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Key issues and models in branchless banking in the Pacific

James Le Compte and Erik Aelbers Access to Finance Expert Pacific Branchless Banking Seminar ADB Pacific Liaison and Coordination Office, Sydney, Australia 19th 20th November, 2013

Contents
1. Constraints to financial inclusion in the Pacific Opportunities for greater financial inclusion in the Pacific Branchless Banking (BB) Models BB Implementations in the Pacific Discussion on Issues

2.
3. 4. 5.

No one said it would be easy

Geographically dispersed & challenging terrain

11 million people (0.15%) across 85 million sq. km. (17%)

Relatively weak physical infrastructure

Low population density

PNG has 17 people per sq. km.

Tonga has 138 people per sq. km.


Philippines 329 people per sq. km.

Bangladesh has 1,034 people per sq. km.

Products that dont meet the needs of customers


Long queues at branches and ATMs, account opening and KYC barriers, high fees and distant location.

Contents
1. Constraints to financial inclusion in the Pacific Opportunities for greater financial inclusion in the Pacific Branchless Banking (BB) Models BB Implementations in the Pacific Discussion on Issues

2.
3. 4. 5.

Self-reported barriers to use of formal accounts


Non-account-holders reporting barrier as a reason for not having an account (%)

Not enough money Too expensive Family member already has account Too far away Lack of necessary documentation Lack of trust
13 18 20 23 25

30

10

15

20

25

30

35

The gradual decline and re-emergence of rural banking

Bank and Mobile Phone Access in the Pacific

Commercial Bank Branches (per 100,000 adults)

ATMs (per 100,000 adults)

Mobile Phone Connections

PNG

2 (2009)

5 (2009)
11 (2011) 37 (2011) 28 (2011) 167 (2011)

2,600,000 (2012)
302,147 (2012) 940,190 (2012) 217,406 (2012) 30,600,000 (2012)

Solomon Is 7 (2011) Fiji Samoa Australia 11 (2011) 18 (2011) 30 (2011)

Supportive Regulatory Environment

Contents
1. Constraints to financial inclusion in the Pacific Opportunities for greater financial inclusion in the Pacific Branchless Banking (BB) Models BB Implementations in the Pacific Discussion on Issues

2.
3. 4. 5.

Hallmarks of a Bank-led Model


- Traditional providers of financial services - New delivery channel for existing or new financial product - Leverages bank infrastructure & where it exists a national payments system - Relies on MNO infrastructure for mobile communications

Strengths of a Bank-led Model


- Existing processes for financial service discipline - Engagement with regulatory bodies - Experienced in running transactional platform - Branches can support agent liquidity

Hallmarks of an MNO-led Model


Non-traditional financial service providers Leverage existing agent networks and experience managing agents A new product in a suite of products delivered over mobile channel Customer funds tied to SIM and held in trust or individual bank account

Strengths of an MNO-led Model


Mass-market brand Agent know-how Experienced in running transactional platform Innovative

Contents
1. Constraints to financial inclusion in the Pacific Opportunities for greater financial inclusion in the Pacific Branchless Banking (BB) Models BB Implementations in the Pacific Discussion on Issues

2.
3. 4. 5.

Branchless Banking Implementations

TIMOR-LESTE

VANUATU

In the Pacific

Fiji: Two MNO-led implementations

TIMOR-LESTE

VANUATU

PNG: MNO & Third-Parties

TIMOR-LESTE

Regional: MNO-led implementations

TIMOR-LESTE

VANUATU

Regional Bank-led roll out

TIMOR-LESTE

VANUATU

What will it take to go further with branchless banking?


Operational Challenges:
Driving Usage - Managing Agent Networks - Attracting New Customers

What will it take to go further with branchless banking?

Enabling Regulation:
Customer Registration - Principal and Agent Agreements Transparency Consumer Protection and Market Conduct

What will it take to go further with branchless banking?

A Need for Further Learning:


What is Best Practice Adequate Investment and Resources - Innovation

Discussion on Key Issues

Thank you.

More information contact :


Pacific Liaison and Coordination Office
www.adb.org/offices/pacific/main psdi@adb.org Asian Development Bank 6 ADB Avenue, Mandaluyong City 1550 Metro Manila, Philippines Tel + 632 632 4444 Port Moresby Resident Mission Level 13, Deloitte Tower Port Moresby, PNG

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