Merchants and Agents - not the same at all

The industry of emerging markets are built on the back-bone of traders. It is the informal markets that distribute most goods and create most jobs. Anybody that have traveled in Africa, would be able to vouch for massive markets of informal traders selling everything conceivable. The nature of the commerce happening in emerging markets are also almost always based on cash transactions.

With the growth of mobile money initiatives throughout Africa, some of these traders have been signed up to perform a critical role; to provide cash-in and cash-out services to wallet holders. These traders are referred to as Agents in the new digital money world. They have to be formally registered, trained and must use a mobile phone to perform this function. It is also a requirement that they should have a certain level of literacy as they frequently have to keep book of transactions for audit purposes. Most of the schema's require these Agents to make a "substantial" pre-payment as a kind of float in order to manage cash flow risks.

With the growth of mobile money solutions in emerging markets, some traders are starting to accept electronic payments (in stead of cash). The incident of this is still very small and informal. It is likely that this practice will grow and will also become more formalised. Traders accepting mobile money (digital) payments can be classified as merchants (in a similar way as for Card Association merchants). It is pretty clear that these two roles (merchants and agents) are very different, and while they may be performed by the same trader in some instances, should be dealt with in totally different ways.

Where is Paypal going

Paypal recently announced that one could use a Paypal account to purchase at any Home Depot shop in the US. (Read here). The service require a Paypal App on a smarphone that generates a 2-D barcode that can be read by POS-equipment in the store. While this is a really innovative solution that takes an on-line product and turns it into a product that can be used in the physical world, it is an open question if this will lead to wide adoption for the mass market.

However, it is important to take cognisance of the following very important implications:

• It is now possible for non-traditional brands to enter the payment domain and go after the more profitable niche markets. Many other players have successfully done this in the past (consider Starbucks), using strategies that build on a wider eco-system than just providing a dependable payment experinece.
• The need for super-security mechanisms are not that critical. With niche solutions, relatively small balances and small take-up, it is just not worth the effort to break the security to steal money. It will be different when the service get to scale and really attracts large amounts.
• Consumers (as is the case with almost everything today), will be confronted with so many choices to pay that it will be difficult to decide what to select and how to manage these diverse options. It will be interesting to observe how the mass consumers react with a prolifiration of payment choices.

The underbanked market in the US may just go Boom!

I have now been writing this blog for the past six years and it is getting more difficult to write about things that I have never written about. I have previously written about the unbanked communities in the US(Read here and here), but I think is important to take another stab at it.

This was triggered by an article based on the Visa announcement of Visa Mobile Prepaid (VMP), aimed at banking the unbanked. (Read here). The author (Bryan Yurcan) makes the point that the US has an estimated 40 million un- (or under-) banked market. This makes it one of the bigger markets in the world for these types of products. While the new Visa product is relevant, it is currently not targeted at this market. This is why many other solutions are made available to this market to serve their needs, ranging from cheque-cashing services to new mobile payment solutions.

One such a service, referenced in this article is the new Boom services recently launched by m-Via. (Read here). The service is a mobile based payment solution focussed on the underbanked market with a lot of emphasis on remitting money offshore, especially to Mexico. If it was not for the ssss, m-Via could have been confused with the new Visa product.

A look at the spectacular growth in Pakistan's branchless banking industry

I have written a lot about the mobile banking revolution in Pakistan on this blog (Read here and here for some samples). It is possibly because we have done such a lot of work in this country and also because the country and its people are so close to my heart. But in fairness, one must also look at the emmense progress just on the merits of it. Pakistan is the only country with a population of more than a hundred million that have embraced branchless banking (from regulators, to banks and mobile operators) and have made a success of it.

The StateState Bank of Pakistan (SBP) recently signed a MOU with the Pakistan Tellecomunication Authority (PTA) - making it one of the first instances where the two relevant regulatory bodies governing mobile banking have formally joined forces to grow the market (Read here). During the signing ceremony, the governor of the SBPquoted some impressive statistics in terms of agent penetration and volume of transactions. At the same time the The World Economic Forum global report on Mobile Financial Services praised Pakistan for the fast growth in branchless banking in the country (Read here). The report described Pakistan as "a breeding ground of innovation for branchless banking" involving a wide range of players collaborating in this new eco-system, including MNOs, technology companies and even courier businesses.

 It therefore does not come as any surprise that one of the biggest investors in the country, the Abu Dhabi Group (ADG) recently announced that they would launch an independent mobile financial services company. (Read here). It seems that the plan is to bring branchless banking products to the market through two of its investment companies: Bank Alfalah (a leading bank) and Warid (one of the bigger operators in the country).

Investment Banking Salaries, Jobs, Interviews…Through A Glass Door

Want to look into investment banking through a glass door? Here is an interesting website I want to share with you - GlassDoor.com
What’s interesting is that you can search by jobs, company and reviews, salaries and interviews.  For example, if you are going to interview at Morgan Stanley, then go look up Morgan Stanley and you can view salary by position and location, and the interview notes

Complying with the HR Component

At the risk of being called a shameless plugger, I am referring you to my recent book, "Human Resources Guide to Social Media Risks" as a tool for complying with the human resources related threats found on yesterday's Social Media Risk Assessment.

I think that the book is a necessary read for not only HR professionals, but any manager and employee in and around social media (e.g., everyone).  There are some very important lessons in the book that can really help organizations manage their social media risks from an HR perspective.  As I like to say, social media risks are human risks.  They are not technology risks.  A review of the risk assessment document in yesterday's post makes that very apparent.  As such, be sure to pick up a copy of the guide.  I think you'll be very happy you did and I really do believe that you will be doing your organization a great service.

Mobile World Congress is bigger than ever

There was something nostalgic about this year's mobile world congress. This was the last year for this key event in the mobile calendar to be held at these premises on Plaza Espanja. Next year the event is planned in a brand new location, but still in Barcelona. as a matter of fact Barcelona started marketing the brand "mobile capital" this year.

And everything was bigger this year: more people, more exhibitors, more flash and bling, more claims, more press releases and more new products. There is nothing like this in the world of business. Any-one attending the congress has been blown away when they experience the sheer size and scale of the event. After four days of intensity, it is almost an anti-climax to take the taxi to the airport.

The key impressions of this year's event was the contrast beween the significant and the insignificant. Many announcements were over the top significant; ranging from new phones to ground-breaking technology. From statements by Google to collaborations between the world's biggest corporations. But, this year again, the spirit and possibility of mobile was actually captured in the insignificant. I was touched by so many small entrepreneurs with great ideas and products. The initiatives of the industry to grow the contribution of women and make innovation in emerging markets more important are the examples that makes this industry special.

Social Media Risk Assessment Process - Part 5

Ahhhh. The fifth and final part of this series on the Social Media Risk Assessment Process ("SMRAP").  I hope you've enjoyed the series up to this point.  I know I've enjoyed bringing it to you.

This last segment is all about completing the SMRAP.  I've created a fairly basic yet effective social media risk assessment model.  As you will note from the graphic below, my model uses the concept of "Threat/Vulnerability" pairs to isolate weaknesses that can result in disaster.  In a nutshell, here's the deal:  there are threats and there are vulnerabilities.

Threats are actions or events that can cause harm to the organization.  For example, when it comes to social media risks, an example of a threat is the disclosure of confidential customer information over social media.

Vulnerabilities are simply weaknesses in the system.  They are the chinks in the armor.  Vulnerabilities are what enable the threats to take form.  For example, a vulnerability related to the threat above could be a lack of understanding of social media-related information security risks by employees.

Therefore, using the same threat example above, a way for the threat to manifest or occur can be due to a lack of adequate employee training.  In other words, an employee does not know that it is a bad idea to post confidential employee information on social media sites and as such, the employee post information or takes part in conversations that reveal confidential customer information.

This is what I refer to as the Threat/Vulnerability pair.  A threat creates havoc and a vulnerability permits the threat to wreak havoc.  It must be noted that threats in of themselves are fairly harmless.  Without a vulnerability threats have no life.

STEP 1:  Determine the threats that apply to the organization's social media environment.  I have created a social media risk assessment template that contains the majority of "high level" organizational threats.  You can download the social media risk assessment document here.

STEP 2: Determine the vulnerabilities (weaknesses) that can create an environment in which the threats can manifest.  In some cases a threat will have only one vulnerability associated with it.  However, in the majority of cases there will be multiple vulnerabilities associated with each threat.  If you inspect the template social media risk assessment you will see multiple vulnerabilities per threat (see graphic above).

STEP 3:  Once the threats and vulnerabilities have been identified it is time to determine the internal controls that are in place.  Internal controls are the practices and processes that will keep the vulnerability from turning the threat into a reality.  The template provided contains common controls.  It is not likely that every organization will have every control listed.  The greater the number and breadth of controls in place, the less likely the threat will take place.  Each control should be listed on the risk assessment as shown in the template document.

STEP: 4:  Based upon the internal controls in place and the nature of the threat and vulnerability, the organization must determine the likelihood that the threat will take place.  A sample Likelihood Matrix is such as the one shown below is contained in the template.

STEP 5:  Next, the organization must determine the severity of the effect of the threat if it were to manifest based upon the existing controls.  Similar to the Likelihood Matrix, the template contains a Severity Matrix such as the one below.

STEP 6: Finally, the organization uses both the Likelihood of Occurrence and the Impact of Severity to determine the Risk Level.  The template also contains a matrix to assist in the determination of risk.

STEP 7:  After completing the social media risk assessment it should be reviewed.  Considerations in the review include a risk level that is too high relative to the organization's risk appetite.  For example, it may be the policy that all "moderate" and "high" risk areas be reviewed with senior management to discuss further internal controls that can be implemented to reduce the risks. It is generally a good idea to summarize the risk assessment process and deliver a report to the organization's Audit Committee and possibly the Board of Directors.  Along with the report may be recommendations or action items that will be taken to increase the number of internal controls to reduce the overall risk.  Once such action items are completed the organization can again perform the risk assessment to determine if the internal controls have been effective in reducing the risk level.

It must be noted that there are many ways to conduct a risk assessment.  This method is just one.  There is no right or wrong methodology as long as the end result provides an assessment of the residual risk and considers all of the practical threats.

I encourage you to take this template and turn it into your own.  I also ask that you return to this post with you recommended revisions/enhancements to the template so that others may also benefit.

Enjoy.