Digital Finance

Greta Bull, CEO CGAP

March 9, 2016

2 billion people have no access to formal financial services

1 billion of them

have a mobile phone

A large number of providers have

now understood this opportunity

Source: GSMA State of the Industry 2015

Number of live DFS services by region

Markets exist worldwide and

are getting deeper

Source: GSMA State of the Industry 2015

72% of these markets have

two or more providers

270+ providers of DFS

across 93 countries

Together they

serve over

411 million

customers

Seven have

interoperability

In Latin America, over

95% of DFS accounts

are card based

In South Asia, vast majority of

DFS customers transact over

the counter (OTC)

In Sub-Saharan

Africa, 90% of DFS

accounts are mobile

The sum total: A global transformation of financial services

Source: GSMA State of the Industry 2015

Models vary depending on

local context

Markets with

more DFS

than bank

accounts 19

DFS transactions

processed each day

33m Source: GSMA State of the Industry 2015

Actively used

DFS accounts

To give a sense of the scale…

Markets with

more DFS

agents than

bank branches

This is having a direct impact on financial inclusion

Africa Continues to Make Remarkable Progress

Findex reports

adults with a

mobile money

account in SSA

Competition Pushes Traditional Players to Adapt

0

5

10

15

20

25

30

2007 '08 '09 '10 '11 '12 ''13 ''14

Mobile

payment

customers:

25.8m

M-Shwari launches in 2012: In two years, 9.2m accounts, 20.6m loans for $277m, $1.5bln deposits mobilized,

PAR(90) 2.2%

Partnerships, own solutions and direct competition

Bank Customers:

28.4m

• China moving rapidly towards full

financial inclusion (64 → 79%), driven by

state owned infrastructure and

technological disruption

• Favorable government policies expand

access

• Leveraging large state bank infrastructure (e.g. PSBC over 400 million clients and

36,000 retail outlets)

• 800,000 agents in 400,000 villages power

digital G2P payments

• Alibaba gives people what they want, finance plays a supporting

role

Leading role of state, but Alibaba has shifted the goal posts

China: Where Tradition and Technology Meet

India Stack provides digital infrastructure for full financial inclusion

India: State Builds the Rails for Private Solutions

• Important regulatory changes in 2014-15

• Open public infrastructure in key areas: ID

(Aadhaar), Unified Payments Interface with

open APIs, Digital Locker, eKYC, RuPay Card

• Private banks licensed to focus on key segments: small business (10) and payments

(11)

• Low-threshold Jan Dhan accounts bring in

200m new customers in 2 years; layer on

insurance and pensions through Jan

Suraksha

• Government drives volume with G2P

payment for social programs (28 programs

to be digitized)

• Mature microfinance industry; major

player BRAC moves into agent

network through bKash

• 12 million new mobile money

accounts added in 2014, 30 million

at end of 2015

• Progress driven by large agent

network. Over 500,000 agents

nationally; 90% of adults live within 5

KM of an agent

• Dominance of OTC means full

potential of system yet to be

realized

• Banked adults moved from 5% to

9% from 2014-15

bKash drives tremendous growth in digital

Bangladesh: Microfinance Player Drives Digital

Latin America: Access Enabled by

Small and Large Retailers

Active Banking Agents (2010-2015)

345,754

97,561

34,427

0

100,000

200,000

300,000

400,000

2010 2011 2012 2013 2014 2015

Brazil

Colombia Peru

Oxxo – a convenience store – is

largest banking agent network

Number of stores/branches, 2014

Banorte

Santander

1,265

1,269

7-Eleven 1,506

Banamex

1,801

1,623

Bancomer

12,597 Oxxo

G2P and consumer purchases driving increased access to financial services

Advancing financial inclusion to improve the lives of the poor

www.cgap.org