The sixth MMU Leadership Forum took place on Friday 7th November in Cape Town, co-located with the Mobile 360 Series – Africa event. Almost 100 industry leaders and senior policymakers from 22 countries participated in the Leadership Forum, where the 2014 theme was “Building Sound and Inclusive Financial Ecosystems through Mobile Money.” The Leadership Forum was preceded by a series of preparatory workshops and by the release of the GSMA Code of Conduct for Mobile Money Providers, a new initiative to further increase the soundness of the mobile money industry and improve customer’s experience.
The full agenda is available online, as well as some photos from the event. In addition, below are some key takeaways from the sessions.
Highlights from the Leadership Forum Sessions
- Mobile money is making an important contribution to the achievement of financial inclusion and fostering economic development in many markets. Evidence from countries where mobile money is successful shows that enabling regulatory frameworks can enable the participation of multiple providers, including mobile operators, to incentivise the necessary investments. Stable and enabling regulation is critical for the private sector, which is increasingly exploring how interoperability and open APIs can increase scale and add more value to their customer’s lives. When it comes to mobile operator and bank relationships, it’s not about competing against each other, but about providing a complete mobile money offering.
—From ‘Digital financial inclusion: A look into the future’
- The first implementations of interoperable solutions in Tanzania and Pakistan are proving: (1) that interoperability can effectively help to increase transactional volumes and values and (2) showing how challenging it is to identify the technical and legal solutions that best suits each market and addresses the challenges specific to each country. On a positive note, in the past few months the policy debate around interoperability has shifted from whether or not regulators should or should not mandate interoperability – we are reaching consensus that interoperability should not be mandated but rather market-led – to a dialogue about supporting, understanding and facilitating interoperable solutions. This allows all parties to focus on how interoperability could be implemented sustainably to create the maximum benefit for customers, mitigate operational and legal risks, and secure providers’ investments. Identifying the right business, timing and technical models for implementation is critical.
—From ‘Implementing interoperability’
- As mobile money usage grows and the number of traditional remittance channels is declining sharply, there is increasing customer demand to use mobile wallets to send and receive funds across borders. Mobile money has the potential for disruptive innovation in international remittances, and safe and enabling regulation could play an important role in accelerating this evolution. Where wallet-to-wallet cross-border services have been launched, providers have addressed a number of different regulatory issues, including issues related to general authorization requirements, cross-border settlement, differences in KYC requirements between and within countries, consumer protection, and differences in transaction and balance limits between countries. A collaborative learning process that brings together regulators and providers would promote mutual understanding of these challenges and facilitate the development of solutions that mitigate key risks effectively and support safe and rapid implementation.
—From ‘Leveraging mobile wallets for international remittances’
- The number of credit services offered using mobile money is increasing, with innovative partnerships that leverage the mobile payments infrastructure (especially mobile operators’ data) to determine credit worthiness and distribution networks for loan collection and disbursement driving this expansion. In Kenya, Safaricom launched M-Shwari with the Commercial Bank of Africa, allowing customers to borrow and save money through M-PESA and earn interest on their savings. Mobile solution provider afb is building customer credit scorecards based on anonymised data from mobile operators and providing customers access to micro-loans to launch small businesses. M-KOPA Solar finances home solar systems for customers in off-grid areas using mobile money to ensure repayment. Once the system is paid off, energy is free and M-KOPA will have established a credit history for the customer, creating further opportunities for loans or asset financing. In providing access to these services, MNOs are expanding access to credit to their mobile money clients without lending their e-money float. In addition, when engaging in these partnerships, MNOs are abiding by data privacy rules and ensuring that credit recipients provide their consent to share data and are appropriately informed about charges, terms, and conditions. In each jurisdiction, these partnerships are also subject to existing laws on the provision of credit.
—From ‘Enabling credit through the digital finance ecosystem’
- In many markets, regulators have treated mobile money as a unique payments product that does not pay interest to customers. However, earlier this year the Bank of Tanzania released a Circular stating that interest accrued on the trust accounts should directly benefit mobile money customers and agents. In September, Tigo Tanzania committed to make a profit share distribution of USD 8.7 million to its 3.5 million Tigo Pesa customers out of returns generated on the capital held in the Tigo Pesa Trust Fund. Tigo has also realised benefits from this decision, estimating that it has been four times more successful than interoperability for increasing customer’s usage and has generated an increase in P2P and cash-in activity.
—From ‘The payment of interest’
- Migrating over-the-counter (OTC) users to mobile money wallets to improve the viability of services remains one of the main challenges facing mobile money providers in a number of markets. To grow financial inclusion, it is necessary to migrate OTC customers to mobile money wallets, and mobile money providers have an important role to play in this. Although there is likely to always be some element of OTC, this migration is imperative for developing the mobile money ecosystem. Developing an agent commission and incentive structure and increasing the transaction types that can be conducted with the mobile wallet (e.g. G2P, P2G, B2B and B2P) can also effectively drive wallet usage.
—From ‘The migration from OTC to mobile money wallets’
- Mobile money providers can reinforce customer confidence by ensuring that customer data stays safe and that protection against fraud is in place. Providers are taking steps to address these issues, both at the country level and the group level. One of the key risks for mobile money is the human factor – the people who operate and manage platforms. As such, providers need to ensure not only that their mobile money technology is always updated and secure, but that they have the proper internal controls in place to mitigate against risk of abuse by staff, third-party service providers, or other parties. In addition, proper policies are crucial for ensuring that providers effectively address fraud risk and AML/CFT compliance. The GSMA is supporting providers’ risk mitigation efforts with a number of tools, including a Risk Management Toolkit that provides helpful templates and guidance for providers and the recently-launched Code of Conduct for Mobile Money Providers.
—From ‘Risk mitigation’
- In October, the Bank of Ghana approved a new regulation for electronic money issuers that enables mobile operators and other non-banks to obtain a license to provide mobile money services. Previously in the 2008 guidelines, only a bank-based branchless banking scheme was allowed and interoperability was mandated. The Bank of Ghana explained that interoperability should not have been mandated at the outset, but rather that the market should dictate the solution. Key provisions in the new regulation include the establishment of multiple account tiers with risk-based KYC requirements; the ability to use SIM registration data to help meet account opening requirements; higher transaction limits allowing for greater functionality; and a requirement that most of the interest earned on the float be passed on to customers.
—From ‘Ghana’s new e-money regulation opens the door to non-banks’
- We’re still very much at the start of the mobile money journey, and it can be easy to lose sight of this with the enormous success of services in some markets. Mobile money providers need to understand how critical it is to get the basics right, such as an enabling regulatory environment and an efficient distribution network, for mobile money to take-off. In addition, ecosystem development is key for sustainable growth, and this requires both open dialogue with key stakeholders and effective collaboration and partnerships.
—From ‘Building sound and inclusive financial ecosystems though mobile money: The way forward’