GRANT APPLICATI ON

Korean Trust Fund for ICT4D

Mobile Banking Users and Non Users

Behavior Study
Submitted By Piya Baptista (pbaptista@ifc.org)
Last Edited May 23, 2008
Printed May 28, 2008

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Basic Facts
Country/Region East and South East Asia, South Asia, Latin America
Project Sector Information and Communications
Amount Requested US$ 350,018
OUI 07916
Primary Area Access

Originating CSMLK
Dept/Division
TTL Arata Onoguchi

Narrative
1. Objective
Provide brief overall While mobile phones have penetrated to more than 3 billion people world-wide and are
project objective, progressively rolling out further into the base of pyramid (“BOP”) market, the mobile communications
including intended industry association GSM Association estimates that more than 5 billion people have little or no
impact. (Max. 500 access to traditional financial services. The World Bank Group believes that mobile banking (“m-
words) banking”) can bring about significant socio-economic benefits for those who have or will have mobile
phones but little or no access to financial services because it can make a break-through on providing
such services at very affordable costs. This study will help address key issues in scaling up further
development of m-banking ecosystems globally as discussed below and in the Rationale section.

[Issues]
In a number of countries, m-banking businesses have already emerged yet the penetration is still
limited in spite of outstanding expectation as a means of reaching billions of unbanked and
underbanked people. One of the major reasons is deemed to be operators’ lack of understanding
about the users payment behaviors at large. This leads to a situation where:
• Customer needs are not yet fully addressed;
• Regulators are not convinced of the value of m-banking;
• Mobile network operators (“MNOs”) and financial institutions (“FIs”) are yet to find out proper
value propositions to each other based on hard data when negotiating the partnership;
• M-banking operators are still in search of proper means of managing float and cash reserve to
pay out upon users’ withdrawal request, particularly, in rural communities.

[Objective]
The proposed Mobile Banking Users & Non-users study (“the Study”) will look into:
(1) from where / whom the users / non-users receive money either through m-banking or
other means of money transfer;
(2) for what they use the money; how much, where and how frequently they pay;
(3) at what time of the day / week / month / year they pay; and
(4) how they pay (one-time or installment) in multiple countries as a comparative study.

The Study will, hence, distill (1) what the users do with the money they send / receive through m-
banking; and (2) overall payment behaviors of users and non-users; and to explore unknown needs
to be addressed, to overcome the cultural barriers and to trigger exponential penetration of the
 service. The Study should also present recommendations on how to manage float and cash reserve.

[Impact]
The outcome of the Study will be published to impact:
• Regulators to develop and implement enabling regulations;
• MNOs and FIs to align their mutual interests leading to win-win;
• Handset makers and m-banking platform vendors to develop right products; and
• M-banking operators to develop right products and services that will address practical needs of
customers.

This study will be the first of its kind to be conducted at a multi-country level.

2. Rationale
Indicate the The IFC is seeking to promote m-banking as it is highly anticipated that mobile applications will
innovative improve the socio-economic status of people at the base of the pyramid in developing countries.
features of the Mobile phones can be used as mobile-money wallets, not just by the rich but also by the poor. In
project and developing countries, the production of low cost hand sets and innovations such as prepaid phone
how it plays a cards have resulted in the explosive growth of mobile telephony. While people at the base of the
catalytic role in pyramid are increasingly buying mobile phones, the vast majority remain unbanked or underbanked.
Bank Group If these unbanked or underbanked individuals could use mobile phones for financial transactions
operations. In such as opening bank accounts, making deposits/withdrawals, receiving salaries and paying bills,
what way does it sending remittances to families in remote locations, etc. at a very low cost, they could overcome the
have an cost and geographic access related obstacles of branch banking and engage in economic activities
impact on core Bank that would otherwise not have been possible.
business? (Max. 250
words) Although some m-banking businesses have emerged to tap the above potential, they have had
limited market penetration. One of the major reasons is deemed to be the lack of understanding
about users and non-users behaviors among major stakeholders - MNOs, FIs and regulators. Given
its global presence, cross sector expertise and role as a neutral facilitator, IFC is well positioned to
catalyze the growth of m-banking through this piece of research. This project will also contribute to
further development of IFC’s investment and advisory services strategies for m-banking.

3. Program Description
Describe project
design Project Approach:
including approach,
components, The project will involve a comparative study of m-banking users‘ and non-users‘ behaviors
resources in five countries, with particular focus on the BOP market, in order to draw general conclusions that
stakeholder roles, will benefit a broad m-banking audience globally. The study will work with both MNOs and FIs to
etc. (Max. reach users and non-users. Simply put, users are expected to be individuals who are currently
1000 words) availing of m-banking services, mainly under additive models, while non-users are individuals who
own a mobile phone but do not have bank accounts.

Specific focus areas for the Study include: (i) from where/whom users and non-users receive
remittances either through m-banking or other means of money transfer, (ii) what users or nonusers
do with the money they send/receive through m-banking or other means, (iii) payment
behaviors including amounts, timing and frequency of payments as well as payment channels,
(iv) needs of users and non-users that have so far not been addressed, (v) cultural barriers to
adoption of m-banking, and (vi) recommendations for small entities that act as cash-in and
cash-out points on managing float and cash reserves.

To elaborate, the Study will look into the following elements:

A. Relevant financial products or services to be offered over mobile (remittances, bill payment,
person to person payments, etc) and ranking thereof. This will reveal what products people are
interested in.

B. Frequency of use of each product (usefulness of each offering from the consumer perspective).
This will rank the products from a usefulness point of view.

C. Willingness to pay (“WTP”) for each product. People will not get exited about this market until
one quantifies market size. WTP is a critical factor in assessing usefulness at B above.
D. Basic conditions of adoption (other people should have m-bank accounts [critical mass
implications], have cash-in/out facilities [infrastructure implications], have a debit card associated
with the account [vital products/offerings], POS accepting mobile payments, etc). This will provide
an insight on when the poor believe the conditions are ripe for m-banking.

E. Float and cash reserve management: This will lead to recommendations on critical requirement
on float and cash reserve at cash-in/out points and appropriate cash circulation management for a
m-banking operator to fulfill potential customers’ needs.

F. User interface: check issues of literacy, phone literacy, phone capabilities, etc. This point will tell
what should be done, assuming the conditions and will is there, to accelerate adoption.

Project Stakeholders and Roles:

IFC will work with MNOs, FIs and/or m-banking operators in five of the following countries to conduct
the Study – Madagascar, China, Cambodia, Thailand, Sri Lanka, India, Pakistan, Egypt, Afghanistan
and Brazil. IFC is currently discussing the Study with Just in Mobile (China), ANZ/Wing (Cambodia),
and Dialog (Sri Lanka). These countries have been selected based on two criteria. First, whether
IFC has existing or potential clients with whom it could conduct the Study, and second, the presence
of an IFC Program Manager in the region to guide/coordinate the work.

Each company will be expected to provide access to its customer base and key staff for interviews
as well as to assist with the coordination of the field surveys. IFC will be responsible for hiring the
consultant firm to undertake the project and for supervising their work.

Project Components:

Component 1: Mobile Banking Users and Non-Users Behavior Study

IFC will hire a consultant firm that will bring together a global expert in consumer behavior analyses
in financial services, country-specific experts in consumer behavior research and field surveyors to
conduct the Study. The study will have the following phases:

A. Field Survey Preparation: The consultant firm will understand the m-banking products of the
participating companies, review consumer behavior, household surveys and other relevant studies in
the target countries, classify users and non-users into meaningful consumer segments, develop
criteria for selecting users and non-users for the Study, and design the field survey and focus group
instruments.

B. Field Surveys: The consultant firm will execute the field surveys in target countries with the
participating companies. The field surveys will cover perspectives of the managers/selected staff of
the operators, distributors/ agents, corporate users, individual users, family members of individual
users, non-users, and others as needed.

C. Research Report: The consultant firm will produce a detailed research report, summarizing
the findings on consumer behavior and recommendations for addressing the key constraints in
the development of m-banking businesses.

In the course of preparing this application, it came to our knowledge that FSD (Financial Sector
Deepening) Kenya, a multi-donor funded program (DFID, IBRD, SIDA, etc.), is planning to conduct a
similar study in Kenya with CGAP and it is expected that their study will be completed and published
around the end of 2008. The Study will refer to their work as a broader benchmark if their report is
published on time.

Component 2: Dissemination of Study Findings

IFC will organize one or two workshops in 2009 to disseminate the findings of the Study to MNOs,
FIs, international development institutions, donor agencies, regulators, academics and other parties
interested in m-banking. IFC will mobilize a broad audience for these workshops in collaboration with
organizations such as CGAP and GSM Association.

Potential relevance to Korea:

 Korea is one of the advanced markets in m-banking businesses and has two globally known large
mobile communication equipment and handset manufacturers (Samsung, LG). The result of the
Study will benefit the Korean m-banking operators and the manufacturers in developing further
products globally that will then contribute development of the broader m-banking ecosystems world-
wide.

4. Program Duration
Indicate the 18 months
expected duration
of the project.

5. Fit with Strategies

Describe how project The mobile telephone platform is large and growing, and is now relatively low cost. There are 3.3
fits with billion mobile telephone subscribers worldwide, of which 20 percent are in IDA countries. This
or supports sector, platform is expanding at the rate of 50 million subscribers every month, with most additions from
regional China and India. The World Bank Group (WBG) believes that m-Banking can bring about significant
and country economic and social benefits in developing countries by delivering essential financial services to
strategies. people who would not be able to access them otherwise. The WBG is committed to helping
Highlight any developing countries around the world seize the opportunities that m-banking offers by providing an
relationship to integrated set of services to help stakeholders develop the foundations for robust mobile money
an existing Bank ecosystems. With mobile phone companies now deploying networks in rural areas and
operation or simultaneously looking for new revenue opportunities, this is the right time for the WBG to increase
program. (Max. 500 its engagement with m-banking.
words)
The WBG is seeking to offer its expertise, lending and investment services to support mobile money
initiatives. As the private sector arm of the WBG, the IFC is working to assist the spread of m-
banking by investing in innovative local mobile operators and financial service institutions, while
leveraging its international corporate relationships to develop, scale and replicate successful models
throughout the developing world. IFC also provides advisory services to enterprises that play a vital
role in providing the complete access platform necessary for the development of sustainable m-
banking ecosystems. One of the 2012 goals of the IFC’s Global Information and Communications
Technology (GICT) department is that 20% of people in LDCs should have access to e-financial
services.

At the regional level, access to finance for the poor, unbanked and small businesses is a key
element of IFC’s strategies in each region. Finally, at the project level, the Mobile Users and Non-
Users Behavior Study will be timely for IFC projects in m-banking that are getting off the ground. The
East Asia m-banking Project, for example, aims to accelerate the development and large-scale roll-
out of m-banking as a means to bank the unbanked. This objective will be achieved by working with
local, regional, and international partners to assess the regulatory framework for m-banking and
advocate for open, interoperable m-banking solutions, build the business case for m-banking in the
region and launch at least one pilot project in the region. The Mobile Banking Users and Non-Users
Behavior Study will yield valuable insights for the WBG as it works with the m-banking community to
realize the above mentioned goals.

Target Countries
6. Target Countries Asia: India, Cambodia, China, Sri Lanka, Thailand
Africa: Madagascar
Latin America: Brazil
Middle East & North Africa: Egypt, Pakistan, Afghanistan
Europe & Central Asia:

(The Study aims to be a global one, however, five countries will be determined from the
above group with two criteria, i.e., (1) IFC has existing or potential clients to partner with; and
(2) the availability of IFC program manager in the region to coordinate.)

Categorization
7. ICT Program Access: Connectivity for Rural and Underserved Areas Low-Cost ICT User Devices or Services
Areas Innovative ICT Services and Applications
Select all applicable Mainstreaming: Access to Finance for the Unbanked
program Innovation and Entrepreneurship:
areas and Regional Scope:
categorization.
8. Deliverable Type Analytical Work (Global)
9. Activity Executed World Bank
By

Key Stakeholders
10. Key Recipients Beneficiaries
Stakeholders and Government Regulators
Other Interested Private Sector (Large) MNOs, FIs, mobile communication equipment &
Parties handset manufacturers, m-banking platform
Please list key vendors
stakeholders Private Sector (SME) M-banking agents, merchants
and other interested Other Individuals with little or no access to financial
parties, services
both recipients and
beneficiaries, in the
government, private
sector,
and elsewhere.

Timeline & Milestones

10. Estimated Deliverables Date
Timeline & Estimated Start Date 1 Aug, 2008
Activity Milestones Consultant Firm Hired 29 Aug, 2008
Please include titles Desk Research and Field Survey Preparation 30 Sep, 2008
and Completed
completion dates for Field Surveys Completed 31 Mar, 2009
each Research Reported Drafted 30 Apr, 2009
deliverable. Research Report Finalized 29 May, 2009
Workshops to disseminate findings 30 Jun, 2009 and/or 10 Sep, 2009
Survey with firms to assess uptake of study 27 Nov, 2009
findings
Estimated End Date 15 Dec, 2009

Risks

11. Risks Affecting Type of Risk Brief Description Measure to Mitigate Risk
Project Implementation Users and Non-Users may be All raw data received by IFC
Implementation hesitant to participate in the will be kept confidential.
Identify and explain field survey given that the Further, IFC and participating
briefly survey is mainly designed to companies will enter into
major risks (including solicit information on financial Memorandums of
political, issues. Understanding (MOUs) which
environmental, will include confidentiality
security, clauses.
governance, and
implementation) to Strategic As the Study is mainly An expert in consumer
project focused on a limited number behavior analyses with
implementation, and of selected countries, m- significant cross-regional
measures to address banking stakeholders in other international experience will
these countries may find it difficult to be hired to lead the project.
risks. apply the findings. S/he will be responsible for
drawing out and documenting
 the global learnings in the
report.
Further, the findings will be
discussed at an international
workshop where experts from
different regions will be invited
to discuss the global
applicability of the findings.

Program Team
12. Program Team Core Team Members Name(s)
Please provide Transaction leader/ contact Arata Onoguchi
names of all person
principal team Other team members Andi Dervishi, Wiebke Schloemer, Bill Kerr-
members. (including back-ups) Smith, Piya Baptista

Management Team Name(s)

Managing unit manager Stephanie von Friedeburg / Sujata Lamba
Director Mohsen Khalil / Laurence Carter

Financing Plan
14. Column Total Amount (US$)
Budget/Financing KTF Request 350,018
Plan Co-financing
Please enter the World Bank Group
column totals Total Cost 350,018
from the spreadsheet
template here.

Monitoring & Evaluation

15. Outputs Measurable Indicators Baseline Intermediate Expected
Please fill in the key Value Value Final Value
measurable
performance
indicators for each Number of Memorandums of Understanding 0 5 5
component. These (MOUs) signed with participating firms
M&E Number of field surveys completed with users 0 3 5
milestones need to and non-users
include Public report on Mobile Banking Users and 0 0 1
base line data, Non-Users Behavior completed
expected Number of copies of the public report printed 0 0 1500
value and and disseminated
intermediate Number of follow-up surveys with firms 0 3 5
achievements participating in the Study to assess uptake of
(collected findings
during supervision). International workshop held to disseminate 0 0 1
Study’s findings

16. Outcomes Project Activities Expected Outcomes Expected Impacts

By project Mobile Banking 1. MNOs and FIs participating in the Study Pilots for testing
component please Users and Non apply the Study’s findings to develop transformational m-
enter the tasks to be Users Behavior transformational m-banking models. banking models are rolled out
performed, their Study 2. Regulators refer to the study to guide in the markets selected for the
outcomes their work in m-banking Study
and their expected
long term Dissemination of A wider range of regulators, MNOs, FIs, Pilots for testing
impact.
Study’s Findings third party m-banking operators, mobile transformational m-
communications equipment and handset banking models are rolled out
manufacturers, m-banking platform globally
technology vendors, etc. worldwide apply
the findings to develop transformational
m-banking models and relevant products
and services