Research Symposium, 18th Microcredit Summit, Abu Dhabi UAE, March 14-17, 2016

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Expanding Access to Finance the through Digital
Channels: FINCA - MNO Partnership experience.
Nathan Were
Program Manager - Financial Inclussion, Africa
#18 MicroCredit Summit: [Abu Dhabi - UAE 14 – 17, March 2016]

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Video: 2 minutes
https://www.youtube.com/watch?v=P-yh4tTiwMI

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Our Global Presence
In 2015, we reached nearly 2 million clients across five continents and 23 countries.
Mexico
Guatemala
El Salvador
Ecuador
Nicaragua
Honduras
Haiti
Afghanistan
Jordan
PakistanNigeria
D. R. Congo
Uganda
Tanzania
Malawi
Zambia
Kyrgyzstan
Kosovo
Azerbaijan
Georgia
Armenia
Russia
Tajikistan
3

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 Case study: Tanzania
The Journey
• Launched Mobile Payments in
2012 with MNOVodacom.
• 2014 Launched Agency
Banking [FINCA Express] with
own proprietary agents.
• 2015 engaged an aggregator
[Selcom] and integrated with
several MNOs [Tigo, Airtel,
Vodacom] to launch Mobile
Banking.

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Digital Channels - Uptake & Usage
% of Mobile
to total # of
Transactions
26%
% of Agents
to total # of
Transactions
35%
% of Tellers #
of
Transactions
to total
transaction
39%
# of transactions as a % of total
transactions : January, 2016
% of Mobile
to total # of
Transactions
26%
% of Agents
to total # of
Transactions
43%
% of Tellers #
of
Transactions
to total
transaction
31%
# of transactions as a % of total
transactions : February, 2016

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Lessons learned
Developing partnerships that
work
Implications of Digital
channels on Cost reduction
Impact on customer behavior

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1. Developing
partnerships that work
The reality
FIs are always at a negotiation disadvantage
when it comes to partnering with MNOs,
Aggregators given there sheer size & market
power.
FIs may come under pressure to bend down
to the demands of the MNO which may
dictate the direction of the relationship.
Customer experience may be affected.
 What we have learnt.
 Do not relegate the management of
the MNO-MFI relationship to IT/IS.
 Nurture and cultivate the relationship
management. Appoint a dedicated
resource.
 Enter into a Service level agreement
with clear service level standards and
penalties for non-compliance.
 You need a working group of senior
team members on both sides to
constantly engage and address the
issues that crop up.
 Understand the decision making
structure of the Telco and push for
people that can make decisions on the
table.

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2. Impact on customer
behavior
 The reality
 Introduction of digital channels will
change customer behavior. Typical with
FIs that run group lending
methodologies.
 The channels will potentially impact
group cohesion and that in some cases
may drives dis-integration of solidarity
groups.
 What we have learnt
 Be prepared for the trade-offs that
arise from introduction of the digital
channels.
 Re-think the value for group meetings
beyond payments and collections.
 The industry needs to collectively
think about the future OF group
guaranteed lending methodologies in
the wake of digital channels.

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3. Implications of Digital
channels on Cost reduction
Cost per Transaction
Teller Feb'15 Nov'15
Direct Cost per Txn $0.50 $0.80
Indirect Cost per Txn $0.65 $1.03
Total Cost per Txn $1.15 $1.83
Agents 11 Agents 46 Agents
Direct Cost per Txn $1.48 $0.43
Indirect Cost per Txn $1.73 $0.65
Total Cost per Txn $3.22 $1.08
Mobile
Direct Cost per Txn $0.16 $0.18
Indirect Cost per Txn $0.33 $0.47
Total Cost per Txn $0.49 $0.66
Weighted Average $1.02 $1.25
Teller, 62%
Agent, 5%
Mobile, 33%
Feb 2015 Channels Mix
Teller, 39%
Agent, 31%
Mobile, 29%
Nov 2015 Channels Mix

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Cost reduction implications:
Our learning
 Digital channels only give you a lower cost per transaction when they achieves
scale.
 For MFIs not in high-growth mode, a strategic shift of transaction activity to
branchless channels must be accompanied by a robust plan to decrease cost
structure at the branch/teller, or more radically, a plan to cut down or close the
branches/tellers completely
 On a competition level, traditional brick-and-mortar MFIs must realize that the
cost efficiencies from adding branchless channels are not as immediate or
readily enjoyable as they may initially seem.

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You can access full case study here:
http://www.microfinancegateway.org/library/expanding-access-
finance-through-mobile-payments-lessons-learned-mfi-mobile-
network-operator