Today you understand the need for branchless banking in developing countries. There are large areas of rural living where people are unbanked but many have mobile phones – brick and mortar can’t meet their needs but technology can. I wonder though, if Martin Cooper visualised forty-five years ago that his invention of the mobile phone would stretch across the continent. My guess, he did, considering how his idea for a mobile phone came from the original Star Trek series.From history, you can recognise how business shifted when Bell introduced the telephone in 1876. But can you grasp all that has happened with telecommunication since Cooper introduced the mobile phone in 1973?
In 2010 a worldwide count of mobile users reached 3.3 billion people. CGAP realised that while many people in rural areas of developing countries had mobile phones, there remained scores of unbanked. There needed to be a cost-effective way to reach the people so they could enjoy the banking world. That’s when branchless banking became a reality. A “test and learn” approach became essential. On a top priority list, what you want most is for your customer to be protected while experiencing financial stability. You want to assess the needs for financial sector expansion and acknowledge that there could be setbacks such as a legal or regulatory environment that views your model or product unfavourably.
As of 2017, mobile money users worldwide have reached 30 to 35 million with Kenyans leading the way, thanks to M-Pesa, a transfer-money system – deposit, send, and withdrawal. Agent banking and POS devices have reduced the cost from what would have been brick and mortar branches; however, best practices are a necessity, probably more so with branchless banking, As an example, you don’t want to ignore a region’s weather, such as the drought in North Karnataka that made repayment of loans nearly impossible. This makes best practices imperative.
You need to examine your market – to look closely at the environment and the risks. As a provider, you want to know early on that you have product approval. The general regulatory environment could dispute your product so examine the specific characteristics of your product to see if it complies with regulations. Determine the implications. Are they open to innovative models? Overall, you want clarity – you want to know the ins and outs of the regulatory engagement process. “In Pakistan, Telenor legally could not launch mobile money services; to do so, it needed to be a bank.” Be prepared and when all is right you can see how you’re branchless banking platform is reaching millions of people living in developing countries.
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