This presentation was part of a keynote address that was given on August 4, 2016 at the VIII Central American and Caribbean Microfinance Conference in Managua, Nicaragua. This key note provided participants with an opportunity to understand some of the key digital financial service trends that impact on financial inclusion and the potential opportunities for microfinance institutions in the region.

1. CONFERENCIA CENTROAMERICANA
Y DEL CARIBE DE MICROFINANZAS
Tecnología: Competitividad e Inclusión Financiera
VII

2. Key Trends in Digital Financial
Services for Microfinance
John V Owens
Senior Digital Financial Services Advisor

3. Digital Financial Services
Three ways digital technology is facilitating
access to financial services:
Products
Distribution
Back-Office Operations

4. Leveraging mobile payments infrastructure and
machine-to-machine connectivity
Mobile on-demand micro-credit
Mobile & index-based micro-insurance
Big data enabling new credit products
Products offered by financial players riding on top
of the e-money platforms
4
Product Innovations

5. Innovations in Distribution
Apps and tools to digitize and speed up the account
opening process
Biometrics as additional options for customer
authentication
Tokenization
Optimizing distribution – field-force management tools
to track field staff, agents, and/or merchants
Emergence of third-party agent aggregators offering
access to provider-agnostic agent networks
5

6. Back-office Innovations
Integrating with e-money platforms
Technology companies enabling merchant
acceptance of digital payments in-store
Payment aggregators enabling online payments
and e-commerce
Leveraging alternative data sources for credit
decisions
6

7. Key Digital Financial Services Models
E-money Services
Mobile Financial Services
Use of Agents
Payment Operators
New Fintech Players
Other New Players

9. E-Money Providers

10. Mobile E-Money Accounts by Region
GSMA MMU 2016

11. AFI | Alliance for Financial Inclusion
Banks Integrating with E-Money
2012
2006 13%
29%20 Million
bank accounts
4 Million
bank accounts
24 Million
registered mobile money users
Percentage of adults using a bank account in Ke

12. Small Value and Credit Savings
M-Shwari, a savings and credit
product from Safaricom and
Commercial Bank of Africa (CBA)
has registered a phenomenal
uptake.
The product enables M-PESA
subscribers registered for at
least 6 months to get a loan,
anywhere from
$1 to $1,000
for a 30 day term
instantly into their e-wallets.
M-Shwari: Mobile
E-Money
Supported Banking
CBK increased
# of accounts
from 35,000 to
9.2 M
M-Shwari
deposits
total $1.7 B
M-Shwari
loans
disbursed in
2015 total
$322M

13. Financial Service Agents
3rd parties acting on behalf of
a bank or other financial
services provider to deal
directly with customers
AFI | Alliance for Financial Inclusion

14. Agent Banking Services: Bangladesh
 Collection of small value cash deposits and cash
withdrawals
 Inward foreign remittance disbursement
 Facilitating small value loan disbursement and
payments
 Facilitating utility bill payments
 Cash payment under social safety net programme
 Facilitating fund transfer
 Balance inquiry
 Collection and processing of forms for account
opening
 Loan application, credit and debit card
applications
 Monitoring of loans and advances and follow up of
loan recovery
 Receiving of clearing cheques
 Other functions like collection of insurance
premiums
AFI | Alliance for Financial Inclusion https://www.upsides.com/2013/03/25/banking-beyond-branches/

15. Payment Service Providers

16. Payment
Service
Provider
AliPay

17. New FinTech Players
Financial technology players are now
providing a range of financial services,
either directly as non-bank financial
service providers or in partnership with
traditional players.

18. New FinTech Players & Models
P2P lenders
Online balance sheet lenders
Loan aggregator portals
Third-party analytic, data, and lending platform
providers
Invoice, supply chain platforms and trade finance
Mobile-data based lending models
SME value added services and SME financing

19. New Financial Players Driving Financial
Inclusion
E-Commerce & M-Commerce Providers Driving Financial Inclusion via a
compelling value proposition
19

20. New Financial Players Driving Financial Inclusion –
Social Networks & Payments
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21. Analyzing DFS Opportunities

22. DFS Policy, Regulatory and
Oversight
 Proportionate AML/CFT (FATF Compliance)
• Tiered KYC Regulations
 E-Money Operator Regulations
 Remote Account Opening Rules
 Agent Regulations
 Interoperability
 Fair Access to ICT
 Competition Policies
 Security and Fraud Mitigation
 Consumer Protection Issues

23. What are the biggest digital
financial service developments for
MFIs in Central America & the
Caribbean?

24. Engaging Customers via SMS
Mobile phones now make it easier to
stay in touch with customers
Juntos Finanzas has partnered with
financial institutions to provide better
customized support for two-way SMS
conversations with customers
This improves uptake of existing
products as well as cross selling new
services

25. Digitizing the ROSCA (Savings Groups)
New technologies can help
mimic informal savings
products like Rotating
Savings and Credit
Associations (Tandas)
FinTech providers like
AhorroLibre are now
offering automated services
that allow people to create
their own “tandas” via their
mobile phone

26. Financial Education
FinTech providers not only
access but also improves the
quality of financial services
New digital financial education
tools can cost effectively teach
and incentivize customers to use
new products and services

27. Alternative
Data for Credit
Scoring
Digital Tools + Online
Footprints=Credit
Scoring Opportunities
New platforms like
Lenddo are providing
alternative credit
scoring tools

28. Potential Partners
E-Money Operators
Non-Bank Financial Institutions (EMIs & PSPs)
FinTechs (SMS Gateways, Alternative Data, P2P)
E-Commerce Players
Large Social Media Network Payment Providers

29. Gracias!
johnvowens@me.com
Twitter: @jvowens