policy makers as marketers of the industry - key considerations for desired impact

Policy Policy Policy Policy makers as marketers of the industry makers as marketers of the industry makers as marketers of the industry makers as marketers of the industry ––––

key key key key considerations considerations considerations considerations for desired impactfor desired impactfor desired impactfor desired impact

Simon Aderinlola

Head, Service Delivery Interswitch Financial inclusion Services Ltd

A presentation at the GSMA policy session - Abuja, Nigeria

Feb 2016

Interswitch - CONFIDENTIAL

Giri Wijayanto.

CGAP @2015


Nicholas Kahiga

Monsanto


What excuses have the poor against banking or access to

financial services as we know it today?

Source: Ericsson Consumer Lab report: Sub-Saharan Africa


• Do urban cities have enough underserved populations for a business case?

• Are the poor retards or simply our opportunity- & tool-excluded peers?

• Who is an agent and why must he/she be in the value chain?

• What could happen if we took the 17,000 financial touchpoints to 100,000?

• How can all benefit by the true enthronement of the agent/customer?

• Are we committed to doing anything differently?

• Is the regulator just a referee or also a key player in our march towards

Financial inclusion?

Valid opening questionsValid opening questionsValid opening questionsValid opening questions


The Interswitch foray into The Interswitch foray into The Interswitch foray into The Interswitch foray into

Financial inclusionFinancial inclusionFinancial inclusionFinancial inclusion

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• When the Founder-GMD started the business in 2002, he approached the CBN,

laying out his intents. At the time, Bank transaction switching & processing

wasn’t yet regulated, so he got a nod to proceed, and later came regulation

• Our compliance appetite is high and the parent business has received several

accolades for meeting various tech certification standards

• As a switching & processing as well as a card issuance business, we have long

been in the compliance good books of the regulator

• We believe regulation done well – with listening, consistency and fairness -

always allows opportunity to thrive. We also believe the regulated entities

need to look hard enough at both the rules and the opportunities

How we have always viewed regulationHow we have always viewed regulationHow we have always viewed regulationHow we have always viewed regulation


• Define the informal economy

https://media.licdn.com

• Build an irresistible proposition

• Follow the money, deliver value


ReReReRe----Validating the FundamentalsValidating the FundamentalsValidating the FundamentalsValidating the Fundamentals

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About 60million unbanked, but bankable Nigerians

Only 17,000 payment service points including bank branches, offsite ATMs, Motor Parks,

MFBs, SACCOs, existing/active MMO agents etc.

Less than 10,000 active agent banking locations across Nigeria

Opportunity use case 1: Over 8m households on PHCN network & 5m PayTV customer base

with limited subscription base

About 40% of the 774 LGAs with no bank branches

Opportunity use case 2: Domestic remittance value worth over N100b monthly. Internal and

Diaspora transfers are massive untapped economic kick-starters

Big data is the future; generated data is useful for credit, scoring, disbursement & social

services


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Payment Development In Africa Payment Development In Africa Payment Development In Africa Payment Development In Africa –––– Benchmarking BrazilBenchmarking BrazilBenchmarking BrazilBenchmarking Brazil

Source: KPMG, 2015

Egypt Kenya Nigeria South Africa Brazil

Rising POS

Deployments

17,345 POSPOS density currently <

45 per 100,000 people

163,733 POSPOS density currently < 90 per

100,000 people

400,000 POSPOS density currently

760 per 100,000 people

4.5 Million POS as at 2013

2,205 per 100,000 people

Increasing

Issuance of

Payment

Cards

7.6

Million credit or debit

cards in 2014

13.5 MillionEstimated number of

active cards issued as

at Aug 2014

48 MillionEstimated number of active cards

issued as at 2014

99 MillionEstimated number of

active cards issued as at

august 2014

824 million (excluding retailer

cards) 409,904 per every 100,000

people as at 2013

Rising ATM

and Agent

Deployments

About

100,000

Agents

Over 120,000

Agents and about

2,618 ATMs

Over 40,000 Agents

and about 15,000 ATMs

Over 26,000

ATMs

Over 400,000 Agents and

about 200,000 ATMs as at

2013

OPPORTUNITY


PentPentPentPent----up needs we are positioning to addressup needs we are positioning to addressup needs we are positioning to addressup needs we are positioning to address

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If you’re not our agentIf you’re not our agentIf you’re not our agentIf you’re not our agent

…you’re not in business!!…you’re not in business!!…you’re not in business!!…you’re not in business!!


We believe our thinking will workWe believe our thinking will workWe believe our thinking will workWe believe our thinking will work


Sample issue scenarios of Sample issue scenarios of Sample issue scenarios of Sample issue scenarios of

regulatorregulatorregulatorregulator----regulated challengesregulated challengesregulated challengesregulated challenges

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• Issue description: Presently, a CBN MM/SA licensee must approach the state signage agency, just like any other business, to get cover for its posters, banners etc. that ensure visibility >> recall >> retention - a lever of digital payment adoption.

• Impact: One recently got a bill outlay amounting to N30 mil in year 1 of launch (plans 3,000 agents, with cost per location of N10,000). Signage agency insistence on getting addresses of Agents not yet recruited underscores insufficient understanding

• What regulation can do: Collaborative regulation rather than a silo approach to licensees orphans these businesses e.g. CBN - LASAA

• What has been done: ALMPO engaged LASAA to seek a special concession regime

• What needs to be done: both regulators to sit at a table, consider country-strategic visions their work impacts, craft specific regimes addressing industry players and then involve their licensees

• Options being sought: OEM app pre-bundling, PoS, mobile & web for agents

Issue scenario IIssue scenario IIssue scenario IIssue scenario I


• Issue description: NCC licenses Telcos and VAS providers, but not OTT players

• What regulation can do: The music licensing & rights management body; COSON, identified the OTT appendage 2 years back and set out to revise its rules, the copyright law etc.

• Impact: We risk repeating in this fast-growing space the same issue experienced with VAS providers: lack of industry sub-sector visibility for up to a decade

• Regulatory collaboration: a conversation needs be had between the music & telco-regulating industries. Regulation should enable, not hinder

• What to do: Stop calling OTT a threat to Telcos. See it as the next iteration in mobile evolution, embrace it and craft its regulatory path

Issue scenario IIIssue scenario IIIssue scenario IIIssue scenario II


• Issue description: Recent unearthing of an erstwhile abandoned legislation: N50 stamp duty

• Government’s mood at present about disposable funds is understandable

• Impact: The policy seemed to have been re-ignited as soon as discovered. Impact consideration on other long-term visions, projects & initiatives that the Government is driving e.g. cashless policy need to be discussed.

• The movement towards digitization of cash could take a hit: Agents pay averagely between N2,000 & N5,000 to buy e-money from their Super-Agents. They’ll be hit by a N50 cost per deposit if the Super-agent credits the amount received in his current account as agent e-money less the fee. This fee could as much as wipe out the usual 3% or so airtime margins for retail agents.

• What needs to be done: reassess possible undesirable impact on bigger picture, create waiver policy that clears the air on possible conflict e.g concession for cash-in

Issue scenario IIIIssue scenario IIIIssue scenario IIIIssue scenario III


1. Avoid cut-&-paste policies, get closer to the trenches, borrow licensee goggles

2. Breath life into documents, sustain one-on-one dialogues, regulate inclusively

3. Be learning, constantly evolving. Welcome constructive criticism

4. Understand and respect the rights of the regulated

5. When you must block a road, dialogue first, then shine the path to the sidewalks

6. Appreciate the transitory nature of government, so sink policy pedestals well

7. Care killed the cat: lighten the ‘red-tape’ burden & cut to the chase

8. Patience for dawn to break every morning can soon become inaction

9. It’s a strength to ask when unclear…even from those you regulate

10. Say/be quoted for just a few things and stick to them – condense multipoint agendas into 2 or 3 actions

11. Keep an eye on systemically important institutions, manage your brand & never forget you are marketers of the industry you regulate, your body language & utterances on industry health are being watched home and abroad.

Regulators are marketers of their industriesRegulators are marketers of their industriesRegulators are marketers of their industriesRegulators are marketers of their industries


• Do urban cities have sizeable underserved populations for a business case?

• Are the poor retards or simply our opportunity- & tool-excluded peers?

• Who is an agent and why must he/she be in the value chain?

• What could happen if we took the 17,000 financial touchpoints to 100,000?

• How can all benefit by the true enthronement of the agent/customer?

• Are we committed to doing anything differently?

• Is the regulator just a referee or also a key player in our march towards

Financial inclusion?

In closing…ticking the boxesIn closing…ticking the boxesIn closing…ticking the boxesIn closing…ticking the boxes


Thank youThank youThank youThank you

policy makers as marketers of the industry - key considerations for desired impact

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