USAID Releases Mobile Financial Services Risk Matrix

Mobile Financial Services offer significant opportunities for improving the efficiency of financial services by expanding access and lowering transaction costs.  The explosive growth of use of mobile money has had the unintended benefit of increasing public involvement in the formal financial system, including expansion of savings accounts in the regulated financial intermediaries.

Given that there is no common standard for the enabling environment, different regulators have responded in different ways, leading to a proliferation of inconsistent operating environments for account providers, and in some cases, limitations on the range of services that can be provided based on factors other than the underlying risks. Due to this lack of consistency, the US Agency for International Development (USAID) felt that it could play a catalytic role in helping to harmonize legal and regulatory environments for mobile financial services and undertook a detailed analysis of the various risks involved in the different models of mobile financial services, as viewed from each of the key stakeholders involved in these transactions. The research was undertaken in collaboration with Booz Allen, the Kenya School of Monetary Studies, the research and training arm of the Central Bank of Kenya, and involved discussions with various stakeholders around the globe including the GSMA and CGAP.

The analysis produced consists of three parts:

1) The Mobile Financial Services Risk Matrix.

2) Transaction flow mapping of some of the key transactions to show where these risks occur, and how these may differ depending on the service model.

3) Analysis of how various jurisdictions have already responded to these risks.

This analysis is not intended to be all inclusive or prescriptive. Indeed, this would not have been possible since the topic of mobile banking is a rapidly evolving issue.

USAID sees this matrix as a living document that will undergo modification as our collective understanding of the risk factors and responses to these risk factors continues to develop. We invite you to participate in this process by commenting and providing us with any material feedback that you believe would improve its contribution to the development of a sound, balanced regulatory framework for mobile financial services.

View USAID’s Mobile Financial Services Risk Matrix

Comments/suggestions should be sent to Mr. Jeffrey Jackson, Senior Private Sector Advisor, USAID at [email protected]

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