Current & future trends for rural banks to consider in providing greater access to banking services
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Atty. John V. Owens, COP of RBAP-MABS, presentation at the Visayas Confederation Meeting last March 15-16, 2012 at Cebu City
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Current & future trends for rural banks to consider in providing greater access to banking services
- 3. @15!
- 4. • 120 participating rural banks • 1,300 bank branches& OBOs
- 7. Accredited Technical Initiatives and Training Private Sector Partnerships Microfinance Products and Services Regulatory Compliance Local & International linkages
- 8. Factors Affecting Banks Inclusive New Regulations Technologies Rural Increasing Changing Competitio Markets Banks n
- 11. Multiple Borrowings & Over-Indebtedness
- 13. RBAP Pricing Transparency Workshops for Visayas Rural Banks Mar 13-14 Cebu Mar 21 RBAP April 10 RBAP April 20 Iloilo City April 25 Cagayan de Oro City May 5 Bacolod May 11 RBAP
- 14. More Discriminating Clients ATM Cards Microinsurance
- 15. Addressing the Needs of your Market TRADITIONAL NEW Microfinance Housing Microfinance Salary Loans Microinsurance Commercial Loans Debit/ATM/Cash Cards Agriculture Loans ATM Services Deposit Services Micro-Agricultural Remittances Loans Bill Payments Mobile Money Services Mobile Phone Banking Third-Party Branchless
- 16. Inclusive Regulations Enabling Greater Outreach Branchless Banking Mobile E-Money Cash Card Microinsurance ATM Debit Card Microsavings products More micro loan products (Housing Microfinance, Micro Agri) Micro Banking Offices
- 17. • Micro Deposits (deposits/withdrawals) • Micro Loan Disbursements and Collections • ATMs • Electronic Money Cash-in and Cash-out services • Bill payments • Remittances • Government Payments • Utility Payments
- 19. Micro Deposits
- 20. New Technologies & Channels
- 22. The rise of Mobile Banking Apps
- 24. Today, Rural Banks Can Offer the Following Mobile Phone Banking Services…
- 26. Use of Third-Party Networks
- 31. Rural Bank Responses Market trend responses o Product diversification o Customer retention programs o Introduce payment services Competitive responses o Use MBOs o Introduce micro-deposits & mobile money transfer to „up-sell‟ other products/services Use third-party networks to outsource KYC & market bank services
- 32. Rural Bank Responses New Technology Adoption Deploy Cash/Debit Card Mobile Phone Banking “Agent” Channels Upgrade Core Banking Solutions Utilize the Power of Social Networks
- 33. Things to watch out ... 1. Pricing Transparency – Tiered Pricing 2. Credit Bureaus 3. Leverage Technology 1. Outreach 2. Competition 3. Efficiency 4. Social Networks - Crowdsourcing
- 35. Answers from the Experts
- 36. Answers from the Experts
- 38. M a r a ming S a l a m a t!!!
- 39. EMAIL: jowens@rbapmabs.org TWITTER: @jvowens Websites: www.rbapmabs.org www.mobilephonebanking.rbap.org microinsurance.rbap.org www.youtube.com/rbapmabs Facebook: MABS Phil
Notas del editor
- The Rural Bankers Association of the Philippines -Microenterprise Access to Banking Services (RBAP-MABS)Programprovides technical assistance and training to rural banks in microfinance best practices since 1997 with support from USAID.The program is designed to develop the capability of rural banks to profitably provide financial services (loans, deposits, insurance, money transfers and mobile banking) for microenterprise clients.
- In 2012, the RBAP-MABS program is now in its 15th year. Although the funding for the MABS program from USAID will end this year, RBAP will continue the MABS program with support from the rural banking industry, private sector partners and support from donors. Ongoing initiatives and support from the International Labor Organization’s Microinsurance Innovation Facility funded by the Bill & Melinda Gates Foundation for microinsurance efforts will continue until 2013 as well as funding from Microfinance Opportunities with funding from MasterCard Foundation to support financial education in branchless banking will continue until 2013. It is now up to the industry to continue to grow and sustain this important service provided by RBAP to member rural banks. I look forward to coming back in 15 more years to celebrate both RBAP’s 75th anniversary and the RBAP-MABS 30th anniversary!
- RBAP-MABS has provided training to almost all 500+ member rural banks. We are now directly tracking the progress of over 120 rural banks providing a variety of inclusive financial services including micro-deposit services, micro finance loans, micro agri loans, housing microfinance, mobile phone banking services, money mobile enabled transfer services, and microinsurance through more than 1,300 rural bank branches.
- Since the start of the MABS program, participating rural banks have disbursed more than 40 billion pesos in microfinance loans to more than 950,000 new microfinance loan clients and now manage more than 1.45 million micro deposit accounts totaling more than 2 billion pesos.
- RBAP-MABS has also worked with the BSP and Globe’s GXI as well as recently the Smart Money platform to assist rural banks to make use of the two mobile money platforms to facilitate greater access to banking services. Over 73 rural banks with 1,168 branches and other banking offices have now been accredited to offer mobile money enabled banking services. These banks have processed more than 14 billion pesos in mobile money transactions since 2006 and the amount is growing every month. The program has also assisted RBAP in working with the BSP and the Insurance Commission to facilitate the licensing process of rural banks interested in offering microinsurance. The RBAP Microinsurance Course was the first course to be registered and accredited by the Insurance Commission and has already provided the basic microinsurance course to 186 rural banks. Licensed rural banks and their partner insurance providers have already processed insurance coverage for more than 450,000 clients and their family members.
- The RBAP-MABS program now has a roster of accredited training courses and has a pool of registered and accredited trainers that all rural banks can tap. This list will be provided on the RBAP website and will be maintained and updated by RBAP in the coming years. RBAP-MABS has also assisted RBAP to develop multiple private sector partnerships that will continue to be enhanced in the coming years to enable rural banks to better expand the range and types of microfinance products and services that they provide their members. RBAP now has an excellent working relationship with the BSP and Insurance Commission and have developed numerous local and international linkages that will serve the industry well in the future.
- Today, rural banks are faced with a number of factors that affect their ability to expand their services. Markets are changing today more than ever before with new products and services and much greater access to information than ever before. Traditional and new players are now entering the market from all directions. New technologies provide banks and others with new ways to address market conditions. This is both a challenge and an opportunity for those who move quickly. New regulations are promoting greater financial inclusion than ever before.
- Clients today are no longer satisfied with simple deposit and credit services but want access to new products and services including micro insurance, access to ATMs, cash cards, prepaid debit cards, mobile banking and other services.
- We continue to see pockets of multiple borrowings and over-indebtedness among some clients in certain markets so banks will need to be increasingly careful to select new clients and retain old clients as well as to continue to monitor how indebt clients are becoming. The need for sharing credit references and access to credit bureaus are now more important than ever before.
- New Interest Rate Transparency guideline released last year by the BSP under the Effective Interest Rate Circular will be one the biggest changes for all lenders and will bring new competitive pressure, more focus on efficiency and opportunities for those banks willing to invest in systems to promote greater efficiency in their operations.
- To address these concerns, RBAP-MABS helped prepare a Pricing Transparency workshop that will be provided nationwide. The list of courses above are the ones that will take place either at RBAP, in the Visayas region, or in Cagayan de Oro. For a full list of courses, please check the www.rbap.org website.
- Clients also have greater access to information from friends and neighbors and are comparing the services you offer. Do you offer good customer support, are you able to be reached, do you offer access to an ATM or debit card? Microinsurance? Accessible via SMS or on the phone? Are you open late or on weekends? Do you have accessible OBOs or MBOs in areas which are accessible to clients? Do you have low minimum maintaining balances for deposits? Quick loan processing?
- From traditional salary, commercial, agricultural loans, deposits and bill payments, banks will need to offer new products and services to meet the needs of today’s market. Already housing microfinance is attracting more customers and banks are seeing the benefits of not only partnering with others to offer ATMS (or in some cases set up their own ATMs) but are also adding cash cards that are increasingly linked to a mobile wallet and double as ATM and debit cards that can be used be their clients in most POS terminals. Mobile Money platforms and mobile phone banking services are now within the reach of all rural bankers and new KYC regulations that allow banks to partner with 3rd parties to assist in helping banks to attract new depositors and borrowers remotely and even before KYC procedures on behalf of banks. Just look at BPI as well as BPI BanKO and their use of 3rd party “partners”
- OBOs/MBOs can now accept deposits and is designed to fit the capacity and serve the needs of basic sectors.Features of Micro-Deposit includes:Minimum maintaining balance not exceeding P100Not subject to dormancy chargesOnly for individual clients whose ADB balance does not exceed P15kNo frills account to address to basic deposit account and increase savings consciousness to the low-income population.
- Clarify that HMF consists mainly of loans to the poor and low-income households for home improvement/repairs, housing construction, house and/or lot acquisition, and/or access to basic infrastructure or public services. Clarify that Agri Microfinance refers to loans for small farmers and fisherfolk for primary production purposes, tools and equipment, or for purchases of farm produce and/or processing.
- Today rural banks offering savings boxes like this to tens of thousands of small savers. This helps to reduce costs in managing small savings accounts. There are now a number of new strategies and approaches that rural banks are using to attract small deposit accounts and I encourage those interested to check the RBAP-MABS blog for more information at http://www.rbapmabs.org/blog/tag/savings-mobilization/
- New technologies are now offering opportunities not dreamed possible 5-10 years ago. SMS services, POS systems, cash cards, ATM cards, and prepaid debit cards. New social networking sites to reach and interact with clients are becoming increasingly important.
- SMS banking services are also helping banks to reach out to clients in new and innovative ways and to “personalize” customer relationships in ways that were never before possible using basic software and a modem. For more information on RBAP-MABS partner, MyClick Technologies check out http://www.slideshare.net/MABSIV/crm-via-sms-1491074
- I JUST CAME BACK FROM ATTENDING THE GSMA MOBILE WORLD CONGRESS WITH OVER 67,000 PARTICIPANTS. BY FAR, THE LARGEST CONFERENCE I HAVE ATTENDED AND I WAS IMPRESSED TO SEE THE PROGRESS OF THE INDUSTRY AND THE APPLICATIONS THAT WILL BE AVAILABLE SOON FOR ALL BANKS AND ALL PEOPLE. AS THE PRICE OF SMARTPHONES NOW FALL UNDER 5,000, WE SOON EXPECT TO SEE IN THE PHILIPPINES, PHP 2,000 ANDROID PHONES AND PHP 3,000-4,000 ANDROID TABLETS THAT WILL REVOLUNTIONIZE ACCESS TO BANKING SERVICES, PAYMENTS, AND COMMERCE. PHONES AND CHEAP TABLETS ARE BECOMING AND WILL REPLACE TRADITIONAL POINT OF SALE SYSTEMS. APPS WILL SOON BE WITHIN THE REACH OF MOST PEOPLE AND BANKS WILL CONTINUE TO MAKE USE OF THESE. I NOW DO MORE THAN FIVE TIMES AS MANY BANKING TRANSACTIONS THAN I DO ON A COMPUTER AND ALMOST NEVER GO INTO A BRANCH ANYMORE. SMART MONEY HAS A ANDROID APP AND THE NEW GCASH IPHONE/BLACKBERRY/ANDROID APP WILL MAKE USING MOBILE MONEY EASIER THAN EVER. THE NEW IPHONE APP WILL ALLOW ANY CLIENT TO SEND MONEY OR MAKE A PAYMENT TO ANYONE IN THEIR OWN CONTACT LIST OR EVEN VIA FACEBOOK. BANKS THAT HAVE A FACEBOOK SITE CAN ALSO MAKE USE OF THIS IN ACCEPTING PAYMENTS, REVOLUTIONIZING BANKING SERVICES BY RIDING ON THE INCREASING WAVE OF APPLICATIONS THAT EVERYDAY PEOPLE WILL BE ABLE TO USE ON THEIR HANDSETS. IN FACT STARTING LAST MONTH, I HAVE NOW MADE THE SWITCH TO USING MY MOBILE PHONE MORE THAN GOING TO A COMPUTER OR EVEN A BANK BRANCH TO DO MY BANKING MOSTLY DUE TO THE NEW APPLICATIONS THAT MAKE IT EASIER FOR ME TO USE MY PHONE TO APPROVE BANKING TRANSACTIONS.
- Rural banks are fortunate to live in a country with two very active and supportive mobile money platforms and a very proactive and supportive regulatory environment. I highly recommend that all rural banks take advantage of these two platforms to better connect up with clients and customers. One only has to look at the figures in the market place. Globe and Smart now service over 85 million subscribers and this number is growing. Rural banks still service only 6 million clients. There are now some 10 million Filipinos that have registered to make use of mobile money services. Why not look at better ways to serve and bank these clients.
- Cash cards offered by banks such as BDO or ATM cards like the co-branded GCASH Rural Bank FaceCard are now providing greater access and significantly lower fees than ever before. Smart Money MasterCards offer the convenience of not only accessing ATMs but also paying in over 50,000 MasterCard POS merchants nationwide.
- The BSP has opened the doors to partnering and offering banking services that can be promoted through third party agents. BPI has lost no time setting up kiosks in different areas to promote micro savings using the Easy Savers Plan that provides new customers with an instant ATM card. BanKO is also offering any business who wants to partner with them to become a partner outlet like the ones pictured here. Cheaper POS systems and liberal agent banking regulations in countries such as Brazil mean that most banking transactions take place in shops rather than going to a bank where you can pay bills and support deposits and withdrawals. By using a mobile wallet, BanKO is a good example of how this is also now taking place in the Philippines.
- Social networking via SMS marketing or updates or sites such as Facebook and Twitter are changing the face of everything we do including where we shop and even where we bank.
- Here is an example of one Cantilanbank’s Facebook site which it uses to stay in touch with customers and clients who work not only in the community but also overseas.
- BanKO has done extremely well over a short time bringing some of the their clients together to provide information and even business opportunities. For those interested in partnering with the bank to become a BanKO Outlet and make money, the bank is also actively promoting this via social network sites such as Facebook. Within just a few months, they attracted more than 2,000 followers and have developed a site that even allows their clients and customers to share business opportunities and ventures as well as to encourage clients to sign up and open a mobile enabled bank account.
- Banks need to look at how to promote their services and get more viral adoption such as using the FaceCard concept to encourage others to bank with the bank
- Rural banks need to diversify their products and services to both reach new clients and retain existing customers. Now is the time to diversify your product and consider services such as microinsurance, offering a cash/debit/ATM card. Take advantage of new rules to offer payment services. In the future we see prepaid services such as light, water, or even cable as becoming opportunities to service new and existing clients. . The ability to open MBOs provides greater and faster ability of banks to reach new market niches as well as locations. Micro savings services and reduced KYC as well as the ability to outsource KYC to open small accounts will dramatically change the banking landscape and rural banks should take advantage of this as well or potentially loss clients to their competitors both new and old. Make sure to use micro deposits, mobile money transfer services, or payments as a way to “cross-sell” other services in the bank. Offer cheaper transfer or payment services for those who maintain accounts at the bank or are a borrower.
- Take advantage of cash/ATM and debit cards now being offered in the market. Mobile phone banking will only grow and now is the time to ensure you are an early mover. Utilizing merchant partners as “agent” channels is already happening and should be actively explored. At the end of the day, your success will be based not only on your efforts but also on building successful partnerships and strategic alliances in your community. Invest in core banking solutions and make sure to take advantage of low cost and powerful social networking as well as tapping influencers in your community.Inclusive regulation will require quite a bit more focus on loan pricing in the coming year so take advantage of organizations such as MFTransparency. Also their will be increasing importance of consumer protection principles and responding to customer issues so make sure you consider your customer relationship management strategy
- Pricing Transparency will force greater efficiency--- more strategies on tiered pricingNeed for expanded use of credit bureausLeverage technology to addressOutreachCompetitionEfficiency(Examples: ATMs, cash cards, mobile money, and improved MIS)4. Make use of Social Networks - crowdsource
- Before I came to speak, I wanted to share with all of you a concrete example of crowdsourcing so I sent out this message on twitter.
- Here is advice from a colleague in India and another expert in the banking sector in the US.
- And here is from a colleague who has worked with banks on mobile banking in Indonesia, Pakistan, and Cambodia.
- And lastly, here is one of the answers I received from the famous author of Bank 2.0 and the new CEO of one of first cardlessbanks in the US and UK, Brett King. Basically the important thing for banks to consider is about how to create a “utility” in the bank-client relationship to answer the important question of how does the bank help me get stuff done and simplify my financial concerns!Salamat.