Microfinance in a cash-less world
August 18, 2008 2 CommentsCash is no longer king. Plastic has taken over. I try to keep a little bit of currency in my wallet for tips and for the rare instance when a merchant won’t accept plastic, but I would estimate that 99% of my purchases are on a credit card or through some other electronic means. Undoubtedly, my reliance on plastic is due in part to my living in the US, where credit/debit services are easily attainable and relatively inexpensive. And yet each time I travel overseas, the diffusion of credit/debit services is more complete, and I suspect will be nearly ubiquitous within the next few years.
So what impact does the slow death of paper currency have on the poorest of the poor and on the microfinancial services marketed to them? On the one hand, I can see how the inherent dangers and inefficiencies of disbursing and collecting loans in paper currency could be overcome through more universal access to credit and debit services. On the other hand, I can also imagine a scenario in which the lack of access to credit and debit services means that the poorest of the poor are excluded from certain economic opportunities.
This is a question that requires real expertise, and so, if you happen to be an expert, please chime in. Will greater access to credit and debit services facilitate microfinance or hinder it? What form will credit services take in the developing world (a credit card? a mobile phone? a fingerprint swipe?)? Please comment if you have any insight on this question.
News and Commentary
I recently noticed that ACCION is hiring for a specialist to address this very issue:
Job Summary:
http://www.candidatemanager.net/CM/Micro/JobDetails.aspx?&mid=YDFCX&sid=WFY&jid=EVEVDCXEVCX&site=Accion
The Microfinance industry is still very much based on a high-touch sales and delivery models, thus limiting its potential for greater reach-out in its target markets. Therefore, breakthroughs in delivery channels are critical to lower costs and expand the reach of microfinance, especially where the installation of traditional brick and mortar branches are impractical or too expensive.
Recent examples in the Brazil, Peru, and Colombia of banks partnering with retail agents to “deliver” financial services to poorer segments, using solutions such as cards and point-of-sale (POS) machines, have garnered attention. This could dramatically improve client outreach and reduce operational costs. Yet significant questions remain on partnership models, branding, customer adoption, technology, and regulation, among others.
In this context, ACCION seeks to provide its institutional partners and clients (any financial institution targeting the Microfinance market) with support to develop and implement alternative delivery channel solutions. This involves from institutional diagnostics, to finding the solutions, and implementing them, such as those that involve banking agents, cards/POS or use of other technologies such as Mobile banking.
Therefore, the Channels Specialist will be responsible for assisting ACCION’s partners in activities such as conducting banking correspondent and card diagnostics, developing effective strategies, crafting partnerships with technology companies, vendors, payment providers, launching and monitoring pilots as well as roll-out.
Based on these field experiences and industry-wide analysis, the Specialist will also identify and systematize the key factors for implementing channel solutions such a banking agent, card implementation, mobile Banking, etc, in order to “replicate” those models across diverse markets.
The job requires significant travel (at least 40%) to developing countries to help implement strategies in financial institutions working in underserved markets.
Key Areas of Responsibility:
A. Technical Assistance to ACCION partners (80%): Evaluate, design and implement banking agent, card programs or other alternative channels in Latin American, Africa, and Asian markets. Responsibilities could include:
1. Develop strategy and work plan with technical assistance team and strategic partners to design and develop banking agent and card programs in partner institutions.
2. Lead and directly execute technical assistance activities, including:
· Assist in the development of affiliate strategic plans and programs;
· Design & oversee market investigations & analysis to gain in depth understanding of an affiliate’s current customer (by segment) & marketing mix;
· Analyze the market coverage, card/ATM/POS penetration, card payment providers (both international and local), retail agents and distribution network;
· Forecast budgets based on anticipated customer activity and business volume plus cost savings (of substituting electronic payments for cash handling) over the strategic planning horizon chosen by the institution;
· Develop strategic and operational plans for implementing banking agent and card programs (including basic work flows, policies & procedures, required staffing, system specifications, vendor RFPs etc);
· Identify, evaluate & negotiate with potential partners; and
· Monitor progress of work plans and assist in implementation.
B. Research and Development (20%): Expand the application of alternative channels solutions such as electronic payments in microfinance by researching innovations in other markets, learning from corporate experience, working with key players in the value chain (mobile vendors, mobile operators, trade groups, etc.) and maintaining close working relationships with other financial institutions.
1. Contribute to developing the business solutions for Delivery channels.
2. Keeping abreast of industry developments globally and cutting edge research on the challenges & successes in applying electronic payments at the base of the pyramid.
3. Training staff of ACCION and partner institutions on basics & lessons learned of incorporating electronic payments into microfinance.
Qualifications and Requirements:
· Must have five plus years professional experience in retail banking, ideally in an emerging market, managing and implementing delivery channels and the products and services running through those channels.
· Possess knowledge of specific alternative channels of payment mediums.
· Must have substantial experience in cards (operational and commercial perspectives).
· Experience in operational and “field” issues associated with retail banking.
· Strong technological background, especially as it concerns ability to understand system architecture and wireless communication technology.
· Qualitative and quantitative analysis techniques, including use of financial models.
· Experience working and/or living in developing countries and willingness to travel 40% or more
· Highly dependable, requiring minimal supervision. Must possess self-initiative and resourcefulness in implementing projects in a timely manner.
· Ability to work effectively in teams and particularly in the role of external consultant, in diverse settings, and interacting with field staff as well as senior management.
· Relationship-management, particularly with suppliers and alliance partners, is crucial. Experience in negotiating agreements with suppliers and alliance partners a strong plus.
· Project management and organizational and planning skills a must.
· Excellent written and oral skills, particularly applied to establish and sell recommendations. Public presentation skills.
· Fluency in English and Spanish required. French, Portuguese and Mandarin, a plus.
· Graduate degree in Business Management, Finance or another related field desired.
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