Flow of the Presentation

Introduction
The
Dilemma of
Branchless
Banking
Conclusion/
Recommend
ation
Our
Assessmen
t &
Criticism
What is Branchless Banking?
0 Non-bank retail outlets are used as customer touch-points,
at least for cashing in or out of the accounts
0 Technology, such as payment cards or mobile phones, is
used to identify customers and authorize transactions
electronically and, in some cases, to allow customers to
initiate transactions on their own
0 Transactions can be processed against an electronic store
of value (although cash-based services for non-customers
may also be offered in addition)
0 Accounts are issued by institutions recognized and
explicitly or implicitly authorized by the banking regulator,
although they may not be formally licensed and regulated
Introduction to Branchless
Banking
Branchless Banking Platform
0 A branchless banking platform is made up of three
key elements:
0 The retail network, composed of the collection of retail
outlets where transactions are originated
0 The payment network, which aggregates the
transactions from the collection of retail outlets and
routes them to the appropriate issuer
0 The account platform, which manages the service logic
by authorizing individual transactions and maintaining
the value of accounts
Introduction to Branchless
Banking
Extract
0 This article highlights:
0 The potential of Branchless Banking
0 The elements of value-chain in Branchless Banking
0 Banks- Mobile Network Operators- Third Party Agents

0 And Is Branchless Banking desirable for banks?

Introduction to Branchless
Banking
Dilemma of Branchless Banking
0 How to make all these new ways of bankingby
mobile phone, via card readers and enhanced ATMs,
and with third-party agents who act on behalf of
branch staffeither profitable or at least sustainable.
Potential of Branchless Banking
0 2.7 billion, or 72% of adults in the developing world,
who have limited or no access to guaranteed deposits
and other licensed banking benefits.
0 CGAP report on branchless banking in low- and mid-
level income countries around the world shows an
estimated 185 million active users for 2010, up from
137 million a year earlier

0 Branchless banking is a process of reinventing how
people send and receive money in remote locations,
how they pay bills and loans, how they save and
insure against emergencies, and for increasing
numbers, how they enjoy greater freedom and control
over their financial future.
0 leveraging the costs involved in opening and servicing
low-income savings accounts is important.

0 In most scenarios, new customer acquisition is the
highest costanywhere from US$6 over a three-year
period to $50 for inactive customers.
0 The conventional banking business model works just
fine for these larger deposit accounts. And dormancy
in the smaller accounts is an expensive problem that
will not go away
The elements of value-chain in
Branchless Banking
0 New and active accounts
0 Optimal technology, pricing and collaboration
0 And a highly motivated agent network to serve them
Banks
Mobile Network Operators
Third Party Agents
0 Banks- banks do not want this business. The
burgeoning middle classes is swelling in many parts
of the developing economies.
0 And dormancy in the smaller accounts is an expensive
problem.
0 Partnering with MNO and Third Party Agents is
Important for Branchless Banking
0 Most banks, however, see few shared rewards in such
joint ventures and numerous potential new liabilities.

0 Mobile Network Operators- MNOs have a business model
predicated on volume, more volume, and diversified
services to minimize churn. Nothing creates more loyalty
than banking, so operators would dearly love to take on as
much mobile banking as regulators will allow.
0 But there are many legal issues of responsibility which are
to be handled properly.
0 Example: although local operators may now be able to transmit money instantly from mobile to
mobile, if subscribers try to pay a bill or send part of their monthly wage to another phone or bank
account and the money does not arrive, legally this is not the phone carriers responsibility. The
sender may have entered the phone or account or his/her passport number incorrectly, or the
transfer may simply be delayed. Unlike a bank transaction, however, the onus of proof lies with the
customer. Authentication, fraud, and other accountability issues also pose higher risks without
bank-grade security systems. To offer the level of service and trust customers need, MNOs must
partner with banks or obtain their own banking licenses.


0 Third Party Agents- serve either as cash-in/cash-out
points for mobile and other branchless money
transfers in remote areas, or as field officers with
responsibilities for new accounts and basic financial
planning.
0 Increasing number complains that their revenues do
not sufficiently compensate for costs, time away from
core business, and the extra sales effort and expertise
required.
Conclusion/ Recommendation
0 With sophisticated management, branchless banking
can be made profitable or at least sustainable, as
many bank have been able to do this earlier and
continue doing it. Yet complexities and cost associated
to it do make it difficult at times.
0 But the fact that new customer acquisition is
expensive, as is dormancy in the smaller accounts. So
it is important to provide the best of service.
0 Also keeping up with technology is important.
Our Assessment & Criticism