1. Mobile Banking:
Working with
Regulators and MFIs
MOBILE BANKING & PAYMENTS FOR
EMERGING ASIA SUMMIT 2012
8-9 October, Conrad Bali, Indonesia
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2. Mobile Banking:
Working with
Regulators and MFIs
• About Rural Banks and USAID-
assisted MABS project
• Mobile Phone banking
• Working with Partners and Regulators
• Lessons Learned
• Opportunities
MOBILE BANKING & PAYMENTS FOR
EMERGING ASIA SUMMIT 2012
8-9 October, Conrad Bali, Indonesia
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3. Rural Banks in the Philippines
• Rural Bank Act of 1952
• Single-unit banks with limited products
serving small farmers, and rural enterprises
• Private and Family-owned
• Regulated by Bangko Sentral ng Pilipinas (BSP)
& Philippine Deposit Insurance Corp. (PDIC)
• Technically insolvent in late 70’s/early 80’s due
to failed directed government lending to agri
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4. 4

5. 5

6. Rural Banks Today
• 2,700+ banking offices; 97% outside
Metro Manila
• Diversified services:
• Agriculture, Microfinance, Salary/ Consumer
loans, SMEs, Remittance, Payments,
Insurance, Mobile Banking, ATMs
• Profitable, CAR of 18% (modified Basel 2)
• 1.6 mn Loan Accts (incl 900k MF clients)
ave o/s balance: $ 1,700.00
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7. Rural Banks Today
• 3% of total Philippine Banking Assets
• 5.9 mn small deposit accts (Jun 2010, PDIC)
• $ 2.9 billion
• 1 of 4 deposit accts outside Metro Manila
• Ave deposit Balance: $ 480.00
• 88% of accounts < $ 360.00 balance
• 82% of accounts < $ 120.00 balance
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8. What is the MABS Program?
Microenterprise Access to Banking Services
• USAID-supported program of the Rural Bankers
Association of the Philippines (RBAP); 1997-2012
• Technical assistance and training to rural banks in
microfinance.
• Developed capability of rural banks to profitably
provide financial services (loans, deposits, insurance,
money transfers) for micro-entrepreneurs
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9. MABS Program Milestones
• 322 Rural Banks receiving technical assistance
• 1.02 mn new micro loan clients served (cumulative)
• $ 1.05 bn in loans disbursed (cumulative)
• 896,000 new micro depositors served
• Development housing & agri microfinance, and
microinsurance products
• Development of Mobile phone banking
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10. Today, Rural Banks Offer range of
Mobile Phone Banking Services…
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11. Mobile Banking Milestones
• Developed around 2004 when G-Cash (Globe Telecom)
• Partnership RBAP, MABS, Globe, and regulators
• 77 Rural Banks accredited, 1,171 banking offices
• RBs registered over 390,000 clients
• $ 17.7 mn value mobile banking transactions (Jun 2012)
• 3.0 + mn mobile banking transactions
• $ 400.0 + mn in mobile banking transactions (cum.)
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12. Mobile Money Platforms
•Card-less Mobile Money Platform •Card-based Mobile Money Platform
•EMI - G-Xchange Inc (GXI) •EMI – BDO Unibank (manages float)
•Float held in multiple banks •EMNSP – Smart Communications
•Payments •Payments
•Money Transfer •Money Transfer
•Mobile Banking •Mobile Banking
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13. Mobile Money Now Accessible Via
Multiple Platforms
ATM Debit Card
Bank Account Mobile Phone
The BSP issued circular 706 which allows
third party outsourcing of KYC,
making it easier to open bank accounts.
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14. Mobile Money in the Philippines
• 21 E-Money Issuers - Banks
• 3 E-Money Issuers - Non Banks
These EMIs currently have
an agent network of 25,000
and continuously expand
In 2010, there were nearly 150
million e-money transactions
amounting to $ 10.5 billion
• 77 rural banks with electronic banking (mostly mobile
banking using e-money) from none in 2005
• BPI-Globe BanKo - a 3 year old mobile phone/
agent network-based bank. 200k deposit accts
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15. Working with Partners
Rural Bankers Association
Of the Philippines
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16. Thoughts on Working with
Regulators (It can be fun!)
Rural Bankers Association
Of the Philippines
• Provide input and influence regulation
(even specifics)
• Even Telcos say the same thing
• It is still a process-oriented organization
and may take time
• EIU Microfinance Survey: Philippines
ranked 1st in Regulation
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17. Thoughts on Working with
Regulators
Rural Bankers Association
Of the Philippines
• A Microfinance Committee headed by a
member of the Monetary Board
• An Inclusive Finance Advocacy Unit under
the Dep Gov for Bank Supervision
• Formal Consultation Meetings with RBAP
every other month
• Industry Associations matter
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18. Thoughts on Working with
Regulators
Rural Bankers Association
Of the Philippines
• Easy to set meetings on specific issues
• Exposure draft for comment on regulatory
issuances
• Pull aside meeting during events/functions
• Occasional text messages
• Developing personal & professional
relationships over time help
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19. Lessons learned from
Partnership structures
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20. Importance of timing in Partnerships
• Partners should understand time and
investments required
• Commit to this upfront with key partner
officers
• Execution requires all partners to work
together
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21. Important to bring
regulators on board early
• Understand and help shape regulatory
environment
• Facilitate regulatory approval process
• Regulators can be good advisers
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22. Opportunities for the
Philippines
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23. Opportunities
• 96 million
Population • 3 out of 4 do not
have a bank account
• 98%+ (94 mn) are
mobile phone
subscribers •74% NO access to
formalchannels
• 99% geographic
mobile phone • 37% (610 of 1635)
coverage towns have no
bank offices
• 2 Billion SMS
messages/day • 10 mn send remittances
regularly ($ 20 bn / yr)
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24. Bank Accounts vs. Mobile Phone Subscriptions
90
Philippines (in Millions)
80
70 GCASH
60
& SMART
Padala
50
Launched
40
30
20
10
0
1998 1999
2000 2001
2002 2003
2004 2005
2006 2007
2008 2009 2010
Bank Accounts Mobile Phone Subscriptions
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25. Low Levels of Financial Inclusion
Philippines ranked 12 out of 15 countries in the East
Asia & Pacific Region with only 26.6% of the population
having an account with a formal financial institution.
120
100
80
60
40
26.56
20
0
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26. Women top Men in Financial Inclusion
Philippines: number of women with an account in a
formal financial institution was almost 1.8 times
higher than men (33.7% vs 19%)
120
100
80
60
40
33.71
19
20
0
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27. Opportunity for Banks
• Banks can develop linkages with e-money
issuers.
– Increase value of service to clients
– Increase efficiency
– Lower costs
– Reach new clients
• With existing clients an e-money
ecosystem in the local community can be
developed
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28. Opportunity for Banks
Banks can now become an E-Money Issuer without
investing in the entire network infrastructure
Outsourcing to EMNSP, banks will be able to:
Use the wide agent network established by the EMIs
Convert E-money
Use E-money for the payment for goods/ services
Transfer funds from one electronic wallet to another
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29. Mobile Banking:
Working with
Regulators and MFIs
In Summary….
• RBAP-MABS program successes
• Partnerships have really worked well
to jumpstart mobile banking
• Regulations are progressive and
working relationships very good.
• Much remains to be done, we’ve barely
scratched the surface.
MOBILE BANKING & PAYMENTS FOR
EMERGING ASIA SUMMIT 2012
8-9 October, Conrad Bali, Indonesia
29

30. Mobile Banking:
Working with
Regulators and MFIs
Thank you!
Tomas “Mitch” Gomez IV
GM Bank
tg4@gmbank.com.ph
http://rbapmabstoolkit.wordpress.com/
http://www.mobilephonebanking.rbap.org/
http://mabs4finalreport.wordpress.com/
http://www.bsp.gov.ph/
MOBILE BANKING & PAYMENTS FOR
EMERGING ASIA SUMMIT 2012
8-9 October, Conrad Bali, Indonesia
30