Research & Analysis

Branchless Banking 2010: Who’s Served? At What Price? What’s Next?

Excitement around branchless banking is rapidly turning into action by the private sector. Of the 79 live mobile money deployments tracked by the GSM Association (GSMA),1 two-thirds have launched in 2009 and 2010. Nokia and Paypal are investing in mobile payment platforms available to any client regardless of his or her mobile network or bank, a development that could shake up markets.2 And early branchless banking leaders are launching out in new directions. Brazilian banks are increasingly eager to use agents equipped with point-of-sale (POS) devices to originate loans. In Kenya, Safaricom has teamed up with Equity Bank, the country’s largest bank, to offer M-Kesho, a service that uses M-PESA’s mobile payments platform to offer a full range of Equity’s bank products.

Will these sizeable investments pay off? Many in the private sector believe reaching large numbers of mass market clients is a precondition to large-scale profits, but at the same time, they are uncertain about how quickly branchless banking will gain traction with the unbanked, low-income clients who make up the mass market.3 In other words, the prospects of branchless banking are still unclear.

This Focus Note evaluates the evidence from 18 branchless banking providers with a collective total of more than 50 million customers to answer three questions:

  • Does branchless banking reach large numbers of low-income and unbanked clients?
  • Are prices for branchless banking lower than prices for traditional banking for the kinds of transactions low-income and unbanked people want to do?
  • What other services do these customers want from branchless banking?