Page 218 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

Table 9 – Examples of distribution time

Company Distribution time

Branch 10 minutes
Commercial Bank of Africa and Immediate
Safaricom
Greenshoe Capital Few days to a week

InVenture Immediate

KCB M-Pesa and Safaricom Immediate
Traditional lenders 1-6 weeks

Interestingly, some programs are leveraging their DFS connections to automatically collect on loan payments,
providing a piece of mind to customers and increasing collection recovery.

5 Summary of findings and conclusions

1 e-money accounts are tremendously helpful to digital lending programs. From identification, application,
security, funds distribution and repayment, and even recovery, e-money accounts make it possible. It’s
hard to imagine a digital lending program being successful without the backbone of these programs in
place.

2 e-money data is not (yet) as helpful as it could be for several reasons: First, some e-money users only
have a portion of their income go through the account – most of their business is still done in cash. In
addition, just like their customers, small businesses also cash out their e-money accounts, making spend
analytics difficult. To the extent that there is data, e-money providers do not currently identify users as
consumers or businesses and do not separate or track their funds in this way, so it is challenging to know
how well an existing business is performing, what kind of business it is, etc.

3 Digital lending programs are in their nascent stages and most lenders are keeping their programs simple.
Few digital programs are designed for small businesses, but instead offer products designed for the
lowest denominator (no differences in data collection, credit criteria, lending amounts, pricing, etc.). For
example, lending amounts often are not related to e-money account balances, flow of funds, intended
use of funds, etc., but instead have pre-set tiers based that graduate based on repayment and they start
extremely low (e.g., US$2.50).
4 There does not appear to be any interoperability, regulations, standards, best practices, or community
around alternative digital lending, or organizations seeking to share data with the aim to influence
policy. Even facilitating formal discussions focusing on data sharing, best practices, etc. could be helpful,
including conferences dedicated to the topic (we are, however, starting to see individual presentations
on the topic).

5 e-money providers could provide a set of APIs to make it simpler for new programs to get started. In
general, each lender has to do a full integration effort rather than a simple one. Beyond telecoms,
there is even less accessibility with billers (utilities), credit bureaus, etc. An integrator that allows these
companies to integrate once to get to any and all telecoms, credit bureaus, etc. would be useful (though
the business case for each participant is not yet clear).
6 Partnership between providers of mobile wallets, lenders, and other players is critical to the success of
these programs. Equity Bank and Safaricom partnered to introduce M-Kesho. However, according to
the World Bank, lack of a clear agreement on profit sharing and failure to effectively integrate operating

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