Branchless Banking 2010: Is the Hype Justified?

After several years of very high profile attention on mobile money and other branchless banking schemes, we think it’s time to test the hype. Or more accurately, we’ve wanted to for awhile. But acquiring good data is really, really hard. We’ve been unable to say in anything but a fragmented, mostly anecdotal way whether the unbanked really use branchless banking, what they use it for, if it saves them any money, and what more they might want (but aren’t getting yet). Just because we are excited about branchless banking doesn’t mean it is living up to the promises we make on its behalf.

Over the past year, my colleague Claudia McKay and I have pulled together data on 16,708 branchless banking customers in 18 branchless banking providers with more than 50 million customers in 10 countries. Some of the data we had to go and generate ourselves in new field work; we gained access to other people’s research; and some, particularly prices, are public and just needed to be aggregated (somewhat laboriously). We are pretty certain this is the first analysis of branchless banking with a multi-country perspective. What we found is released in a new CGAP Focus Note. Over the next week, we will look at each of the 3 main findings.

Today: Is branchless banking really reaching the base of the pyramid?

We tackled this with data about 8 branchless banking services and the portion of their clients who previously had no formal financial service. We hit most of the high profile pioneers: M-PESA in Kenya and Tanzania, Banco Postal in Brazil, FINO in India, GCash and Smart Money in the Philippines, WIZZIT in South Africa, and WING in Cambodia. Here’s what we found:

  • 37% of active clients were previously unbanked. Put in terms of numbers of people, each service we studied brought 1.39 million people into the formal financial system for the first time. So, branchless banking does reach some not so small numbers of people.
  • But how does that rate to other providers also aiming at the mass market of unbanked? In 5 of the 7 countries, branchless banking serves more previously unbanked people than the largest MFI.
  • And branchless banking is scaling faster than MFIs. The branchless banking services needed 3 years to surpass the outreach of the largest MFI in the same market, which on average operated for 15 years. In other words, the branchless banking services we studied are growing five times faster than the most successful MFI in the same market.
  • Two important caveats: we had no data on branchless banking in several markets where microcredit is most successful – e.g. Bangladesh. And we are not saying branchless banking is poised to replace or eclipse MFIs. The payment services branchless banking typically provides are complimentary to microcredit offered by microfinance institutions.

Bottom line: yes, the data we have shows branchless banking reaches the unbanked, often in significant numbers, and at a pace that often outstrips the growth of MFIs.


- Mark Pickens


31 August 2012 Submitted by Mark Pickens (not verified)

Jason: we had some data on the income level of branchless banking users (and it generally showed BB reaches down to the poor). Some new data is coming out too. Billy Jack and Tavneet Suri have released an interim paper on their 3 year survey of M-PESA users which indicates more than half of poor households in Kenya now use the service.

31 August 2012 Submitted by Jason (not verified)

Thanks for the great post. I am looking forward to this series. A quick question – it seems that you are using unbanked as a proxy for base of the pyramid. Do you have a sense for the income levels of the unbanked who have started using mobile money? I imagine that there are well off people who do not use a bank andw then start using mobile money and this could confound your numbers. Thanks, Jason

31 August 2012 Submitted by Tony Thompson (not verified)


This work is very welcome. The big question for me though is the extent to which branchless banking is capable of moving beyond payment services and, to a lesser extent, very basic savings services into credit and insurance. There has been quite a bit of investment made into trying to make a break-through on that front. There has also been a lot of hype. What’s the state of progress on that front?


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