This month’s lead stories focus on the crucial role that technology is playing in financial inclusion, in particular the mobile phone: a) RBI Governor Dr. Rajan’s speech on how technology can facilitate unified KYC norms, payments and remittances, credit products for small businesses etc. and b) the MMU 2013 State of the Industry Report on Mobile Financial Services for the Unbanked released by GSMA that gives a global overview of the industry.
In a speech at the NASSCOM India Leadership Forum, RBI Governor Dr. Raghuram Rajan highlighted the fact that, “Technology, with its capacity to reduce transaction costs, is key to enabling the large volume low ticket transaction that is at the centre of financial inclusion.” He raised various areas in which technology can help remove roadblocks to inclusion e.g. reduce stringent and cumbersome KYC procedures using transaction monitoring mechanisms and an inter-operable system for KYC, create credit history for small businesses through shared payments records, install processes to detect fraud etc. He also spoke of the need to set up “a secure way to allow funds to be freely transferred between bank accounts and mobile wallets, as well as cashed out of mobile wallets”, through a wide network of business correspondent agents; this would be the key to cheap and universal payments and remittances.
The GSMA’s annual survey showed that mobile money is catching steam across the world, with 219 services in 84 countries at the end of 2013. Nine markets (all in Africa) have more mobile money accounts than bank accounts, compared to four in 2012. While thirteen deployments have more than one million active users, seven of these passed this threshold between June 2012 and June 2013. Mobile financial services are moving beyond payments and 123 mobile insurance, savings, and credit services are live – 27 of which were launched in 2013. Three present trends are expected to be accentuated this year:
• Account-to-account interoperability, among mobile wallets and also with bank is on the rise. There is also an opportunity for mobile money services to connect with more traditional financial services, enabling transactions and new products between bank accounts and mobile wallets. Many deployments have already started to integrate their services in this way, and many more are expected to follow.
• In 2013, transactions involving external companies have been driving the growth of mobile money globally, representing 29% of the value transacted in June. Going forward, more mobile money services are expected to capture the payments demand from companies and institutions to drive high volumes of transactions on their platforms.
• A growing number of providers are interested in launching mobile insurance, credit and savings services, and many new launches are expected over the next couple of years. However, more proof points are needed for how these services can be offered sustainably, in order to ensure adequate levels of investments are made by the industry.
Section I: Policy – the latest from India’s policymakers
The Indicus Centre for Financial Inclusion was launched in 2011 to distil and disseminate information on accelerating the poor’s access to high-quality financial services. The Centre is supported by the Bill & Melinda Gates Foundation. http://www.indicus.net/icfi