Policy making tips the scale either for or against the ease of doing business and of general industry growth. This document - with examples of Nigerian opportunities for policy done well - makes the case for policy-crafting and -shaping professionals to assume their role, not as aloof umpires, but as stakeholders who ensure mobile-driven industries succeed.

2. PolicyPolicyPolicyPolicy makers as marketers of the industrymakers as marketers of the industrymakers as marketers of the industrymakers as marketers of the industry ––––
keykeykeykey considerationsconsiderationsconsiderationsconsiderations for desired impactfor desired impactfor desired impactfor desired impact
Simon Aderinlola
Head, Service Delivery
Interswitch Financial inclusion Services Ltd
A presentation at the GSMA policy session - Abuja, Nigeria
Feb 2016

3. Interswitch - CONFIDENTIAL
Giri Wijayanto.
CGAP @2015

4. Interswitch - CONFIDENTIAL
Nicholas Kahiga
Monsanto

5. Interswitch - CONFIDENTIAL
What excuses have the poor
against banking or access to
financial services as we know it
today?
Source: Ericsson Consumer Lab
report: Sub-Saharan Africa

6. Interswitch - CONFIDENTIAL
• Do urban cities have enough underserved populations for a business case?
• Are the poor retards or simply our opportunity- & tool-excluded peers?
• Who is an agent and why must he/she be in the value chain?
• What could happen if we took the 17,000 financial touchpoints to 100,000?
• How can all benefit by the true enthronement of the agent/customer?
• Are we committed to doing anything differently?
• Is the regulator just a referee or also a key player in our march towards
Financial inclusion?
Valid opening questionsValid opening questionsValid opening questionsValid opening questions

7. Interswitch - CONFIDENTIAL
The Interswitch foray intoThe Interswitch foray intoThe Interswitch foray intoThe Interswitch foray into
Financial inclusionFinancial inclusionFinancial inclusionFinancial inclusion
7

8. Interswitch - CONFIDENTIAL
• When the Founder-GMD started the business in 2002, he approached the CBN,
laying out his intents. At the time, Bank transaction switching & processing
wasn’t yet regulated, so he got a nod to proceed, and later came regulation
• Our compliance appetite is high and the parent business has received several
accolades for meeting various tech certification standards
• As a switching & processing as well as a card issuance business, we have long
been in the compliance good books of the regulator
• We believe regulation done well – with listening, consistency and fairness -
always allows opportunity to thrive. We also believe the regulated entities
need to look hard enough at both the rules and the opportunities
How we have always viewed regulationHow we have always viewed regulationHow we have always viewed regulationHow we have always viewed regulation

9. Interswitch - CONFIDENTIAL
• Define the informal economy
https://media.licdn.com
• Build an irresistible proposition
• Follow the money, deliver value

10. Interswitch - CONFIDENTIAL
ReReReRe----Validating the FundamentalsValidating the FundamentalsValidating the FundamentalsValidating the Fundamentals
10
About 60million unbanked, but bankable Nigerians
Only 17,000 payment service points including bank branches, offsite ATMs, Motor Parks,
MFBs, SACCOs, existing/active MMO agents etc.
Less than 10,000 active agent banking locations across Nigeria
Opportunity use case 1: Over 8m households on PHCN network & 5m PayTV customer base
with limited subscription base
About 40% of the 774 LGAs with no bank branches
Opportunity use case 2: Domestic remittance value worth over N100b monthly. Internal and
Diaspora transfers are massive untapped economic kick-starters
Big data is the future; generated data is useful for credit, scoring, disbursement & social
services

11. Interswitch - CONFIDENTIAL
11
Payment Development In AfricaPayment Development In AfricaPayment Development In AfricaPayment Development In Africa –––– Benchmarking BrazilBenchmarking BrazilBenchmarking BrazilBenchmarking Brazil
Source: KPMG, 2015
Egypt Kenya Nigeria South Africa Brazil
Rising POS
Deployments
17,345 POS
POS density currently <
45 per 100,000 people
163,733 POS
POS density currently < 90 per
100,000 people
400,000 POS
POS density currently
760 per 100,000 people
4.5 Million POS as at 2013
2,205 per 100,000 people
Increasing
Issuance of
Payment
Cards
7.6
Million
credit or debit
cards in 2014
13.5 Million
Estimated number of
active cards issued as
at Aug 2014
48 Million
Estimated number of active cards
issued as at 2014
99 Million
Estimated number of
active cards issued as at
august 2014
824 million(excluding retailer
cards) 409,904 per every 100,000
people as at 2013
Rising ATM
and Agent
Deployments
About
100,000
Agents
Over 120,000
Agents and about
2,618 ATMs
Over 40,000 Agents
and about 15,000 ATMs
Over 26,000
ATMs
Over 400,000 Agents and
about 200,000 ATMs as at
2013
OPPORTUNITY

12. Interswitch - CONFIDENTIAL
PentPentPentPent----up needs we are positioning to addressup needs we are positioning to addressup needs we are positioning to addressup needs we are positioning to address
12

13. Interswitch - CONFIDENTIAL
If you’re not our agentIf you’re not our agentIf you’re not our agentIf you’re not our agent
…you’re not in business!!…you’re not in business!!…you’re not in business!!…you’re not in business!!

14. Interswitch - CONFIDENTIAL
We believe our thinking will workWe believe our thinking will workWe believe our thinking will workWe believe our thinking will work

15. Interswitch - CONFIDENTIAL
Sample issue scenarios ofSample issue scenarios ofSample issue scenarios ofSample issue scenarios of
regulatorregulatorregulatorregulator----regulated challengesregulated challengesregulated challengesregulated challenges
15

16. Interswitch - CONFIDENTIAL
• Issue description: Presently, a CBN MM/SA licensee must approach the state
signage agency, just like any other business, to get cover for its posters, banners etc.
that ensure visibility >> recall >> retention - a lever of digital payment adoption.
• Impact: One recently got a bill outlay amounting to N30 mil in year 1 of launch
(plans 3,000 agents, with cost per location of N10,000). Signage agency insistence on
getting addresses of Agents not yet recruited underscores insufficient understanding
• What regulation can do: Collaborative regulation rather than a silo approach to
licensees orphans these businesses e.g. CBN - LASAA
• What has been done: ALMPO engaged LASAA to seek a special concession regime
• What needs to be done: both regulators to sit at a table, consider country-strategic
visions their work impacts, craft specific regimes addressing industry players and
then involve their licensees
• Options being sought: OEM app pre-bundling, PoS, mobile & web for agents
Issue scenario IIssue scenario IIssue scenario IIssue scenario I

17. Interswitch - CONFIDENTIAL
• Issue description: NCC licenses Telcos and VAS
providers, but not OTT players
• What regulation can do: The music licensing &
rights management body; COSON, identified the
OTT appendage 2 years back and set out to
revise its rules, the copyright law etc.
• Impact: We risk repeating in this fast-growing
space the same issue experienced with VAS
providers: lack of industry sub-sector visibility
for up to a decade
• Regulatory collaboration: a conversation needs
be had between the music & telco-regulating
industries. Regulation should enable, not hinder
• What to do: Stop calling OTT a threat to Telcos.
See it as the next iteration in mobile evolution,
embrace it and craft its regulatory path
Issue scenario IIIssue scenario IIIssue scenario IIIssue scenario II

18. Interswitch - CONFIDENTIAL
• Issue description: Recent unearthing of an erstwhile abandoned legislation: N50
stamp duty
• Government’s mood at present about disposable funds is understandable
• Impact: The policy seemed to have been re-ignited as soon as discovered. Impact
consideration on other long-term visions, projects & initiatives that the Government
is driving e.g. cashless policy need to be discussed.
• The movement towards digitization of cash could take a hit: Agents pay averagely
between N2,000 & N5,000 to buy e-money from their Super-Agents. They’ll be hit
by a N50 cost per deposit if the Super-agent credits the amount received in his
current account as agent e-money less the fee. This fee could as much as wipe out
the usual 3% or so airtime margins for retail agents.
• What needs to be done: reassess possible undesirable impact on bigger picture,
create waiver policy that clears the air on possible conflict e.g concession for cash-in
Issue scenario IIIIssue scenario IIIIssue scenario IIIIssue scenario III

19. Interswitch - CONFIDENTIAL
1. Avoid cut-&-paste policies, get closer to the trenches, borrow licensee goggles
2. Breath life into documents, sustain one-on-one dialogues, regulate inclusively
3. Be learning, constantly evolving. Welcome constructive criticism
4. Understand and respect the rights of the regulated
5. When you must block a road, dialogue first, then shine the path to the sidewalks
6. Appreciate the transitory nature of government, so sink policy pedestals well
7. Care killed the cat: lighten the ‘red-tape’ burden & cut to the chase
8. Patience for dawn to break every morning can soon become inaction
9. It’s a strength to ask when unclear…even from those you regulate
10. Say/be quoted for just a few things and stick to them – condense multipoint
agendas into 2 or 3 actions
11. Keep an eye on systemically important institutions, manage your brand & never
forget you are marketers of the industry you regulate, your body language &
utterances on industry health are being watched home and abroad.
Regulators are marketers of their industriesRegulators are marketers of their industriesRegulators are marketers of their industriesRegulators are marketers of their industries

20. Interswitch - CONFIDENTIAL
• Do urban cities have sizeable underserved populations for a business case?
• Are the poor retards or simply our opportunity- & tool-excluded peers?
• Who is an agent and why must he/she be in the value chain?
• What could happen if we took the 17,000 financial touchpoints to 100,000?
• How can all benefit by the true enthronement of the agent/customer?
• Are we committed to doing anything differently?
• Is the regulator just a referee or also a key player in our march towards
Financial inclusion?
In closing…ticking the boxesIn closing…ticking the boxesIn closing…ticking the boxesIn closing…ticking the boxes

21. Interswitch - CONFIDENTIAL
Thank youThank youThank youThank you