Increasing access to finance using mobile banking services

Increasing access to finance using mobile banking services What are the factors MFIs should consider before engaging in m-banking solutions? Case Study on M-Paisa in Afghanistan Benoit Destouches Financial Analyst contact@e-mfp. eu www. e-mfp. eu

The First Micro. Finance. Bank Afghanistan n Mission ¡ To reduce poverty, diminish the vulnerability of poor populations and alleviate economic and social exclusion. It aims to help people become self-reliant and eventually gain the skills needed to graduate into the mainstream financial markets. Shareholding Structure n Key Indicators ¡ ¡ 1 st banking license (2003) 33 branches / 850 staff 40, 500 borrowers / USD 52 M portfolio 46, 000 depositors / USD 90 M deposit contact@e-mfp. eu www. e-mfp. eu

Why Mobile Banking? Poor transport infrastructure Popularity of mobile phones M-Paisa Large unbanked population contact@e-mfp. eu Security www. e-mfp. eu

Model: MNO-Based n Roshan is Afghanistan’s leading telecom operator. n M-Paisa developed in partnership with Vodafone. n Piloted in 2007, launched in 2008. n “Hawala on Your Mobile” contact@e-mfp. eu www. e-mfp. eu

Pilot Phase n Pilot Agreement signed in February 2007. n Limited scope: Kabul and Mazar n Test of: ¡ Registration ¡ Loan disbursements ¡ Loan repayments n …but also of: ¡ IT systems ¡ Processes and procedures ¡ Agents contact@e-mfp. eu www. e-mfp. eu

M-Paisa Accounts Structure Internal Transfer Holding Account Loan Disburse Commission Account Loan Repay FMFB Client contact@e-mfp. eu Mobile Micro Finance Account Sell M-Paisa Registration Process Buy M-Paisa Roshan Bank Account www. e-mfp. eu

Pilot Review Is M-Paisa a useful service in general? contact@e-mfp. eu Is M-Paisa an easy to use service? Will you continue to use M-Paisa? www. e-mfp. eu

Results so far n Mixed results n Additional survey of agents: ¡ 76% trust saving through an electronic system. Ø Willingness to accept new technologies. ¡ 69% would not feel comfortable saving with their shopkeeper. Ø Lack of trust with players outside formal financial institutions. contact@e-mfp. eu 7, 000 Progress Report 6, 000 5, 000 4, 000 3, 000 2, 000 1, 000 0 Nb Registration Transactions 2007 Nb 2008 2009 2010 www. e-mfp. eu

Lessons Learned – Understand the Market n From… n …To contact@e-mfp. eu www. e-mfp. eu

Lessons Learned – Know Your Partner contact@e-mfp. eu www. e-mfp. eu

Lessons Learned – Manage the Agent Network n From… n …To contact@e-mfp. eu www. e-mfp. eu

Thank You! For further information: benoit. destouches@akdn. org www. akdn. org/akam contact@e-mfp. eu www. e-mfp. eu