Sign Illinois Banking Living Will Mobile

Industry sign banking illinois living will mobile

not too long ago all banking there you could think of just about every banking service on the planet really took place within the banking Hall you had to waste a significant amount of time just queueing and of course it was not exactly the most convenient thing in the world but in the last decade there's been a massive massive change with the adoption of mobile phones in a bunch of other technologies broadband access across Africa for example has become a key game-changer for this banking now happens and literally at the palm of your hand but it's not all perfect let's see what the sector looks like now and what it looked like in the future David Cracknell is the global technical director at micro save he joins me now in studio thank you for your time thank you so this this market for digital lending there's a bit of really curious about we know what bank lending books look like same thing for savings and credit societies but digital lending is the dark horse as it were how big is it well I think you have to look at digital ending in various different ways so you've got at the bottom of the pyramid if you like the M shuara as you know the digital lending through m-pesa and you've got a number of different companies and products taller branch and perhaps 20 different providers doing the same kind of thing but these are really small loans 1000 2000 3000 shillings but if you're really looking at digital lending more holistically then you're thinking about how digital technologies can be added into existing lending processes even of the commercial banks and those changes are beginning to happen alright there was something interesting that I saw in one of the blogs written by the micro-sim managing director this was in November last year the basic thesis of that blog was I hear as arguing that it in its current form FinTech quote may be largely irrelevant because which is a bit it's an interesting contradiction isn't it because we think of FinTech as expanding access to financial services to a lot of people but here we are saying hang on we might actually be excluding a whole bunch of people for Finnick why is that okay I think if you think about FinTech what is actually being delivered through the mobile phone at the moment is often a very small loan 1,000 shillings 2,000 shillings three thousand shillings that may be being used for household expenditure or something like that it's not a game changer per se it's not an enterprise loan it's not necessarily going to help them generate more income and this loan is fairly formulaic over a one month period you're paying 7.5% as a fee now really we need to a we need to make the products and services closer to what people actually want to use and want to buy financial technology itself also has limitations how do you collect a very small loan at the moment if you don't pay you can be negatively listed it's a bit like having a sledgehammer to crack a nut and sort of using a scalpel yes so the issue is but you also have to think about the fact that many people need help and assistance your typical rural African may need to talk to somebody they may not have a phone they may not have a smartphone they may need an app on the smartphone which helps them to interact with this technology a sort of a slightly different approach where they're counting notes because that's what they do normally yes so a more graphic approach to using one of these apps now understand you just to clarify that the current approach as it were because it's mostly USSD services to use mor e as an example really isn't fit for purpose in expanding access at least not to the level that we'd like I think that it is a step and it's a step in the right direction but for it to be considered as the end product it's certainly not it's a step so for example if you've got a market trader that once credit for a day why are they using em Schwar e or a similar product to buy credit for a month and paying 7.5 percent for a month when in fact they want the money for a day to increase the sales for the day so there's a liability mismatch there alternative credit scoring because this is something we've been debating in this country especially given the fact that now we have a race capital or that's been in place for the better part of about 15 months but with all the information that digital lenders do develop why do we seeing alternative credit scoring happening and off the back of that differential lending rates well I think that there's a lot of things that need to be in place particularly in the banking sector before alternative scoring can really work because of the way that bank data is structured it's not structured really for data analysis you would need data warehouses or you would need different types of systems in order to interrogate that data and banks typically and not using the data that they have so if you want to develop alternative scoring mechanisms and mechanisms that can be used to provide risk adjusted interest rates then we're a little bit far away from that simply because of the way that data at Bank level is structured but what about on the Lending's on the digital lending side because that mean that seems like this massive missed opportunity that someone like branch or Tala or Resolution Credit will just jump right into headphones well one of the challenges is that many of these micro or nano lenders as you might call them they have scorecards if you like and they've got algorithms but the principal data point they use is have you paid the last loan so what they're doing is they're graduating people through a series of small loans right and doesn't tell us much which doesn't tell us much and it means it's going to take time for people to get the credit history on which you would give them bigger loans all right then one last question for you by the end of 2016 we had 135 financial services which had about 1 million plus active users we often hear about the success stories but we rarely ever do hear about the fingers the ones that didn't make it what we usually learn when we start digging into that dark hole that no one usually wants to poke into I actually think that obviously Safaricom is m-pesa has been an international success story but there is a challenge with an international success story because people fail to differentiate between what's a principal ie this is how it works and what's a practice which is local and pestle was designed for Kenya micro say was involved in the design of empresa it was piloted for 18 months by the time it was launched it was designed and fit for purpose for Kenya other people then just copied cut and paste it and yet is Zambia the same as Kenya is Tanzania the same as Kenya is Uganda the same as Kenya and you've got to remember the demographics of Kenya with split families mean that p2p person-to-person payments is is a huge dynamic if you go to Ethiopia 85 percent of families live together so is a volume driver going to be a person-to-person payment not in the same way you have to find a different economic rationale that's driving the service and obviously Safaricom when m-pesa was launched it was in a battle for subscriptions your airtime so the real driver for m-pesa at the beginning was actually to create customer loyalty now the business case for Mobile Money has shifted to does it make money for us and so Safaricom could put a large amount of money through into advertising and promotion to protect its core market share so this became an attractive value-added service it was then later when it got to volume that it really started showing its potential fascinating stuff as ever an eloquent reminder Africa's not a country you can't afford to have that copy and paste business of translating thank you very much David cranky from mic received the global technical director there with us in studio