the agent banking revolution: extending banking...
TRANSCRIPT
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3/13/2014
The Agent Banking Revolution: Extending Banking Reach Malaysia’s Experience
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Kamisah Abd Kadir, Deputy Director Development Finance and Enterprise Bank Negara Malaysia 12 March 2014
Seminar on Agent Banking: Expanding Access to Payment and Remittance Services Achievements and Opportunities, Brazil, March 12-14 2014
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Measures implemented to build an inclusive financial sector in Malaysia in the past 13 years
Pillar 1: Financial Service
Providers
1. National Sustainable Microfinance Framework 2. Transformation of Credit Guarantee Corporation (CGC) 3. Strengthened role of Development Financial Institutions
(DFIs)
Pillar 2: Distribution Channels
4. Guidelines on shared banking services 5. Banking services in every district and sub-district
Pillar 3: Banking Products &
Services
Pillar 4: Financial Literacy,
Advisory & Awareness
7. Guidelines for Consumer Education and Protection 8. Integrated Contact Centre (BNMLINK, TELELINK, SME
Advisory unit) 9. Credit Counselling and Management Agency (AKPK) 10. Small Debt Resolution Scheme (SDRS) 11. Financing Help Desks at Associations/Chambers via
‘Train the Trainers’
Pillar 5: Supporting Financial
Infrastructure
6. Basic banking services and products
Pillars
12. National SME Development Council 13. Central Bank Act 2009: financial inclusion as primary role 14. CCRIS (credit registry) and Credit Bureau Malaysia
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Measures
32,846
End 2000 End 2013
19,738
Take-up of deposits
Outreach
1.5 1.1
End 2000 End 2013
2
1
Take-up of loans
8,673 3,105
End 2000 End 2013
3 Increase from 2000-2013 Loans accounts per 10,000 adults
Increase from 2000-2013 Branches per 10,000 adults
Increase from 2000-2013 Deposits accounts per 10,000 adults
Key improvements
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Innovative channels
10 financial inclusion strategies
Strategic outcomes
i. Agent banking ii. Mobile banking
iii. Structured training programmes
iv. Holistic monitoring framework
v. Strengthen role of specialised DFIs in financial inclusion
vi. Flexible micro-financing
vii. Contractual micro-savings product
viii. Micro-insurance/ takaful roadmap - short, medium & long term
ix. Financial literacy via mobile LINK and partnerships
x. Leverage NGOs for capacity building programmes
A financial system that best serves all members of society, including the underserved, to
have access to and usage of quality, affordable essential financial services to satisfy their needs towards greater shared prosperity
Vision
1 Well informed and
responsible underserved
4
High Take-up Convenient accessibility
Responsible usage
High satisfaction
Desired outcomes for the underserved
Continuous monitoring & evaluation framework
Innovative products and
services 4 Effective FIs and
infrastructure 2
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Framework under the Financial Sector Blueprint (2011 – 2020) to further enhance financial inclusion
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• Belaga is a small district in Sarawak of
East Malaysia with population of above
37,000. The main economic activity is
logging
• The nearest town where banks are available
is about 100 km away i.e Town Bintulu, 6
hours away via gravel road or 5 hours by
river.
• Accessibility to Belaga is an issue for the
banks to open a branch.
• Dependent on their heads of community or
friends to do banking on their behalf.
It all started in Belaga…
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Percentage of sub-district with a population of ≥2,000 with & without access points in Malaysia 2011
Branches and ATMs per 100,000 adults in Malaysia compared with high income countries 2009
1532
Challenges faced leading to introduction of agent banking in year 2012
Lower physical outreach compared to high income countries1, concentrating in urban area
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Total sub-districts with ≥2000 population: 838 Ave. population per sub-district: 24,000 (0 – 533,000)
Sub-district with access
points (Served mukims)
46%
398 mukims
Sub-district without
access points (Unserved mukims)
54%
449 mukims
At sub-district level, about 54% of sub-districts with ≥2,000 population in Malaysia are yet to be served2
Challenges
100.0100.0100.0100.0
67.355.353.452.652.452.3
43.542.6
36.432.531.731.2
0.00.00.00.0
32.744.746.647.447.647.7
56.557.4
63.667.568.368.8
KLLabuan
PutrajayaSabah**Selangor
JohorSarawak
PerakPerlis
N.SembilanPenang
MelakaKelantan
TerengganuPahangKedah
% of served sub-district by state
(50%)
53 Malaysia
High income countries
Branches ATMs
94
15
32
Source: 1 Financial Access Report 2010, CGAP & FICPS. 2 Mapping exercise by BNM, 2011 & Jabatan Perangkaan Malaysia (DOSM 2000)
Source: BNM
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Agent Banking: Case for change
** Sabah’s lowest admin. area is a district
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Agent Banking has high potential to enhance outreach to unserved at lower costs
Increased Outreach 1 Lower Costs 2
≈28m
≈1m 665k 500k 250k
Western Unions
Bank Branches
Post Offices
ATMs Agents
Worldwide points of presence
Source: CGAP
• 2 Malaysian FIs • Start-up cost: > 80% lower • Transaction costs: > 60 % lower
• Mexico: 25% - 50% lower
Global experience • Brazil : >160,000 agents • Mexico : >22,000 agents • Kenya : >16,000 agents • India : >15,000 agents • Malaysia : 460 agents
Cost of offering financial services through agent outlets vs. physical branches
Source: 2FIs, McKinsey (Global Financial Inclusion) 2010, CGAP
Contributes to e-Payments agenda 3
Increase # of debit cards
Increase # of terminals
Agent Banking: Case for change
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Guidelines on Agent Banking in 2012 to facilitate the implementation of agent banking in a reliable, safe and sustainable manner
Guidelines on Agent Banking outlines the minimum regulatory expectations for FIs as well as encourages cashless transaction & use of system that promotes open access
Agent banking services
• Emphasis on unserved areas • Real-time transaction & within premise only • Basic banking services - deposits, cash withdrawals, fund transfers, bill payments &
loan/financing repayments • Prohibited services – opening of bank accounts, money changing activities & loan
appraisal
• FIs retain ultimate responsibility of all agent banking risks & activities, including technology risk, agent management, security, operational risk, customer protection
• FIs must conduct Know-Your-Agent & agents must have existing business • Agents to comply with relevant legislation including secrecy provision • Agent contract, monitoring & supervision mechanism
• National agent banking logo • Dispute resolution mechanism • Database on agent for public verification • Agent banking awareness programme
Oversight & governance
Agent Selection, Conduct, Monitoring
Customer protection, awareness & education
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Agent Banking: Regulatory framework in Malaysia
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Agent banking: Key achievements to date
Agent banking enhances outreach of financial services to the underserved in a more cost-efficient manner
Served sub-districts Unserved sub-districts Unserved sub-districts Served sub-districts
46% mukims served End 2011
92.5% mukims served End 2013
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Before After
17 cash in & cash out access points per 100K adults Financial access point by type, end 2011
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460
Branches Agent banks
3,143 3,603 cash in & cash out access points nationwide
Population: 2010estimate
• Peninsular: 23.0m • Sabah: 3.3m • Sarawak: 2.6m
40 cash in & cash out access points per 100K adults Financial access point by type, end 2013
Branches Agent banks
3,2265,474 8,700 cash in &
cash out access points nationwide
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5,474 banking agents nationwide, mainly in
rural areas
From 94% (end-2012) to 99.8% (575)
↑ served State Legislative Reps
Number of Agents
Agent banking by 3 FIs
The underserved can conduct business in familiar environment
>13.9 million transactions worth >RM1.6 billion
(USD495 mil)
Transactions by Agents
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Synergy between agent banking and microfinancing
• Agent banking boosts up his almost
dying business – more new customers
• Microfinancing helps him to expand the
business
• Agent banking commisions help to pay
his microfinancing loans.
• Top performer agent in suburb Kuala
Lumpur
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… Malaysia also leveraging on mobile banking infrastructure, MyMobile to facilitate all Malaysians to access financial services 24/7
Opportunity
Types of services
Benefits
• Mobile banking can cover all sub-districts • Adoption of mobile banking has been increasing
• Available on all mobile phones • Internet connection is not required • Safe and secure
• View transaction history & balances • Fund transfers (e.g. same bank & inter-bank) • Bill payments • Credit card repayment • Airtime reload transactions • Mobile to mobile transactions
• 3 participating Fls and 3 participating Telcos • 132,275 registered users as at end-2013 • 1.5 million transactions, of which 254,237 are
financial transactions valued at RM21.3 million (USD6.5 mill)
Mobile Banking: MyMobile
127.6 246.7 367.6 574.6 675.0 898.51560.3
3793.0
2446.2
2005 2006 2007 2008 2009 2010 2011 2012 2013
No. of mobile banking subscribers (‘000) As at end
MyMobile System
132,275 users
3 Telcos (Maxis, Celcom & Digi)
Government 3 FIs (Maybank, CIMB & Public Bank) MyMobile
*500*888#
Achievements
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eSPICK
Interbank GIRO (IBG)
E-money
Debit/ATM Card
Charge Card
Credit Card
Instruments Channel
Agent Banking
Internet Banking
Branch
Mobile Banking
Financial Process Exchange
(FPX)
Shared ATM Network / IBFT
Cheque
Real-time Electronics Transfer of
Funds and Securities System (RENTAS)
Direct Debit
Domestic PIN-based
ATM/debit card
National Payment and Clearing System
The back end system of one of the participating Financial Institutions of agent banking and MyMobile platform
Mobile Payment
MyMobile platform
Retail payment system
High value payment system
FI’s back end system
ATM Bank
account
Money
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Continuous engagement with the public nationwide to create greater awareness and educate consumers
Financial talk by BNM, FI booth (account opening & other product and services) & media interview
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Who to contact What is agent banking
Brochures National Logo
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Dos and Don’ts Simple steps
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Newspaper coverage
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In the pipeline..
i. Reviewing the Guidelines to :
• Expand the scope and permissible services provided by agent banking
• Allow opening of accounts by agent at minimum risk
• Uplift the location restriction
ii. Mapping of access points at smaller area – by villages, by radius
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Key contributors to the success
i. Conducted pilot before launching the guidelines
ii. Private sector driven - FIs decide the best business model suit their business appetite
iii. Guidelines specify minimum requirements for FIs to observe consumer protection
iv. Awareness and education for the unserved are critical
v. Technology driven
vi. Simple and easy to understand, meeting the needs of the poor
vii. Continuos monitoring
viii.Clear key performance indicators and targets