Revising our definitions for credit, savings and insurance enabled by mobile money

Earlier this month we launched the 2016 Global Adoption Survey of Mobile Financial Services. The survey encompasses the development of the mobile money ecosystem, as well as updated surveys for credit, savings and insurance enabled by mobile money. This year, we have updated the definition of mobile money, in addition to the definitions of credit, savings and insurance. This blog explains which changes were made around these products and why.

The main change to these definitions is that now all three services are defined by customers having a mobile money account. The service itself should be integrated with the mobile money account, and most of the processes should be done via the mobile money account. We have used language to reflect this, by adding “enabled by mobile money” to better reflect the role mobile money services play in supporting the development of these core financial products.

Credit enabled by mobile money

Credit enabled by mobile money now includes services that are smartphone-only services, as well as feature phone-based services. This new definition also includes different customer segments, such as merchant and agent working capital loans (e.g., like those Kopo Kopo offers merchants in Kenya, or Airtel’s “Timiza Wakala Loans” for mobile money agents in Tanzania).

Last year’s Global Adoption Survey revealed that 11% of respondents offered agent credit and we encourage providers offering agent credit to participate in our Credit and Savings enabled by Mobile Money survey.

Our new definition of credit enabled by mobile money:

  • To use the service, the customer must have a mobile money account.
  • Credit enabled by mobile money uses the mobile phone to provide micro-credit to customers.
  • The service allows subscribers to borrow a certain amount of money that they agree to repay within a specified period of time.
  • Customers can be mobile money agents, mobile money users, or merchants accepting mobile money.
  • The loan must be disbursed and repaid electronically directly to/from the mobile money account. Services which offer collateralised lease-to-own assets, such as solar home systems, are not included.
  • The credit service should be technically integrated with the mobile money account and rely heavily on mobile technology throughout the customer journey.
  • Services where the mobile phone is used as just another channel to access a traditional credit product should not be included.
  • The service must be available for customers on any types of mobile device (including smartphones apps).

 

Insurance blog graph 1

 

As a consequence of this new definition of credit enabled by mobile money, we have included two new smartphone-based services, and 14 new services offering agent credit. For data rigour, we have also removed nine services that no longer fit our definition, because mobile money is an optional payment mechanism and these services are still dependent on cash.

Savings enabled by mobile money

As we highlighted in the 2015 Mobile Insurance, Savings and Credit Report, there are several interesting and new innovations and products enabling mobile money users to save and invest their money. To capture these, we have included investment products and pension savings under “savings enabled by mobile money.”

Our new definition of savings enabled by mobile money:

  • To use the service the customer must have a mobile money account.
  • Savings enabled by mobile money uses the mobile phone to provide dedicated savings facilities.
  • Also included in this definition are:
    1. Mobile investment uses the mobile phone to provide investment facilities (e.g., in government bonds).
    2. Mobile pension uses the mobile phone to provide pension savings facilities.
  • The savings service allows subscribers to save money in a dedicated account that provides principal security and in some cases, an interest rate.
  • The customer should be able to store value electronically in the savings account, and be able to transfer funds to/from a mobile money account.
  • The savings or investment product should be integrated technically with the mobile money account, and rely heavily on mobile technology throughout the customer journey.
  • Services where the mobile phone is just another channel to access a traditional savings accounts should not be included.
  • The service must be available for customers on any types of mobile device (including smartphones).

 

Insurance blog graph 2

 

This updated definition impacts the number of savings services we track: three services have been deleted and three services have been added, leaving 25 live dedicated savings products.

Insurance enabled by mobile money

Our new definition of insurance enabled by mobile money is primarily determined by services using the mobile money account. However, many mobile insurance services rely on airtime deduction to pay for premiums. Although airtime-based services are not enabled by mobile money, airtime-based insurance is unique and a proven stepping-stone for mobile money-based insurance products.  Therefore, we will continue to track airtime-based insurance and there will be limited impact on our current data.

Our new definition of insurance enabled by mobile money:

  • To use the service the customer must have a mobile money account.
  • Insurance enabled by mobile money uses the mobile phone to provide micro-insurance services.
  • The service must allow customers to manage risks by providing a guarantee of compensation for specified loss, damage, illness or death.
  • The customers should be able to pay the premium using the mobile account, and receive the claim using the mobile account (unless the beneficiary mobile money account has exceeded the limit, or the beneficiary does not have a mobile money account).
  • The insurance product should be technically integrated with the mobile money account, and rely heavily on mobile technology throughout the customer journey
  • Services where the mobile phone is just another channel for the clients of an insurance company to access a traditional insurance products should not be included.
  • The service must offer customers an interface for managing the insurance product for customers that is available on mobile devices (SMS, USSD, call center, smartphone app).

 

Insurance blog graph 3

 

Participate in the 2016 Global Adoption Survey

We actively encourage any new service providers to contact us at [email protected] if they believe they qualify under these new definitions, and we will be delighted to include them in the 2016 Global Adoption Survey of Mobile Financial Services. The survey is also available for download and the deadline to submit responses is 31 August 2016. 

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