Crime and Mobile Banking – Scenarios for 2020

6 months + 200 technology and finance leaders from 30 countries = four scenarios of branchless banking for poor people in 2020.

In 2009, CGAP and DFID talked with over 200 technology and finance leaders from 30 countries to determine how branchless banking, including mobile banking, might look in the year 2020. The work culminated in the CGAP/DFID Branchless Banking Scenarios 2020 Focus Note. A video discussion with the authors and some of the leaders in mobile and branchless banking was held in Washington in December; you can watch the archived video here. To help frame the scenarios process, we identified four forces and four uncertainties that are shaping the industry.

Force 3. Crime of various types will continue to rise.

The risk and cost of cash crime is an important force on the demand side—driving customer adoption of electronic forms of payment—as well as affecting the business case of providers. Crime varies greatly in its manifestations and incidence across countries. Two types are especially germane to this analysis:

• Cash crime, where individuals or institutions (such as banks or merchants) who are known to carry cash are vulnerable to robbery
• E-crime, where new forms of crime target electronic delivery channels

Cash crime drives up the cost of holding cash (which is often perceived to be “free” by consumers) relative to other alternatives. In Kenya, for example, the cost of insuring cash and transporting it has risen materially in recent years, in part due to central bank regulations mandating increased security after a series of highprofile armored car robberies.

However, while robberies are still the most visible form of crime, looking ahead, emerging forms of e-crime are at least as worrying to providers and increasingly to consumers. The spread of e-commerce has opened new opportunities for criminals, enabling fraud to be committed more quickly, at larger scale, and across borders.

Branchless banking in developing countries is at the very early stage of experiencing e-crime, simply because the amount of usage has not warranted the attention of syndicated criminals who have the resources to make this more than a nuisance to the system as a whole. However, as usage grows, so too will e-crime.

Senior managers of branchless banking schemes interviewed as part of this project displayed a keen sensitivity to the threat of crime, particularly if a massive single episode or a chronic condition of fraud and threat led to loss of consumer trust. One interviewee described it as “the nightmare scenario,” and the only thing they could imagine derailing the growth of mobile financial services.

-Sarah Rotman