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Branchless Banking and Financial Inclusion

Branchless Banking and Financial Inclusion. Michael Tarazi FDIC June 2, 2011. What are the factors that limit access?. Long distances & low pop density. High bank costs relative to income. Low education & illiteracy. Poor product/ channel design. Branchless banking may

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Branchless Banking and Financial Inclusion

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  1. Branchless Banking and Financial Inclusion Michael Tarazi FDIC June 2, 2011

  2. What are the factors that limit access? Long distances & low pop density High bank costs relative to income Low education & illiteracy Poor product/ channel design Branchless banking may overcome these constraints

  3. Branchless Banking: What do we mean? Client Bank Agent “… delivery of financial services outside conventional bank branches using information and communications technologies and nonbank retail agents.”

  4. Branchless Banking: Cash-in Client Bank Agent Agent opens bank account (accessible by mobile phone) Client opens bank account (accessible by mobile phone) 1 1 - 4 Agent account debited + Client account credited 2 Cash-in Electronic value sent 3

  5. Branchless Banking: Cash-out Client Bank Agent - + Agent account credited Client account debited 3 3 Electronic value sent to agent 1 2 Cash-out

  6. The logic of branchless banking Use existing deployed technology Use existing retail infastructure

  7. Any store can potentially be an agent

  8. The power of using existing infrastructure ~5.7bn ~28m Worldwide points of presence ~1m 665k 500k 250k Mobile Phone Connections Western Bank Post ATMs POS Union branches offices

  9. 3.3 bilunique mobile owners 1.4 bil Sources: CGAP, Wireless Intelligence 9

  10. 2x Sources: CGAP, Wireless Intelligence 10

  11. $0 $10,000 $250,000 $50,000 $2,000 $400 No agent (cashless) ATM Traditional branch Branchin store Agent with POS terminal Agent with mobile Reducing the cost of banking infrastructure 11

  12. The Global Status of Branchless Banking Branchless Banking Implementations 10 of the Largest Implementations

  13. Reaching the Unbanked Weighted Average 37%

  14. Nonbank E-Money Issuers Agent Bank Bank ? Pooled Account Mobile Network Operator Client

  15. Regulatory Issues • AML/CFT: Can low-income users meet ID requirements? • 2. Agents: Who, what services, who is liable for what? • 3. Consumer Protection: Price transparency, recourse, education? • 4. Moving beyond payments: interest-bearing, insured deposits?

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