IFC IN THE SOUTH PACIFIC IFC Brief BUILDING DIGITAL FINANCE The IFC has developed a comprehensive mobile banking INFRASTRUCTURE program which aims to catalyze transformational impact across the Pacific region by scaling up support to three leading regional BEGINNING IN 2014, IFC has been working with ANZ and BSP to increase access banks including BSP and ANZ. to final services and strengthen financial literacy areas among existing and ANZ’s goMoneyTM and BSP potential clients, beyond main urban centers in the Solomon Islands. IFC’s Mobile BankingTM are mobile assistance involved: banking accounts that are • Business model: developed and tested the business model, and accessible to customers via a recommended adjustments to ensure learnings were incorporated as mobile handset. Both leverage project expanded; USSD technology allowing cost- • Agent network: improve agent network deployment and effective access regardless of the management; type of handset a customer might • Cash management: recommended strategies to mitigate agent cash possess. Each mobile banking management issues; product provides the same core • Incentives and training: created adequate pricing structures to functionalities: deposit or incentivize merchants, and encouraged agent training to handle withdraw cash through agents, multiple responsibilities including customer acquisition, education, as transfers, mobile phone top-ups, well as cash-in and cash-out tasks; electricity bill payments, merchant • Targeting women: fostered efforts to bank women; payments, balance enquiries and • Educating customers: designed and developed training materials for mini statements. merchants, agents, and bank staff to deliver effective financial There are also some key education. differences between the two models. Notably, the BSP model is a card based model linked to a mobile phone, and its merchants accept payments through a POS device. ANZ merchants conduct all transactions using the USSD platform. Moreover, ANZ offers a card only to customers who wish to complete more in-depth KYC to request it. Icon credits (clockwise): Gan Khoon Lay, Shashank Singh, Tyler Glaude, Delwar Hossain from thenounproject.com. IN JULY 2016, a survey was conducted of ANZ and BSP customers to gauge their levels of usage and satisfaction with the new mobile banking services. In Key takeaways: partnership with the banks, IFC interviewed a sample of bank customers in Honoria, the capital city, in rural areas of the main island of Guadalcanal, as well as the more • The mobile banking accounts remote locations of Akui (Malatia Island), and Taro (Choiseul Island). All have made it easier to access a respondents were existing customers of the bank, who owned a mobile phone, were bank agent. aware of the mobile banking product, and had used it at least once. By design, • Even though all respondents are approximately half of the respondents were women, and a quarter were inactive currently bank account holders, users, that is customers that had not used the product in the three months prior to they have been leveraging the the interview. When compared with national data, survey respondents were better mobile bank accounts for educated than the national average and significantly more connected via mobile sending, spending, and saving at internet and comfortable with mobile phones generally. sometimes greater frequency than bank accounts. FINANCIAL INCLUSION IN THE SOLOMON ISLANDS • As is the norm in other mobile wallet or mobile banking The Solomon Islands is an archipelago of about 1,000 markets, sending funds to islands and atolls that span 1500 kilometers at its widest point. As of June 2016, the population stood at friends and family is one of the about 635,000 with 55% under the age of 25. About top uses by a factor of at least 75% of the population depends on agriculture, which five over sending via traditional contributes about 50% of the GDP. bank accounts. • In order to promote digital In 2015, a nationally representative survey on financial inclusion was carried out payments for household jointly by the Central Bank of Solomon Islands and the Solomon Islands National expenses such as groceries or Statistics Office and was supported by the Pacific Financial Inclusion Programme. school fees, providers will have The Solomon Islands has one of the lowest financial inclusion numbers in the Pacific to acquire more merchants and Islands. other vendors. • Only 26% have an account at a formal financial institution. • Perhaps most importantly, the • Number of ATMs per 10,000 adults: 1.27 overwhelming majority of respondents would still • Number of bank branches per 10,000 adults: 0.46 recommend this product to • 14% of adults reported that travelling to a bank could take a day or longer others and plan to continue Due to the geographic spread of all the islands, and the low number of access points using this product themselves: per adults, the average time to get to a bank easily exceeds one hour of travel time o 95% said they plan to and can cost nearly USD9 which is twice the average daily income. This distance is continue using mobile one of the main reasons almost half of unbanked Solomon Islanders cite for not money in the future. having a bank account. o 93% said they would recommend mobile money to others Source: Benchmarking financial inclusion in Fiji, Samoa, and Solomon Islands /Pacific Financial Inclusion Programme, 2016 Importantly, a general trust in banks is a positive for mobile banking products, such as ANZ Go Money and BSP’s Mobile Banking. The exception, as expected, are for casual and agricultural income earners who are more likely to rely informal financial services and do not see banks as particularly welcoming. KEY FINDINGS: Given the difficulty faced by the general population in reaching a bank branch or other access point, the fact that over half of respondents said it was easy to find an agent and nearly 90% said they could at least get to an agent in less than an hour is noteworthy. HOW ARE THE MOBILE BANKING ACCOUNTS USED?