PlaNet Finance and Oliver Wyman launch a report of mobile microfinance during Mobile World Congress 2011.
The report, “Beyond Payments – Next Generation Mobile Banking for the Masses” is the result of a joint effort and was funded by the Bill and Melinda Gates Foundation.
The objective of this work has been to look at distribution strategies and second generation mobile microfinance products that go beyond P2P. At present, most mobile money deployments have been focused on 1st generation mobile money products such as domestic remittances, airtime top-up, bill payments and loan repayment, and the transformational impact of mobile money is expected to come from 2nd generation financial services such as micro-savings, micro-credit and micro-insurance, especially in countries with less than 10% retail banking penetration. Both MNOs and financial institutions are set to benefit from the take-up of these products, as they reap expertise from complementary skills and are able to deliver more value to their customers.
However, the formula for success is not straightforward. Drawing on their on-site experiences in pilots conducted in Africa and in South-East Asia, PlaNet Finance and Oliver Wyman describe the challenges in deploying mobile microfinance and offer strategic and operational solutions. The two distinct innovative models that have been explored through the pilots are:
- The distribution of microfinance through mobile money via existing microfinance banks.
- The distribution of microfinance through a virtual microfinance bank, operating as a pure mobile player.
The study outlines that the benefits of these models include a more than twofold increase in access to banking, 20-50% lower operational costs for the MFI and revenue or market share benefits for the MNO.
The report, highlights that mobile microfinance can have a significant socio-economic impact on increasing financial services access for unbanked subscribers by eliminating all the disadvantages of physical bank branches. In addition, it is a cost-effective way for banks and MFIs to reach the masses by capitalizing on the widespread penetration of telecom distribution networks.
Ultimately, the report draws attention to a new breed of emerging intermediaries, which will allow partners on both sides to interact smoothly by playing a mediating or complimentary role. This echoes some of emerging features of the new generation of products we are seeing within the realm of mobile money which we will be writing about in the coming months.