Promoting Financial Inclusion through Digital Financial Services – Jordan Ready to Take Off

Paul Newall discussed with Khurram Sikander, who has been leading key digital inclusion initiatives in the country.

Enclude has been involved in multiple projects in Jordan recently, including a project working with the Central Bank of Jordan (CBJ) to promote financial inclusion through mobile financial services (MFS). What is the state of financial inclusion in the country and what is the vision for MFS?

There is a very low rate of financial inclusion in Jordan with only 24.6% of the adult population banked, leaving an entire 75% of the population un(der)banked. On top of that the Jordanian population is also expanding rapidly due to the influx of refugees who have limited access to financial services – further increasing the underserved population.

Recognizing the importance of financial inclusion to broader inclusive economic growth, the CBJ saw an opportunity to leverage MFS to reach these unbanked segments. Specifically, the CBJ took a proactive and forward-looking step by establishing regulations that enable both banks and non-banks to offer MFS, and by spearheading the development and roll-out of JoMoPay, the country’s mobile payment platform.

In establishing and operating the platform itself, the CBJ was able to set rules of the game and ensure a level playing field in Jordan. For example, JoMoPay is fully interoperable among providers – both banks and payment service providers (PSPs). This means that a bank, mobile network operator, or a wallet issuer (or a consortium of these providers) can offer MFS by applying for a PSP license with the CBJ. JoMoPay is also integrated with other national payment systems, including JoNet, the interoperable ATM and point of sale (POS) switch, and eFawateercom, the centralized bill presentment and payment platform. These integrations promote usage of various channels and instruments (mobile, ATM, agent, and card) to access mobile wallet accounts.

Ultimately, the CBJ’s vision for JoMoPay is to build a mobile money ecosystem that brings unbanked segments into the formal financial system, thereby benefiting the Jordanian economy and society as a whole.

How has the market responded to the initiatives promoted by the CBJ?

Since the launch of JoMoPay in 2014, four PSPs have received licenses and two PSPs have received provisional licenses. The four licensed PSPs include Al Hulool, which is a consortium of the telco Umniah, Emerging Markets Payments Group, and four commercial banks; Zain Cash, which is affiliated with the telco Zain; Aya Jo; and Dinarak. The market has been relatively slow to fully launch their services and expand market awareness of their products and services – this is the case for several reasons, including a focus on the technical and operational aspects of their services over the development of marketing and distribution strategies. It seems the market is waiting for one of the PSPs to make the first move.

That said, there is substantial market potential, particularly as the PSPs now focus on expanding their agent networks and targeting key sectors / segments. The foundation for MFS in Jordan is strong and the industry is well-positioned to scale.

Recognizing the CBJ’s vision for financial inclusion and MFS, how did our work fit into their broader strategy?

Two key pillars of the CBJ’s Vision and Strategic Framework 2013-2016 were to enhance oversight of the payment system department and to modernize the retail payment system while promoting financial inclusion. Additionally, the CBJ has been in the process of developing and rolling out a financial inclusion strategy and formalizing commitments to the Maya Declaration – both of which view digital financial services as a core enabler to achieve their targets.

Our work with the CBJ contributed directly to supporting achievement of these strategies and commitments. Specifically, with support of the European Investment Bank (EIB), our mandate was to enhance the oversight capacity of the CBJ’s payment system department (PSD), particularly as it relates to MFS. When the project was first designed, the CBJ had only recently gained authority to oversee the payment system. The PSD – led by Executive Manager Ms. Maha Bahou – was therefore eager for support to build the capacity of the team in areas including the legal and regulatory framework, risk management, and data collection for digital retail payments.

What were some of the key project outcomes and how did we approach them?


The Enclude team facilitates a risk management workshop with key industry stakeholders

A key characteristic of our approach was engagement with stakeholders across the payments ecosystem throughout the project. Although the CBJ was our main client, a strong understanding of market realities and the opportunities an
d challenges facing stakeholders was critical to delivering recommendations that were fully tailored to the Jordanian market.

At the end of the program, we produced a number of deliverables that we were happy to see were not just sitting on a shelf, but rather, were being used by the CBJ. For instance, on the legal and regulatory framework, our recommendat ions were incorporated into the CBJ’s bylaw and into the memorandum of understanding between the Telecommunications Regulatory Commission and the CBJ.

We also delivered a risk management framework and implementation plan for JoMoPay, with inputs from industry stakeholders, which is designed as a live tool for the CBJ to enhance readiness to mitigate and respond to risks as they rise. We developed a data collection methodology for the CBJ, including templates for the CBJ to collect data from the industry on indicators related to the access, usage, and quality of digital financial services. We also facilitated study visits between the CBJ and De Nederlandsche Bank (DNB), the central bank of the Netherlands; Finansinspektionen, Sweden’s financial supervisory authority; Riksbank, the central bank of Sweden.

What are some of our key takeaways from the project, and how will they inform our work and the broader industry moving forward?

A key takeaway from the project is an understanding of the role that regulators have in pushing the industry along and ensuring that the journey towards cash-lite is one of engagement and consultation with the industry. The CBJ has taken action to create a DFS ecosystem that is fully interoperable from day one – allowing providers equal and fair access to platforms and the customer, regardless of size.

In our work, we have often seen regulators struggle with the financial ‘integrity vs. inclusion’ debate. Particularly in a market like Jordan, which is in a region characterized by social, political, and economic instability, ensuring financial integrity is an utmost concern. However, the CBJ has been able to strike a good balance, understanding the importance of financial inclusion for inclusive growth and pushing the market where it needs to go when it was too slow to take up the reigns. Jo
rdan has all the right ingredients for DFS to take off. There is also another exciting project we are implementing that focuses on the digitization and inclusion of refugees and host communities in Jordan but that will have to wait for another blog.

Industry News

Must Read of the Week:

At Enclude, we are consistently reviewing key trends that we observe in the digital financial services (DFS) ecosystem. These trends are informed by ongoing conversations with key industry stakeholders (banks, MNOs, regulators, etc.), as well as key market dynamics observed when on-ground in several frontier markets. While we won’t go into the details of the trends currently observed by our team, they are key dynamics that would move the industry’s focus from ‘access’ to ‘uptake’.

Until now, much time and effort in the DFS industry has been (rightly) spent on analyzing ways to increase access to DFS among the world’s un(der)served populations. While there still needs to be focus on improving access globally, the reality is that the channel is facing a key issue to its long-term success: uptake. For example, per GSMA’s latest State of the Industry report, they note the global activity rate of 33% among mobile money users. If, after all the effort to improve access for un(der)served markets, only 1/3 of all mobile money users are regularly using the service, then more effort needs to be spent on increasing the use cases. One such use case is essential to the continuing growth of DFS is merchant payments.

Both Ecobank and MasterCard have also realized that improving the merchant payment use case may unlock a large sector of consumers – after all, merchant payments account for a large portion of household financial activity on an on-going basis. They signed a memorandum of understanding to roll out MasterPass QR, a mobile payment solution that allocates payment through the scanning of a QR code at the merchant location, across 33 African countries. The roll-out, represents one of the largest implementations of a digital payment solution in Africa and is closely aligned with Ecobank’s focus to add 100 million new customers by 2020.

As far as the solution itself, QR presents an interesting case study for merchant payments. Our analysis shows that deployment of a point of sale device can be a costly venture for all parties, especially the merchants themselves who often bear the brunt of the deployment. According to the article, QR represents a much more cost-effective payment solution, hopefully increasing the value proposition to the merchant. Of course, scanning of the QR code also requires the end-user to have a smartphone – something that may initially create a barrier to usage. However, per GSMA, smartphone usage in Africa is anticipated to be 725 million by 2020, so MasterCard and Ecobank are making a long-term bet. It will be interesting to see if it pays off in time.

Read the article here:

Other News:


Africa: Mobile money on the rise in Africa as millions get phones


Globe: Will Alipay dominate global mobile payments?


USA: Banks bet on next big thing: financial chatbots


Nigeria: In former Boko Haram stronghold, POS bankers make quick cash

Industry News

Written by Christine Loftus

Following the meteoric growth of M-Pesa in Kenya, mobile financial services (MFS) have been lauded as an important channel for expanding access to financial services to the un(der)banked. Yet, global activity rates (33% per GSMA in 2015) have lagged behind those seen in Kenya (47% per GSMA in 2014), and other  frontier markets. The reasons for such inactivity vary; some find MFS solutions inefficient, burdened by cumbersome hierarchical mobile money phone menus that prolong even basic transactions. Others lack the literacy skills necessary to navigate text-heavy interface that often fails to capture key terms in local languages due to unicode constraints. Some cannot even register for MFS as they cannot access agents given mobility restrictions. For many, existing models do not fulfill their needs and, as such, they remain unbanked.

Thus, the Center for Financial Inclusion asks us to consider how to keep clients first in a digital world as we celebrate Financial Inclusion Week 2016. How do we ensure that an increasingly diverse array of products and services are demand-driven, fulfilling clients’ needs?

As many of the obstacles hindering the usage of MFS stem from feature phone use, much of the conversation regarding user interface centers upon this platform. However, increasing usage of smartphones worldwide may soon mitigate many of these concerns. The number of smartphone subscriptions globally is anticipated to grow by 2.6 billion by 2020, resulting 5.8 billion unique mobile subscriptions. As smartphones sell for as little as USD 28 in some countries, they are becoming increasingly accessible to low-income consumers. Service is not limited either; a minimum of 2G service will be ubiquitous within the next five years.

The proliferation of smartphones will provide the opportunity to develop MFS solutions that overcome many of the challenges reducing uptake and usage. They allow providers to simplify menus, increasing efficiency and minimizing written text. To further enhance reach to those with low literacy levels, providers can also utilize videos and graphics on smartphones. For those with limited mobility, smartphones can even facilitate self-registration, allowing individuals to enroll within their home provided access to mobile service. Smartphone technology could further allow MFS to expand to new markets by providing new models for product and services better meeting clients’ needs.

Although there are many opportunities posed by this new channel, many MFS providers utilizing smartphones have simply transplanted complex USSD interface onto a new platform. They have failed to develop new interface to reach new customers, which would increase uptake and usage. Recognizing the problem, CGAP recently partnered with various providers worldwide to determine how to best serve low-income consumers. Ultimately, they unveiled 21 fundamental principles requisite to expand MFS use via smartphones:

  1. Allow users to explore before using
  2. Help users find agents
  3. Simplify application registration
  4. Flatten menu hierarchy
  5. Focus menu choices on actions
  6. Reduce text and use visual cues
  7. Design icons relevant to local users
  8. Use simple and familiar menu terms
  9. Build on users’ familiarity with smartphones
  10. Customize transaction choices
  11. Auto-fill from the address book and transaction history
  12. Auto-check to minimize human error
  13. Display information in digestible chunks
  14. Reassure with transaction confirmations
  15. Leave a clear trail of transaction histories
  16. Provide instructions when needed
  17. Handle errors by providing next-step solutions
  18. Customize and simplify keyboards
  19. Auto-calculate fees during transactions
  20. Provide full transaction details on one screen to finalize transactions
  21. Make account balance easy to see and hide

Although the list contains ample recommendations, the underlying message behind the principles is much simpler: consider the needs of end-user when designing new products. As technology continues to evolve, new challenges to MFS uptake will emerge that are not currently addressed. Yet, adherence to the core principle of human-centered design will facilitate continued development of viable products capable of catalyzing usage in untapped markets previously outside the reach of MFS.

Read the Article Here: The Power of Smartphone Interfaces for Mobile Money

Other News:

Smartphones and MFS

Myanmar: Wave Money Myanmar: The Power of Smartphone Design

Economic Growth

Global: The Powerful Link between Digital Finance and Economic Development

Global: How Digital Finance Could Boost Growth in Emerging Economies

Financial Inclusion

Global: Cash Call

Sustainable Development+

Global: Fintech should be Eco-Friendly

Kenya: How Mobile Banking Brought Water Back to Nairobi’s Slums


India, Kenya, and Mexico: A Buck Short Report


Industry News

Must Read of the Week:

Recently the traditional sending of remittances has been under attack from FinTechs. Companies like TransferWise, Xoom, and WorldRemit have utilized technology, superior user experience, and lower prices to compete with more traditional players – banks and Western Union, for instance – over the $582 billion global market. However, such disruption has not gone unnoticed and some country’s regulators are wary of the new entrants. In a recent move, the Central Bank of Nigeria (CBN) – a country who received an estimated $21 billion of remittances in 2015 – issued a new directive that will require the vast majority of the country’s money transfer operators (MTO) to suspend operations.

The CBN has a reputation for being a ‘hands-on’ regulator, and their focus on the role of MTOs in the country is not new. Last year, per Quartz, CBN issued a directive that all MTOs must be:

  • Operational in 20 countries;
  • Have a net worth of $1 billion; and
  • Have at least 10 years of working experience

The above are intended to be prohibitive requirements, especially for new FinTech companies who have been in business several years.

Per Quartz, the new regulation builds on those made in 2015 and “targets money transfer companies that work through local partners and do not have their own infrastructure to remit foreign currency to banks. Effectively it means all but a handful of MTOs that fulfill the central bank’s stiff requirements will have to close.”

In our work, we often see the struggle faced by regulators with the ‘inclusion vs. integrity’ debate. While the priority of central banks will always be to secure the safety of the payments ecosystem, they should not be overbearing and unduly shape the market and products offered (within reason, of course). While CBN may argue that more traditional players can best provide security, we believe this move to be shortsighted and incorrect. TransferWise, for instance, is an established company who is operating in 38 different currencies around the world – and several other companies share their global coverage. Unfortunately, in the case of Nigeria, ultimately the population and diaspora suffers the most – we hope that CBN reverses their decision shortly.

Read the article here:

Read the directive here:

Other News:


India: An Indian Start for Digital Credit

Nigeria: Nigeria’s New Collateral Registry Aims to Increase Access to Finance for Small Business


Africa: Smartphone Use Has Doubled in Africa in Two Years


Africa: FinTech isn’t Disrupting Africa’s Financial Industry – It’s Building It

Industry News

Written by Justin Ahmed

Must Read of the Week:

A great deal of hype has surrounded the emergence of blockchain technology and its potential to disrupt and transform financial services industries across the globe – lowering the costs and complexities of transactions, improving transparency, and supporting service delivery to the unbanked. Still, maybe not enough attention has been paid to its potential to alter enterprise management structures, networked business models, and consumer-company dynamics at their very core.

In an article for the Harvard Business Review, Don and Alex Tapscott reveal some of their key findings from a two-year research project spanning hundreds of interviews with blockchain experts. The authors expound upon blockchain’s power to shift business, government, and society in ways even more profound than the advent of the internet. Central to such power is the ability to impart productivity gains while eliminating the need trusted intermediaries. For example, smart contracts (software programs that self-execute complex instructions) and autonomous agents (bundles of smart contracts acting like rich applications) are such applications which can eliminate contracting, payment, agency, and coordination costs and facilitate structural shifts in enterprise management.

Much of the focus of blockchain technology in the context of global development has been on applications improving efficiency of financial services (e.g. remittance platforms offered by BitPesa in Kenya and by Rebit and in the Philippines) and on increased transparency and capacity of public service providers (e.g. for land registry as provided by Factom in Honduras and Bitland in West Africa). However, start-ups have emerged across the blockchain space for ends as diverse as protection of intellectual property, crowd-sourcing project management, and expansion of “sharing economy” infrastructure. Some multinationals have themselves taken up the call to adapt to and anticipate the shift, as Visa has through the launch of an innovation laboratory in Bangalore solely dedicated to global blockchain technology development. As the article’s authors recognize, the individual control and immutability afforded by distributed ledgers holds implications for management, collaboration, exchange, and ownership across increasingly-integrated segments of the economy across the developing world.

Read the article here, or purchase their book on the same subject released this week: Blockchain Revolution: How the Technology Behind Bitcoin is Changing Money, Business and the World.

Other News:

Financial Inclusion

Peru: 34 Peruvian savings banks have launched a fully-interoperable national e-wallet system, “Billetera movil” (BIM)

Pakistan: Enclude partner, Karandaaz Pakistan, part of a consortium to set up USD 58 million Pakistan Microfinance Investment Company (PMIC)


Bangladesh: $81 million Bangladesh Bank heist linked to 2014 Sony hack and additional SWIFT breaches

Global: Kount’s ‘Nine Deadly Costs of Fraud’

United States: Lending Club facing questions concerning executive leadership, stock prices, and the future of its entire lending niche

Wearables / Financial Responsibility

United States: Intelligent Environments releases Pavlov-inspired electro-shocking bracelet to support financial responsibility