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Mobile banking – a profitable and innovative channel?

Mobile banking – a profitable and innovative channel?. Massifying financial products through cellular phones August 2009, Colombia. Contents. Market opportunity? Banking technologies and pushing the frontier to access The role of the cellular phone Challenges on the demand side

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Mobile banking – a profitable and innovative channel?

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  1. Mobile banking – a profitable and innovative channel? Massifying financial products through cellular phones August 2009, Colombia Jenny Hoffmann, Riskfrontier Consultants

  2. Contents • Market opportunity? • Banking technologies and pushing the frontier to access • The role of the cellular phone • Challenges on the demand side • Challenges on the supply side • Profitability conclusions

  3. Mobile phone penetration in developing countries

  4. Africa mobile phone penetration ITU 2008

  5. LA mobile phone penetration ITU 2008

  6. LA Banking infrastructure

  7. Distribution infrastructure frontiers branch Merchant Cell phone ATM and conventional POS Current Banked Potential New Product Very Low cost Banking Product Passive products

  8. Critical mass: pushing the frontier • Debit cards reaching critical mass in many countries. • Adoption limited by: Penetration of bank accounts among population Weak business case for deploying sufficiently dense network of acquiring infrastructure in environments with low economic activity or population density Cost of communications underpinning real –time authorization of payments in markets with limited communications infrastructure or very low-value transaction

  9. Mobile banking – the marketing “Mobiles begin calling the shots on banking and payments” The Banker, 1 Feb 2007 GSMA 2009: Unbanked with a cell phone 1 billion today and 1.7 billion in 2012 “The end of the cash era” The Economist, 15 February 2007

  10. Mapping main benefits for using mobile phones to banks’ strategic drivers Strategic drivers for banks Use of mobile phone CGAP Focus note 48, June 2008

  11. Challenges Demand Side Supply Side Low Cost Viable business case for all stakeholders • Affordability • Value proposition • Ease of use • Multiple channels • Reliability and trust • Access to widespread eco system • Financial education and training

  12. Average income of population deciles in Zambia

  13. Income and affordability: Zambia Mobile phone Owners – 2.6 million Poverty line – 56% of Population

  14. Population Groups: Mozambique Population 21 million Population over 15 – 11.5 million Population aged over 15 – 11.5 m

  15. Value proposition: Anytime, anywhere More convenient Cheaper to use Quick and efficient Unique or value add offerings

  16. Ease of use: Client acquisition and registration • Software • Process • KYC

  17. Low cost solution • Initial investment – system and implementation • Transaction volumes • Transaction types • Interoperability/ubiquity of acquiring infrastructure

  18. Strategic approach to mass adoption Choice – no channel silver bullet Reliability and trust Access to widespread eco system Viable business case for all stakeholders Access to client base Education and training

  19. Mobile banking • Profitability • Alternative benefits • Loyalty programme • Branding and reputation • Critical mass

  20. Thank you Riskfrontier Consultants Ltd

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