ICTs in Rural Finance: Two Good Practice Examples

1
ICTs in Rural FinanceTwo Good Practice Examples

• ARD Workshop on Using ICTs to Support Rural
  Livelihoods Evidence, Strategies, Tools.
• June 5, 2007
• Renate Kloeppinger-Todd, Adviser
• Agriculture Rural Development Rural Finance
• Washington DC

2
Case I Computerization of Ghanas Rural Banking
System

• Ghanas rural banking system consists of
• ARB Apex Bank founded in 2000 and open for
  business in 2002, 10 regional branches
• 123 independent rural banks, owned by members of
  rural communities
• ARB Apex Bank was incorporated to help address
  the following challenegs facing the banks
• lack of trained human resources on all levels
  (directors, managers, staff)
• lack of effective internal controls
• inefficient operational systems,
• Lack of appropriate products and services
• lack of public confidence
• The computerization and networking of the whole
  system is seen as mandatory to achieve an
  efficient banking network covering the rural
  areas of Ghana and offering the financial
  services necessary for economic development.

3
Computerization of Ghanas Rural Banking System
Challenges and Solutions

• ARB Apex Bank and its 10 branches need to be
  computerized and linked real time
• eMerge licences bought (4 for ARB)
• Network types developed (2 LAN WAN)
• Back-up generators bought
• LANs established (43 1 ARB Apex Bank 42 rural
  banks).
• All the 123 Ghanaian rural banks and their 563
  branches and offices are to be computerized and
  provided with a standard banking software.
• 50 rural banks each provided with 2 servers, 5
  PCs, and 3 printers
• 6 eMerge licences bought for each of the 123
  rural banks
• 4 ARB Apex regional branches (Kumasi, Takoradi,
  Sunyani, and Bolgatanga) have been fully
  computerized
• Linkages using leased VSAT links with Apex Bank
  branches

4
RFSP-Supported ICTs Stimulating/Mobilizing/Expan
ding Outreach Innovating Ghanian Rural Banking
Source ARB Apex Bank Ltd, 2007
5
Some Results of the RFSP-supported Computerization

• Achievements
• Installation of LAN at ARB Apex Bank head office
  and 42 rural banks.
• Installation of various applications at ARB Apex
  Bank including
• treasury management application system,
• SWIFT,
• Ghana Interbank Settlements (GIS) system,
• Central Depository System (CDS),
• MICR check requisition system.
• Advantages for rural banks and their customers
• more efficient and accurate operations
• significant cost reductions (no more constant
  overtime)
• increase in client focus and better customer
  service
• better products and services (money transfer,
  savings products).

6
The Future Deliverables Expected under the
Ghanaian Nationwide Technology Platform
Project(MCC)

• A National Automated Clearing House for
  electronic credits and debits will be
  established.
• Check Codeline Clearing and Transfers will be
  introduced to allow for the electronic processing
  of checks entering the banking system.
• All rural banks will be provided with required
  computers, software and networking equipment.
• Technical training will be provided to manage the
  new computerized payment system environment.

7
Impact of the Ghanaian ICT-Driven Apex Banking
System
Source ARB Apex Bank, 2007
8
Case II m-Banking in the Philipines

• Financial characteristics of rural people in the
  Philipines
• Their average income is low with many people
  having no involvement with a bank at any time in
  their life.
• They survive on cash and they very likely have no
  trust that a bank would serve their interests
  very well.
• Their segment of the market is regarded by many
  banks as being unworthy of any eff ort and likely
  to be more trouble than its worth.
• Any one individuals cash assets held would be
  too small for any bank to regard as having value
  when considered alongside the traditional costs
  to maintain banking records for those
  individauls.

9
m-Banking in the Philipines What it is/What it
does.

• Mobile phone business characteristics of rural
  Philipinos
• The same market segment that has shunned the
  banks and the associated electronic funds
  transfer systems, has contributed to the very
  high growth of prepaid mobile services in rural
  markets in the Philipines.
• 3.5 million Filipinos are using mobile-enabled
  financial services to transfer money over the two
  major mobile networks operated by
• SMART Communications, and
• Globe Telecom
• m-Banking is the use of mobiles for
  micro-payments.
• The mobile-enabled financial services addresses
  a major service gap neglected by banks but that
  is critical to the social and economic
  development of rural Filipinos.

10
Mobile-enabled Financial Services Mobile Phone
The New Way To Pay?
Remote SMS P2P Mobile Payment Process Source
Federal Reserve Bank of Boston accessed at
http//www.bos.frb.org/economic/eprg/papers/briefi
ngs/mobilephone.pdf
11
Stakeholder Architecture in m-Banking
12
m-Banking Products in the Philippines