Remote Account Opening: Making it Work for Mobile Money

GSMA Mobile Money for the Unbanked (MMU) and other financial inclusion stakeholders have long argued that the account opening process for mobile money accounts need not be burdensome. Know Your Customer (KYC) requirements should be proportional to risk in order to facilitate entry to the formal financial system. We are pleased to see many regulators adopt these principles around the globe, and private sector players implementing them to stimulate mobile money uptake.

In some markets, we see a tiered KYC approach taken to a whole new level, allowing for prospective customers to self-register for mobile money wallets remotely and paper-less. Instead of registering through an authorised agent or point of sale, customers can dial a USSD code, enter basic personal information (e.g. a name, phone number, date of birth, ID document number), and set up their secret PIN. With just those few steps, customers can self-register their mobile money accounts, and in a few moments receive an SMS confirmation.

Of course, this method of account opening is most feasible in markets where a national identity registry exists so that customer information can be verified on the back-end. In addition, SIM registration datasets can be leveraged for this purpose in some cases. GSMA welcomes remote account opening as a mechanism to ease entry-level registration and accelerate the adoption of mobile money in markets where it is practical.

Remote account opening is particularly popular in Latin America. Brazil, Colombia, Mexico and Paraguay allow for paper-less, self-registration. Remote account opening within tiered KYC frameworks has been rolled out in other regions as well, with South Africa and Sri Lanka as two recent examples.[1]

There are important commercial factors mobile money deployments should consider when enabling remote account opening. First, face-to-face interaction and customer education is highly valuable and, if not handled at the point of registration, needs to be incorporated as part of the on-boarding process. Second, assisted registration may be necessary for specific customer segments and may improve the likelihood of account activation. Third, agent registration commissions are an important source of revenue for the distribution channel in the early days of a mobile money deployment, when transaction volumes are too low to keep agents happy—so the distribution implications of remote opening should be weighed.

Mobile money deployments may find the following suggestions helpful when evaluating how to maximize the remote account opening opportunity.

  1. Ensure early face-to-face interaction with clients, regardless of registration method employed. Introducing customers to a new service will require a high-touch approach to educate customers on how to use the service, regardless of how easy the registration process may be. A strong sales force and effective BTL training activities are critical in the early days of a deployment.
  1. Consider an assisted registration channel to complement self-registration.  Not all mobile money target segments will find the self-registration process intuitive, particularly those with low-literacy levels. Moreover, assisted registration at a cash-in point may increase the likelihood of activation. An MMU analysis from last year revealed that customers that transact at the point of registration are more likely to be future active customers (26% more likely) and produce higher mobile money ARPU (95% higher) than those that register without immediately transacting.
  1. Identify alternate ways of keeping agents happy, absent registration commissions. Agent registration commissions tend to be in the range of $0.60-1.00 USD per customer, which provide a healthy incentive for agents to sign up new customers proactively. When the registration commission is split between registration and first deposit, agents are further incentivised to explain the benefits of the service properly and to convince customers to transact, not just register. In the absence of agent registration commissions, deployments should consider extra rewards for agents that process the first (or first several) cash-in transactions for new customers. More on agent incentives can be found here.

Remote account opening should accelerate, rather than hinder, mobile money uptake and usage. Let’s ensure the industry can reap the benefits of a progressive regulatory framework that allows for remote account opening as part of a risk-based approach.

We welcome your opinions on this topic.  You can send your thoughts to mmu@gsma.com.

 

[1] Refer to “Enabling Mobile Money Policies in Sri Lanka: The Rise of eZ Cash,” for further information on remote account opening and risk-based KYC in Sri Lanka.

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