Ignacio Mas

• Independent

This report summarizes the intent, activities, outputs and key lessons from an ambitious program of field research which sought to capture vividly and succinctly the essence of how ordinary people think about the management of their money and resources. We wanted to come up with simple constructs which could be stretched, by analogy, to shed light...

Collected blog posts on technology-enabled models for financial inclusion

Book reviews of Real Money, New Frontiers, by Mark Napier (ed); More than Good Intentions, by Dean Karlan and Jacob Appel; Poor Economics, by Abhijit Banerjee and Esther Duflo; Getting Better, by Charles Denny; Money Real Quick, by Tonny Omwansa and Nicholas Sullivan; Behind the Beautiful Forevers, by Katherine Boo

This note shows the headline results of a census of cash outlets conducted in Tanzania by the Financial Sector Deepening Trust of Tanzania (FSDT). The availability of places where one can exchange cash for transferable or storable electronic value is an essential component of financial access. The note explores how significant is the spread of mobi...

This paper presents the key issues are around financial inclusion in developing countries as gaps between three representations of money: as physical cash, as electronic value, and as mental models.

All the blog posts and short articles I have published in 2012.

In India, the business case of the BC model is yet unclear. The main limiting factor is very low customer activity rates. Low usage is compounded by the prevalence of unduly low pricing models on the basic savings proposition, which is based on a perception that customers have low willingness to pay for savings services. These two factors are of co...

The contribution of mobile payments (and in particular M-PESA) in Kenya to strengthening family/social networks is well documented, and its potential to tackle financial inclusion is well understood. What has perhaps received less attention is how well mobile money is serving the business market. This study assesses how extensive is the use of M-PE...

With today's mobile money platforms, the value proposition for keeping money digital and driving up usage of digital payments is still thin. Mobile money is built on speed (real-time clearing) and liquidity (thousands of merchants where you can cash in and out). It’s ready-cash (an immediately accessible mobile wallet), cash-to-go (P2P money transf...

Across the world mobile money schemes are being launched. In such schemes financial service providers interact with clients via mobile phones or other mobile devices such as tablets. Service offerings include payments and saving as well as basic insurance products and sometimes credit based on scoring methods that use information about the client’s...

This essay reviews the potential, reality and challenges of creating pervasive mobile money networks in developing countries.

This paper puts a spotlight on the importance of promoting ubiquitous digital retail payments in emerging markets. Moving people from cash onto a safer, cheaper and more convenient payments fabric should be an important enabler for economic growth and business cohesion. We term our vision LiFi – one where people can manage their liquidity and payme...

This paper presents a new framework which allows people to manage their diverse payment, cashflow management and commitment savings needs simply and intuitively, from a single account. It builds on the logic of mobile money platforms, which provide customers with the ability to initiate real-time electronic payments from their mobile phone and to k...

This article discusses the potential of using mobile phones to greatly increase access to financial services in developing countries, and reviews the main success factors in a mobile banking project.

Retail payment systems require scale to get off the ground and struggle to grow incrementally, as they need to build trust, reap network effects and overcome chicken-and-egg problems of acquiring both customers and merchants. To overcome these barriers, they must (i) create enough urgency in customers’ minds to learn about, try, and use the service...

Building a successful mobile money system requires a complex ecosystem of players handling a large volume of transactions. This paper identifies four principal paths to building mobile money ecosystems; makes the case that countries should adopt regulatory frameworks that allow for any or all of these models to emerge; and develops the commercial c...

Poor people need safer, more affordable and convenient ways of managing what little money they have. While many financial institutions have discovered that poor people make good borrowers, fewer have figured out how to provide savings to poor clients. Savings is simply a harder product to deliver: unlike credit, poor people are not willing to pay a...

A collection of short notes posted mostly on NextBillion, CGAP, GSMA's MMU, IFMR and World Bank blogs. Most are from March 2010 onwards.

Providing poor people with a safe place to save is a challenging commercial proposition because the poor tend to keep small balances, prefer to make many transactions, and live and work far from traditional banking outlets. These challenges are further complicated by the upfront costs of opening accounts, the inability to charge clients enough to c...

This paper reviews the growing literature that has spawned around branchless and mobile banking in developing countries over the last five years. Around 2.6 billion people in the world do not have access to formal financial services, and yet 1 billion of them have a mobile phone. Branchless banking systems take advantage of increasingly ubiquitous...

In developing countries, banks are simply not present where the majority of poor people live and work. This imposes burdensome access costs on the part of customers who need to travel to distant branches – and the majority of the population opts out. The paucity of banking infrastructure can be overcome by enabling banking services to be offered th...

Technology, and in particular the spread of real-time communications networks, permits banks to delegate last mile cash management and customer servicing functions to third-party retail outlets. By making basic deposit, withdrawal, and payment functions available securely through retail shops that exist in every village and neighborhood, there is a...

Governments around the world have within their hands a powerful catalyst to promote financial inclusion – their own payment interaction with low-income households. Indeed, government is frequently the largest micro-payer and bill payer in the country. Delivering government payments electronically will not only connect low-income households to an el...

This paper reviews the opportunities and strategic choices facing banks considering branchless banking options. Technology, and in particular the spread of real-time mobile communications networks, permits financial service providers to delegate 'last mile' cash management and customer servicing functions to third-party retail outlets. By making ba...

M-PESA, a mobile-phone-based electronic payments system, has been adopted by 8.5 million Kenyans in the relatively short span of three years. Surveys of users show it is a highly valued service, and Safaricom continues to expand the range of applications for which it can be used. This paper explores how Safaricom, the mobile operator that commercia...

This paper describes the opportunity of using mobile phones as a way to increase access to finance in developing counties. It also explains how mobile payments can trigger innovation and entrepreneurship at the base of the pyramid, and how they can serve to bring liquidity to rural communities.

Poor people may have low average savings balances and little use of additional financial services, but their transactional needs may be similar to most other customers. Business models addressing the poor need to reflect this usage pattern.

This paper outlines the role of mobile phones in addressing the financial inclusion gap in developing countries and the value of retail payments in jump-starting mobile schemes. It then lays four key challenges in the evolution of mobile money schemes from pure payment mechanisms to vehicles for broader financial inclusion.

This article is a response to the article “The Crux of Daedalus” by Kentaro Toyama. It explains why mobile phones can be transformative in the delivery of financial services in developing countries.

The paper reviews the relevance of formal financial services - and in particular savings - to poor people, the economic factors that have hindered the mass-scale delivery of such services in developing countries, and the technology-based opportunities that exist today to make massive gains in financial inclusion. We also highlight the benefits to g...

In parts of Africa, only one in five people have access to traditional banking services. In Latin America only one in three do. Claire Alexandre, Ignacio Mas, and Daniel Radcliffe of the Bill and Melinda Gates Foundation say this need not be the case. The technology exists to make banking available at traditional retail outlets and thus spread acce...

The potential of mobile phones to revolutionize access to financial services in developing countries is exemplified powerfully by the success of the M-Pesa mobile money service in Kenya. But the apparent difficulty of replicating M-Pesa’s success even in neighboring countries suggests that some contexts may be more receptive to such an innovation t...

Cash imposes large costs on society, yet it is hard to envision moving to an entirely cashless society. If we cannot get rid of cash, then we need to change it in a way that makes it less costly for all to handle. We consider the possibility of creating a new kind of banknote that can be activated or deactivated electronically by transferring value...

M-PESA, a mobile-phone based electronic payments system, has been adopted by 8.5 million Kenyans in the relatively short span of 2½ years. Surveys of users show it is a highly valued service, and Safaricom continues to expand the range of applications it can be used for. This paper explores how Safaricom, the mobile operator that commercializes M-P...

M-PESA is a small-value electronic payment and store of value system that is accessible from ordinary mobile phones. It has seen exceptional growth since its introduction by mobile phone operator Safaricom in Kenya in March 2007: it has already been adopted by 14 million customers (corresponding to 68 percent of Kenya’s adult population) and proces...

Microfinance aims to provide financial tools for people to be able to invest in their productive activities and stabilise their expenditures in food, health and education. Micro-credit is one such tool, but not always the most appropriate. Everyone should have the option to use formal, safe savings instruments to save up for such purposes. Savings...

Since the bulk of MFIs remain relatively small scale in terms of deposit mobilization, this prompts us to look into the growth strategies pursued by MFIs, large and small. Do the larger deposit-taking MFIs exhibit a more intensive utilization of their distribution network in terms of savers per branch (giving rise to what we term intensive growth),...

The option to store value and to transact from a safe savings account is the foundation of financial inclusion. There is a need for developing banking models that allow poor people to save daily, as they earn money, right from their neighbourhoods and villages. This requires leveraging existing non-bank retail outlets to serve as cash transaction p...

M-PESA is a remarkably successful mobile payments system launched in Kenya three years ago. Users are able to send money to each other conveniently from their M-PESA using only their mobile phones. A key to the success of M-PESA is the availability of an extensive network of retail shops that accept M-PESA deposits and withdrawals, i.e. they stand...

Mobile phones may have a huge role to play in expanding access to finance. But does the company that operates the mobile network need to actually provide financial services? Or should others offer financial services, with the mobile operator merely providing the underlying wireless connectivity? The fact that mobile phones can be used as transactio...

Provides a formal analysis of the economic drivers for branchless banking solutions. It exposes the design trade-offs that occur at the each of the key layers of service: the retail network (transaction acquisition), payments network (transaction aggregation and routing) and account/service platforms. It also reviews the volume drivers of various e...

This paper presents ten key service design features that have facilitated the rapid adoption and active use of M-PESA in Kenya. These relate to branding and messaging, ease of use, consistency of customer experience, agent monitoring, instantaneous customer registration, free deposits, ability to send money to non-registered customers, and agent ch...

Microfinance institutions (MFIs) are becoming more efficient.1 Operating expenses are the most important cost component of MFIs. Institutional efficiency is generally measured by dividing operating expenses by the size of the loan portfolio. An MFI is usually regarded as having become more efficient when it lowers this indicator.

This paper reviews various data sources that have a bearing on microfinance, or access to finance more broadly, and discusses their relevance. Attention is restricted to multiple country sources that achieve some level of comparability of data.

The potential of mobile phones to revolutionize access to financial services in developing countries is exemplified powerfully by the success of the M-Pesa mobile money service in Kenya. But the apparent difficulty of replicating M-Pesa's success even in neighboring countries suggests that some contexts may be more receptive to such an innovation t...

This note reviews the Spanish experience with regulating the competition aspects of new mobile payment networks in the absence of formal technical standards. The saga is in two parts, as the strategy of the early movers, dominant telco Telefonica and leading bank BBVA, changed radically in mid-course. At first, they sought to create an industry pla...

This paper reviews the various commercially-available access bearer technologies that can be used by microfinance institutions to connect their devices or applications. It discusses the technical characteristics and possible business limitations of each connectivity solution.

Technology can enable banks and their customers to interact remotely in a trusted way through existing local retail outlets. Customers can be issued bank cards with appropriate personal identification number (PIN)-based or biometric security features, and the local store - the “banking agent” - can be equipped with a point-of-sale (POS) device cont...

In this paper we put forth a vision in which people are able to make small deposits into their bank account through a variety of cash handling outlets right in their neighborhood. In fact, buying and selling deposits (i.e., depositing and withdrawing money from your current account) is just another product your local store or supermarket offers you...

Branchless banking has great potential to extend the distribution of financial services to poor people who are not reached by traditional bank branch networks; it lowers the cost of delivery, including costs both to banks of building and maintaining a delivery channel and to customers of accessing services (e.g., travel or queuing times).

In this paper we further develop a broad vision for financial inclusion sketched out in Mas (2008), where payments can be easily made through an electronic network. What makes visioning such a payments utility possible is the technology we have today, which can be used to bridge distances, close information gaps, contain settlement risks, and gener...

This paper examines how banks can translate the potential of mobile phones into greater financial access for poor people. Although mobile phone operators have been able to use the mobile phone for mobile remittance and bill payment services in several countries, banks have had little success in using mobile phones as part of a growth or outreach st...

This paper reviews some of the bigger failures and some of the more promising experiences in the use of smartcards and mobile phones as payment platforms in developed countries. We selected just a few examples - from dozens of possibilities - and did not delve into much detail on any given scheme. Beyond telling the stories of these ventures, our o...

Merely establishing an independent central bank may not bring about its professed benefits in developing countries with shallow financial markets where there is limited scope for a truly independent monetary policy. The benefits of an independent central bank may be eroded by conflicts between fiscal and monetary policy and by inherent problems of...

This commentary argues that heavy-handed regulation and onerous implicit taxation of financial intermediaries in Latin America in the 1980s was softened by governments' assumption of responsibility for bank failures. This in turn induced governments to avoid dealing with bank distress, with disastrous subsequent consequences. In effect, mismanaged...

Confiscation of currency has sometimes occurred through the fine print of currency reforms. While only a small fraction of currency reforms world‐wide have masked a confiscation, when they don't they are likely to follow a hyperinflationary bout. Thus, one way or another, currency reforms are emblematic of government reneging on its most idiosyncra...

Unlike prudential regulations that are put in place prospectively to develop banks, procedures for dealing with banks in distress are generally determined on an ad hoc basis. Often the lack of clarity in the policy framework creates incentives for bank managers, shareholders, depositors, and regulators that undercut prompt resolution of financial d...

The authors explain the features of an array of futures contracts and their basic pricing relationships and describe a few applications to show how investors and risk managers can use these contracts. Futures - and derivatives generally - allow economic agents to fine-tune the structure of their assets and liabilities to suit their risk preferences...

While expansive literature on central bank independence contains some criticisms to the independent central bank quasi-paradigm, few critical analyses have been undertaken in the years between Friedman (1962) and Posen (1994). The author extends Posen's analysis to developing countries, discussing more broadly and systematically the reasons why mer...

About a dozen developing countries have deposit insurance systems and several others are considering establishing them. These systems are typically createdto prevent contagious bank runs, to provide a formal national mechanism for handling failing banks, and to protect small depositors from losses when banks fail. Without a deposit insurance system...

Thesis (Ph. D.)--Harvard University, 1988. Includes bibliographical references.