Emerging models for international

remittances through branchless

banking

Presentation to the Forum on Promoting Remittances for

Development Finance
18th March, 2015

Research context

This presentation examines the landscape for international remittances

through branchless banking, with a focus on transfers into mobile phones.
This presentation cites research that Dalberg Global Development
Advisors conducted on behalf of the CGAP Technology & Business
Model Innovation Program.
Dalberg conducted global landscaping studies of remittances through
branchless banking for CGAP in 2010, 2012, and most recently in 2013.
Summaries and copies of all the full studies can be found on the CGAP
Technology blog: www.cgap.org/blog.

Wameek Noor
Technology and Business Model
Innovation Team
snoor@worldbank.org

Andria Thomas
Associate Partner
andria.thomas@dalberg.com
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Agenda
What are international remittances through branchless
banking?
What does the global landscape look like?
What is working well? Where are the innovations?
What does this mean for the customer, and for financial
inclusion?

Our study focused on international remittances

through three forms of branchless banking, with a
focus on mobile
Included in study

Out of scope

Mobile cash-out
Funds are stored in an mWallet until the
recipient cashes out

Traditional banking
Cash-to-bank
transfers
Bank-to-bank
transfers
Mobile-to-bank
transfers
Online-to-bank
transfers

Pre-paid card
Funds are added to a card which can be
cashed out at an ATM, or spent at retail
stores on the card companys network

Not technology
Transfer to a nonbank agent network
(eg, Western Union)

Directed transfer
Sender transmits funds directly to
payments on behalf of a beneficiary

1. Branchless banking
2. Technology-enabled
3. For cash or a basic
necessity

Not basic necessity

Mobile top-ups

Mobile money offers an attractive opportunity for

remittances
Number of financial access service points across developing countries

3/19/15

3/19/15

3/19/15

3/19
/15

3/19/15

Source: GSMA State of the Industry Report (2014);

and is increasingly accessible across developing

countries
Availability of mobile money
(proportion of developing markets with mobile money per region, December 2014)

3/19/15

3/19/15

3/19/15

Regions with ADB

member countries

3/19/15

3/19/15

3/19/15

Other
6

Source: GSMA State of the Industry Report (2014);

Of the four countries with interoperable mobile

money services, three Indonesia, Pakistan, and Sri
Lanka are in Asia

1 mobile
money
service

2 mobile
money
services

>3 mobile
money
services

Interoperable
markets

Source: GSMA State of the Industry Report (2014)

There are ~100 million registered mobile money

accounts across Asia
Number of registered and active mobile money accounts by region (as
of Dec 2014)

Registered accounts
represent 15-20% of
the population
8

Source: GSMA State of the Industry Report (2014)

Our study identified 41 active deployments in 2013;

35 based on mobile
The Philippines is
home to the oldest
mobile IR
deployments, and
has an extremely
strong domestic
mobile money
ecosystem

Pre-paid card and

new directed transfer
models increasingly
popular in Latin
America

Legend:
Live during 2012 study
Newly live in 2013 study

Mobile cash-out
Pre-paid card
Directed transfer

Existing mobile
money deployments
and large unbanked
populations
encourage
international
remittance
deployments in Africa
9

Source: Dalberg research and analysis

There has been a steady increase of deployments

since 2010
Live deployments for branchless banking cash-out

3
2
1

Pending
3/19/15
3/19/15
3/19/15
3/19/15
3/19/15
3/19/151

~10-26+
3/19/15
3/19/15
3/19/15
3/19/15
3/19/15

3/19/152

3/19/15

3/19/1533

New deployments have launched since our study, including a

corridor between
mHITs Australia and Indosat Dompetku Indonesia
10
Source: Dalberg research and analysis

The role of new partnerships

A
Interoperability solution

Hub for interoperability for

mobile-centric money transfer
between sending and receiving
operators

Partnerships with traditional

remittance providers

Partnering provides brand name,

knowledge of the money transfer
ecosystem and regulatory issues,
and established agent networks
to allow for faster expansion

11

Source: Dalberg research and analysis

New technology and models of interaction

Model

Innovative online sender

Customer benefits

Examples

Fee transparency
Process transparency
Ease of user experience
Customer service

Same established brand on

the sending
End-to-end mobile deployments and receiving sides
Price savings
Senders have some control over
how funds are spent
Remitting to a cash substitute Remittance value can be stored
May reduce costs (some
markets)

Remitting a direct payment

Currency exchange at
much lower fees

Source: Dalberg research and analysis

Senders have complete control

over how remittance is spent
Receivers can ensure that their
bills are paid promptly
Technical innovation to
drive down fees and
expand access in the
South Pacific, through
peer-to-peer currency
exchange

12

Trends to watch as the landscape continues to

evolve
Trend

Examples

Additional cash
substitute models

Quippi offers retail gift cards

purchased in a sending country and
redeemable at local retailers in
Mexico. Cannot be cashed out.

MNO partnerships
for cross-border
remittances

MTN and Bharti Airtel partner to

support remittances between MTN
Ivory Coast and Airtel in Burkina
Faso.

Remittances
through social
media

Source: Dalberg research and analysis

Azimo allows money transfer

between Facebook-connected
friends, but still requires
traditional cash out.
Singapore-based fastacash offers a
social platform to communicate an
international money transfer with a
link and a personal message.
Receiving bank account needed.
Facebook rumored to be
separately considering international
money transfer, with funds stored in

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Technological innovation in remittances can lead to

increased affordability and convenience for
customers
Opportunity for
customer value

Decreased prices

Expanded access
and ease of use

Greater
financial
inclusion

Observations
Prices are beginning to respond to competition and new
business models
But, lowering prices not a priority for most operators
given senders pay IR fees
The cost is the same for traditional remittances and our mobile
service
Other fees are pretty big. We wanted to bring down the cost
to both
the sender
themore
receiver.
New
channels
mayand
offer
immediate benefits for
senders and receivers
With mWallets, customers need incentives to switch
from an agent cash-out
We want the service to be more consumer-centricthere is
a need for a fast, easy, low-cost service.
New channels and models support smaller transaction
sizes (<$100 USD) and increased reach for money
transfers

but the link to access of other financial services

remains tenuous. In particular, many services do not
focus particularly on the unbanked
We dont track the share of banked to unbanked, but our
user proportion roughly represents the country overall
Source: Dalberg research and analysis We look at the bankable market as early adopters

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once customers trust the service; it is their key

consideration
The Federal Reserve Board noted that
significant factors in consumers choices
include trust in the provider, security
[and] reliability.
- US Consumer Financial Protection
Bureau

Despite 82% global brand

awareness, Western Union
spends $175 million per year
on advertising (~3% of total
revenue) an average of $1
million per country

Lower cost is not the emphasis of our

marketing efforts because this does not
establish trust and reliability, which is the
primary concern of users.
Mobile RSP
Trust is the most important factor for
success in the international remittance
space.
Online send-side deployment and
settlement firm

No mention of price
as a competitive
differentiator

15

Key takeaways
Landscape evolving rapidly
Partnerships - with non-traditional firms or potential
competitors - are critical to scale
Need to play the long game

16

THANK YOU
Andria Thomas
Associate Partner
andria.thomas@dalberg.com

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