The VodafoneCR dialogues

The VodafoneCR dialogues

The VodafoneCR dialogues

economic empowerment through mobile

The VodafoneCR dialogues

The VodafoneCR dialogues

The VodafoneCR dialogues

ContentsIntroduction 01

Mobile phone banking and low-income customers: EvidencefromSouthAfrica,byCGAP 02

A sense of balance:Asocio-economicanalysisofairtimetransferservicesinEgypt,byForumfortheFuture 05

Mobile-enabled transactions for the base of the economic pyramid:Abriefreviewofthe2006state-of-play,bytheWorldResourcesInstitute 11

ThisseriesofpapersTheVodafoneCRdialoguesexploreskeyissueswefaceinmanagingourrelationshipswithsociety.Ouraimistoconsidernewideasandstimulatedebate.

IfourCRreportfocusesonourmostmaterialissues,theVodafoneCRdialoguesexplorethemindepth.Theyalsoextendourengagementprogrammebecauseweinvolveexpertsandstakeholdersoneachissueinordertoenrichthedebate.

TheVodafoneCRdialoguescovertopicsthatarespecifictothetelecommunicationsindustry(suchasprivacyoraccessibility)andalsothosethatreflecttheprocessesofacorporateresponsibilityprogramme(suchasstakeholderengagementorassurance).Weaimtofullyexploretheseissuesandthereforevaluegreatlytheopinionsofothers.

Wewelcomeyourthoughtssopleasesendusyourcommentsorideasto:

responsibility@vodafone.com

Wewouldliketothankthefollowingorganisationsfortheirhelpinproducingthispaper.

VodafoneGroupPlcEconomicempowermentthroughmobile

Introduction

Introduction WelcometoourthirdCRdialogue,oneofaseriesofpapersdesignedtoexploreissuesthatarespecifictoourindustry(suchasprivacyandaccessibility)andalsothosethatreflectapproachestocorporateresponsibility(suchasstakeholderengagementandassurance).Ouraimistoshareourlearningsandthelearningsofotherswithaswideanaudienceaspossibleandtoprovideaforumtoconsidernewideasandstimulatedebate.Wewelcomeyourthoughtsandactivelyencourageyourinvolvementinthediscussion.

Webelievethatthemobileindustryhasgreatpotentialtogeneratepositivesocialandeconomicdevelopmentparticularlyforindividualsinthedevelopingworld.IndeedtwoyearsagotheoverwhelmingamountofevidencearoundthisresultedinourfirstSIMreportwhichoutlinedthebroadimpactthatmobilephoneshavehadindevelopingcountries.Sincethenthedebatehasmovedforwardandthepotentialformobilestoactasconduitsforbankingservicesisnowbeingexplored.

VodafonehasbeeninterestedinmobilebankingandmicropaymentsforsometimenowandoursuccessindevelopingM-PESA,amicropaymentsolution,istestamenttoourlong-termcommitmentinthisarea.M-PESAhasbeendevelopedasapartnershipwiththeUKDepartmentforInternationalDevelopment(DfID)andisexpectedtolaunchinmarketsacrossAsiaandAfricashortly.

Itisclearfromthecombinedresultsofthethreereportsoutlinedinthispaper,thatthepotentialformobilebankingtoassistpeopleonlow-incomeisenormous.Ifsuccessfullymanagedwehopeitwillhaveadramaticandpositiveeffectonthelivesofpeoplewhocurrentlylackaccesstotraditionalbanks.Thisiswhywesupportknowledgesharingandwanttoworkwithotherstoexplorenewwaystoreachthosewhoneedtheseservicesmost.

TheCRdialoguebeginswithasummaryofarecentlyreleasedstudytitledMobilephonebankingandlow-incomecustomers:EvidencefromSouthAfrica.IwouldliketotakethisopportunitytothanktheConsultativeGrouptoAssistthePoor(CGAP)foragreeingtosharethisstudy,whichwasdesignedbyCGAPandproducedthroughapartnershipbetweenCGAP,theUnitedNationsFoundation,andtheVodafoneGroupFoundation,withimportantcontributionsfromSouthAfricasFinMarkTrust.ThestudyshowsthatpoorpeopleinSouthAfricaareusingmobilebankingservicesandvaluethemhighly.Italsoidentifiesthechallengesinbringingmobilebankingtomorepoorconsumers,includingtheneedtobetterunderstandpoorpeoplesperceptionsofbanking,technologyandmobile-banking.

ThesecondreportisasummaryofourworkwithForumfortheFuturetounderstandthesocialandeconomicbenefitsofaspecificproduct,AirtimeTransfer,whichhasbeenwidelyavailableandusedinEgyptsinceSeptember2004.Thekeylearningfromthiswasthat,inadditiontotheeconomicbenefitthatsharingairtimebrings,thesocialbenefitisalsoconsiderable,particularlyforfamilies,whichareoftenseparatedforeconomicreasons,andwhomightotherwisebeunabletokeepintouch.

Finally,wehaveaskedtheWorldResourcesInstitute(WRI)tooutlinethevarietyofwaysthatmobiletelephonesarecurrentlybeingusedtodeliverdifferenttypesoffinancialservices,includingmobilepurchasing,electronicmoneyandelectronicbanking.Thisreportexploreswaysinwhichtraditionalbusinessmodelsarebeingchallengedandoutlinesthecommercialopportunitiespresentedbyservicingthebase-of-the-pyramidmarket.

Inordertobesuccessfulwemustlistentoourcustomersandadaptourofferingstosuittheirneeds.In2005therewere.4billionmobilephoneusersindevelopingmarkets,theWRIestimatethattherewillbe3billionby200.Individualswhowerepreviouslysilentandignoredcannowbeheardandindustrymusttakeaccountofthis.Thesethreereportssuggestthatthismeanschallengingtraditionsandadaptingexistingbusinessmodelsinordertoprovidereal,relevantbenefits.

Itsachallengewelookforwardtoembracing.

Charlotte Grezo

Charlotte GrezoDirector of Corporate Responsibility

CharlottejoinedVodafoneinJanuary200witharemittoestablishaGroupCorporateResponsibilityfunction.ThisincludesworkingwiththeGroupssubsidiariesandaffiliatestoestablishthepoliciesandprocessestomanageCorporateResponsibilityattheGrouplevel.CharlottesroleistoleadCRfortheVodafoneGroup;toensuretheachievementofthestrategicgoalonresponsiblebusiness,promotethevaluePassionfortheWorldAroundUsandtoensurethatthecommitmentsmadeintheVodafoneCorporateResponsibilityReportaredelivered.SheisaTrusteeoftheVodafoneGroupFoundationandtheVodacomFoundation.DrGrezohasservedonarangeofGovernmentCommitteesandtaskforcesincludingACCPE(AdvisoryCommitteeonConsumerProductsandtheEnvironment)andtheSustainableProcurementTaskforce.CharlotteGrezojoinedVodafonefromBPwhereshewasDirectorofGlobalEnvironmentalIssues.

2VodafoneGroupPlcEconomicempowermentthroughmobile

1 Wetermthedeliveryofbankingservicesthroughmobilephonesmobilebanking,orm-banking.Thetermsmobilepayments(m-payments)andmobilecommerce(m-commerce)arealsoused,butusuallytorefertotheuseofmobilephonestomakeretailpaymentsandperson-to-persontransfersonly.

2 GSMAssociation.GSMHitsTwoBillionMilestone.16June2006.3 BAI2005.TowerGroup2004.BoozAllen2004.4 FinmarkTrust.FinscopeSouthAfrica2005andFinscopeBotswana2004.5 Thecompletereportprovidesadetaileddescriptionofthestudymethodology,includingimportantinformationaboutitslimitations.SurveyswereconductedinJulyandAugust2006.6 Porteous,David.MakingFinancialMarketsWorldforthePoor.PreparedforFinMarkTrust.October2004.

Asmobileusageexpands,somayopportunitiestobanktheunbanked.Withm-banking,low-incomepeoplenolongerneedtousescarcetimeandfinancialresourcestotraveltodistantbankbranches,oftenlocatedfarfromlow-incomecommunities.Andsinceanm-bankingtransactioncostsfarlesstoprocessthanatransactionstransactionatanATMorbranch,3bankscanmakeaprofithandlingevensmallmoneytransfersandpayments.

Mobileisalreadyreachingtheunbankedpoor:inSouthAfricaandBotswana,one-thirdofpeoplewithoutbankaccountsownamobilephoneorhaveaccesstoone.4Manyofthesepeoplearepoor.M-bankingthereforeholdsgreatpromise.Butquestionsremainaboutwhetherpoorcustomerswilladoptm-banking.Forexample,willlow-incomecustomersviewbankingthroughtheirmobilephonesasreliable?Willlimitedschoolingandunfamiliaritywithtechnologyslowtheiradoptionoftheservice?

Thispaperpresentsthefirstpublicfindingsonhowlow-incomepeopleviewandusem-banking,usingresultsfromasurveyof55low-incomeindividualsinSouthAfrica.5Threehundredofthosesurveyeddonotusem-banking,while25arecustomersofWIZZIT,astart-upmobilebankingproviderthattargetsthe6millionSouthAfricanswholackorhavedifficultyaccessingformalbankingservices.WIZZIToffersabasiccurrentaccountaccessibleviamobilephoneandaMaestro-brandeddebitcardthatcanbeusedatATMsandbranchesoftwomajorbanks.WIZZIThasaccumulated50,000customerssincebeginningfull-scaleoperationsin2005.

Whilethefindingsofthisstudyarenotrepresentativeofalllow-incomem-bankingusersandpotentialusersinSouthAfrica,theyareencouragingandpointtoimportantchallengesandopportunitiesforthoseseekingtoincreaseadoption.Low-income WIZZIT customers value the m-banking service for its affordability, ease of use, and security.RespondentsindicatedtheyuseWIZZITbecauseitischeaper(70%),safe(69%),convenient(68%),andfast(68%).Ofallbankingchannels,m-bankingfallsclosesttowhattheWIZZITuserssurveyedsayistheiridealwayofdoingbanking.Nineoutof0surveyedsaythem-bankingserviceisnotexpensiveorinexpensiveforthebenefitsitgives.Incontrast,theseuserssaybankbranchesandATMshavehighfeesandlongqueues,poorcustomerservice,andcarrytheriskofrobbery.

ThecostofanaveragebasketoftransactionsappearsconsiderablycheaperthroughWIZZITthanthroughtheleastcostlyfull-serviceaccountsofferedbySouthAfricasBigFourbanks.WIZZITalsoappearslessexpensivethantheMzansiaccount,anentry-levelaccountdesignedbySouthAfricasbanksespeciallyforlow-incomecustomers.Forthesamebasketoftransactions,WIZZITchargesaboutUS$6permonth,whiletheBigFourbankschargeUS$9withthecheapestfull-serviceaccountandUS$8withtheMzansiaccount.FinMarkTrusthasdetermined2%ofincometobethemaximumpoorpeoplecanaffordtopayforaccesstobasictransactionbanking.6Atthesecosts,WIZZITfallsbelowthethresholdofwhatwouldbeaffordabletothepoor,whilethefull-serviceandMzansiaccountsareaboveit.

Perhapsbecausetheyperceiveittobelowercost,convenientandsecure,WIZZITscustomersconductmorebankingtransactionspermonthusingtheservice(9.3permonth)thannon-usersconductatallotherchannelscombined.WIZZITcustomersprefertousetheirmobilephoneoverotherchannelstopayforpre-paidelectricity,transfermoney,buypre-paidairtime,checkaccountbalancesandpaystoreaccounts.

Gautam IvaturyCGAP

GautamIvaturyisamicrofinancespecialistwiththeConsultativeGrouptoAssistthePoor(CGAP),aglobalresourcecentreformicrofinancestandards,operationaltools,training,andadvisoryserviceswhosemembersincludingbilateral,multilateral,andprivatefundersofmicr