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e-MITRA
Agent Network Models: Lessons from Other Countries Agent Network Strategy Workshop December 6th 2012
The challenge is to create a mobile financial services model that is profitable
Mobile Financial Services Lifecycle Cost Curve
Capex
Staff training
Agent recruitment
Agent training
Agent Education
Mass Marketing
Agent incentives
Mass marketing
Agent and user education
User incentives
User education (BTL)
Mass marketing (ATL)
Partner with
competitors
G2P transactions
P2P transactions
New Accounts
P2B transactions
Mass transaction volumes
Significant float
• Profitability requires
going through multiple
stages of development
• Enabling an evolving
ecosystem that meets
customer’s needs is of
critical importance
• Overcoming the mobile
financial services
lifecycle requires
anticipating expenses,
revenues and important
strategic decisions
Source: ShoreBank International (2010) 2
Pro
fit
Time
3
Pakistan: UBL Omni
• Leveraging government contracts (G2P) to
roll out agents
• Appropriate agent selection
• Offering services to both walk in and
account holding users
• Appropriate products for target market
Best practices
• ~14% of Pakistanis hold formal bank accounts (~25 mln.)
• However, mobile phone ownership is high: 98 mln. mobile phone connection across 6 mobile
network operators
• UBL is the second largest private bank with assets of $7.5 bln, and operates a networks of over
1,121 branches across the country, with 17 overseas branches and nearly 14,000 employees
• UBL built their mobile banking platform internally
• Creating a new business line within a
commercial bank
• Rapid scaling and customer uptake
• Building an agent network in remote or
conflict areas
• Understanding a new market segment
Challenges
4
Pakistan: Easypaisa
• Easy to use service aimed at low literacy
levels
• Good relation with regulator
• Online real-time KYC validation with
centralized national ID authority
Best practices
• Telenor Pakistan, a major MNO, bought Tameer Microfinance Bank to enter the mobile financial
services market in Pakistan, as the regulator did not allow MNOs to offer these services
• Regulator (State Bank of Pakistan) allowed a flexible approach to launch, now “bank-led” model
• Focused on Over-The-Counter (non-account based) remittance and bill payment transactions.
Now trying to find ways to move from Over-The-Counter to account-based transactions
• 20,000 agents, 160,000 transactions per day, 4 million users per month
• Licensed an internationally recognized mobile financial services software platform to offer
services (Fundamo)
• Moving from over-the-counter to account
based to offer full financial services
Challenges
Source: www.easypaisa.com.pk (November 2012); CGAP (2011)
5
Bangladesh: bKash
• Creating an enabling regulatory
environment
• Strategy partnership with Banks and
NGOs to build business case
• Leveraging networks of partners (e.g.
Telcos, NGOs) to expand agent network
Best practices
• In Bangladesh: 83% of the population lives under $2 a day; less than 15% is formerly “banked”.
• bKash is a join venture of BRAC Bank and Money in Motion.
• Mobile network cover 99% of Bangladesh and mobile phone ownership rates as high as 83% for
urban Bangladeshis and almost 60% of the rural populations.
• bKash was set up as a separate company to provide mobile financial services, giving it more
flexibility and autonomy than a traditional division of a bank.
• Striking the right deal with a vendor and
customizing technology
• Negotiating an agreements with Telcos
• Developing a go to market strategy that
ensures customer uptake
• Developing a robust agent network
Challenges
6
Mobile financial services business models
Role
Account provider Safaricom/M-PESA State Bank of India and other banks
Transaction provider Safaricom/M-PESA FINO
MNO Safaricom Any company
Third-party operators
Banks ATM networks Utility companies
Government, insurance companies
ANMs Aggregators, superagents, and Top Image all play an agent management role
FINO
Agents Independent cash merchants
Trusted community members
Source: CGAP (2011)
7
Key takeaways
• Local delivery is essential for extending the outreach of the bank
• Convincing customers that local/ agent banking is credible requires appropriate targeted marketing
• Designing appropriate products customized for the delivery channels and for the low income market is key
• Costs are very much lower with agent banking initial experience shows that costs are about 80% less than
branch based banking
• However, profits for agents/ intermediaries are through the transaction volumes. Hence, scaling the
number of accounts fast becomes necessary in order to reach profitability – to scale, technology is the
solution
• However, technology in and of itself is not a panacea for branchless banking
– its value to the bank and customer is directly related to trust and functionality
• Training of the agents that deliver services to:
– Serve the customer properly/respectful
– Provide consistent experience to customers through out agent network
– Cross sell to add value and keep the account/customer "sticky"
• Creating awareness among the target market about the available services and products is an important
cornerstone for success Source: ShoreBank International (2011)
8
A profitable mobile financial services model requires thorough strategic planning
Source: ShoreBank International (2010)
Review Landscape
• Who are the competitors and other market players?
• What are the options for an agent network?
Market research
• What is the market demand and need?
• What is the value add of the proposed services? For customers?
Internal Capacity
• What internal capabilities should be built?
• What internal systems are necessary?
Investment & resources
• What are the required investments and who will provide it?
Technology • What technology is required for the
strategy? • Who are the available vendors?
Market strategy
• What type of platform is required? • What are key risk and challenges in
implementing the strategy?
Business case • What type of partnership or
implementation structure is most sustainable and scalable?
Products • Which products are demanded? • Which products should be offered?
Marketing and awareness
• How can you generate awareness rapid scale among customers?