Page 306 - The Digital Financial Services (DFS) Ecosystem

ITU-T Focus Group Digital Financial Services
Ecosystem

secure. Each franchise could keep track of its inventory, payments, and sales patterns more effectively, and
digital payments would be more secure than cash. It could also give the storeowners the flexibility needed to
hire employees and delegate financial responsibilities, as discussed above.
The digital record of successful payments to Farmaenlace could also allow the franchise owners to access
credit. The IDB or Farmaenlace could offer subsidized loans to qualifying franchises through digital B2B payment
services. These services could enable more efficient disbursement, and the digital histories could be used to
enable better credit decisions.

Example #2, Coca-Cola:
Consumer goods companies are investing heavily in emerging markets as a source of future business growth.
In 2014, for example, Coca-Cola announced a $500 million investment in Egypt and Pakistan. Coca-Cola
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products are often sold through local distributors to small shops throughout developing countries.
Digitizing the payments between the buyers and the distributors could result in significant benefits for the
entire supply chain. Small business owners could allow employees to pay for products from Coca-Cola, even
when the owner wasn’t there. Not only would those payments be easier and more secure, the business owner
would not be limited to cash on hand to fund inventory purchases. And, if a small buyer has a digital history
of payments to the distributor, the distributor could feel more comfortable offering credit to the small buyers.
Other financial service providers could also get involved, offering receivables financing, business cash advances,
or more traditional loans to support business growth.

The histories could also be used for enhanced analytics. For example, Coca-Cola could enable accurate
“preferred buyer” programs, offering incentives to companies that buy more.

Example #3, Tenoli:

Rural mom-and-pop stores in Mexico often carry products made by large, multinational companies like Pepsi
and Nestlé. When small buyers purchase these products, they often pay distributors in cash. These cash
payments create inefficiencies in the supply lines, and don’t allow the small shops to capture all of the benefits
of digital payments.

The distribution company Tenoli, based in Mexico, is trying to help by enabling large suppliers digitize to
their supply chains, and better understand small buyers. The company set up distribution sites, where large
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suppliers like Pepsi, Cemex, and Nestlé can deliver goods. Tenoli will then deliver the goods to the small buyers
and collect the payments.

The data collected from the payments allow Tenoli to create consumer behaviour reports and bottom of the
pyramid (BoP) economic profiles, which are then sold to suppliers. The reports give suppliers the ability to
better understand small buyers, including mom-and-pop shops, in dangerous parts of Mexico. Large suppliers
can then use the data to create loyalty programs that could benefit the small buyers. In the future, Tenoli
could offer credit that would enable a more efficient supply chain. These greater efficiencies could also result
in lower prices for the small buyers.

14 Shadia Nasralla. Coca-Cola invests in Egypt and Pakistan, sees big sales growth. Reuters. June, 2014.
15 Based on an interview with Thomas Ricolfi, co-founder of Tenoli: http:// www. tenoli. org

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