Leveraging Mobile Money to Increase Financial Inclusion
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This presentation was given during the Asian Development Bank session on "Enhancing the Potential for Inclusion-Friendly Electronic G2P Payments" held at the Bangko Sentral ng Pilipinas (BSP) on May 2, 2012.
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Leveraging Mobile Money to Increase Financial Inclusion
- 1. Leveraging Mobile M ney to Increase Financial Inclusion in the Philippines John V. Owens Chief of Party RBAP-MABS Program, USAID Enhancing the Potential of Inclusion-Friendly Electronic G2P Payment Bangko Sentral ng Pilipinas, Manila May 2, 2012
- 2. CCT Disbursement via the Rural Banks Pay-Out Counter CCT Recipient Rural Mobile Mobile Bank Money Money Pay-Out Counter CCT Recipient Pay-Out Counter CCT Recipient One of the channels for providing CCT has been under a partnership between Land Bank, Globe GCASH, rural banks & other partners using mobile money to enable transfers in hard to reach communities.
- 3. Actual CCT Disbursement Through GCASH Remit Step 1 – Grouping beneficiaries by barangay and lining them up based on the order of their names in the DSWD-provided “payroll” list.
- 4. Actual CCT Disbursement Through GCASH Remit Step 2 – GCASH Remit numbers & ID confirmed by bank employees
- 5. Actual CCT Disbursement Through GCASH Remit Step 3 – Cash disbursement by bank teller
- 6. CCT Recipients in Cantilan
- 7. Opening Up Savings Accounts for Children of CCT Recipients
- 8. 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 (age 15 years and above) having an account with a formal financial institution.
- 9. Women top Men in Financial Inclusion In the Philippines, the number of women with an account in a formal financial institution was almost 1.8 times higher than men (33.7% vs 19%)
- 10. Mobile Money – Bright Spot in Financial Inclusion Study Mobile Money enabled accounts increasing financial inclusion in countries such as Kenya & the Philippines with the advent of MPESA mobile money in Kenya and and in the Philippines.
- 11. 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.
- 12. MOBILE MONEY ECOSYSTEM DEVELOPMENT Clients Individual buys food, pays tricycle fare, fuel and even buy from the market using Individual receives electronic money electronic money by way of Text-A- Market Remittance or Text-A- Vendors Sweldo Utility Restaurants Individual pays Companies Utility company, school etc. tru bill- pay facility offered by rural bank Bank credits utility company's and school’s accounts with the corresponding amount paid by individuals through electronic money BANK Market vendor, tricycle driver, gas station, restaurant, suppliers and repair Transport shops deposit daily Schools sales thru Text-A- Deposit Operators Gas Station Market vendor, tricycle driver, gas station owner and restaurant pays suppliers, repair shops etc. thru Suppliers electronic money Service Centers Farmers
- 13. Disbursing CCT via a Mobile Money Linked Bank Account with an ATM / Debit card would result in a dramatic increase in the number of people with access to a formal financial account, especially those at the lowest income levels of society. Bank Account
- 14. Benefits of Offering CCT via a Mobile Money / Bank / ATM / Debit Card Account For the For the For Government Recipients Providers While only having cash, an ATM card, a debit card, a bank 4.Cheaper and easier to account or mobile manage multiple small Brins down COST and money account might accounts and transactions. TIME of disbursing limit what you can do CCTs. with your benefits, 6.Cross selling other linking all of them services. together in one account opens up new doors.
- 15. Email: jowens@rbapmabs.org Websites: www.rbapmabs.org www.mobilephonebanking.rbap.org www.youtube.com/RBAPMABS Thank Y u!
Notas del editor
- One of the channels for providing CCT has been under a partnership between LandBank, Rural Banks, GCASH Remit, and other partners show graphically how this works
- Step 1 – Grouping beneficiaries by barangay and lining them up based on the order of their names in the DSWD-provided “payroll” list.
- Staff from the bank need to confirm the GCASH Remit code and the clients ID and the amount they will receive
- Clients then proceed to the bank teller to receive the CCT funds
- Here are photos from CCT recipients at Cantilan Bank who I met and interviewed on Monday. This bank directly disburses CCT via transfers from Land Bank. Of the 45 women we interviewed, 50% owned a mobile phone and the majority had someone in the household with a mobile phone. The vast majority did not have a bank account. The bank does use the CCT payout event to promote financial education and the importance of opening a bank account.
- About 10% actually open an account and most only do so due to the banks encouragement to open an account for their children. These two children are both from CCT recipients. The bank provides them with a free locked savings box where the children are encouraged to save little by little with their parents. Promoting CCT recipients to open up accounts is a challenging and diffuclut task and there are easier ways to promote financial inclusion as I will demonstrate.
- We know from both the CCT numbers and the recent World Bank Study on Financial Inclusion that the Philippines ranks 12 out of 15 countries in the East Asia & Pacific Region with only 26.6% having an account with a formal financial institution and less than 10% of those in at the lowest income levels (bottom 40%). http://datatopics.worldbank.org/financialinclusion/region/east-asia-and-pacific
- Women in the Philippines, however have the highest ratio of financial inclusion when compared to me with almost 1.8 times more women having accounts in a financial institution than men (33.7% vs 19%) this ratio was the highest not only in the East Asia & Pacific Region but also one of the highest in the world. http://datatopics.worldbank.org/financialinclusion/region/east-asia-and-pacific So we know, women, who make up the vast majority of CCT recipients in the Philippines also have a much higher propensity to open a financial account and save than do men.
- Another bright spot in the report was the expansion of Mobile Money enabled accounts as a rising new way to increase access to financial inclusion especially in countries such as Kenya and the Philippines with the advent of mobile money such as MPESA in Kenya and GCASH and Smart Money in the Philippines
- While there are various options to either disburse funds via a ATM card or a debit card or via a bank account or mobile money account, combining all four of these platforms will open up multiple options for greater financial inclusion. This is now much easier to do as the BSP has now issued circular 706 which allows for third party outsourcing of KYC which makes it easier to open bank accounts especially for those that are mobile money enabled and linked to a debit/ATM account allowing many more options and uses.
- Experience disbursing mobile money enabled payroll in the countryside also shows how rapidly mobile money enabled ecosystems can develop when a regular stream of funds are provided in the countryside via mobile money.
- Since we know Philippines has a low financial inclusion ratio and since we know most beneficiaries are women and women have the highest demonstrated interest in opening up an account within a financial institution, this one change in government policy that would allow CCTs to be disbursed via a mobile money enabled bank account with a debit/ATM card would result in a dramatic increase on the number of people with access to a formal financial account, especially those at the lowest income levels in society.
- Slide 7 - Boxes on the left and then right For the government This would bring down the time and costs of distributing CCTs For the recipients Having a simple mobile money enabled account with a debit/ATM card and a bank account would be easier While only having cash, an ATM card, a debit card, a bank account or mobile money account might limit what you can do with your benefits, linking all of them together opens up new doors For providers - business case is there - much cheaper and easier to manage multiple small accounts and transactions. Cross selling to encourage savings over time may also be useful as we have seen with the use of raffles and small prizes to encourage small savings in the countryside.