This presentation is an updated version of our experience in the Philippines working with more than 800 rural bank branches to utilize mobile money platforms to facilitate banking and microfinance services.

2. MABS Program
The Microenterprise Access to Banking
Services or MABS Program provides technical
assistance and training to rural banks in
microfinance best prac;ces.
The program is designed to develop the
capability of rural banks to profitably provide
financial services (loans, deposits, insurance,
money transfer, micropayments) to
microenterprises.

3. Mobile Phone Banking Penetra;on
• Very rapid expansion over the last 10 years
• More than 50% of Filipinos are mobile phone subscribers
Mobile Phone Mobile Phone Mobile Phone
Subscribers Subscribers Subscribers vs. Bank
(World Projec;ons) (Philippines) Accts (Philippines)
> 68 million subscribers 1998
1998
2008 (ITU): > Projec;ons 76 M Bank Acct: > 23 M
Bank Acct: > 23 M
2008 (ITU):
4 Billion > 60% penetra;on rate
(2010) Mobile sub: > 1.7 M
> 70 million subscribers Mphone: > 1.7 M
4 Billion
2040 (World Bank): > Projec;ons 76 M (2010)
2040 (World Bank): 2009:
6 Billion 2008:
Bank Acct: > 32 M
6 Billion Bank Acct: > 32 M
Mobile sub: > 70 M
Mphone: > 68 M

4. Opportuni;es for Mobile Phone
Banking
Mobile Phone
Remi]ance Business Rural Banks
Industry
Growing ($17B in 2009 &
Subscriber base is growing More than 50% of
expected to grow to $18B in
rapidly. popula;on is located in the
2010)
rural areas where many are
S;ff compe;;on among under‐banked or unbanked
Transac;ons and transfer
telcos is bringing costs of due to high transac;on costs
methods now increasingly
service down (unlimited
using E‐Money (GCASH/
text, rebates, promos.) Very minimal investment
Smart Money)
needed to offer mobile
Mobile Phone Cost is phone banking services.
ge[ng cheaper.

5. Breakthroughs & Milestones:
Mobile Phone Banking for Rural Bank & their Clients
BSP approved Smart Money Pilot in 2 Rural Banks
Mobile phone banking specialist program generated more than
in July.
2007
60,000 new users; more than 3,400 signed up as local merchants
RBAP signed an MOA with Globe (GXI) for Loan Payment using
2004‐2005
2006
2008
2009
Some RBs started paying employees salaries or allowances with
Gcash Salary disbursements (Text-A-Sweldo) expanded to other businesses
Gcash Mobile Phone Marketing program launched
55 Accredited Rural Banks with 830 branches and
in the community
other banking offices
BSP approved pilot of Text‐A‐Payment to selected rural banks
M‐commerce was used by local merchants 400 branches are Gcash
More than 40 rural banks with more than
Text-A-Bill Payment was initiated by a rural bank with local utility
accredited outlets
cooperative 44% increase in M‐Banking Transac;ons in 2009
BSP approved Cash‐in/Out (Text‐A‐Remi]ance) services for rural
Autoloadmax retailers as Gcash outlets was launched
banks RBAP and Globe (GXI) partnership renewed (Gcash)
Cumula;ve Mobile Banking Transac;ons via the
Text-A-Withdrawal was approved by BSP
Study on Cost Savings conducted in selected rural banks on the
GCASH plajorm exceed $100 million
RBAP signed an agreement with Nokia Philippines (Nokia phone
BSP approved Text‐A‐Deposit service for rural banks
use of G‐Cash for loan payment materials for was launched
Mobile Phone Banking Specialist Program mobile phone
financing and educational
Strategic Planning was conducted with 5 pilot banks
RBAP Signed an agreement with Smart Communications (Smart
Money)

6. Prac;cal Issues between Mobile
Money Issuers and MFI partnerships
✔ Flexible
✔ Responsiveness
✔ Marke;ng Support
✔ Training

7. Preparing Small Financial Ins;tu;ons
to Promote Mobile Money and Mobile
Financial Services

8. Environment for Mobile Phone
Banking & Mobile Commerce
• Evolu:on of the retail and financial sectors:
– Nature of financial and retail market is important for determining
func:onality
• Level of financial/electronic literacy:
– Influences nature of transac:ons
• Regulatory and Policy Environment
– Need suppor:ve environment for
mobile phone banking & mobile commerce
– Bring the regulators on board – early
– New Philippine E‐Money Circular

9. Regulatory Environment
• Basle CommiJee on Banking Supervision –
important role of regulators to balance e‐
banking risks while suppor:ng innova:on
• Regulatory framework governing e‐banking:
– Underlying soundness of the banking ins:tu:on
– Adequate risk management surrounding e‐
banking ac:vity

10. Regulatory Environment
• Philippine Central Bank (BSP) – sees e‐
banking as way to improve efficiency &
increase access to banking services
• BSP remains responsive to the rapidly
developing technologies related to
electronic banking
• BSP has issued numerous circulars to
oversee & support e‐banking

11. Regulatory Environment
BSP Circular 511 (Technology Risk
Management)
– Risk Management
– Opera:onal issues
– Compliance
– Reputa:on and strategic risks
associated with tech‐related products

12. Regulatory Environment
Circular 542 Series 2006 (Consumer Protec:on for E‐Banking)
– Board Oversight
– Internal Controls
– Security
– Authen:ca:on
– Customer origina:on/verifica:on
– Monitoring and repor:ng
– Disclosure and complaint resolu:on

13. Regulatory Environment
• BSP built up its capacity to respond & support the e‐
banking environment in the Philippines
• Crea:on of a Core Informa:on Technology Supervisory
Group (CITSG)
– Central group to monitor & address electronic
banking issues
– Includes Mobile Money & Mobile Phone Banking

14. Regulatory Environment
Product Approval Process:
‐ Proposal for banks used as Cash In/ Cash Out outlets
allowed BSP to evaluate the GCASH product and features
– Key areas reviewed:
• KYC
• An: Money Laundering Requirements
• Risk Management
• Integrity
• Security and Confiden:ality

15. Regulatory Environment
Measures approved:
• Transac:on cap
– PhP 40,000/day ($1,000)
– PhP 100,000/month ($2,500)
• Process flow was devised for more expedi:ous
product approvals in the future
– Banks interested in providing approved service can
apply through their respec:ve banking associa:ons
– Associa:on accredits member banks aaer complying
with requirements and training
– Associa:on submits to BSP the list of accredited banks

16. Regulatory Issues Considered
• Key areas of confiden:ality, money laundering, risk
management should be upheld even with the new
modali:es
• Consumer protec:on is especially important in e‐banking
• Risk and security management requirements as well as
regulatory costs should be commensurate to risks involved
• Responsiveness to innova:on and experimenta:on is
important

17. Regulatory Issues Considered
• Ins:tu:onal arrangements are important especially if
the e‐banking services outsource to non‐bank
ins:tu:ons (i.e. E‐Money Issuers (EMI)/Mobile Network
Operators (MNOs).
• When third party, such as EMI or MNO, handles or
supports banking transac:ons, BSP has the authority to
inspect the database of the third party.
• Confidence in industry associa:on and networks – key
issue for BSP in suppor:ng expansion of e‐banking
services.

18. E‐money Circular
• Defines Electronic Money & E‐Money Issuers
• Uses of Electronic Money
 P2P
 Payroll
 Remi]ances
 Purchases
 Payments
 Disbursement of loans, etc.
• Load limit of PhP 100,000/ month
(accumulated)

19. The Business Model for Small Financial
Ins;tu;ons to offer and use Mobile
Money:

20. The Business Model for Small Financial
Ins;tu;ons to offer and use Mobile
Money:
Reduce Interest rates on Micro
Loans Clients (TAP)
Ac;vate Mobile Money Resellers
(Source of Mobile Money of TAP
Clients)

21. Issues and Lessons Learnt from Pilot
Tests
Understand your market
Acceptance
and fear of Importance of registra;on,
the use of training, and adop;on of
service by clients/merchants
technology
especially Ecosystem Development –
among mul;ple sources and uses –
elderly clients m‐banking/m‐commerce

22. Issues and Lessons Learnt from Pilot
Tests
Value
Proposi;on  onvenience
C
 educes transac0on
R
for Clients,  educes risks
R
Merchants &  ncreases sales
I
Customers

23. Issues and Lessons Learnt from Pilot
Tests
Effec;ve training and
Lack of educa;ng Loan Officers
and Front‐line staff
Mobile
Money Release of employee’s
Outlets or payroll or
source Allowances via mobile
especially in money
the rural
Plan for sufficient cash‐in/
areas
cash‐out points

24. Issues and Lessons Learnt from Pilot
Tests
How to reach Informa;on and Product Awareness
clients in Campaigns through media print, radio,
remote TV, online
communi:es
Mobile Phone Banking website
‐ awareness
h]p://mobilephonebanking.rbap.org
and
informa:on Promote Mobile Money by banks in key
campaign loca;ons/events (such as local fes;vals)

25. Issues and Lessons Learnt from Pilot
Tests
Incen;ve
programs for
Increasing of accredited rural
volume and banks
usage of
Mobile Phone
mobile Banking
money in the conferences &
rural areas workshop
dialogue events

26. Issues and Lessons Learnt from Pilot
Tests
Crea;ng a sense of ownership among
bank partners
Working with
Regular Accredita;on training
MFIs –
Networks are Rural Bankers Membership Mee;ngs
key to
outreach Tes;monials from accredited rural
banks
Globe GCASH promo;on

27. Overcoming Cash‐in/Cash‐out
Constraints in Rural Communi;es
Bank partnered with Local
Merchants to act as
resellers of mobile money
in rural areas.
Larry Bat‐ao, Can;lan Bank Merchant‐Deposit
and provider of GCASH

28. Overcoming Cash‐in/Cash‐out
Constraints in Rural Communi;es
Bank established kiosks,
sub‐offices, and other
business offices (OBOs) to
provide Cash‐In and Cash‐
Out

29. Overcoming Cash‐in/Cash‐out
Constraints in Rural Communi;es
Bank coordinates with GXI
for AutoLoadMax Dealers
to provide Cash‐Out
func;ons

30. Developing Mobile Money Ecosystems
Commitment of Bank Management
Development of Mobile Money Ecosystem
Sufficient Cash‐In/Cash‐Out Agents/Resellers
Crea;ng Awareness of the use of Mobile Money in the Rural Community
Promote the value proposi;on for businesses, clients, and customers