Mobile Money and the aspiration of entering a modern world

Chronic drought and conflicts have brought widespread famine and misfortune to the land-locked West African country of Niger. It is ranked among the bottom of the list of countries in the human development index and per capita income. Niger’s population has reached 18 million and growing at four per cent annually. Agriculture production falls short to feed its people, rendering more than 20 per cent of its population food insecure¹.

Food insecurity is one of the leading causes of migration. Able-bodied people are fleeing to other places in search of better lives, leaving the elderly, young and the vulnerable behind to fend for themselves in this harsh land.

World Food Programme implemented cash incentives to promote food security in order to provide better living conditions for the needy. To receive this benefit, they have to use the proven WFP agriculture technique². Beneficiaries receive US$55 a month for working their own field.  To further scale this impact, WFP Niger and UNCDF have agreed to jointly work on digitizing social cash transfers to 10,000 households in vulnerable situations. UNCDF selected PHB Development and Innate Motion Motion to support the digitization efforts, by grasping the beneficiaries’ realities and needs, supporting the development of a reliable agent network and building capacities through tailored training. 

 The team first needed to understand the context more deeply through human-centric  research and by speaking with people like Mikou Ango, a WFP beneficiary who said,  “We want to be part of the modern world, but because we are poor, many people think we cannot; thus we keep on being excluded.”

Based on the conversations with beneficiaries such as  Mikou,  our visiting team, assisted by UNCDF/PAM Members on the ground, began conducting human-centred immersions with rural WFP  beneficiaries around Maradi, the second-largest city and economic capital of Niger. Lisa Chassin, PHB Partner and the lead consultant, said, “In order to make the shift to digital a success, we first needed to identify people’s needs and constraints in using and adopting digital financial services. These barriers hide in plain sight -  but with our partner Innate Motion, we used empathy to connect with the beneficiaries, see the world from their perspective and delineate their inherent struggles, extracting significant learnings. This exercise allowed us to identify the digital capacity gaps among the WFP beneficiaries. It is these critical gaps that will be addressed through our training of trainers curriculum  to be delivered in sessions with WFP's operational partners, NGOs, village leaders and other stakeholders.”

Amina Boubacar feels that WFP  has eased the challenges of staying in Niger. “Life is easier now that we receive the support from the WFP. We eat better food, and more regularly; now I can afford to buy soap which impacts my skin health – before, even after the shower, I was always feeling muddy.”

Despite the current structural challenges on the ground, such as poor connectivity, low literacy levels, low-levels of phone ownership – the WFP beneficiaries seemed excited about the possibilities of receiving their monthly disbursements via mobile money. They especially liked the discretion and the confidentiality the service provides. "Mobile money seems great! No need to get together on disbursement day, with everyone knowing that you are receiving money," said 55-year-old Amza Sha.

In order to enable cash disbursements effectively,  UNCDF, WFP and the mobile money provider must ensure that the agent network is reliable and can support the WFP beneficiaries specific use-case in underserved communities.   Strengthening the agent network for the digitization of cash transfers is, therefore, a critical next step – and our next mission will look specifically for ways to strengthen the deployment of agents to key sites to service WFP’s beneficiaries.  So far, the findings from discussions with beneficiaries indicate that, for them, technology is a bridge to development and to the rest of the world. This project is a way to bring them closer to their aspirations of entering the “modern world”  while being able to manage their finances better. 

Legends:
^1-Source https://www.wfp.org/countries/niger

² – Video:  WFP Resilient Agriculture Techniques in action.

If you are interested in our  work, please contact me,

Lisa Chassin
PHB Partner and Head of Studies and Strategies

lchassin@phbdevelopment.com

Photos: Dominique Tagba | Lisa Chassin
Story Contributor: Lisa Chassin

 Challenges and Solutions: Increasing the use of
Mobile Money in Low-income areas

The implementation of mobile money in developing countries is aimed at having the highest positive impact on the livelihoods of the poor. It is therefore important to identify some factors which may hinder the successful use of mobile money, and strategize how to overcome various obstacles in different geographical areas.

Language and product literacy

If someone does not understand a device and/or the language of its operations, then it is difficult for them to use it. This can be an obstacle in the success of mobile money that should be addressed with effective marketing and operational strategy, using visual and voice approaches, especially in rural areas of developing countries.

Adaptation and cost

People in developing countries may not own a mobile phone due to the cost.  And in cases which the poor may own a mobile phone, they may still be accustomed to their established systems of cash management. In these scenarios, using customer-centric approaches to develop products that take people’s needs into account can help foster adaptation and adoption.

Demographics

Young adults can be quicker to try out new technical and subsequent financial services. Convincing young adults to adopt mobile money services and then to spread the word among their neighbourhood and families can be plausible but still challenging, a route to success.

Agent professionalism

Product competence and behaviour of agents toward customers can make the difference in a positive approach to increasing use products and services – or a failure to deliver the needed support to enable customers to use mobile money systems.

PHB Solutions

To overcome some of these issues that may inhibit the positive impact of mobile money, PHB Development has been working with providers on identifying various solutions such as:

• Implementing voice recognition technology and call centers to support less literate customers using mobile devices;
• Using pictograms, icons and visual communications to explain the product, and to support customers;
• Ensuring products are developed in the most-spoken languages of the country in focus – not just the official language;
• Using a human-centred design approach to develop products addressing customers’ needs, therefore establishing tangible benefits for those are using or will begin using the mobile products and services;
• Ensuring customers are involved throughout the whole design and development process of a new product with regular interactions. This “rapid prototyping” is an opportunity to test a new product and its features with customers to see if they can understand and use it easily. Product developers can then make needed adjustments before a larger pilot and the rollout;
• Identifying and recruiting product ambassadors and early adopters – especially among the youth – to explain to their community how DFS services can be used for personal and community benefit;
• Ensuring a value proposition and a compelling business case is developed for agents and other stakeholders in the ecosystem while motivating agents to promote the product and effectively support customers;
• Addressing the adoption of mobile money with an ecosystem perspective, ie creating use cases to ensure people do not need to cash out mobile money but can use it to make payments and needed transfers.

PHB Development values the diversity and innovation that its consultants can bring to developing financial inclusion systems nearly anywhere on the planet. PHB Associate, Pall Kvaran, recently shared views from his current work in Uganda.

What are the areas of need you currently working on?

I am working on two different projects, one in tea and one in coffee, both focused on helping farmers gain access to digital financial services. We move towards achieving this goal by digitizing the payments farmer receive for their major cash crops. By doing this, we help them get access to services such as savings accounts and loans through mobile money.

What are the challenges you are facing and what are you doing to solve them?

The coffee project I am working on is all about problem-solving. This project is funded by CGAP and UNCDF, and we are working with one of the largest coffee companies in Uganda. UNCDF has been working on digitizing payments to farmers for a couple of years and PHB was tasked with doing a deep dive and figuring out what the most important problems are and how to solve them in order to make the digitization effort work as effectively as possible.

We used a new method we call Value Proposition Mapping, where we essentially mapped all income and expenses farmers and traders in the coffee value chain engage in on a month to month basis over the course of a year. We then calculated the costs of cash and digital payments for each transaction type and figured out which ones are ready for digitization, depending on the value propositions farmers and traders face.

What is the most interesting or surprising thing that you have encountered in the field?

 The extreme level of interest farmers has in spending management. Almost every farmer I have spoken to in my work in a range of different agriculture value chains sees mobile money as helping them manage their own spending to save up for investments. This can be even more true for women because they are usually not the head of the household and thus have a hard time controlling how the money they make is spent. Mobile money can really help them keep a part of their income for themselves and save up for future investment.

Where are you seeing as the current and potential impacts?

 In the short term, I see the digitization of payments in agriculture value chains having a positive impact on spending management as well as the risks farmers face. Being paid with mobile money allows people to store their money safely as well as reducing the risk they face while travelling with cash. In the medium and long term, as more affordable financial services will be offered through mobile money platforms I see these farmers gaining access to interest-bearing savings accounts, loans for investments and important risk mitigation services such as crop insurance.

The current agricultural productivity in Uganda is multiple times lower than what it can and will be in the near future. I believe these services are of vital importance when it comes to helping farmers in developing countries increase their production and income.

 How do local traditions and ways of doing business affect your work?

I believe my work as a PHB consultant is actually centered around this very question. My job is gain a deep understanding of local contexts and use that understanding to figure out how we can best help people. I think our coffee value proposition mapping methodology does this exceptionally well, especially when we get a chance to combine it with more qualitative human-centred design methodologies.

Why did you choose to work in the field of financial inclusion, and what do you like best about working for PHB?

 I strongly support development policies focused on helping people help themselves and I feel financial inclusion is exactly this. I believe the people we are trying to help are best qualified to decide what they need in order to help them better their lives.

I think providing access to financial services is one of the most important pieces in this puzzle. If we are able to give people access to interest-bearing savings accounts and loans for investment, they have been given a set of tools they can use to decide themselves what goals they want to work towards

When it comes to PHB Development, I really like the cooperative nature of the company. Most of the success of the company is channelled into reinvesting for growth and increasing possibilities. Rather than being typical employees, we function more like a group of independent consultants who work closely together towards our common goals.

Republished from the UNCDF MM4P website:  https://www.uncdf.org/article/2507/agents-revolution-on-the-ground-lao-pdr

Vientiane, LAO PDR – The mixed emotions of excitement and nervousness would be the best way to describe how new branchless banking agents feel in the Lao People’s Democratic Republic (Lao PDR). For many prospective agents, who humbly regard themselves as rural, less-educated people, having the opportunity to work with the country’s largest bank is an unusual, unexpected opportunity.

In June 2015, one of the country’s leading banks—Banque pour le Commerce Extérieur Lao Public (BCEL)—launched a new concept in banking for the country: branchless banking through agents, a service the bank branded as BCEL Community Money Express (BCOME). The project was supported by United Nations Capital Development Fund (UNCDF), its national implementation programme Making Access to Finance More Inclusive for Poor People (MAFIPP) and PHB Development, from concept through pilot and on to commercial launch. Today, BCOME has more than doubled the size of the BCEL branch and service unit network, and with more than 125 agents, it is represented in every province of the country.

One of the most outstanding agents in the country, Nouteng Sybounheueang of Souvannaphoun Village in Paklai District, briefly shared her story:

First, I was worried [that] I did not make the decision right away when the staff of BCEL approached me about being an agent. I just replied to them that I needed time to think about it. And in my thoughts, I started to wonder how can one walk into my shop and offer me such a big job? Being a bank’s agent, how much money would I have to have? What kind of tasks would I be dealing with? I am only a low-educated rural woman, running a small shop selling miscellaneous goods, and I had never touched a computer or iPad.

After taking a night to think it over, Mrs. Sybounheueang called bank staff the next day to confirm her interest. She then spent two weeks preparing the agent documents, to apply and to be approved. After that, she transformed a storage room for her goods into her new office. She purchased a laptop and a printer as required by the bank, though as she completed primary school only, she did not know how to use them. However, the BCOME team arranged a one-day training at her place on how to use the computer, how to access the BCOME system and how to conduct transactions for her customers.

Mrs. Sybounheueang was among the first few BCOME agents registered in July 2015 when the project was still in its pilot phase. Since that time, BCEL has expanded the BCOME agent network across the country, with over 128 agents in every province and a target of 410 agents by the end of 2019. Yet, the quantity of agents is less important to BCOME than the consistent, high-quality service that agents must deliver. As the agents are the face of the service and there is a reputation risk to the bank for non-compliance, the quality of the service should be its first priority.

BCEL supports its agents in several ways, such as the service system, technical and operational training, marketing and publicity material, and encouragement of the agents to do conscientious self-promotion, carefully focusing on three components of performance: trust, high visibility, and location.

A successful agent like Mrs. Sybounheueang attributes her success to these three attributes but primarily to the trust she has from her customers and the bank. She knows how to use the promotional material (brochures and posters) that the bank provides, and she speaks to her community about the value of the BCOME service and the convenience it can offer them. Situated on the main road, her location is premium and highly visible. Her converted storage room serves as a dedicated BCOME service office, providing her customers a comfortable environment to conduct their transactions. She is now involved in supporting the construction of a new market for the region that is only 100 metres away from her agent location. When completed, the market will attract more customers to transact at her location.

Agents in different parts of the country serve communities with different standards of living and different circumstances. Khaek Phanthalath, an agent in Ban Tha Kok Hai, Pak Ngum District (a village about 50 kilometres from a city), explained that the transaction type that she deals with the most is receipt of remittances. People from other provinces send money to their parents or relatives who live in the village or nearby, and they come to get the money at her shop. In contrast, Mrs. Sybounheueang, the agent from Paklai District, mostly serves customers who send money to their children who are studying in the capital or other large towns. Another agent, who represents BCOME in the busy and crowded capital of Vientiane, handles more business-related transactions.

These various use cases and requirements from different communities are carefully considered by the BCOME development team, as Nanthalath Keopaseuth, Deputy Director at BCEL, explained, “Sometimes our development team even thinks that we should modify the specific product to meet the particular need of each province and locality. This is a subject that we are thinking about for the possible development of our service—we keep thinking how we can create the best product to fit the rural community.”

It is noticeable that most BCOME agents are women—women who have a business to manage, who hold a lot of responsibility in their family and who are eager to support their community. All are happy to bring the service to their village and provide more convenience for their relatives and fellow villagers, to save them the time and money of traveling a long way to a city to complete their transactions. For farmers in their village, the agent’s extended service hours, from early morning until late in the evening, help them so that they are able to focus on production and not lose valuable time conducting transactions; they can stop by and do the transaction whenever is convenient. Suddenly banking is easier and less stressful.

The commission is not the only benefit of being a BCOME agent. Agents also build friendships and share convivial moments during their workday. They also benefit from the prestige conferred on them by the brand of the first commercial bank in the country, giving them considerable standing in their local community. And, the new, efficient service of BCOME draws in more customers to agents’ existing business location; it helps their existing business grow.

BCEL has brought the new age of banking—branchless banking—to Lao PDR with a service that relies on local people becoming engaged as agents to serve their own community at their community members’ doorstep. BCOME is designed to help a new group of customers, who have until now been unfamiliar or even unaware of financial and banking services, experience these services and benefit from them. In fact, BCEL has discovered just how much money flows from people in remote, rural areas to the capital city of Vientiane and other main cities, for their children’s education, for their families and for their commercial needs.

With their enthusiastic approach to providing accessibility and to helping support growth of their communities, agents are raising the awareness of villagers (e.g., through careful self-promotion at their agent location) and educating them about the low risk, inexpensive cost and speed of the new system. BCEL supports agents with periodic awareness-raising campaigns to promote overall services of the bank, while focusing attention on the agents as the primary source of the service in the community.

As Mrs. Sybounheueang summarized, “I can give them friendly advice to use this new service—it is convenient and safe. Before they sent money to their children by a bus driver. Their children would come to pick up the money at the bus station, but they had difficulties with timing and missing the bus. It was high risk. Now more and more come to use my service. They like it here because some of them feel uncomfortable to go to the bank branch.”

June 2017. Copyright © UN Capital Development Fund. All rights reserved.      

The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.

For more information, please contact

Aliska Bajracharya

KM Consultant, Lao PDR

http://mm4p.uncdf.org

Republished from the UNCDF MM4P website:  https://www.uncdf.org/article/2940/the-roaming-agents-of-lao-pdr

On October 16^th 2017, Yong Duangphachanh did not make the 2-hour journey to a banking agent point in the district town to deposit money for her children’s educational fees. Instead, she attended a Xainiyom Micro Finance (XMI) center meeting in her village in northern Lao PDR and was the first in her area to experience the latest evolution in branchless banking.

XMI has partnered with BCEL’s Community Money Express (BCOME) and since February 2017, has been providing BCOME transactions to its customers via their 7 branch offices; including Beng where Yong Duangphachanh has her XMI account. But what delighted her was that now she did not have to travel to the agent - now the agent could travel to her.

This pilot initiative is supported by the UNCDF Making Access to Finance More Inclusive for Poor People (MAFIPP) programme jointly operated with the Bank of Lao PDR, with support from the Australian Government and technical assistance from UNCDF MM4P. The programme aims to integrate microfinance institutions (MFIs) into the digital finance ecosystem in appropriate ways. As a follow up to MAFIPPs “Training on Digital Finance and Interventions Models for MFIs” in and building upon the UNCDF MFI strategy toolkits to enter the digital financial service (DFS) arena, XMI was ready to take the next step.

To provide convenience and continuous service to its remote customers XMI conducts weekly center meetings in all villages accessible by motorbike. Meetings only occur in the mornings and take about one hour typically for clients to make loan repayments, to deposit or withdraw on their savings accounts. Now, as part of the center meetings, the XMI field staff travels to the community with a laptop, printer and, most importantly, a 3G Pocket Wi-fi router to allow the loan officers to connect to the BCOME platform. There are already plans to replace the equipment with a more portable tablet and a pocket-sized Bluetooth printer. Although now customers can avail opportunities like BCOME transactions including depositing and remitting funds. Currently, XMI conducts center meetings in 3 provinces (Oudomxay, Luang Namtha, Bokeo) and 14 districts covering 415 villages.

And with all that travelling, XMI staff are well known in the communities that they serve, and they look for innovative ways to bring valuable services and raise awareness about them. As part of their mission, they conduct promotional activities at schools. Such as the outreach to high school seniors conducted by XMI at Meuang Beng High School where students were introduced to the benefits of savings and educational loans. Although XMI accounts cannot be opened by minors, it is presumed that parents will be able to avail of these services on their behalf. Additionally, XMI explained how BCOME transfers can help students who study away from home and need to receive financial support from their relatives.

XMI continues to make further inroads for financial inclusion and values its relationship with BCOME as it is a positive way to associate with BCEL (the largest bank in Lao PDR with 41% market share in retail savings and 4% in lending). The association makes people more confident in conducting banking and financial services with XMI.

This pilot activity of offering remote transactions has been well received by customers but it is not without its challenges. BCEL is cautious about allowing agents to conduct transactions away from the designated and approved premises. BCEL understands the importance of trust in agent banking transactions. And they ensure it by having an authorized signboard and customer pricing clearly displayed. XMI and their well-trained staff could offer significant assurance to BCEL. XMI has been authorized by BCEL to conduct only on-line BCOME transactions so that the BCOME remittance occurs in real-time. The customer either gives cash or the amount is debited from her/his savings passbook – the transaction will be recorded in the XMI monitoring information system only when the credit officer returns to the Service Unit. The XMI savings passbook (containing the client’s picture) can be used for formal client identification in lieu of the common ID card of the family book – a procedure mandated by BCEL to fulfill the anti-money laundering obligations applicable to commercial banks.

XMI is hampered by the lack of suitable mobile data connectivity in many communities, which would require offering off-line transactions. For example, when a customer wants to deposit or remit funds, that transaction would be executed once the officer returns to the branch office where there is a stable internet connection. BCEL is considering authorizing off-line transactions based on the success of this initial pilot with a roaming BCOME agent.

“A service such as this makes banking more accessible and can also increase business for us,” said Khanthaly Saenvilayvong, Managing Director of XMI. He accompanied the team on this first experiment and is pleased and proud that XMI is the first to bring a real-time DFS solution to a remote community in northern Lao PDR. “These DFS services will continue to develop and provide opportunities to offer more and more services - once people become aware of the service they will try it and then become regular users due to the security and convenience.”

XMI key figures (as of Q3 2017 unless stated otherwise, source: mixmarket.org)

By David Kleiman

DFS Expert, Lao PDR

For more information, visit

http://mm4p.uncdf.org/

Republished from the UNCDF MM4P website:  https://www.uncdf.org/article/2528/creating-new-world-banking-lao-pdr

On 12 May 2015, the first branchless banking transaction was completed in a rural village in the Lao People's Democratic Republic (Lao PDR). This ground-breaking transaction took place with a service launched by Banque pour le Commerce Exterieur Lao Public (BCEL), one of the country’s leading banks. The service, BCEL Community Money Express (BCOME), was the first of its kind in this largely agrarian and rural nation.

Digital financial services (DFS) in Lao PDR can have significant impact by providing access to services that the dispersed population is sorely missing. The first branchless transaction opened a new world of banking that is fast, safe, inexpensive, convenient and reliable, though the story behind the project was neither swift nor simple. The journey to launch digital finance and branchless banking took investment and planning that began years ago, in 2012, with the engagement of the Bank of the Lao PDR (BoL) and the United Nations Capital Development Fund (UNCDF).

Bringing digital finance to Lao PDR required a serious commitment by BoL, which had not yet established a regulatory framework for DFS at the time. But BoL had a vision for digital finance, that it would be an important service to broaden financial inclusion and to accelerate local development. The 2014 FinScope survey of the country revealed that access to banking services was twice as high in urban areas than in rural, with the areas without year-round road access severely affected. The two main reasons for the finding were the following:

• Distance: It takes more than one hour of travel time for at least 40% of rural people to travel from the often remote mountainous areas where they live to a bank branch or an ATM.
• Income: Most rural dwellers have unpredictable income.

In sum, banking was an awkward, time-consuming and expensive proposition for many people (see the figures for greater understanding of the financial context at the time).

In 2013, BoL hosted a two-day stakeholder conference with the support of UNCDF and International Finance Corporation to explore the benefits of digital finance for financial inclusion and to develop a strategy to implement DFS for the benefit of rural Lao people. BoL also requested a scoping mission to assess the potential for DFS in the country be conducted by the UNCDF programme Mobile Money for the Poor (MM4P), through the national implementation programme called Making Access to Finance More Inclusive for Poor People (MAFIPP). The project received generous financial support from the Australian Government.

In parallel, with the support of UNCDF, BoL went to work on creating an enabling regulatory framework for DFS to permit banks and non-banks to offer services. As Akhom Praseuth, Director General of the Financial Institution Supervision Department at BoL, explained, “The Bank of the Lao PDR has a vision for digital finance and we work on its promotion. We are focused on building a strategy for expanding access to financial services, and set the laws and regulations for mobile banking as a tool to control digital finance.” UNCDF supported BoL in its regulatory efforts by assisting BoL staff to attend different workshops and go on exposure visits to Cambodia as well as providing international regulatory experts to advise on the development of appropriate regulations. In 2014, two members of the BoL regulatory committee also travelled to the United Republic of Tanzania to meet with staff of the country’s central bank, Bank of Tanzania, to understand its role and the framework that had helped that country develop its own successful DFS ecosystem.

In the intervening period, BCEL became attracted to DFS and started developing its own vision to promote a suitable service for the Lao context. BCEL worked concurrently with a UNCDF-supported consultancy to develop a five-year business case that established a target of serving 150,000 customers annually through a network of 410 agents. “The inspiration to create this project began when we received the statistics on Lao people’s access to financial resources and the banking system in the country,” said Nanthalath Keopaseuth, Deputy Director at BCEL (the service provider for BCOME). “We like to bring the technology into the system to reduce costs and at the same time to offer the communities accessibility to funding resources. That is how it made BCEL to be interested, to carry out studies and have a hands-on approach to the project,” stressed of Mr. Keopaseuth.

BCEL is one of the oldest and largest banks in Lao PDR in terms of retail customers, branches and ATMs. In the last few years, BCEL has successfully rolled out i-Banking—a corporate Internet-banking platform—within its organization as well as a popular, highly functional mobile banking application for individual clients called BCEL One. Introducing branchless banking was a wholly new concept for BCEL and for the country that required the bank to think outside the box and to be ready to manage a range of complex challenges like merging traditional retail banking with branchless banking and digital finance. Addressing these challenges meant considering not only the technology required but the manpower and knowledge needed—as well as the capital required. Most significantly, BCEL had to change its views of the customer.

Typically, a bank builds branches and customers go to the branches. In the new world of branchless banking, the bank is in the position of going to the customer, bringing them much needed services. The concept of banking at the customer’s doorstep is highly appealing to customers, but at the same time, it can represent some level of risk for the bank.

The BCOME service relies on agents, so BCEL needed to build a relationship of trust with them and in turn inculcate trust in the agent within the community and by individual customers. To create a meaningful value proposition for BCOME agents, BCEL invested significantly in training its agents, conducting substantial marketing campaigns with agents, and teaching agents how to proactively promote the service and serve customers.

To create a clearer picture of the service, UNCDF and MAFIPP brought the BCOME development team to visit countries that have similar market situations. The team exchanged lessons learned and brought back know-how to develop a system that was well-suited to the bank, its customers and the Lao context.

After operating for over a year, the BCEL branchless banking service has seen positive signs of development. By the end of 2016, there were 128 agents working in all provinces nationwide.

“What surprised me is the result of the products that BCEL has developed, and it has been introduced to communities. The service has been well accepted in society and the product has been widely used by customers, and the number of the agents has increased,” reported Sengchanh Manivanh, BCOME Coordinator.

The success of the BCOME project is a result of the hard work of the BCEL team—and that team clearly includes the agents. As trusted leaders in their communities, they have become the face of banking for many people and are educating them about financial services. People are understanding the services and realizing that banking is not something incompatible with them. With the creativeness of BCEL to build its business model around the circumstances of the country and with the help of external organizations, BCOME is now a reality.

This is the third blog post of a series about the dawn of digital financial services in Lao PDR. Read also "Community development through digital finance in Lao PDR" and "Agents—The revolution on the ground in Lao PDR" .

June 2017. Copyright © UN Capital Development Fund. All rights reserved.

The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.

For more information, please contact:
Aliska Bajracharya
KM Consultant, Lao PDR
http://mm4p.uncdf.org/mm4p%40uncdf.org

David Kleiman
DFS Expert

Republished from the UNCDF MM4P website:  https://www.uncdf.org/article/3302/10th-digital-finance-working-group-in-lao-pdr-is-a-clarion-call-for-digital-finance

On 13 December 2017, the 10^th Digital Finance Working Group (DFWG) was convened by UNCDF¹ and the Bank of the Lao PDR² (BoL) with the generous support from the Australian Government. Under the chairmanship of BoL, this event marked a milestone for digital financial services (DFS) in Lao PDR. Not only it is the 10th meeting a milestone, showing the commitment of BoL and the engagement of the industry, but it also highlighted a new era of digital payments in Lao PDR.

More than 60 representatives from banks, mobile network operators (MNOs), microfinance institutions and government stakeholders were acquainted with the recently ratified National Payment System (NPS) Law.

The NPS law has secured passage in the National Assembly on November 7^th and is expected to be signed into law in Q1 2018. The emergence of this new policy instrument will:

• Give clarity to the industry about the roles they could play within the digital finance ecosystem.
• Mandate the creation of a payments department within BoL to issue licensing to both payment service providers and payment system operators.
• Pave the way to bring innovative, accessible and affordable payment solutions to Lao PDR.

“With emerging demand for quick access to financial services and success stories of existing products in South East Asia, Lao’s digital finance sector has also been witnessing progressive changes. For digital payments or mobile money to work in any market- collaboration is the key! There needs to be a strong dialogue and a sturdy partnership between MNOs, banks and third parties to work towards developing digital solutions that can reach the broadest portion of the population. “- Nopphorn Danchainam, Managing Director of Digio, a pioneering payment systems provider in Thailand.

Towards the end of the programme, BCEL spoke of new updates to their BCELOne mobile banking application, which has a current client base of 70,000 registered users. In November 2017, BCEL introduced the third release of its BCELOne application with an added feature of QR Payments known as OnePay. It allows account holders to make instant mobile payments to vendors simply by scanning the merchants QR code. This domestic payment service is first of its kind in Lao PDR, with a standards-based solution that will integrate into the NPS infrastructure and allow interoperability with other providers over time. BCELOne previously integrated into the UNCDF-supported BCEL Community Money Express (BCOME) service, which allows banked customers to send payments to anyone in the country using the application. Funds can then be collected from the banks’ branches or more than 200 agents nationwide. You can read the detailed case study of BCOME here and watch the video about BCOME’s pioneering role in DFS in Lao PDR.

The DFWG has served as an excellent industry forum for discussion, knowledge sharing and promotion of a new suite of services in the Lao financial services market. Looking ahead to the 11^th DFWG, BoL with the support of UNCDF aspires to promote the creation of action-oriented sub committees or taskforces that can address the challenges of delivering more innovative services in Lao PDR.

^{1.Through the in-country joint programme with BoL Making Access to Finance More Inclusive for Poor People (MAFIPP) and the global thematic initiative MM4P↩}

^{2.Lao People’s Democratic Republic↩}

For more information, please contact:

Aliska Bajracharya

KM Consultant

David Kleiman

DFS Expert, Lao PDR

Or visit mm4p.uncdf.org

Republished from the UNCDF MM4P website:  This article was first published on 21 June 2017 at https://www.uncdf.org/article/2512/community-development-through-digital-finance-lao

Using branchless banking to support education, agribusiness and more

There is an old Lao saying, ‘If you don’t go out of the village, you will not see the land far away; if you don’t go study, you will not have any knowledge.’ It is still commonly used in the Lao People's Democratic Republic (Lao PDR)—a country with a surge in demand for education, with 78% of youth enrolled in lower secondary education[1] while 56% of adults have primary education or less[2] (see the figure for more detail). Sending children away from home for higher education is considered a requirement for parents to build their children’s future. So, there is little surprise that sending money to support children’s education has become a primary use case for the first branchless banking service in Lao PDR.

Banque pour le Commerce Extérieur Lao Public (BCEL), one of the country’s leading banks, developed the branchless banking service, which is called BCEL Community Money Express (BCOME). It is entirely new; no other bank offers this kind of service in Lao PDR. Supported by United Nations Capital Development Fund (UNCDF) and its national implementation programme Making Access to Finance More Inclusive for Poor People (MAFIPP) and PHB Development, BCEL launched BCOME

in June 2015 with a small pilot of only 11 agents. Today, with more than 125 agents in every province of the country, BCOME has more than doubled the size of the BCEL branch and service unit network. Villagers perceive BCOME as convenient, quick, safe and friendly, the latter because it is offered by someone they know in their community—a neighbour, relative or acquaintance in town whom they can trust and with whom they can comfortably share their needs.

Figure from FinMark Trust and UNCDF-Making Access Possible, FinScope Survey Highlights: Laos 2014, p.9 (n.p., November 2015).
© UNCDF MM4P

Agriculture is the backbone of the Lao economy, but farmers are dispersed, living in remote, rural areas throughout the country. Travelling to a district town can be an undue burden for them, and accessing formal financial and banking services is even more difficult both because of the distance to a bank branch and because of insufficient income and low financial literacy. These challenges have understandably led farmers to depend on cash. For them, sending money to family members in other provinces by a bus driver is a method often used, but it is time consuming and sometimes risky.

Sompong Veosy, a farmer from Souvannaphoum Village in Paklai District, grows rice and raises buffalo and cows for his income. He normally spends all day looking after the rice paddy and livestock, only leaving his farm after sunset. Taking time from his work to travel to town to complete a transaction is exhausting. But, since a BCOME agency in his village opened, his outlook has changed. “In the past, I had to travel a long way to send money to my children for their education, but now it is easy, fast and convenient. I am very, very happy now. It is perfect,“ he explained with a happy smile.

Sompong Veosy, a farmer from Souvannaphoum Village in Paklai District.
© UNCDF MM4P

The BCOME service has drawn this new customer segment to BCEL, which has been surprised to learn just how much money from rural farming communities flows throughout the country. Through the service, BCEL can stay close to these new customers and learn about their requirements.

Thong Khoun, a villager from Thakokhai in Pakngum District, regularly sends money through BCOME to her son who is studying in the southern part of the country. Sometimes, though, it is the opposite: she has an urgent expense of her own, and her son sends money back to her. “My son asked me to open a bank account so that he can send money to me in the future. So, I wish that BCOME can open the account here. It is convenient because it is close to our house,” Ms. Khoun explained. “I used to ask the agent if I can open my account with her. I want to save money, and I also want to have an ATM card. I feel that I don’t want to carry cash anymore. If I have a card, wherever I go I can withdraw money from the machine—that is what I want now. If we can open the account with BCOME, it would be wonderful,” she added.

BCOME is not only a solution for farmers to support their children’s education, it also allows them to have more opportunities to trade their products more broadly—helping them to break free of poverty. It helps farmers increase their income by providing a quick and easy payment system. BCOME responds directly to the needs of communities with a service that old-fashioned banking cannot provide. Siavone Phomavong, an agent in the capital city of Vientiane, shared an example: “I have a customer who sells organic vegetables. He sends money to buy them from farmers in Pakse, Champasak Province.” The BCOME service assists the growth of agribusinesses, as the money from buyers in the main cities flows out to farmers in the provinces, where the farmers can save and re-invest for better techniques and more productivity.

The access afforded by branchless banking does not only support education of farmers’ children and their agribusiness, it is also suited to many different types of business requirements, such as paying for insurance and making monthly payments for the purchase a car. Early adopters who have experienced the efficiency of the first branchless banking service in Lao PDR have greater understanding of the new system and value the system more. It benefits them in many ways, relieving stress in their lives and reducing the time and the cost of transactions, which in turn gives them a chance to save and thereby prepares them to take a first step out of the poverty trap.

In the future, BCOME will continue to grow with new product and service offerings and to play an important role in accelerating the growth of all kinds of businesses. The convenience and accessibility can be applied to any customer segment, from low-income populations who deal in small transaction amounts to large organizations that can network with people in any isolated region. These advancements will contribute to a greater number of people improving their livelihood by using a low-cost, easy and friendly system, which will drive the economy of the household and in turn the communities that form the core of the country’s wealth.

This is the second blog post of a series about the dawn of digital financial services in Lao PDR. Read also "Agents—The revolution on the ground in Lao PDR" for an agent's perspective.

June 2017. Copyright © UN Capital Development Fund. All rights reserved.

The views expressed in this publication are those of the author(s) and do not necessarily represent those of the United Nations, including UNCDF, or their Member States.

[1] Lao People’s Democratic Republic, Ministry of Education and Sports, Education and Sports Sector Development Plan (2016–2020) (Vientiane, December 2015).

[2] FinMark Trust and UNCDF-Making Access Possible, FinScope Survey Highlights: Laos 2014 (n.p., November 2015).

For more information, please contact:
Aliska Bajracharya
KM Consultant, Lao PDR
http://mm4p.uncdf.org

David Kleiman
DFS Expert in Lao PDR