Using Mobile Money to Promote Financial Inclusion in Pakistan
Imran Khan and Naeha Rashid
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2
CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETS AGENTSOPPORUNITIES: INCREASING M-WALLET UPTAKE
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3Pakistan’s Financial Inclusion numbers are improving according to most sources
8%
7%
2013 2014
InterMedian = 6000 (individuals)
Adults 15+Financial inclusion is defined as “having a
registered account with a financial institution that provides a full suite of
financial services.”
World Bankn = 1000 (individuals)
Adults 15+Financial Inclusion is defined as “having an account either by oneself or together with someone else, at a bank or another type of financial institution, or having personally
used MM in the past 12 months.”
State Bank of Pakistann = 10,000 (households)
Adults 18+“Formally served”
*To be released In 2015
10
%
13
%
2011 2012 2013 2014
ACCESS TO FINANCE
10
%
23
%
2008 2009 2010 2011 2012 2013 2014 2015
FINANCIAL INCLUSION INSIGHTS
FINDEX
4Variations in Financial Inclusion numbers can be explained by definitional differences
8%
1%
0.3%
5.7%
8.7%
5.8%
0%
2%
4%
6%
8%
10%
12%
14%
16%
FII 2014 FINDEX 2014
Bank account (registered) Non-bank Financial Institution Account (registered)
Mobile Money Account (used in the previous 90 days) OTC (used in the previous 90 days)
Financial Institution Account alone or with some else (registered) Mobile Money Service (personally used in the last 12 months)
*Numbers do not account for double counting
5
13%
31%34% 34%
53%
83%
14%
34%
46%51%
54%
62%
PAKISTAN BANGLADESH NEPAL BHUTAN INDIA SRI LANKA MIDDLE EAST SUB SAHARAN
AFRICA
SOUTH ASIA LATIN AMERICA & CARRIBEAN
DEVELOPING COUNTRIES
WORLD
Yet, despite significant progress, Financial Inclusion in Pakistan is low in comparison to regional and global standards
SHARE OF ADULTS WITH AN ACCOUNT – FINDEX 2014
SOUTH ASIA
23%
6
Some groups are more financially excluded than others
GENDER
LOCATION
%AGE OF POPULATION THAT IS FINANCIALY INCLUDED
7%
13%
23%
20%
Men are 3x more likely to be
financially included than women
Urban dwellers are 1.5x more likely to
be financially included than rural dwellers
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7
While half of all adult Pakistanis took loans in the last year, only 5% borrowed from formal financial institutions
Family and friends
46%
Shopkeeper42%
Bank/MFI5%
Misc7%
SOURCE OF BORROWING FOR MOST RECENT LOAN
46 48 50 52
79
0
10
20
30
40
50
60
70
80
90
India Bangladesh Pakistan Low Income Kenya
BORROWED IN THE PAST YEAR (%)
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Savings too, remain largely informal
In cash at home51%
Committees (ROSCA)
27%
Advance purchase/deposit With shopkeeper
6%
Buying Durable for Dowri
5%
With a family member
5%
Bank or MFI3%
Misc3%
TYPES OF SAVINGS
24
32
38
47
76
73
1410
30
0
10
20
30
40
50
60
70
80
Bangladesh Pakistan India Low Income Kenya
SAVINGS AND FORMAL SAVINGS %
Saved any money in the past year
Saved at a financial institution
Awareness and penetration of insurance remains low
Only 1% of respondents to the Financial Inclusion Insights 2013 survey had insurance. 90% of this group had life
insurance.
I do not need one35%
I do not know what it is
22%
I do not know how to get one
9%
I do not own anything valuable
7%
Misc27%
TOP REASONS FOR NOT HAVING INSURANCE
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10
Compared to peer countries, incidence of domestic money transfer to relatives and friends is higher in Pakistan
9.814.1
24.8 25.6
61.0
9.9 10.415.7
18.3
53.0
0
10
20
30
40
50
60
70
India Bangladesh Pakistan Low Income Kenya
REMITTANCES %
Received domestic remittances in the past year
Sent domestic remittances in the past year
Personal delivery by self93%
Direct deposit to a bank4% Agent's m-money
account3%
METHODS FOR SENDING MONEY
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11
Pakistanis don’t use formal financial services due to a lack of either awareness or income
15%
31%
41%
41%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Lack information about products/services
Not enough money to open an account
No regular income
Never thought about it
TOP REASONS FOR NOT USING FORMAL FINANCIAL SERVICES
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12
CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETS AGENTSOPPORUNITIES: INCREASING M-WALLET UPTAKE
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All adults (15+) 59%
Adult Males 80%
Adult Females38%
%AGE OF ADULTS WHO OWN A MOBILE PHONE
%AGE OF ADULTS WHO HAVE ACCESS TO MOBILE PHONES
All adults (15+) 79%
Adult Males89%
Adult Females70%
Branchless Banking provides an opportunity to kick start financial inclusion
The majority of Pakistanis have access to a mobile phone…
…which make these devices the most viable channel to enable financial outreach
93
,10
0
6.5 9.3 4
7.1
33
.9
12
.2
47
3.1
A TMS COMMERCIA L BA NK BRA NCHES
POS MOBILE PHONE SUBSCRIPTIONS
Pakistan Global
58
,49
9
INFRASTRUCTURE OF FINANCIAL SERVICES DELIVERY CHANNELS
14
In Pakistan, Branchless Banking is characterized by two mobile money delivery models
OVER THE COUNTER
MOBILE WALLET
Register Put money in account Conduct Transactions Directly
Register to provider’s
wallet via BVS.
Add money digitally or
through a CICO point
Conduct transactions from mobile
device without any 3rd party assistance
Convenient, secure,
integrated on- and
offline payments.
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15
Currently, fewer than 1 in 10 Pakistanis have full service accounts that can be accessed digitally
39.3 % of adult Bangladeshis have
full-service financial accounts
6.8% of adults have digital bank accounts
0.3% of adults have mobile money accounts
7% have digital finance
accounts*
*Digital accounts are those that can be accessed through ATM/debt cards, online or through mobile phonesOverlap representing those who have multiple kinds of financial accounts is not shown.
Bank accounts are more likely to be digitally
accessible vs. non bank accounts
An additional 8% of adults are non-registered mobile
money users
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16Pakistan’s Branchless Banking policy environment has come a long way
2006 2008 2010 2011 20122007 2009 2013
November 2006: First public discussions on branchless banking.
June 2007: SBP released Policy Paper on Regulatory Framework for Mobile Banking.
December 2009: SBP and PTA draft framework for Third Party Solution Provider system.
2014
2008 : CGAP invested in Easypaisa; catalytic impact on market
2010: CGAP coordinated an exchange between SBP and Mexican regulators on “level 0” accounts.
December 2012: At CGAP workshop, SBP and PTA assured no introduction of anti-market regulations.
N
E
X
T
?
2015
April 2008: Branchless Banking regulations issued.
2011: KYC requirements relaxed, Level 0 accounts introduced.
April 2015: Pakistan joins BTCA
2015: SBP gave limited permission for remote wallet opening (biometric verification)
2014: Daily limit for Level 0 transactions increased from Rs. 15,000 to Rs. 50,000
November 2014: NADRA lowered fees.
May 2015: NFIS launched
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The market is competitive
4 different models: 3 telco-owned MFBs, 3 banks, 1 telco-bank partnership, 1 third-party
7 product types: Bill Payments, P2P Transfers, Airtime Top Ups, Bulk Payments, Loan Repayments, Merchant Payments, International Remittances
New product innovations in the market: Health Insurance Life Insurance Alternative energy financing
8 live mobile money services
To Date
October 2009
November 2012
September 2013
April 2013
January 2014
April 2010
December 2012
2009
2013
2010
2012
TIMELINE
2014
2011
1 Primary, and 1 Secondary Regulatory Body: SBP, and PTA
18
Within 5 years, the value of mobile money transactions have reached 3.5% of GDP
0.9
8%
2.4
5%
3.5
0%
PAKISTAN2011 2012 2013
VALUE OF MM TRANSACTIONS AS % OF GDP (reference year)
-
5
10
15
20
25
30
-
20,000
40,000
60,000
80,000
100,000
120,000
140,000
160,000
Sep-11 Mar-12 Mar-13 Mar-14
Vo
lum
e (m
illion
s)
Bill Pmt Value P2P Value
Gment Pmts value Merchant pmts value
Top-up value Loan repmts value
Bill Pmt Volume P2P Volume
Top-up volume Gment pmts volume
Loan repmts volume Merchant pmts volume
Val
ue
(P
KR
mill
ion
s)
VOLUME AND VALUE OF KEY MM TRANSACTIONS
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Use of mobile money seems to be increasing
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
Dec-11 Dec-12 Dec-13 Dec-14
0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
Av. Value per Transaction Deposits as of date (PKR in millions) Av. Volume of Transactions (per day)
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20
While early entrants had first mover advantage, relative market share is shifting as new providers enter the market
59
%
27
%
6%
4%
3%
1%
0%
54
%
20
%
14
%
3% 4%
1% 5
%
EASYPAISA OMNI MOBICASH TIMEPEY UPAISA HBL EXPRESS MOBILE PAISA
MCB LITE
SHARE IN NUMBER OF TRANSACTIONS
Dec-13 Dec-14
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CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETSAGENTSOPPORUNITIES: INCREASING M-WALLET UPTAKE
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22
OTC dominates the market
0
1,000
2,000
3,000
4,000
5,000
6,000
7,000
8,000
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Dec-11 Dec-12 Dec-13 Dec-14
Number of Accounts Deposits as of date
PK
R in
Millio
ns
M-WALLETS
80%
14%
6%
TRANSACTION TYPE (VOLUME)
OTC M-Wallet Agent Liquidity
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Pakistan lags behind leading countries in uptake of m-wallets in comparison to phone ownership
0
50
100
Kenya Tanzania Bangladesh Pakistan India
mobile phoneownership
mobile walletusage (transaction in last 90 days)
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Many who do open m-wallets do not use the accounts
22 22
29
42 42 43
EAST ASIA AND
PACIFIC
MIDDLE EAST AND
NORTH AFRICA
SOUTH ASIA LATIN AMERICA AND THE
CARRIBEAN
SUB SAHARAN
AFRICA
PAKISTAN
ACTIVE ACCOUNTS AS A % OF TOTAL REGISTERED ACCOUNTS
This is a common trend, and is seen in mobile markets globally
0
1,000,000
2,000,000
3,000,000
4,000,000
5,000,000
6,000,000
Dec-11 Dec-12 Dec-13 Dec-14
Number of Inactive Accounts
Number of Active Accounts
ACTIVE VS. INACTIVE ACCOUNTS
25
GENERAL PROFILE OF MOBILE MONEY USERS
.0
1.0
2.0
3.0
4.0
5.0
6.0
7.0
15
.00
18
.00
21
.00
24
.00
27
.00
30
.00
33
.00
36
.00
39
.00
42
.00
45
.00
48
.00
51
.00
54
.00
57
.00
60
.00
64
.00
68
.00
73
.00
90
.00
%A
GE
AGE (YEARS)
AGE DISTRIBUTION OF MOBILE MONEY USERS
Who are the users of mobile money in Pakistan?
>35
77% are men
41% live in urban areas
70% have a primary education
20% already have a bank account
54% live above the poverty line
72% are aged 35 and under
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26A TYPICAL MOBILE MONEY TRANSACTION
AMOUNT
DISTANCE TO AGENT
TRANSPORTATION COSTS
TRANSACTION TIME
TRANSACTION FEE
SUCCESS RATE
OTC Transaction
Mobile Wallet Transaction
Rs. 4214
0.75 km
Rs. 21
26 min
3%
89%
Rs. 5181
n/a
Rs. 0
n/a
0% - 5%
100%
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27
OTC users are satisfied with the service
I can have all the services through
an agent, I do not need
31%
I do not need to, I do not make any transactions
15%I do not understand the purpose of this account12%
I never have money to make a
transaction12%
Using such account is
difficult8%
There is no point-of-
service/agent close by
6%
I do not see any additional
advantages to registration
4%
Misc12%
MAIN REASON FOR NOT HAVING AN M-WALLET
47
%
40
%
21
%
6%
RECEIVE MONEY SEND MONEY TO ANOTHER PERSON
SEND MONEY TO ORGANIZATION
OR AGENCY
MISC.
REASONS FOR STARTING TO USE MOBILE MONEY
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28
CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETSAGENTSOPPORUNITIES: INCREASING M-WALLET UPTAKE
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29
0
100
200
300
400
500
600
700
800
900
0
50,000
100,000
150,000
200,000
250,000
Dec-11 Dec-12 Dec-13 Dec-14
Number of Active Agent Outlets Number of Inactive Agent Outlets
Transactions/Active Agents (in a quarter)
The agent network is growing…
Kenya Bangladesh Pakistan
Exclusivity 87% 44% 34%
Dedication 36% 4% 23%
LOW LEVELS OF EXCLUSIVITY AND DEDICATION
66% of agents are non-exclusive and are shared by a median of 3 providers
58% of exclusive agents are in rural areas
Agents are profitable due to non exclusivity and low operating expenses, however, transactions per day remain low at a median of 8 in comparison to countries like Kenya (46) and Bangladesh (15)Number of Unique Active Agent Outlets (ANA 2014)
Total: 204, 073
97
, 64
2
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30
Customer satisfaction with agents is high
52%
46%
1% 0%0%
10%
20%
30%
40%
50%
60%
Verysatisfied
Somewhatsatisfied
Somewhatdissatisfied
VeryDissatisfied
SATISFACTION WITH MM AGENTS (n=85)
40%
34%
32%
22%
0% 5% 10% 15% 20% 25% 30% 35% 40% 45%
Agent was absent
GSM or mobile network was down
Agent system was down
I did not get a receipt
PROBLEMS WITH AGENTS
31
However, the agent network still lags behind regional and global counterparts
18
2
20
9
28 42
30
9
84 1
24
44
1
PAKISTAN BANGLADESH KENYA
ACTIVE AGENT OUTLETS PER 100,000 ADULTS
2011 2012 2013
27
20 89
42
34
7
13
5
13
1
1,0
47
19
9
PAKISTAN BANGLADESH KENYA
ACTIVE AGENT OUTLETS PER 1000 KM 2
2011 2012 2013
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32
CURRENT STATE OF FINANCIAL INCLUSIONMOBILE MONEYOTC AND M-WALLETS AGENTSOPPORTUNITIES: INCREASING M-WALLET UPTAKE
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33
New regulations have made it increasingly easy to open a m-wallet account
LEVEL 0 LEVEL 1 LEVEL 2
HOW TO OPEN
ACCOUNT LIMIT
• BVS verified customers can open their MA by dialing string
• Non BVS customers have to visit Franchise
• Instant Registration
• Only CNIC required• No KYC fields are required for
account opening• Instant Registration
• CNIC along with other supporting documents required
• Transaction Limits defined according to customer needs and documentation
• KYC fields must be filled by the customer
• Account instantly registered with level-1 transaction limits, and upgraded within 3 days of document verification
• Day: 50,000 • Month: 80,000• Year: 800,000
• Day: 25,000 • Month: 60,000• Year: 500,000
• Day: 50,000 – 500,000 • Month: 100,000 – 1,000,000• Year: 600,000 – 6,000,000• Max Balance: 300,000 –
3,000,000
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34
While only 1 in 4 agents are able to help customers open accounts…
25%
75%
ABILITY TO REGISTER CUSTOMERS FOR ACCOUNTS
Can register accounts Can not register accounts
Only 26% of those who don’t open accounts, view mobile wallets as a threat to their
business
84% of agents who are capable, do open accounts
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35
…Biometric verification technology has overcome this hurdle for Level 0 account opening
In Q4 of CY 2014 701,510 new M-Wallet accounts were opened
95%
5%
NEW ACCOUNTS IN Q4
Level 0 Accounts Other Accounts
63%
37%
METHOD OF ACCOUNT OPENING
BVS Other
The Jan-April 2015 SIM re-verification
drive spurred providers to start
remote account sign ups; the results of this
push will be seen in the coming months
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36
Opportunity 1: Improving Customer Awareness and Understanding
37
Brand awareness about MM providers is increasing but low, and few people have a full understanding of MM
41
%
36
%
16
%
12
%
6%
5%
5%
10
%
SEND MONEY
TO OTHER PEOPLE
RECEIVE MONEY FROM OTHER PEOPLE
PAY BILLS
BUY AIRTIME TOP-UPS
SAVING G2P P2G MISC
MOBILE MONEY AS PEOPLE SEE ITAWARENESS OF MOBILE MONEY BRANDS
61
%
32
%
30
%
22
%
22
%
13
%
0%
n/a
73
%
46
%
33
%
31
%
29
%
15
%
25
%
14
%EASY PAISA MOB IC ASH OMN I UPAISA T IMEPEY MC B L IT E MOB ILE
PAISAH B L
EX PR ESS
2013 2014
38
Generally banks are perceived as being more trustworthy than mobile money
37
%
19
%
16
%
10
%
9%
31
%
36
%
26
%
29
%
28
%
14
%
22
%
29
%
27
%
27
%
7%
13
%
18
% 19
%
20
%
10
%
10
%
11
%
15
% 17
%
STATE OWNED BANKS PRIVATE BANKS FOREIGN BANKS M-MONEY SERVICES M-MONEY AGENTS
Fully trust Rather trust Rather do not trust Do not trust at all Neither trust nor distrust
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39
Being a subscriber to a provider’s parent company, doesn’t mean that people recognize its MM brand
EASYPAISA MOBICASH UPAISA MOBILE PAISA TIMEPEY
TELENOR89% 58% 43% 31% 36%
UPHONE85% 60% 52% 37% 42%
WARID89% 62% 53% 48% 50%
ZONG84% 63% 51% 44% 53%
MOBILINK85% 61% 37% 29% 32%
Most recognized MM service
CEL
L P
HO
NE
PR
OV
IDER
OF
CU
STO
MER
RECOGNITION OF DIFFERENT MM BRANDS
Second most recognized MM service
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40
Even awareness levels of OTC users regarding product mix is low…9
6%
95
%
81
%
45
%
29
%
28
%
25
%
25
%
17
%
16
%
12
%
5%
1%
1%
PA Y B ILLS SA V E BUY A IRTIME TOP -UPS
RECEIV E MONEY FROM OTHER PEOPLE
P2G G2P SEND MONEY TO
OTHER PEOPLE
PA Y FOR GOOD S IN A
SHOP
MA KE PA YMENTS
ON CRED ITS A ND LOA NS
INSURA NCE RECEIV E WA GES
D ON' T KNOW
NONE NO RESPONSE
AWARENESS LEVELS OF OTC USERS
41
UnawareAwareness of
what m-wallet is
Understanding of how m-wallet could be useful
personally
Knowledge of how to conduct transactions via
m-wallet
Trial of m-wallet service
Regular use of m-wallet
TIGO IN DRC• Developed a song in partnership with a popular singer explaining MM, how it could be used in different
situations, and how to access the service• Drove up registration 50%
EASYPAISA IN PAKISTAN• Launched an ad campaign explaining mobile money
in 2010• Low uptake of wallets, but continued uptake of OTC
M-PESA IN KENYA• Launched a send money campaign• Only 3% of non-users did not recognize the campaign
after 21 months
TRUE MONEY IN THAILAND• Launched a national ad
attractive only to high income earners
• Alienated a number of potential low income customers
PR
OD
UC
T C
AM
PAIG
N
AW
AR
ENESS
CA
MPA
IGN
KN
OW
LEDG
E C
AM
PAIG
N
(UN
TAR
GETED
) U
SE CA
SE C
AM
PAIG
N
Communication is needed throughout the m-wallet adoption process
WALLET ADOPTION PROCESS
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42
Opportunity 2: Circumventing Customer Skill Deficits
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43
Mobile phone ownership and capabilities affect m-wallet uptake
80
%
9% 12
%
38
%
32
%
30
%
MOBILE OWNERS ACCESS TO SOMEONE ELSE'S
MOBILE
NO ACCESS
ACCESS TO MOBILE PHONES
Male Female
Make
Calls
Receive
Calls
Send/Receive
Text
Messages
Do everything myself 62% 63% 34%
Somebody helps me with part
of the activity4% 3% 2%
Somebody helps me with entire
activity3% 3% 1%
During FGDs, women revealed key details about mobile ownership: Most do not see their mobiles as personal devices; mobiles are shared with husbands and children
Women have to justify calls and messages to family members
ABILITY WITH MOBILE PHONES
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44
0%
10%
20%
30%
40%
50%
60%
70%
80%
Dial a number Add contacts to phone Send a text
DO YOU NEED HELP IN DOING THESE TASKS?
I never do this on my phone Very poorly, always need help Somewhat poorly, often need help
Somewhat well, occasionally need help Very well, never need help
Sending a text message is a relatively more difficult task for individuals
45
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
Very Easy Easy Difficult Very difficult
UNDERSTANDING TEXT MESSAGES
Friends and Family Cellphone providers
Pakistanis find it relatively more difficult to understand messages from Cellphone Providers, vs. Family and Friends
During an HBL experiment with BISP beneficiaries, it became clear that the beneficiaries did not understand HBL
messages which contained both text and numeric information about their
transaction
This phone receipt was not understood
by recipients
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46
Moving towards human centered design can circumvent the skills gap
Business Viability
TechnologyFeasibility
Business Viability
TechnologyFeasibility
People Desirability
PRODUCT CENTERED
HUMAN CENTERED
These are examples
of communication of
amount paid that are
more transparent
because illiterate BISP
recipients are more likely
to understand them.
One of the findings of the HBL HCD experiment, was that redesigning products like receipts, can significantly improve
illiterate people’s understanding
47
New User Interface Design innovations may revolutionize the mobile wallet experience and encourage uptake
76.0
28.4
3.3
2.2
Basic Phone
Feature Phone
Smart Phone
Don't Know/Refused
0.0 10.0 20.0 30.0 40.0 50.0 60.0 70.0 80.0
TYPES OF MOBILE PHONES USED IN PAKISTAN
Globally, smartphone penetration
will increase 1.7 fold by 2017
GRAPHICSUse icons or imagery to overcome
literacy barriers
CONVENIENCELeverage smartphone capabilities to move away from complicated USSD
menus
ENGAGEMENTLeverage social networks and/or gamification to keep customers
engaged, and minimize trust barriers
BEFORE AFTER Smartphone applications, and new products for MM are already present and can be adapted to the Pakistani context. Some key examples are: Globe’s Gcash
(application -Philippines)
Zuum (application -Brazil)
pesaDroid(product)
Mledger (product)
1 2 3
4
7
5 6
8 9
THE MOVE TO SMARTPHONES OPENS UP THE POSSIBILITY OF IMPROVED UI DESIGN BASED ON HCD
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48
Opportunity 3: Diversifying Product Mix
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49
More Pakistanis have borrowed and saved in the last year, than those who have received or sent remittances
50
%
32
%
25
%
16
%
BORROW SAVE RECEIVED REMITTANCES SENT REMITTANCES
%AGE OF PAKISTANIS WHO HAVE ENGAGED IN THIS FINANCIAL BEHAVIOUR (LAST 12 MONTHS)
50
Yet the product mix offered by all providers remains skewed towards payments
Bill Payments * * * * * * * *
Airtime Purchase * * * * * * *
Money Transfer through Agents * * * * * *
Formal Account * * * * *
Money Transfer to Bank Accounts * * * * *
Donations * * * * *
Salary Disbursement * * *
Life Insurance * * *
ATM Card * * *
Retail Payments * *
International Remittance Transfer *
Ticketing (Airlines, railway etc.) *
Savings Account *
Health Insurance *
Corporate Services other than Salary Disbursement *
Internet Banking *
USING WALLETS ALLOWS PEOPLE TO EFFICIENTLY ACCESS A WIDER PRODUCT MIX
OTC Product Mix
Mobile Wallet Product Mix
Bill Payments
Airtime Purchase
Money Transfer through Agents
International Remittance Transfer
Formal Account*
Money Transfer to Bank Accounts
Donations
Salary Disbursement
Life Insurance*
ATM Card
Retail Payments
Ticketing (Airlines, railway etc.)
Savings Account*
Health Insurance*
Corporate Services other than Salary
Disbursement
Internet Banking
AVERAGE COSTS
Rs. 21
26 min
3%
AVERAGE COSTS
Rs. 0
n/a
0% - 5%
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52
Opportunity 4: Promoting Interoperability
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53
Success in achieving interoperability remains limited across the globe
Interoperability is defined as “the possibility to transfer money between customer accounts at different mobile money schemes and between accounts at
mobile money schemes and accounts at banks”
- GSMA report on Implementing Mobile Money Interoperability, 2013
INTEROPERABILITY IN PAKISTAN OTC services are available to all customers Mobile accounts are “closed loops” meaning that they are restricted to customers of a particular mobile
operatoro IBFT (Inter Bank Funds Transfer) through 1-Link offers significant potential but is not yet live on all
mobile wallets
54
Recent developments prove that interoperability can spur mobile money use
• “Exponential increase post launch• Widespread acceptance and awareness• High visibility due to press release • Exponentially faster adoption than that of Voucher
transaction”
- GSMA report on Operator’s Journey, Nov 2014
2012 2013 2014
2011/2012: Tigo starts conversations about interoperability
Nov 2013: First bilateral interoperability agreement between Tigo and Airtel signed
Jun 2014: Tigo, Airtel and Zantel announce interoperability agreement
Aug 2014: Tigo and Airtel launch W2W interoperability using ATL campaigns
TIGO/AIRTEL: COMBINED VOLUME AND VALUE OF P2P TRANSACTIONS
2014: Tanzania becomes the “first country to successfully develop and implement standard
business rules for interoperable MFS transactions”
- IFC case study on Achieving Interoperability, 2015
In Tanzania…
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The Tanzanian case reveals some key ingredients for achieving interoperability
Allow all industry players a voice in creating interoperability rules and
regulations
Have an industry champion
Identify a neutral broker to act as a facilitator
Ensure clarity of definitions across parties
Pilot the initiative prior to commercial launch
Market the new initiative to increases customer awareness
Successful execution based on foundation built in Phase I and II
PHASE I: COLLABORATION
PHASE II: DEVELOPMENT
PHASE III: IMPLEMENTATION
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56
Opportunity 5: Digitizing Government to Person (G2P) Transfers
57
Global comparisons reveal the scope for G2P digitization“G2P payments have the most potential to accelerate financial inclusion in the short to medium term as it is easier for government to dictate how it pays recipients than to influence how other parties transact.”
- McKinsey & Company report on Government Payments in Nigeria, 2014
The Kenyan Government has been a huge
proponent of going “cash lite” since 2008. As
of 2013 the value of mobile money
transactions equaled
50.03% of Kenya’s
GDP in the same year.
0.4
%
1% 1
.8% 3.6
% 6.4
%
1.3
% 3.2
%
1.4
% 4%
18
%
BANGLADESH LOW INOCME PAKISTAN INDIA KENYA
USING ACCOUNTS FOR OFFICIAL TRANSFERS (%)
Used an account to receive government transfer
Used an account to receive wages
58
100%
70%
100% 100% 100% 100% 100% 100% 100%94%
30%
100% 100% 100%
6%
B U M U N I C E F B I S P C D C P A R M Y J A W A N S & J C O S S A L A R I E S
A G P R S A L A R I E S P U N J A B P R O V S A L A R I E S
A R M Y J A W A N S & J C O S P E N S I O N S
A G P R P E N S I O N S P U N J A B P R O V P E N S I O N S
N A V Y P E N S I O N S A I R F O R C E P E N S I O N S
F R O N T I E R C O N S T A B U L A R Y
P E N S I O N S
E O B I P E N S I O N S
Cash Digital
A large proportion of G2P payments in Pakistan can be digitized
LEVEL OF DIGITIZATION OF KEY GOVERNMENT PAYORS 2013
Social Protection Cash Transfer7 million beneficiaries
Government Payroll2 million beneficiaries
Government Pension2 million beneficiaries
59
The benefits of G2P digitalization include and extend beyond Financial Inclusion
A 2014 McKinsey study on G2P payments in Nigeria
revealed that 3 distinct
groups will benefit from G2P digitization
20 million direct beneficiaries
US$10-20 million p.a. in additional benefits
US$600-800 million p.a. in additional taxes
US$150-160 million p.a. in additional
revenue
BEN
EFIC
IAR
IES
GO
VER
NM
ENT
BA
NK
S
2important lessons for those using G2P digitization as a way to also spur digital account adoption i iiEnsure a value
proposition for customers
Communicate sufficiently with customers
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60
THANK YOU
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