The challenges ahead for mobile financial services in Myanmar

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Written by Sachin Bansal

Myanmar has been receiving lot of attention recently. As a result of its increased openness with the global community, there have been many articles written on the country, its people, and many are looking at Myanmar to take great strides in the coming years. As a result of the increased dialogue with international players, there has been significant foreign investment in various sectors of the economy. The country is now moving towards a market-oriented economy, a change that is helping the government-driven economy to be more efficient and competitive. As an example of the increased competitiveness, entry of new players in the telecommunications space has brought down the cost of SIM cards from as high as $2,000o to $1.25 today, making it more accessible to the population. This fall in price has resulted in increased mobile penetration in Myanmar, 54.6% as of March 2015. The Ericsson Mobility Report of November 2015 states that 87 million new mobile subscribers were added globally in the Q3 2015, of which Myanmar contributed 5 million – ranked fourth globally of the fastest growing markets.

The Central Bank of Myanmar is eager to leverage this now omnipresent tool to expand financial services to the un(der)banked citizens of Myanmar. In July 2015, it issued draft Mobile Financial Services (MFS) regulations and the final regulation is expected soon. In spite of all the efforts being made by the government, central Bank, financial institutions and telecom companies, the journey to launch MFS will not be easy in Myanmar. There are several challenges facing uptake and usage:

Lack of trust in the banking system: 

There is a very high level of mistrust with the banking system in Myanmar and most people still do not have bank accounts. The lack of trust is so ingrained that several big institutions pay their staff in cash, as the employees are not willing to accept a bank transfer. This lack of trust in banks can mainly be attributed to the 2003 Myanmar banking crisis but there have also been several recent rumours of banks failing, leading to people withdrawing all their money from the banking system. The MFS players will have to work very hard to overcome this challenge to change people’s perception.

Low level of perceived risk for carrying cash:

People in Myanmar do not perceive carrying large amount of cash on their person as a huge risk, unlike in other countries. This lack of risk is evident in the country as you can see money changers sitting on the roadside of Yangon streets, with minimal security arrangements, counting large US Dollar bills out in the open. As the perceived risk of carrying cash is low, people may be unwilling to pay fees/charges to store their money in MFS wallets for just safety reasons.

Low pricing of existing formal channels of money transfer:

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Money Transfer Charges of Myanmar Post

Most successful MFS offerings have person-to-person money transfer (P2P) as their core product offering as it is cheaper than transferring money through a bank. In Myanmar, however, the money transfer service offered by many formal institutions has a very low transfer fee. The Myanmar Post Office, for instance, has an extensive presence throughout the country and offer money transfer service in 335 of their branches. The fee is lower compared to other countries at 0.05% to 0.5% of the amount remitted plus fees. Indian Post Office by comparison charges 5% on low-ticket money order service. Establishing a business case to compete with such low pricing is going to be a challenge for MFS players in the near future. However, there is limited geographical coverage of such formal services available to the citizens and customers may be willing to pay for convenient services if the price was appropriate.

Prevalence of Hundi system (informal remittance channel)

There are several informal channels , such as the Hundi system, that also offer money transfer services to citizens of Myanmar.  The Hundi system has been used and trusted for several decades. As per The Economist, people migrating outside the country perceive the traditional hundi system to be cheaper, quicker and safer than anything the banks can offer. The new MFS offering will have to beat the advantages offered by such informal systems.

To launch successful MFS operations in Myanmar, the providers will have to work on an innovative business model and develop customer-centric products that learn a lot from the informal offerings. Pricing will also play an important role as customers may be willing to pay for accessibility and convenience.


Trends for 2016

As the calendar turns to December, we reflect on the year and look forward to what’s ahead. Many of the key issues and trends from 2015 have been highlighted on our blog – MTN’s fraud case in Uganda, increasing focus on challenges to branchless banking and mobile financial services uptake, omni-channel strategies – but as we reflect on the year past, we ask ourselves: what do we look forward to in 2016 ? Here are our thoughts:

Mobile Data for Development – Khurram Sikander

Over the past few years, the term ‘big data’ has been promoted as a potential solution to development challenges that exist in many of the developing and emerging markets in which we work. Automated analysis and interpretation of large data sets is not new. However, in the markets where we work, use and interpretation of data has been largely restricted to multi-national corporations or sophisticated commercial banks with the resources to consolidate data from disparate systems. With 4.6 billion unique mobile connections expected by 2020[1], we now have a single view of the customer through the mobile device. The increased utilization of mobile data, specifically call detail records (CDR)[2], can provide exciting opportunities. As smart(er) phone penetration increases in these economies, there will be richer data sets available for decision making in the next five years. In the immediate future, we have to maximize the opportunity that CDRs present to inform decision-making by governments, donors and the private sector.

There is real potential for CDRs to provide actionable data for industry stakeholders, and there are four key segments[3] where it could prove an important addition: economy, financial services, agriculture, and health.

I also look forward to Arsenal winning the 2015-2016 English Premier League title in May.

Governments taking hands-on approach to financial inclusion – Roland Pearson

Although financial inclusion has been a long-term goal for many, we are seeing more concrete and articulated national plans to reach previously un(der)served markets. In these new strategies, DFS is a key channel with which central banks, ministries of finance, and other key officials plan to reach new populations. Though the initiation of these plans is commendable, it is important that governments position themselves for an active approach in the development of inclusive, sustainable, and profitable financial ecosystems.

Governments and their agencies are among the few stakeholders that can influence all areas of the financial ecosystem, from industry-level actions to working with specific financial service providers. The unique nature of their position highlights the importance of their role and also the inclusive atmosphere that they must create. Governments cannot rely upon one player to develop the financial ecosystem, they must enlist a wide-range of stakeholders to develop the ecosystem at all levels (banks, payment service providers, MNOs, MFIs, SACCOS, and many others). They must also take initiative and drive issues themselves, such as creating an interoperable payments system – an important aspect of the ecosystem and often reliant upon the push from officials.

While their actions and influence is required throughout, there are several areas of focus, including: creating an enabling environment for all stakeholders, with regular industry input; designing and implementing a non-restrictive, but comprehensive, regulatory framework; ensuring consumer protection and empowerment; and tracking results and performance of the ecosystem. A government’s cross-cutting impact and pervasive influence is key to ensuring that the financial ecosystem is developed in a collaborative manner and with a focus on including un(der)served populations.

Concrete actions to advance national payment system development and financial inclusion at a macro level – Tricia Cuna Weaver

With the first set of commitments to the Maya Declaration pledged in 2011, government-level support for financial inclusion is not a new trend. However, governments are increasingly taking action to execute on these commitments in concrete, actionable ways. These actions include the development of national payment system strategies, which acknowledge the role of new financial players and innovations in promoting development of the national payment system, while also ensuring the safety and soundness of the system. Within these national payment system strategies, governments are also stating financial inclusion as a direct objective.

Increasing investments in financial inclusion through digital financial services at a meso level – Tricia Cuna Weaver

At a meso level, global financial sector players are also increasingly investing in initiatives that promote financial inclusion, broader inclusive growth, and cashless economies. It is not the foundations tied to these institutions which are making these investments, but rather the corporations themselves, which recognize the importance of broad-based economic growth and financial inclusion to their business objectives. For example, Enclude is supporting MasterCard’s Center for Inclusive Growth with the development and execution of its strategy to connect one million microentrepreneurs to the formal economy by 2020. In Mexico, MasterCard also has a model in place that enables microfinance institutions to issue MasterCard-branded products.

More innovation in SME analytics and Fintech solutions – Vanina Vincensini

Fintech companies have started providing solutions to further expand access to finance to small businesses, moving away from a focus on the mass consumer market. They provide tools and platforms to help connect businesses to financial institutions, or build financial track record and transaction history as alternative measure of SMEs’ risk profiles. For example, Kopo Kopo promotes the acceptance of digital payments at merchants while building business intelligence analytics and cash advance services for these merchants. Yet few solutions propose to leverage technology to build adapted interfaces for businesses’ day to day financial lives. We could expect solutions to develop financial literacy and management applications for SME clients, as well as an adaptation of smartphone digital finance interfaces to incorporate menus for business purposes, e.g. accounting and record keeping.

Emergence of Big Data Ecosystem – Michael Adenuga

Big data is changing the way companies do business, and, when leveraged well, it can create new opportunities, transform business models, and disrupt industries. In financial services, the proliferation of big data will create an ecosystem where data can be obtained from multiple sources, aggregated, harmonized, and transformed. These emerging ecosystems will be made up of various actors, ranging from large incumbent companies, such as mobile networks operators, insurance companies, commercial banks and microfinance institutions, to start-ups such as fintechs, social media and internet businesses. At the heart of the ecosystem, together with the support of regulatory bodies, data scientists and data engineers will drive data aggregation, harmonization and transformation. The harmonized or transformed data will provide support towards the development of financial products that are disruptive, cheaper, and customer centric. The development will require support of regulatory bodies on consumer protection and data privacy issues.

Mobile phones assisting responses to the refugee crisis – Paul Newall

The world is facing the greatest humanitarian crisis since WWII. While there have been many instances of mass migration in human history, there is one key difference to today’s crisis, and it’s a trend that may provide an avenue to reaching/connecting those in-need: the mobile phone.

At a time when ignorance and fear about the refugees is at an all-time high (Hello, Mr. Trump), the mobile phone provides the tool to reach refugees and learn from their behaviors. Through mobiles, governments/donors can connect to those in-need, allocate cash-transfers, provide health and re-settlement information, and break down any language barrier. Using the data generated from the refugees’ usage of the mobile phone, we can better target our response to their needs (transfers, products, etc.). Such a targeted, data-driven approach was not available in mass migrations of the past; we must make sure we do not waste it now.

Proliferation of the budget smartphone – Mark Nichols

The proliferation of smartphones globally will continue to change mobile money services and players. While this trend is skewed towards more developed economies (in sub-Saharan Africa, smartphones are only 25% of total mobile subscriptions), smartphones’ relative market share is growing much faster in sub-Saharan Africa than in North America or Europe.[4] Affordable handsets (MTN, Tecno, and Google already offer smartphones at or below $50) and mobile internet access (driven by initiatives including Facebook’s allow mobile money providers to move beyond the constraints of feature phones.

An immediate consequence of the spread is improved user interfaces and integration with smartphone capabilities for existing mobile money services, but this shift cuts deeper. Third parties can develop apps built on the mobile money service, such as pesaDroid and m-ledger, money management applications built on M-PESA. With the service delinked from SIM cards, competitors using mobile and web-based interfaces, such as Facebook’s remittance/e-money services, can enter the market, and existing services can expand to a customer base beyond that of a specific telco.





Understanding Remittance Corridors: A Strategy for Driving Digital Financial Services Uptake

Written by Michael Adenuga

Understanding the nature and patterns of remittance flows between the banked and unbanked populations within a market can be critical to deciphering the challenges of digital financial services (DFS) uptake, especially in countries where branchless banking and mobile financial services (BB and MFS) are struggling to gain momentum. This is a particular imperative for providers in bank-led markets where senior executives of financial institutions (FIs) take quite a conservative stance toward funding BB and MFS initiatives, and where telecom operators are less supportive due to the fringe roles they are allowed to play within the BB and MFS ecosystem.

The general perception that uptake of DFS is most effective when driven from the banked to the unbanked customer segments, or from urban to rural areas, still holds water. For example, it is easier to sell mobile money to a banked customer on the premise that he/she may have an unbanked person within his network (relatives, employees, suppliers) with the need to receive money through mobile wallets. After all, most mobile money campaigns are built on remittance services such as person–to-person (P2P) transactions. While this tactic has been well-utilized by providers and in some cases overused, engaging more proactively with potential wallet customers at the receiving end of remittance flows can also yield efficiencies as well as additional market share.

E1ngaging customers at the receiving end of remittance flows is perhaps the most important factor in driving DFS transaction volume. Banked customers have at their disposal many channels which compete with their mobile wallet: electronic funds transfer (ETFs), debit/credit cards, mobile banking and internet banking, and even cheques.  However, for unbanked customers, the wallet is predominantly the only channel he/she has to make payments or transfer money.

Simply put, unbanked customers have more potential to drive wallet transactions through P2P, bill pay, and retail payments. For example in Kenya, in 2006, only 26.4% of adults in the country had access to formal financial services, but by 2013, the percentage of adults that are formally included had increased to 66.7%[1] – mainly driven by previously unbanked adults who are now financially-included via mobile wallets. Additionally, these newly included adults have contributed significantly to the $331M USD[2] mobile money industry which facilitated financial transactions to the tune of 37% of Kenya’s GDP in 2014. To put things in perspective, the revenue of the Kenyan mobile money industry is about 12%[3] of the country’s banking industry revenue. The message is clear: mobile money has become a key revenue driver and a critical source of competitive advantage.

The big question for providers is how to collect vital market intelligence that can aid the effective and efficient deployment of resources to build a competitive advantage in the market. Service Providers can benefit from critically dissecting remittance flow patterns and it is important to know that domestic remittances are not limited to urban-rural remittance flow patterns. Several other flow patterns co-exist, namely urban-urban, rural-urban and rural-rural. In addition, several factors often account for the nature of domestic remittances flow, including the level of economic growth in the country; the nature of geographical and population distribution; household income distribution among provinces; and regions and migration patterns. Providers must be able to understand how these flow patterns relate to the distribution of banked and unbanked populations and that useful insights can be derived from such relationships.

Recently, Enclude’s worked with one of West Africa’s leading DFS providers to understand the reasons for low activity rates among its customers and agents. A key finding of the project revealed that the provider gave more attention (in investment and management time) to agents in key urban locations (where the majority of the population is banked). Considerably less attention was given to agents in semi-urban and rural areas where the percentage of unbanked consumers is higher. Enclude also found that the majority of P2P transactions initiated from urban locations were sent to semi-urban and rural locations, and that poor service rendered in the rural locations greatly undermined customers’ confidence and trust in those locations, resulting in inactive accounts.  The negligence of the service provider to properly track its customer transaction (remittance) pattern resulted in management’s poor approach towards investment and management of its agent networks especially at the receiving end of customer’s remittance flow.

‘Big data’ approaches offer cost-effective insight and data on consumer behavior, and the mobile phone presents an interesting tool through which rich transaction data and other customer information can be collected. The data generated by mobile financial transactions can provide the basis for analyzing geographic concentration and distribution of consumers together with migration patterns, financial behaviors, remittance flows, consumption trends and so on. This information on domestic remittance flows can in turn aid the effective deployment of scarce resources for market development.

Within financial institutions, DFS departments compete for management resources with more lucrative departments like corporate & investment banking, institutional banking, and even small and medium scale enterprise (SME) banking. In order for DFS executives to get more management’s attention towards DFS, they should embrace a proactive but cost effective approach by leveraging intelligence from remittance corridors to inform their market strategy and resource allocation decisions. Examples of the type of information DFS executives can collect to understand remittance corridors include the following:

  1. Key Information on agents including type of agent, its location, and other formal financial services touch points around the agents
  2. Agent’s performance tracker which should collect performance indicators such as account opened, account activity rates, type of transactions conducted, failed transactions, and so on. The tool must also be able to conduct trend analysis on the performance indicators.
  3. Profiles of the sender and receiver of remittance transactions including information on other various channels used by the customer
  4. Information on reasons why the sender is transferring money and what the recipient of remittance utilize  collected funds for should be periodically collected through surveys and research2

This information should be stored and regularly updated in a central database where it can be easily retrieved by executives to identify customer-agent related issues, monitor and track transaction flow, understand demand for new products and services and inform the need for marketing and sales activities. Enclude’s Ecosystems Value Assessment (EVA) Tool is an example of such business intelligence tool that can collect and analyze critical information on remittance corridor for service providers.  Service providers must do more to understand remittance corridors used by their customers. It presents opportunities for service providers to learn more about their agents, customer and the overall market. This can help executives in making more informed decision in maximizing the little resources they have now.

Michael Adenuga ( is a consultant, Digital Channels and Linkages at Enclude, you can also follow his twitter handle, @micolo123.

To learn more about EVA and our services contact Santhosh Thiruthimana, Practice Director – Channels and Linkages on or visit our website at

[1] Enabling Mobile Money Policies in Kenya Fostering a Digital Financial Revolution, GSMA 2015

[2] United States International Trade Commission; Enclude Analysis

[3]Eastern Africa Banking Sector, 2014 Ernst and Young; Enclude Analysis

Adopting an Omni-channel Strategy

Written by Trica Cuna Weaver

A UBL Omni pop-up in Pakistan

A UBL Omni pop-up in Pakistan

In 1995, an essay in the ABA Banking Journal argued that “the banking industry will suffer the same fate as the dinosaur within the next five years unless the brick and mortar branch banking system is cast off in favor of more nimble delivery alternatives.”[1] As we move forward into 2015, the delivery of banking services around the world is certainly different than it was twenty years ago. Back then, I remember being fascinated by drive-through bank tellers (a service commonly available at U.S. banks branches), sitting in the back seat of the family minivan, watching as canisters stuffed with checks zipped through tubes and back with deposit receipts. Fast forward to today, I now rarely issue or receive checks, and when I do, I snap a picture of it with my smartphone and it’s deposited to my bank account in a manner of seconds. From drive-through bank tellers to mobile banking, the customer banking experience has changed dramatically.

This significant shift to digital has characterized financial services not only in developed countries, but also (and in several cases, perhaps more so) in emerging markets. Branchless banking and digital financial services[2] are not new concepts in banking; in the late 1970s, for example, Citibank pioneered the roll-out of ATMs to reduce the operating costs of manual cash disbursement at branches. In the financial inclusion space, discourse on digital and mobile financial services has also moved beyond debates on relevance to discussions on tailored applications in sectors such as agriculture and clean energy. Globally, usage of digital channels has increased rapidly in recent years; a 2014 survey found that retail banking customers in 21 countries (in both developed and emerging markets) handled more than 70 percent of their banking interactions through mobile (smartphone, tablet), online, and ATM channels.[3]

Nevertheless, the pressure on banks to expand their delivery channels, as well as the products and services offered through these channels, has intensified due to the exponential rate of financial technology innovations offered by non-bank actors (such as mobile network operators and payment service providers), which increasingly compete in the traditional banking space. From Pakistan to Kyrgyzstan to China, Enclude’s microfinance and retail / commercial bank clients have invested substantially in online, mobile, and card-based channels to improve operating efficiency, more effectively mobilize deposits, expand customer outreach, and, in the case of China, rival Alibaba’s Alipay.

As banks push to “go digital or bust,” however, it is critical to keep the customer experience at the core of any growth strategy. This requires a true understanding of customer preferences – which may vary across customer segments such as industry, geography, gender – and how their banking experience may be enhanced through both digital and physical channels. The emphasis should not be on developing a siloed, electronic banking strategy, but rather, an integrated “omni-channel” strategy that provides customers with a seamless experience across their interactions with a bank teller, call center, online platform, mobile application, branchless banking agent, and/or ATM. According to Wells Fargo & Co., a leading bank and financial services holding company in the U.S., “high-intensity” customers, or those who frequently utilize multiple channels, are 1.7 times more profitable and own six more products on average than low-intensity customers.[4]

Alternative channels are also being utilized to acquire new customer segments. For example, in India, the central government has taken on the task of providing country-wide and universal access to financial services, starting with the opening of a bank account. Over a span of eight months, the program enrolled over 150 million registrants, including over 90 million from rural areas.[5] While similar government initiatives had faltered in the past, the recent success of Pradhan Mantri Jan -Dhan Yojana came in large part due to the mobilization of over 125,000 Bank Mitra (business correspondents) assisting in bank account enrollment camps and conducting transactions via phone and computer from their respective corner shops.[6],[7]

Particularly in the markets where Enclude works, physical channels, such as branches and call centers, will continue to play an important role in the delivery of banking services. Their role, however, must evolve to reflect the particular needs and preferences of customers. In Kenya, for example, Musoni, a microfinance institution (MFI), has taken advantage of the well-developed mobile money and mobile payments infrastructure and conducts all of its transactions (such as loan disbursements and repayments) entirely through mobile money accounts. Nevertheless, while Musoni’s operations are cashless, they are not branchless; Musoni does have a number of branches, recognizing the importance of channels that provide face-to-face interactions with clients. Since the branches are cashless, however, they are less costly for Musoni to operate, which also improves the MFI’s ability to open more branches in rural areas.[8]

In this context, branches are not doomed to the fate of dinosaurs. Nevertheless, banks must determine how their channels must evolve to be nimbler, less costly, and more integrated in order to expand customer access and outreach, and to enhance the customer banking experience.

[1] Fowler, Judge W, and John P. Hickey. “The Branch Is Dead! Long Live the Branch!” ABA Banking Journal 87.4 (1995).

[2] Digital financial services is defined here as financial services (such as credit, savings, investments, insurance, transfers, and payments) offered through digital instruments (such as debit, credit, and pre-paid cards and mobile wallets) and digital channels (such as ATM machines, point-of-sale terminals, mobile phones, tables, and computers)

[3] “Customer Loyalty in Retail Banking: Global Edition 2014.” Bain & Company, 18 Dec. 2014. Web. 4 Jan. 2015. <;.

[4] Huang, Daniel. “Mobile’s Rise Poses a Riddle for Banks.” The Wall Street Journal 18 Dec. 2014. Web. 5 Jan. 2015. <;

[5]Department of Financial Services. PMJDY website, Progress Report. <;

[6] Narendra Modi’s personal website. “FM: Record Number of 11.50 Crore Bank Accounts Opened Under Pradhan Mantri Jan Dhan Yojana (PMJDY) as on 17th January 2015 against the original Target of 7.5 Crore by 26th January, 2015,” January 20, 2015.<;

[7] Rama Lakshmi, “India pushes bank accounts  for the poor in bid to share benefits of economic growth,” October 18, 2014. The Washington Post. <;

[8] Pénicaud, Claire, and Arunjay Katakam. “State of the Industry 2013: Mobile Financial Services for the Unbanked.” <;.

Mobile Money in Uganda

Written by Paul Newall

Discussion between Khurram Sikander (KS) and Paul Newall (PN)

The recent ruling in Uganda to declare mobile money illegal has surprised many and caused quite a commotion in the digital financial services (DFS) space – and much conversation in the Enclude offices. I talked with Khurram Sikander, Enclude’s Global Group Lead for Digital Payments, to discuss some of the major topics and gain his insights on the matter.

PN: The recent ruling in Uganda has thrown into uncertainty one of Sub Saharan Africa’s most promising mobile money environments. What are your initial takeaways?

KS: I do not believe that the views shared by Member of Parliament Katunu and Justice Madrama are entirely correct. While the regulations in Uganda could be more clearly articulated and could include a more comprehensive set of guidelines, they do mandate that mobile money operators (referring to non-bank providers such as MNOs) partner with financial institutions to apply for a license. It is then the responsibility of the financial institution to carry out due diligence on the mobile money operator, including proof of financial position; and review of the operator’s business plan, risk management proposal, technology system, and AML/CFT measures. Once approval from the Bank of Uganda (BoU) is obtained, mobile money is treated as a financial institutions business regulated under the Financial Intelligence Authority.

PN: There does seem to be some recurring confusion with how the money is reconciled between the two parties in this relationship. This confusion has led the MP and Justice to consider MTN a financial institution. Can you expand upon that – once transferred, how is the money reconciled between the bank and the telco?

KS: The regulations clearly state that the mobile money operators have to hold, in an escrow account in their partner financial institution, the equivalent value of the mobile money / wallet they sell to their customers. The parties are expected to reconcile the balances of the escrow account and the mobile money accounts to ensure the net effect is always zero. Negligence in this area is where the fraud often takes place.

PN: This all seems like a misunderstanding of the regulations. Keeping in mind how successful Uganda’s mobile money market has been, why do you think the MP and Justice took it upon themselves to declare it illegal?

KS: It seems that there is a fundamental lack of clarity from those reviewing the regulations. In any case, I do not see the government suspending a $6 billion per year business (as of 2014) and a large source of tax income anytime soon, and in fact, the BoU has responded to the situation by issuing a statement confirming that mobile money is lawful and secure.