A 'Coopetitive' Business Model For Financial Inclusion
“Same: Same, but different” - We have all seen this printed on t-shirts across the world. It is a similar story here in Nepal with the shared access mobile financial services platform “Hello Paisa” – that is now beginning to scale up.
The Hello Paisa platform is currently live with 8 partner banks – and is totally interoperable among all its members. The customers can have a sim card with any mobile service provider in Nepal and through a simple registration process at a bank branch or a designated Hello Paisa Operator (“HPO” or agent) – can enjoy a world of financial services that was not possible to them before. One would think that all these member banks joining a common platform would end up with the same services offered by them to their customers– and to some extent that is true, but at the same time the approaches taken by the member banks are very different.
This is because of the manner in which this unique “coopetitive” business model that this service is implemented by Finaccess private limited http://www.hellopaisa.com/ – the company that offers the Hello Paisa service to any bank in Nepal. In the highly fragmented banking market in Nepal (more than 200 registered financial institutions), it is hard enough to make two banks agree on a common agenda, Hello Paisa has now proven this with not 3 or 4 banks, but 8 banks and the number is set to increase as more banks are now at test / planning stages.
So what is same? The customer experience!
All customer fees and charges across the member banks are same. Thus – the customer does not need to be confused about how much it would cost to send money to someone – irrelevant of which bank they use this service from. The experience of depositing money or withdrawing money is also the same whether they use the branch or agent of the bank they belong to or another partner bank of the Hello Paisa platform. This has been specifically agreed upon by all partner banks to ensure easier customer acceptance and adoption. More importantly, these fees and charges are NOT decided by the platform provider (Finaccess), but by all the partner banks coming together and agreeing on what the fees and charges should be – and then implementing them across their service(s).
Then how do the partner banks differentiate their offerings to their customers?
• All Hello Paisa enabled accounts offered by the partner banks are interest bearing / savings accounts. So they offer different levels of interest rates based on what they perceive as their bank's value proposition and their strengths in the market.
• Different approaches / market segments that are targeted. Here is a flavour of the current activities of some of the partner banks of Hello Paisa platform:
1. Siddhartha Bank: they brand this service as “Sajilo Banking Sewa” or “Easy Banking Service". Siddhartha Bank is using the Hello Paisa service in combination with a biometric device for disbursement of Government to People (G2P) payments. Currently a pilot is being implemented by them to disburse “school-going child allowance” to over 12,000 mothers in 2 districts of far western Nepal. This pilot project is specific to the electronic distribution of Scholarship Payments to the School going children (26,000+) of 13,000+ households in 2 districts. The total project period is of 18 months with 6 payment cycles. The total amount to be distributed is approx. USD $ 800,000.00 All the beneficiaries are the women receiving funds on behalf of their children. All of them shall maintain saving account against which biometric card / mobile financial services is provided. The first payouts by the Ministry of Local Development are currently being carried out (May 2014) and it is expected to be rolled out to other districts after completion of this pilot, and it is expected to have other types of G2P disbursements also through these channels.
2. Laxmi Bank: Laxmi Bank is the pioneer in using mobile financial services in Nepal and is using the Hello Paisa platform to disburse microfinance loans of their subsidiary Micro Finance Institution (MFI), in addition to facilitating domestic remittance, utility payments, savings and basic transactions. The MFI loans are given only to women and in the Grameen model. They have also partnered with a local NGO working on low cost housing – beneficiaries use Hello Paisa to both receive the loan disbursements and pay back the bank on time. If not through Hello Paisa, these beneficiaries have to travel for two hours by bus to another town 77 Kilometers away. The bank has a network of over 500 customer touchpoints for Mobile Banking spread across 52 (out of 75) districts of Nepal.
3. Prabhu Bikas Bank: Prabhu is going through a very different approach by ensuring that as many SACCOS / cooperative in Nepal can be enabled as Hello Paisa touch points. Their aim is to ensure that every cooperative in Nepal, through the Hello Paisa platform is linked to the national economy. As all cooperatives in Nepal are local based and are not connected to any national settlement mechanism, the cooperative members are limited to their financial services only to the main office of the cooperative – or carry cash if they have to move anywhere outside of their locality. Prabhu provides the cooperatives with a simple web interface through which they can then enable Hello Paisa services – even if the cooperatives does not have any banking software. They plan to make 1,500 cooperatives live in Hello Paisa by the end of 2014.
4. Civil Bank: Civil Bank was the 1st bank (and currently the only bank) in Nepal to offer “cardless cash” ATM withdrawals in Nepal through their ATM’s using the Hello Paisa platform. Now Civil Bank customers (and all Hello Paisa customers) can use the ATM’s of Civil Bank to withdraw money – without the need of a plastic card. This aspect is another proof of the “coopetitive” business model concept – the infrastructure (ATM and its related financial switch) is from Civil Bank, but the service is available to all partner banks.
What are the challenges to take it to the next level? To Scale? While there are many challenges in such a complex business model, one key element of reaching scale that has not happened in Nepal is the expansion of touch points, the agents / Hello Paisa Operators expansion by the member banks.
What is being done to address this?
All partner banks have agreed to take forward the proposal of Finaccess to offer Agent Network Management (ANM) services to the partner banks. Thus, the next few months are going to be very exciting as finaccess rolls out its ANM services to the partner banks to scale up the setting up of HPOs nationwide.