Our Woman in Milan: Observations on the Intersection of Mobile Money and Regulation

> Posted by Susy Cheston, Senior Advisor, CFI

The Financial Inclusion 2020 campaign at the Center for Financial Inclusion at Accion is building a movement toward full financial inclusion by 2020. Accordingly, this blog series will spotlight financial inclusion efforts around the globe, share insights coming out of the creation of a roadmap to full financial inclusion, and highlight findings from research on the “invisible market.”

Hearing that Bill Gajda was springing for dinner in Milan, our intrepid consultant Loretta Michaels volunteered to go represent us there, and to swing by the NFC & Mobile Money Summit while she was at it. Bill is not only Visa’s Head of Global Mobile Products but also Chair of the Technology-Enabled Business Models Working Group for our Financial Inclusion 2020 campaign, and he’s been a terrific leader. GSMA’s Seema Desai—GSMA is the Summit’s organizer—is another valued member of that group, giving us another good reason to spring for the airfare. Above all, the meeting fits one of our theories of change, which is that financial inclusion will advance if regulators and technology providers, as well as other stakeholders, understand each other’s perspectives better. As it does every year, the GSMA convened decision-makers from both financial regulatory authorities and mobile network operators (MNOs) to discuss regulatory issues around digital money and financial inclusion.

We hear the agenda was good, and the side conversations over coffee were even better. Here are a few observations from Loretta’s quick recap of the meeting:

  • Mobile money implementations continue to grow, but not at the speed that most operators would like, as no one’s yet been able to replicate Safaricom’s success. A lot of focus these days is on increasing the activity rates of users, rather than just focusing on signing up new users alone. Most transactions are still P2B (person to business), such as airtime top-up or repaying MFIs, and operators continue to look for new use-cases for their customers, particularly around being able to pay merchants and expand retail relationships.
  • NFC (Near Field Communications) activity is primarily focused on developed markets, but it’s interesting to note that over 1 million NFC-enabled Android devices are shipping per week these days; considering that Android is becoming a leading operating system in developing markets makes me wonder whether this technology won’t start landing there as well (I know that Google has already launched an NFC-enabled bus prepaid card in Nairobi, called Beba).
  • The three topics that the Technology-Enabled Business Models Working Group chose to focus on (interoperability, regulation, and customer data) were all key issues in the presentations and discussions at the Summit, which was interesting and satisfying to see. I’m very confident that we’ve honed in on the main concerns of the key stakeholders in this space.
  • One interesting new implementation to watch is mBank, a joint venture of Planet Finance and Smart Communications in the Philippines. They launched nationally three weeks ago, after some initial piloting in selected areas. They’re offering MFI services via Smart’s retailers, and so far they say they’ve seen a less than one percent default rate while 95 percent of borrowers have repaid on time. (The mBank platform is being provided by Experian MicroAnalytics, which is offering an interesting platform for linking banks and mobile operators.)
  • The “Leadership Forum” after the conference was largely for regulators, donors, and some operators. The day’s agenda focused on business models, regulation (including a FATF* representative), and a very interesting session on data analysis and geo-spatial mapping, with the Gates Foundation presenting some of the output of research they’re doing now on data gathering for policymakers and service providers. Key messages here were the importance of data for measuring not just adoption, but also access, usage, and quality, and being able to use that information to measure the impacts of regulation, supervision, product design, and business models.  Needless to say, the regulators were very intrigued.

For more information on Financial Inclusion 2020, sign up for campaign updates.

*FATF is the Financial Action Task Force on money laundering.

Loretta Michaels specializes in strategic planning and new venture development, implementation of market strategies and regulatory support for startup-mobile payment providers, with a particular focus on developing markets. While serving as a Consultant to the Center for Financial Inclusion and an Advisor to the Consultative Group to Assist the Poor (CGAP), she is also a partner & co-founder of HMS Wireless.

Image Credits: GSMA; MIT

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