from payments to electronic banking to financial...
TRANSCRIPT
From Payments to Electronic Banking
to Financial Inclusion Investment & Advisory Services Strategy
• Owned by 182 countries
• Additional joint special
programs with such
countries
• 50+ years of immaculate
brand
• Aligned with countries’
development agenda
• Benefit from WB brand
IFC at a glance …
Establish’d
Largest
emerging
markets
Investor
TRUSTED
Trusted by
gov’ts,
regulators
and
private
companies
alike
COMPLETE
Full suite
of
products
and
services,
patient
capital
PRESENT
Largest
Footprint
of any
Investment
House
100 offices in 86 countries 3,354 staff
• Preferred funder in
multiple industries
• Domain savvy investor
• Transparent
commercial and
development agenda
• Consistently good
commercial returns
• Proponent of good
governance, long
term thinking
Our three businesses fit together, adding value
to clients and helping shareholders achieve development
results
3
o Long-Term Debt
o Equity/Quasi-equity
o Short-term Finance
o Risk Management
o Mobilization
o Treasury Operations
•Investment
Services
o Investment Climate
o Access to Finance
o Sustainable Business
o Public-Private Partnerships
•Advisory
Services o Launched in 2009
o IFC Capitalization Fund
o Africa/ Latin America & Caribbean Fund
o Africa Capitalization Fund
o Others to come. . .
•Asset
Management
• IFC Advantages
o Global knowledge, local delivery (present in 82 countries)
o Combined focus on development impact and business results
o Strong network of clients, banks, and donor partners
o Commitment to monitoring and evaluation
Source: Mix Market, Safaricom and MFI websites.
Note: Top 10 LAC MFIs by clients: Compartamos, Crediscotia, CrediAmigo, MiBanco, FMM Popayan,
Bancamia, Financiera Edyficar, CAME, WWB Cali and CMAC Arequipa.
Note: CAGR (Compounded annual growth rate).
Why Do We Care?
CAGR
275%
115%
18%
0
5,000,000
10,000,000
15,000,000
20,000,000
25,000,000
2007 2008 2009 2010
Top 10 LAC MFIs MPESA FINO
IFC’s Objectives:
Development impact
Financial return
Environmental
sustainability
0.40 0.71
1.10 0.61
1.87
0.06
0.00
0.50
1.00
1.50
2.00
2.50
3.00
3.50
Bil
lio
ns
No. of people currently
affected Potential no. of people
affected
1.01
2.97
0.77
2007 Emerging Market Population = 5.5 billion
Credit Bureaus Remittances Domestic Payments
Our Vision is that people should have the
opportunity to escape poverty and improve
their lives
Application of technology can dramatically extend access to finance
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E-Money Reduces The Costs That Impact Both Supply And Demand
Remittances: Cost of sending remittances to remitter’s home country.
Domestic payments: Cost of sending payments within country.
$0
$5
$10
$15
$20
$25
$30
Remittances Domestic
Payments
Co
st
pe
r $
10
0 le
nt
or
se
nt
Cost of least efficient system
Cost of most efficient system
Total potential reduction in costs
75%
90%
Fees for
transactions
can be
reduced
dramatically
Demand Constraints
•Affordability (fees)
•Availability &
Convenience (time &
cost to reach nearest
branch)
•Administrative
paperwork, lack of
ID, illiteracy, time
spend in queues
Significant potential
to reduce consumer
cost to transact
beyond fees charged
Supply Constraints
• Affordability (fees)
•Availability &
Convenience (days
to complete
transaction,
documents required,
physical proximity)
•Quality (price
transparency, fair
disclosure, risk
management
E-Payment Ecosystems
• Banking/cash point
infrastructure
• Credit bureaus/public
registries
• Collateral/movable
registries
• Biometrics
• Payment system
platforms
INFRASTRUCTURE
• Branchless banking:
• ATMs
• POS
• Internet banking
• Prepaid cards
• Debit Cards
• Credit Cards
• Smart Cards
• Mobile Phone Banking
Technologies that can
enable access to the
unbanked / underserved
Value added
technology services
• Credit scoring
• MIS upgrades for MFIs
• KYC (Know Your
Customer) software
identification tools
CLIENTS
Base of the pyramid
INFRASTRUCTURE PROVIDERS
Commercial banks/lending institutions
Microfinance Institutions (MFIs)
Mobile operators
A B C
Technology Is Not The Key Constraint, But Greater Reach Does Require
Technology As An Enabler
Greater
reach
Increased
A2F
TECHNOLOGY
Legal & Regulatory: Enabling Framework
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8
The Ability To Integrate Many Components Is Key To Developing A Healthy And
Scalable Ecosystem. This Ecosystem Is Not Well Developed In Many Countries
Regulation
Regulatory framework
drives what is permissible
and possible in terms of
players and products
these players offer in a
given market. Drives
ability to build out agent
networks. Key success
factor: Risk proportionate
regulation
Payment Instruments
Critical to identify one
product that will attract
customers, meeting their
greatest need and build
other services onto that.
Key success factor:
Anchor Product
SVA with
Card
Cash
Linked
Bank Account
Debit, Credit
or Charge Card
Stored Value
Account (SVA)
Access Points/Network
A closely knit and well managed agent network is a
critical success factor as it provides many access /
acceptance points = 10 * branch network. Agents are
key interphase to customers and must have minimum
of 50 transactions/ day and must be within 2km of
user. Key success factor: Scalability
Retail
Outlet Phones ATM
PSP MNO Bank
POS Online
Branding & Operating Model
Branch
Integration of the different players and choice of
operating model will influenced product offering in
market. Need business justification and market strategy. Key success factor: Trust
E Money Platform/ Switch: focus of
Payment Practice
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An E-wallet, provided by MNOs or PSPs, Can Be An Important Intermediate
Step In Bringing E-Money Acceptance To The Poor Fin
ancia
l In
frast
ructu
re
Financial Integration low high
high Differentiation
(Alternative
Infrastructure)
Cost Leadership Segmentation
Deposit
Account
Insurance
Loan
E-Wallet
E-Payment
Fund
transfer, bill
payment
simple
payment
processing
Cash
Cash
management:
holding
funds,
remittance,
cash-in &
cash-out
Holding
funds &
paying
interest.
Debit
card
Lending
Funds &
charging
fees &
interest:
overdrafts
(negative
deposit),
ST and
installment
loan Irregular
savings,
informal
credit
Likely Future Evolution
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Markets Will Evolve Based On Their Eco-system Characteristics -- These
Will Allow Certain Players To Dominate In Certain Conditions
Mobile
banking
MNO
dominance
Regulation Market Demand Financial
Infrastructure Mobile
Infrastructure
Disables
Enables
Banks
MNOs
Met
Unmet
ATMs,
Switches
Financial Inst
fragmentation
Fragmented
Single player
dominates
PSP Inter-
operable
systems
Ecosystem Characteristics
Dominate
Model:
Dominate
Players:
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A Scale PSP Can Provide Value To The Banks & Foster Inclusion
R
E
G
U
L
A
T
O
R
Y
F
R
A
M
E
W
O
R
K
PSP/ Switch
E-Wallet
Contract For Switching, Products Supported, Brand & Agents
Agents & Merchants network build out, management & training
Brand development and marketing
Contracts with MNOs to provide mobile channel
Loans
Loans
BANK
Loans
RELATIONSHIPS CUSTOMER
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Mobile Phone Enabled E-payment Emergence Can Be Steep & Fast In
Underdeveloped Markets (& Slow In Developed Markets)
Demand driven by
appropriateness and availability
of services and agent network
in combination with consumer
education
Customer adoption evolves
from more urban and educated
to rural and unbanked if
product offering is right
Unbanked customers attracted
through product push, i.e.
government payments and
salary disbursements
Extensive agent infrastructure
required to encourage savings
and routine transacting
Business models dependent on
transaction volumes and
relative size rather than
customer numbers
Success requires value add for
all participants
# o
f C
usto
me
rs
high
low
low high Market Opportunity / Increased Segmentation
Mobile Money Adoption Curve
Undeveloped Emerging Developed
Once all technology & eco-systems
are in place, we see rapid up-take if
product is right
Growth is driven by product
innovation
IFC Focus
IFC Focus Areas are based on Critical Success Factors
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Transformational electronic banking
Global Expertise in
Business Model Design, Testing and Refinement
Market Research and Product Design
Performance-Based Grants, Convertible Grants, Equity
Agent Network Build-Out, Economics and Management
Customer Education and Uptake
Impact Assessment
Identify potential customer
segments and money flow
Identify anchor and priority
products
Identify Bank, MFI and MNO
partners
Develop strategy for
technology up-take per
segment
Partner
Identification
& Coalition
Building &
Product
Development
Cash-in, cash-out
Payroll transfer
Utility bills payment
C2B, B2B payment (remote)
C2B, B2B payment (on site)
Remittance (domestic)
Remittance (international)
Pension fund payment
Interoperable platform design
Business Modeling and Testing
Develop value proposition
Financial modeling of revenue
and cost streams
Valuation for business building/
spin-offs
Equity
Building the
Business Case
Support to agent network development
− Business modeling
− Training of agents, master agents and agent managers
Provide risk share or liquidity facility for agent financing
Market Research
& Strategy
Design
Agent build-out strategy tailored to market needs
Cell phone penetration
Projected cell phone growth
Retail networks
Retailer support needs
Agent value proposition
Agent segment and suitability survey
Geographical areas to service
Cash-in / out, AML, KYC requirements
Basic conditions of adoption
Float & cash reserve requirement
Training needs assessment
Operation flow, terms and conditions
Network Build out, Economics and Management
Payment Currency & Volume
Location
Spending
Conduct needs and demand assessment
− Product design
Market Research
& Strategy
Design
Identify customer pain point and design product
Cell phone penetration
Projected cell phone growth
Customer behavior
Segmentation
Customer value proposition
Retail networks
Market Research and Product Design
Develop financial awareness campaign via agents and
focusing on customer care as part of correspondent
training:
− The role of the banking services
− The benefits of using mobile banking services
− The descriptions of mobile phone banking transaction
Market
Research &
Campaign
Design
Awareness raising campaign and adapted training modules
Customer behavior & preferences
Retail networks
Understanding of financial services
Appropriate tools & channels
train agents to educate clients,
TV and radio spots
Print ads/ comics
Podcast
Plays
Customer Uptake and Education
In-house data analysis capacity
Access to baseline data
Ability to establish experimental or semi experimental assessment
Develop and verify model
Define indicators of success for respective market
Collect baseline data
Conduct data for assessment
Evaluate and interpret data
Recommendations for business model adjustment
Design &
Data Analysis
Impact Assessment
E-Banking-Portfolio
• Global Innovative Retail Payments Facility −Knowledge management, specialists, seed grants
• Market Development − Latin America, South Asia, China
• Regulatory Reform −Cambodia, Laos, Indonesia, Tunisia, Egypt, Nepal, Papua
New Guinea, Pacific Region, South Asia Region
Mobile
Transactions
• Current Pipeline
• Portfolio
Advisory Services Portfolio Investment Services Portfolio & Pipeline
THANK YOU
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