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You don’t have to be in development or aid to know that mobile has been disrupting banking for a while. But those of us in the sector are acutely aware of how mobile banking has literally changed the lives of millions of people by providing financial access to even the most remote areas, and the results have been, generally speaking, fantastic. As just one example, we know that people who have access to mobile banking are more resilient to shocks and emergencies, a potential game changer in many parts of the world. While its well established, the use of mobile in the banking world is far from complete. In fact, its still just beginning. Where it is going next is the primary focus of Xavier Faz, my guest for the 128th Terms of Reference Podcast. Xavier is the Lead of the Digital Finance Frontiers Initiative at Consultative Group to Assist the Poor (CGAP) – which is housed within the World Bank – where they look to leverage innovations around mobile phones and mobile payments that allow new services to be delivered. You can connect with Xavier here: https://www.linkedin.com/in/xavierfaz https://twitter.com/xavierfaz
IN TOR 128 YOU’LL LEARN ABOUT:
- The current level of mobile banking in the developing world. It has proven to be reliable and scalable.
- But how mobile banking is not fully fledged banking.
- The current field of action: extending the platform to more partners and services.
- How financial inclusion is key but only if it opens the door to innovative products.
- Topics of trust, regulations, engagement and interactivity surrounding mobile banking.
- The role of CGAP in helping to find opportunities.
OUR CONVERSATION INCLUDES THE FOLLOWING:
Organizations
- CGAP
- World Bank
Topics
- Financial Inclusion
- APIs
- Digital Finance
- Mobile Payments
- Financial Inclusion
- Financial regulation
- Financial products
Places
- Washington, DC
- Kenya
EPISODE CRIB NOTES
CGAP’s Digital Finance Frontiers Initiative Today CGAP is a World Bank entity working on innovation for financial inclusion. Digital Finance, leveraging mobile payments innovation. Mobile banking appeared in Africa and it was quickly discovered as reliable and scalable. Lots of businesses rely on it today. 430MM accounts in mobile banking today, 40% are active (a transaction in 90 days). Is mobile banking not banking? Different in many ways. “Mobile” does not mean smartphones. People need to go to a physical place. Mobile being the primary (or only) channel means advanced tech to strip down the experience. The good news is people are using it, adding money, they transfer to people on the other side of the country. It makes people more resilient. A family can pitch in to a relative in need from wherever. Positive effect in education. School is not free in Kenya. The “disappointment” is many uses beyond the intended. There is “payments inclusion”, not “financial inclusion” wholly. It has not diminished the use of cash. “Cash is king and will be king for many years.” Do you know who you are mobile banking with? Telcos (telecommunication companies) have gained the licenses to create and operate financial services. It is not the telecoms per se, and they are not actual banks. The pseudo-banks offer money moving services. Regulation allows them some banking behavior BUT THEY ARE NOT BANKS. The actual offering and ecosystem varies from country to country. Xavier’s work is expanding the things you can do with mobile bank accounts. In particular, APIs and interaction between telcos and third-parties. There’s a long road ahead before connecting the system to many, let alone across borders. Current stage in talks for the development of a common platform. Applications are narrowly focused. It’s the birth of an app, market of sorts. Innovation from mobile banking depends on the innovation of the partners. African tech savviness Satellite data streaming photos, allow farming analysis. An API could inform farmers and plan on agricultural capacities, and develop loan or financial services on top. Stephen worked on U.S. farming projects. Many technologies are not mobile or banking, but interact with mobile banking. Engagement and trust are always issues, tech could cater better to individual needs. The relationship is valuable. Interactivity is critical. “A close relationship with customers.” Open APIs, Driving innovation and… The Nature of the Problem (of Financial Inclusion). “Access to financial services is important. We all know that.” But the value of finance is not inherent. It depends on what it enables. New businesses and ideas are spawning because there is mobile financial inclusion. A startup is giving solar roofing solutions on a pay-as-you-go basis. Stephen: similar to Takamoto Biogas (TOR 025). Mobile financing solves the lack of collateral when investing on people: Mobile banking is a financial asset. Companies have transactional data from where to build credit risk scores, offer better products profitably, like loans. Private companies are now able to make larger investments. Working with telcos Xavier’s role is to look at markets, find opportunities, identify and work around obstacles. “We can go far into demonstrating a situation or how a problem can be solved.” Other markets are more advanced and startups bring the innovative solutions. “Our website is a resource center. Academics and businesspeople come to it for solutions.” We run pilots all the time. Xavier Articles, specialized magazines. “An essential source is going to the field.” Cellphones.Please share, participate and leave feedback below!
If you have any feedback you’d like to share for me or Xavier, please leave your thoughts in the comment section below! I read all of them and will definitely take part in the conversation. If you have any questions you’d like to ask me directly, head on over to the Ask Stephen section. Don’t be shy! Every question is important and I answer every single one. And, if you truly enjoyed this episode and want to make sure others know about it, please share it now:[feather_share show=”facebook, twitter, linkedin, google_plus” hide=”reddit, pinterest, tumblr, mail”]
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