Funders' Role in Providing Investment and Advisory Services

Since 2007, IFC has actively invested in branchless banking services such as WIZZIT in South Africa and FINO in India and provided advisory services to financial institutions, MNOs, and third party payment service providers. IFC’s interest in payment service providers stems from the recognition that payment services provide an entry point to access to a broad array of financial services. For example, FINO in India (with 30 million customers across 24 states in India) started with just payment services to clients but now offers savings, insurance, and loans. Through its advisory services, IFC is supporting FINO in the design and market testing of some of these products as well as educating customers.

IFC hopes to reach some 40 million un-banked or under-banked consumers over the next five years. Through its advisory services, IFC supports small start-up companies and works with more established firms to develop additional low cost channels that will help reach into more remote areas at a reasonable cost. For instance in Papua New Guinea, IFC supports Bank South Pacific in developing its rural banking business and network of cash and POS agents to help the bank reach an additional 200,000 customers in rural areas through mobile phone banking and cards.

The focus of IFC’s advisory work lies in agent network development, based on intensive market research to fully understand customer needs. The results of the market research are instrumental for product design, network build out, and customer education.

In working with start-up companies such as Mobipay in Georgia or WING in Cambodia, IFC can help bring a service to market and over time, provide capital assuch companiesscale up. Growth capital has for instance been provided to Yellow Pepper, a mobile financial network based in Latin America, and a partnership, facilitated by IFC, with Digicel, helped the company launch mobile wallet services in Haiti.

In its work to date, IFC has found that its advisory and investment services can at times build on the other, or used together to complement each other.

While IFC works with financial institutions and MNOs, leveraging its existing client portfolio, we also support third party payment service providers through our payment practice. IFC Advisory Services decide whom to engage with using criteria such as:

• Potential to reach commercial viability and sustainability
• Potential for outreach, defined by percent of population reached
• Potential for reaching challenging populations and geographies (such as post-conflict, rural Africa)
• The establishment of shared infrastructure/ shared use of ecosystems to ensure interoperability and efficiency, and
• Potential to reduce cost to serve

A number of factors clearly play a role in prioritizing which countries we engage in such as:

• Mobile phone penetration (percentage by population)
• Literacy levels (percentage by population)
• Access to finance (percentage by population)
• Regulatory environment
• Technology adoption (prior use of SMS texting, etc)
• Ecosystem (components in place and reach)
• Anchor products (demonstrated customer demand)
• Management team (operational capacity and expertise)
• Customer care strategy

For example, while there may be a big need for technology enabled access to financial services in some emerging markets, a very low mobile penetration is likely to limit the reach of any solution brought to that market.

Overall IFC’s strategy is driven by its desire to extend reach and its understanding that to do so we need to give full consideration to complex ecosystems which must hold a value proposition for all players involved.