging the reputation of both the brand and service.</p>
<p>For example, their ability to manage liquidity is likely to be suboptimal due to lack of training and provider support. Lack of liquidity, in turn, limits the agent’s ability to offer services to clients consistently, and thus will limits commissions and earnings potential, likely making the DFS business financially unviable for the agent in question.</p>
<p>Thankfully, some MNOs in the DRC have already started to take measures to address this issue. Some of the measures that providers are currently employing to curtail the “black market” of agent SIMs include:</p>
<ul>
<li>Linking the issuance of an agent SIM card to the agent in question, after the agent fulfills <a href="http://www.helix-institute.com/data-and-insights/benchmarking-training-and-support-agent-network-management-model">official training</a> and contracting requirements</li>
<li>Deactivating agent SIMs that either have been dormant for a specific time, or whose operational locality does not match with the registered locality</li>
<li>Driving re-registration of black market SIMs. For example, some DFS providers have communicated to all agents that those working with a SIM card that is not registered in their own name cannot reclaim e-money balances if they lose the SIM card.</li>
</ul>
<p>Other measures that DFS providers have employed effectively in other markets include:</p>
<ol>
<li>strengthening agent selection and recruitment procedures to ensure that all agents undergo requisite checks and are equipped to offer services,</li>
<li>regular audits of agent outlets to ensure that all operational agents have been registered,</li>
<li>withholding commissions for agent transactions on unregistered SIMs,</li>
<li>mystery shopping and feedback from customers who use agent outlets to ensure quality of service and identify unscrupulous agents.</li>
</ol>
<h2>Quality vs. Quantity of Agent Bankers</h2>
<p>Finding the right balance between the quantity of agents on the ground and the quality of agents is tricky. Yet it is crucial for a DFS provider to get this right if they are to minimize risks and ensure that the service is sustainable. We believe that three major factors would help ensure a better balance between the quantity and quality of DFS agents on the ground, while also working to eradicate the black market itself. These are:</p>
<ul>
<li>investment in human resources to monitor and support agents,</li>
<li>improved training programs,</li>
<li>the implementation of stricter agent selection criteria and processes.</li>
</ul>
<p>As our research clearly shows, the black market for agent SIMs in the DRC presents significant risks to providers and is likely to stifle the long-term growth of DFS in the country.</p>


The proliferation of rogue mobile money agents selling black market SIM cards in the Democratic Republic of Congo bogs down provision of high-quality financial services. 

Blog Post

“Up until today, I have never received a SIM card from XXX” (a leading mobile network operator). “The agent SIM I use is not mine, it is in the identity of another person, and I bought it from him,” explained Francis Malamu.

Francis is a mobile money agent from Kongo Central in the Democratic Republic of Congo (DRC). His problems with registration came up while we were determining his pathways of becoming a mobile money agent. MicroSave Consulting recently conducted a market research study in the DRC to determine the <a href="https://www.microsave.net/wp-content/uploads/2019/02/190207_Agent-Network-Accelerator-research-report-002.pdf">key trends, success factors, and challenges in the operational management of agent networks</a>. The research comprised 50 in-depth interviews with digital financial services (DFS) agents across the DRC, as well as interviews with key staff from Airtel, Equity, FINCA, Orange, and Vodacom.

In this blog post, we take a deep dive into one of the key findings from the market research study—the reselling of MNO agent SIMs on the black market.

This is not a phenomenon unique to the DRC. In fact, we’ve observed this across numerous markets, usually during the initial stages of DFS industry growth. We believe that DFS providers in the DRC need to address this issue urgently if the sector is to flourish in a way that is sustainable for providers while providing high quality, transformative financial services.
<h2>What is the “Black Market” for Agent SIMs?</h2>
A black market for agent SIMs is created when the original owner of an agent SIM re-sells it for use by an unregistered third party, who will use the SIM to provide DFS services. A special SIM is necessary to enable a person to act as an MNO agent, carrying out cash-in and cash-out transactions, among other services, and reaping the accompanying commissions.

We established that there are two main reasons for the agent SIM black market:
<ol>
 	<li>MNOs generally have a permissive agent SIM card issuance policy, enabling one agent to own many—or even an unlimited number in some cases—agent SIMs. Some of these are then sold (illegally) to people who are keen to become DFS agents.</li>
 	<li>Regulations allow MNOs generally to have agent selection criteria that are less strict than the banking sector. MNOs tend to issue agent SIMs relatively freely to interested parties. Without any real barrier to entry for this work, the perception is that it is an easy job to get and that it will generate income quickly.</li>
</ol>
Unfortunately, this means many new agent SIM owners are underprepared for the job. They lack capital, skills, and sufficient client base, among other factors. Moreover, agents rely on commission earnings: if they do not transact, they quickly become inactive. Inactive agents may choose to re-sell their SIMs to other people who are interested in becoming agents, thus perpetuating the black market.

&nbsp;

Rogue Mobile Money Agents and Black Market SIMs of the DRC: A Barrier to Financial Inclusion

Jeffrey Riecke

Mireya  Almazan

Part two in a conversation with Mireya Almazan and Jennifer Frydrych about the boom in mobile money in the region. 

<em> </em>

<em><a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/09/2015_GSMA_Mobile-financial-services-in-Latin-America-the-Caribbean.pdf"><img class="alignright wp-image-18582" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/07/gsma-lac.png" alt="" width="363" height="513" /></a>GSMA’s Mobile Money for the Unbanked (MMU) program recently released the report ‘</em><a href="https://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/09/2015_GSMA_Mobile-financial-services-in-Latin-America-the-Caribbean.pdf"><em>Mobile Financial Services in Latin America &amp; the Caribbean</em></a><em>,</em><em>’ spotlighting the region’s booming mobile money activity. I talked with the report’s authors, Mireya Almazán and Jenny Frydrych, to learn more about the project. The first half of our conversation, published last week, is available </em><a href="http://cfi-blog.org/2015/07/02/surging-forward-latin-americas-mobile-money-market/"><em>here</em></a><em>. The second half of our conversation follows.</em>
<h3><strong>An enabling regulatory environment, as identified in the report, is one where the regulator has taken a functional and proportional approach that allows banks and non-bank providers to compete, as well as establish different types of partnerships for the provision of mobile money services. What does this means in practical terms, and how has or hasn’t Latin America and the Caribbean (LAC) met these conditions? </strong></h3>
An open and level playing field that allows banks, mobile operators, and third parties to offer e-money is critical for mobile money to succeed. Anecdotal evidence, commercial lessons, and international regulatory principles all speak in favor of opening the market to providers with different value propositions and business models. Best practices are well established at both the regulatory and commercial level to guarantee the soundness of mobile money schemes, as well as the integrity and stability of the financial system.

As of April 2015, six of 19 (32 percent) mobile money markets in LAC have an enabling environment for mobile money, up from only two in 2012 (Nicaragua and Peru). These six include Bolivia, Brazil, Guyana, Nicaragua, Paraguay and Peru. Uruguay also has enabling regulation for mobile money and in fact issued the nation’s first e-money license to Redpago in April 2015; however, as Redpago has not formally launched, Uruguay is not categorized as a "mobile money market" in this report's analysis.
<h3><strong>Along with rules surrounding who can issue e-money, what other regulatory considerations are affecting whether mobile money markets in LAC can thrive?</strong></h3>
Other regulatory considerations affecting whether mobile money thrives in LAC include:
<ol>
 	<li><span style="text-decoration: underline">Minimum capital requirements</span> are set as barriers to entering the financial market - in this case, more specifically, to the electronic money and payments market. The size of the minimum capital required in each country has the potential of shaping the competition of the market. Higher minimum capital requirements could mean fewer companies entering the market and vice versa. We are seeing different approaches within the region: Peru, Bolivia, and Brazil have set their minimum capital requirements a little below the US$ 1 million threshold. Colombia, on the other hand, set it at around US$ 2.5 million. Other countries, like Paraguay and Uruguay, have shown bolder approaches by not setting minimum capital requirements at all. It is still early to predict how this will shape each market, as the regulation in some of these countries was issued very recently and many of the companies aspiring to take part in the e-money market are still in the middle of the application process before the financial regulators.</li>
</ol>
<ol start="2">
 	<li>It is critical for regulators to adopt <span style="text-decoration: underline">know-your-customer (KYC)</span> requirements that are proportional to risks and not unnecessarily onerous for providers and consumers. Simplified and tiered KYC regimes have been embraced in Guatemala, Mexico, Paraguay, Colombia, and Peru. Some LAC regulators have gone an extra step and allow for paperless self-registration. Instead of registering through an authorized agent or point-of-sale, customers can dial a <a href="http://www.cgap.org/blog/what-ussd-why-does-it-matter-mobile-financial-services">USSD code</a> or access a <a href="http://www.gsma.com/personaldata/faqs/sim-toolkit-sat-or-stk">STK menu</a>, and enter basic personal information to set up their mobile money account. Brazil, Colombia, Mexico, and Paraguay allow customers to open their accounts in this manner. This method of account opening is most feasible in markets where a national identity registry exists so that customer information can be verified in real time on the back-end.</li>
</ol>
<ol start="3">
 	<li><span style="text-decoration: underline">Government support for financial inclusion</span> is also a key regulatory consideration. Mobile money can deliver its financial inclusion potential faster when it’s part of a broader comprehensive national financial inclusion strategy. On one hand, setting common national financial inclusion goals allows governments to coordinate and align the different authorities in charge of regulating the various dimensions surrounding electronic payments. On the other hand, national financial inclusion strategies usually include measures designed to accelerate adoption and increase the use of mobile money. Some of these measures can include the commitment of the government to pay official salaries and public benefits using only electronic channels, or a set of special incentives to reduce the use of cash, for example.</li>
</ol>
<h3><strong>Despite strong mobile money growth in recent years, the new Global Findex tells us that roughly half of adults in LAC still don’t have a formal bank account. What’re the next steps needed to ensure that the recent expansion of mobile services continues and that more individuals gain financial access? </strong></h3>
Continued progress on creating enabling regulatory and policy environments for mobile money will be critical for sustained growth in this sector. An enabling environment is certainly not enough, but necessary if the industry is to untap the potential of mobile money in LAC.

Of course, continued investment from the private sector is also a must. In particular, on-going operational investment is needed to strengthen distribution networks and to communicate the value of the service to the target population.

Additionally, the GSMA believes ecosystem development is essential to onboarding new customers and making mobile money accounts more useful and relevant. The mobile money ecosystem can facilitate transactions from different sectors, such as retail, utilities, health, education, agriculture, and transportation  - in addition to offering credit, insurance, and savings. A robust mobile money ecosystem allows customers to make and receive more secure, convenient, transparent, and affordable payments and financial services, encouraging them to keep mobile money in their accounts.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/03/05/the-state-of-mobile-financial-services-an-interview-with-gsmas-jennifer-frydrych/">The State of Mobile Financial Services: An Interview with GSMA’s Jennifer Frydrych</a>

<a href="http://cfi-blog.org/2014/09/22/adopting-digital-financial-services-in-guatemala/">Adopting Digital Financial Services in Guatemala</a>

<a href="http://cfi-blog.org/2015/07/02/surging-forward-latin-americas-mobile-money-market/" target="_blank" rel="noopener">Surging Forward - Latin America's Mobile Money Market</a>

Regulatory Considerations for Latin America’s Mobile Money Market

Mireya Almazan and Jennifer Frydrych discuss factors driving mobile money's expansion in Latin America and Caribbean.

&nbsp;

<em><a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/05/2015_GSMA_Mobile-financial-services-in-Latin-America-the-Caribbean.pdf"><img class="alignright wp-image-18582" style="border: 0 solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/07/gsma-lac.png" alt="" width="331" height="468" /></a>GSMA’s Mobile Money for the Unbanked (MMU) program recently released the report ‘</em><a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2015/05/2015_GSMA_Mobile-financial-services-in-Latin-America-the-Caribbean.pdf"><em>Mobile Financial Services in Latin America &amp; the Caribbean</em></a><em>’, spotlighting the region’s booming mobile money activity. I talked with the report’s authors, Mireya Almazán and Jennifer Frydrych, to learn more about the project. The first half of our conversation follows. The second half of the conversation will be published in the coming days.</em>
<h3><b>One of the headline messages of the new report is that the mobile money market in Latin America and the Caribbean (LAC) is the fastest growing of any region in terms of account ownership. How do the numbers look?</b></h3>
Collectively, the 37 mobile money services in the region account for roughly 15 million registered mobile money accounts and 6.2 million accounts that have been active within the past 90-days. Notably, LAC witnessed a 50 percent growth rate in the number of new registered mobile money accounts between December 2013 and 2014, making LAC the world’s fastest growing region in new accounts. LAC’s users are more active than the global average active customer rate (42 percent of all accounts are active, compared to 35 percent globally). Most encouragingly, there are now five deployments in LAC with over a million registered customers. Each of these deployments counts at least half a million 90-day active customers, and together they cover an extremely diverse set of markets.

The three markets that stand out in the region are Paraguay, Honduras, and El Salvador. These three markets all feature in the top 15 globally for mobile money account penetration (number of active mobile money accounts divided by total adult population).
<h3><b>To date, mobile money has largely been used for airtime top-ups and domestic money transfers (P2P). Is this what we’re seeing in the LAC region?</b></h3>
[caption id="attachment_18590" align="alignright" width="331"]<a href="https://centerforfinancialinclusionblog.files.wordpress.com/2015/07/figure.png"><img class="wp-image-18590" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/07/figure.png?w=490" alt="" width="331" height="266" /></a> (click to enlarge)[/caption]

There are some important differences. Over a quarter of all transaction volumes (the volume of money transacted) in LAC were from ecosystem transactions with third parties—such as bill payments, bulk payments, and merchant payments—up from just 14 percent in September 2012. By comparison, in East Africa—home of the world’s most successful mobile money deployments in terms of uptake, volumes, and transactions—only 6 percent of all transaction volumes over the same period were considered ecosystem transactions. Ecosystem transactions are critical to realizing the full potential of mobile financial services, although they are traditionally the most difficult products to gain traction in a mobile money market.

We’re not necessarily looking at a copy/paste scenario of East Africa’s P2P success, as the figure shows.
<h3><b>What are the factors driving expansion?</b></h3>
Three factors that may be contributing to the growth include:
<ol>
 	<li><span style="text-decoration: underline">Offer of products tailored to use cases that meet customer needs</span>: For example, in El Salvador—one of the most densely populated countries in the region—Tigo Money is gaining traction through bill payments and international remittances. Bill payments are relevant for much of the adult population, and international remittances constitute <a href="http://idbdocs.iadb.org/wsdocs/getDocument.aspx?DOCNUM=38842219">18 percent</a> of El Salvador’s GDP. Identifying customer painpoints in each market is critical to drive services enrollment and usage.</li>
 	<li><span style="text-decoration: underline">Greater investment from mobile money providers</span>: Setting up a mobile money service is extremely hard work, even for mobile operators that already have high penetration rates on voice and data services. As the <a href="http://www.gsma.com/mobilefordevelopment/wp-content/uploads/2014/11/2014_Mobile-money-profitability-A-digital-ecosystem-to-drive-healthy-margins.pdf">GSMA’s profitability research</a> indicates, operators will incur heavy losses in the early years to acquire customers and build a distribution network, and will need to invest in the service for roughly three years before breaking even. We’re beginning to see more patient capital flow to the sector.</li>
 	<li><span style="text-decoration: underline">A gradual regulatory shift to allow non-banks to offer e-money</span>: While LAC is <a href="https://centerforfinancialinclusionblog.files.wordpress.com/2014/11/eiu_global_microscope_2014.pdf">ranked as the lowest</a> region in the world when it comes to regulation of e-money, considerable progress has been made in recent years. Four LAC markets adopted enabling regulatory frameworks between 2012 and 2015. Greater regulatory clarity has contributed to the growth of e-money services, though there’s still a long way to go.</li>
</ol>
<h3><b>The report highlights that LAC hosts a greater diversity of mobile money business models than any other region. What are the models we’ve seen take root in LAC, and what’s influencing these approaches?</b></h3>
Given the diversity of markets in the region, there is no one-size fits all commercial model for mobile money in LAC. At one end of the spectrum are models akin to those in East Africa, where a mobile operator assumes most of the functions in the value chain (e.g. Tigo in Central and South America, Digicel in the Caribbean). At the other end of the spectrum, banks drive mobile money schemes and, in some cases, have even invested in mobile virtual network operators (MVNOs) to one day offer mobile financial services independently of mobile operators (e.g. Bancolombia). Finally, new entities dedicated to mobile payments, including joint ventures between mobile operators and financial institutions or payment processing companies, are an alternative approach to mobile money in the region (e.g. Transfer, a joint venture between América Móvil and Citibank in Mexico; and MFS, a joint venture between Telefónica and MasterCard in Brazil).

The paper divides the region into two different market archetype categories. Type I markets—the poorest countries in the region with relatively low banking penetration rates, such as Bolivia, El Salvador, Guatemala, Honduras, and Paraguay—are characterized by mobile operators taking the lead in launching mobile money services to fill a banking infrastructure gap. Mobile money deployments in these markets tend to resemble those that have been successful in East Africa.

Type II markets—relatively wealthier LAC markets with robust banking sectors, such as Brazil, Mexico, and Panama—have produced a range of integrated partnership models involving operators, financial institutions, retail chains, and others. Banks and retailers are deeply rooted in these economies and are strong contenders to become mobile financial services leaders in their respective markets. Companion cards (stores of value and payment cards to accompany mobile phone use) are common, as well as integration with existing banking infrastructure.
<h3><b>Peru and Ecuador have unique mobile money set-ups. Could you tell us about these models?</b></h3>
In Peru, based on an initiative of the Association of Banks (ASBANC), a group of banks, non-bank financial institutions, and e-money issuers are preparing to launch an open and interoperable e-money platform, with a unified value proposition for consumers. To facilitate the implementation and future administration, these partners have created a new company, Pagos Digitales Peruanos (PDP) S.A. For cash-in and out, PDP will leverage Peru’s existing network of banking agents, in addition to building more service points. Merchants and agents will be fully interoperable, and the goal is to reach about 20,000 shared agents. PDP is fully financed by its partners, who mobilized an initial investment of US$10 million. The project manager has shared that PDP expects to reach five million Peruvians within five years of launching. PDP expects to go live very soon in 2015. Once launched, this multi-tenant interoperable financial industry-led scheme would be a world first.

The Ecuadorian approach to mobile financial services is government-led. The Central Bank of Ecuador (CBE) established itself as the sole e-money issuer in the country. Customers in Ecuador will now be able to open an e-money account at the CBE. Distribution, however, will be a collaborative effort of the public and private sector. CBE will contract with banks, financial cooperatives, credit unions, payment networks, and local mobile operators to build agent networks. This emerging e-money model in Ecuador demonstrates the complex interplay between commercial and government interests.

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2015/03/05/the-state-of-mobile-financial-services-an-interview-with-gsmas-jennifer-frydrych/">The State of Mobile Financial Services: An Interview with GSMA's Jennifer Frydrych</a>

<a href="http://cfi-blog.org/2014/09/22/adopting-digital-financial-services-in-guatemala/">Adopting Digital Financial Services in Guatemala</a>

<a href="http://cfi-blog.org/2015/04/30/aging-in-latin-america-and-the-caribbean-challenge-meets-opportunity/">Aging in Latin America and the Caribbean: Challenge Meets Opportunity</a>

Surging Forward: Latin America’s Mobile Money Market

New markets, shifts in the mobile payments mix, successes with products beyond payments, the main hurdles facing mobile money ecosystems, and more

<em><a href="https://www.gsma.com/mobilefordevelopment/resources/state-of-the-industry-2014/"><img class="alignright wp-image-17531" style="border: 1px solid #000000" src="https://centerforfinancialinclusionblog.files.wordpress.com/2015/03/gsma.png" alt="" width="342" height="481" /></a>Coinciding with this week’s Mobile World Congress in Barcelona, GSMA’s Mobile Money for the Unbanked (MMU) program released its fourth annual ‘State of the Industry Report on Mobile Financial Services.’ CFI spoke with Jennifer Frydrych, Insights Coordinator for the MMU program and one of the authors on the report, about the project’s findings.
</em>
<h3><strong>The mobile money industry has grown rapidly in recent years. Can you bring us up to date with some of the growth figures and dynamics?</strong></h3>
In the past five years, mobile money services have spread across much of Africa, Asia, Latin America, and the Middle East. At the end of 2014, there were 255 live mobile money services across 89 markets, 36 more than in 2013. Mobile money is now available in 61 percent of developing markets globally. In terms of adoption and usage growth, 75 million additional mobile money accounts were opened globally in 2014, bringing the total number of registered accounts to 299 million. Importantly, account activity increased faster than account registration in 2014, and the total number of active mobile money accounts is now 103 million (up from 73 million in 2013). An increasing number of services are reaching scale: 21 services now have more than one million active accounts.
<h3><strong>As of the last State of the Industry report, half of all live mobile money deployments were in sub-Saharan Africa. How has this distribution changed? What were some new or emerging markets of the past year?</strong></h3>
There were 22 new services launches in 2014, of which half occurred in sub-Saharan Africa. The mobile money industry in sub-Saharan Africa continues to grow, and the region still accounts for just over half of all live services globally, and 60 percent of all active accounts. Much of this success can be attributed to East Africa; however we are now seeing exciting growth in mobile money uptake and active usage in West Africa.

In 2014 mobile money was rolled out for the first time in six new markets– Dominican Republic, Myanmar, Panama, Romania, Sudan, and Timor-Leste.
<h3><strong>Historically, airtime top-ups have dominated the mobile money payments mix, followed distantly by domestic P2P transfers. Can you give us a snapshot of the current payment product space and a sense for how this is changing?</strong></h3>
In the month of December 2014, mobile money users transacted a total of 717.2 million times, totaling a value of US$16.3 billion. Domestic P2P transfers and airtime top-ups continue to dominate the global product mix in terms of volume and value, but the fastest growth in 2014 occurred in bulk disbursements, and bill and merchant payments. This reflects an expanding ecosystem of institutional and business users of mobile money. Equally, there was a steep increase in the number of international remittance transactions in 2014, largely driven by the exciting new model of using mobile money as both the sending and receiving channel.
<h3><strong>It’s still early days for mobile credit, savings, and insurance products. What were some of the success stories of 2014?</strong></h3>
As of June 2014, 17 million mobile insurance policies had been issued, representing an annualised growth rate of 263 percent. Life insurance cover remains the most popular mobile insurance offering; however, we see growth in the number of health, accident, and agricultural insurance policies being issued. New commercial and partnership models have helped mobile insurance providers achieve scale. A number of MNOs have partnered with specialist solution providers to develop tailored insurance products for the low-income market segment. In addition, many providers have reassessed their commercial models, and have in many cases employed loyalty and “freemium” models to encourage customer uptake.

When it comes to mobile savings, one interesting innovation in 2014 was <a href="http://www.gsma.com/mobilefordevelopment/financial-inclusion-in-tanzania-tigo-rewards-its-mobile-money-customers">an initiative of Tigo Tanzania</a> which began to return interest generated on the trust account to its users. In September 2014 Tigo Tanzania disbursed US$8.7 million to 3.5 million users, followed by a second disbursement of US$1.8 million in November. Tigo plans to make payments to users quarterly.

2014 also saw a 50 percent increase in the number of mobile credit services. This was fueled in part by new partnerships between MNOs and banks to provide mass-market short-term loans, and by microfinance institutions and start-ups targeting specific segments of the underserved. New credit scoring models using MNO data are also starting to result in lower numbers of non-performing loans compared to traditional lending.
<h3><strong>A mobile money service’s success is contingent upon a plethora of factors, including agents, merchants, competition, interoperability, regulation, and client awareness. What are the main hurdles we’re witnessing today?</strong></h3>
Lack of investment in operations is one factor preventing the development and expansion of mobile money services. A recent MMU paper on mobile money profitability revealed the extent to which providers must invest heavily in operational and commercial infrastructure at the start of the life of the service in order to ensure operational excellence in areas such as customer awareness and distribution to begin the journey towards profitability.

Industry learning gaps still exist around how to reach and serve harder-to-reach customers, including rural communities and female clients.

In a number of markets regulatory hurdles still exist, which can slow the development of the mobile money industry and the benefits it can bring for financial inclusion. Today, regulation is enabling in 47 out of 89 markets where mobile money is available, according to the new report.
<h3><strong>What were the data sources used for this year’s State of the Industry report, and is it a challenge getting ample quality data to assess the industry to the extent desired?</strong></h3>
The report is based on data from GSMA Mobile Money Intelligence on planned and live mobile financial services. The data includes qualitative insights on these services, as well as quantitative information on numbers of users, distribution points, transaction volumes and values, and revenues. This data is updated regularly, primarily using the results from MMU’s annual Global Adoption Survey of Mobile Financial Services, which captured data from 127 respondents from 69 countries in 2014. In addition, for core metrics, MMU uses data modelling to estimate and forecast figures, making information available for the entire industry, rather than only for survey participants. The estimates help to provide a true representation of the scale of the industry both globally and at the market level. This data provides key industry stakeholders–such as regulators, senior executives in telecoms and banking sectors, and international development agencies–with an authoritative overview of the industry and its impact on the financial lives of unbanked and underbanked users.
<h3><strong>Last year’s reports paid special attention to women and mobile money, and mobile money in rural areas. Over the past year, what progress was made in these priority areas?</strong></h3>
Where data is available, it showed that penetration of mobile money services amongst women and within rural areas has increased. Much of this growth may be organic and due to the overall growth of the mobile money registered base, but MNOs that want to drive adoption in the mass market need to adapt their strategies and tactics specifically to tap into underserved segments. Regardless of the level of maturity of their service, there are fundamental indicators mobile money providers can use to improve the visibility of underserved segments, including the collection of demographic data to identify and track usage amongst women and rural customers.
<h3><strong>What’s next from GSMA that we can look forward to?</strong></h3>
Coming up the MMU team will publish a number of publications including:
<ul>
 	<li><strong>Case study on cross-border international remittances</strong>: insights into commercial implementation and user adoption from two early examples in West Africa.</li>
 	<li><strong>Case study on enabling mobile money policies in Paraguay</strong>: this publication will showcase the journey Paraguay has taken towards digital financial inclusion, in particular through the creation of a regulatory framework that enables the mobile money market to increase its outreach and efficiency.</li>
</ul>
<em>The full </em><em>‘State of the Industry Report on Mobile Financial Services’  is now available for</em> <em><a href="http://www.gsma.com/mobilefordevelopment/programmes/mobile-money-for-the-unbanked/insights/industry-reports">download here</a></em>. <em>Over the next few weeks, some of the main findings from the report will be discussed</em> <em><a href="http://www.gsma.com/mobilefordevelopment/programmes/mobile-money-for-the-unbanked/mmu-blog">on the MMU blog</a>. Stay tuned!</em>

<strong>Have you read?</strong>

<a href="http://cfi-blog.org/2014/07/28/mobile-money-sprinters-adapt-to-local-conditions-in-pakistan-somaliland-and-zimbabwe/" target="_blank" rel="noopener">'Mobile Money Sprinters' Adapt to Local Conditions in Pakistan, Somaliland, and Zimbabwe</a>

<a href="http://cfi-blog.org/2014/01/31/mobile-money-in-afghanistan-an-uphill-battle/" target="_blank" rel="noopener">Mobile Money in Afghanistan: An Uphill Battle</a>

<a href="http://cfi-blog.org/2014/04/18/unexpected-benefits-of-mobile-money/" target="_blank" rel="noopener">Beyond On-Ramps and Uptake: Exploring Surprising Benefits of Mobile Money</a>

Jenny Frydrych

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