remittances and technology: the role of mobile money and
TRANSCRIPT
Remittances and technology: the role of mobile money
and branchless banking
UNCTAD
20 June, 2014
Edwin Macharia, Partner, Dalberg
2
Introduction
SAN FRANCISCO
JOHANNESBURG
NAIROBI
DAKAR
LONDONCOPENHAGENGENEVA
MUMBAI
SINGAPORE
NEW YORK
WASHINGTON DC
Edwin Macharia [email protected]
Partner, Dalberg +254 20 259 0002
Contact info:
3
Over the past 20 years, remittance flows have grown >10% per year
400
300
+39%
+92%
ODA
Remittances
200
100
020112010200520001995
Resource flows to developing countries
$ billions
CAGR: 12%
CAGR: 6%
Year
4
They form a significant source of income for developing countries
Global remittance inflows by destination country
Top recipients by volume, $ billions / as % of GDP
0
5
10
15
20
30
70
40
60
50
20
10
0
24
Pa
kist
an
Me
xico
12
23
Eg
ypt
Ph
ilip
pin
es
14
20
Nig
eri
a
Leb
an
on
8
Vie
tna
m
9
$ bn % of GDP
62
11
Ch
ina
61
Ind
ia
Ba
ng
lad
esh
5
Reducing prices in four top sending countries…
Average remittance prices by country of origination
% of remittance amount ($200)
USA
Australia
Germany
9.2%Canada
11.5%
France 11.9%
13.4%
6.0%
6
Reducing prices in four top sending countries could unlock ~$2b a year
Average remittance prices by country of origination
% of remittance amount ($200)
This could unlock >$2 billion that would go directly into the pockets of recipients
USA
Australia
Germany
9.2%Canada
11.5%
France 11.9%
13.4%
6.0%
~$575m
~$500m
~$450m
~$475m
X = annual
incremental savings
from cost reduction
7
We focused research on technology-enabled models for “branchless banking”
• Branchless banking
• Technology-enabled
• For cash or a basic necessity
Mobile cash-out
Prepaid card
Directed transfer
1
2
3
8
Our study identified 41 active deployments in 2013
Mobile cash-out
Pre-paid card
Directed transfer
Live during 2012 study
Newly live in 2013 study
Legend:
9
15
325
8
5
4
11
2012 study
41
20
3
2010 study Planned to go "live"
within 12 months
of the study
2013 study
~10-26+
Mobile cash-out
Directed transfer
Pre-paid card
Pending
There has been a steady increase of branchless banking deployments since 2010
Live deployments for branchless banking cash-out
Number of companies for each technology
10
The role of partnerships in increasing deployment
Partnerships with traditional remittance providers
A
Interoperability solution
B
11
New technology and models of interaction
End-to-end mobile
deployments
Remitting to a cash
substitute
Remittances through
social media
12
The role of trust and reliability
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
No mention of price as a
competitive differentiator
“The Federal Reserve Board noted that significant
factors in consumers’ choices ‘include trust in the
provider, security… [and] reliability.’”
- US Consumer Financial Protection Bureau
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
13
The tenuous link to access to finance
We want the service to
be more consumer-
centric…there is a need
for a fast, easy, low-cost
service.
We don’t track the share
of banked to unbanked,
but our user proportion
roughly represents the
country overall
We look at the bankable
market as early adopters
14
Potential scenarios
1 2 3Consolidation
Disruptive
technology scales
High-margin
competition
15
Asante sana
SAN FRANCISCO
JOHANNESBURG
NAIROBI
DAKAR
LONDONCOPENHAGENGENEVA
MUMBAI
SINGAPORE
NEW YORK
WASHINGTON DC
Edwin Macharia [email protected]
Partner, Dalberg +254 20 259 0002
Contact info: