ADC+Handbook+ +2014

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ACKNOWLEDGEMENTS
The authors would like to thank the IFC team: Andrew Lake, Charles Niehaus,
Joseck Luminzu Mudiri, Lowell Campbell, Greta Bull and Margarete Biallas for their
contributions to the development of this handbook including in-depth reviews and
invaluable insights. Also, many thanks go to Anna Koblanck and Bonny Jennings for
making this handbook a user-friendly and easy-to-read resource.
This handbook was inspired by our clients and partners, many of whom have shared
their experiences with us over the past few years and with whom we have partnered
to scale up the provision of financial services through alternative delivery channels.
In particular, we’d like to thank Denis Moniotte of Microcred, Nick Meakin of Urwego
Opportunity Microfinance Bank and Kea Borann of AMK Cambodia for either providing
specific feedback on the drafts or for allowing us to share their experiences in the
handbook. The authors would also like to acknowledge the partnership with The
MasterCard Foundation, particularly Ruth Dueck-Mbeba and the financial inclusion
team, without whom this handbook would not have been realized.
Finally, the authors would like to note that any errors, either of omission or
commission, in this document are entirely their own. The views presented herein
represent those of the authors and the IFC team working on this paper, and are not
an official position of the World Bank Group.
b ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY

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2 ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY
CHAPTER 1
CONTENTS
CHAPTER 2
CHAPTER 1 12
Alternative Delivery Channels......................................................................................................... 12
ADC risks................................................................................................................................................. 15
ADC devices........................................................................................................................................... 16
ADC applications................................................................................................................................. 16
CHAPTER 3
ADC communications......................................................................................................................... 20
Authentication...................................................................................................................................... 21
CHAPTER 2 24
Step 1: Define ADC objectives......................................................................................................... 25
Step 2: Assess the environment..................................................................................................... 26
External assessment........................................................................................................................... 27
Internal assessment............................................................................................................................. 30
CHAPTER 4
Case Study: MicroCred...................................................................................................................... 31
Step 3: Develop the channel strategy and the business case............................................ 34
Case Study: Buy, build or rent?...................................................................................................... 35
CHAPTER 3 37
Step 4: Identify the available options.......................................................................................... 38
Step 5: Gather influencing criteria................................................................................................. 39
CHAPTER 5
Step 6: Select the platform.............................................................................................................. 41
Decision tree: mobile banking........................................................................................................ 43
Decision tree: agency banking ...................................................................................................... 44
From a technology perspective..................................................................................................... 46
Applications........................................................................................................................................... 46
Devices..................................................................................................................................................... 48
ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY 3 CHAPTER 6

INTRODUCTION
CHAPTER 4 50
Selection overview.............................................................................................................................. 51
Initiation................................................................................................................................................... 51
Step 7: Collect the Requirements.................................................................................................. 52
Collect the requirements................................................................................................................... 52
Weigh the requirements.................................................................................................................... 52
Prepare requests for proposals...................................................................................................... 52
Step 8: Issue the RFP and evaluate proposals.......................................................................... 53
Who should be invited to the RFP................................................................................................ 53
How to evaluate the responses...................................................................................................... 53
Step 9: Contract the vendor............................................................................................................ 55
Front-end applications...................................................................................................................... 55
Back office systems............................................................................................................................ 56
Integration components.................................................................................................................... 59
ISO8583................................................................................................................................................... 60
HTTP/web APIs..................................................................................................................................... 60
EFT switches and middleware........................................................................................................ 60
Other requirements............................................................................................................................. 61
CHAPTER 5 64
Implementation methodology........................................................................................................ 64
Step 10: Prepare kick-off and analysis......................................................................................... 65
Project kick-off...................................................................................................................................... 66
Requirements analysis....................................................................................................................... 66
Hardware procurement...................................................................................................................... 67

CHAPTER 1
Step 11: Configure and confirm the system................................................................................ 69
CHAPTER 2
Data migration...................................................................................................................................... 69
Installation.............................................................................................................................................. 69
User acceptance testing.................................................................................................................... 69
Training.................................................................................................................................................... 70
Step 12: Pilot and go live................................................................................................................... 70
Maintenance and review.................................................................................................................... 70
Implementation tips............................................................................................................................ 71
CHAPTER 3
Integration.............................................................................................................................................. 75
CONCLUSIONS AND LESSONS LEARNED 77

Case study: AMK Cambodia............................................................................................................ 79
CHECKLISTS 81
GLOSSARY 93
ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY 5 CHAPTER 4

CHAPTER 5
CHAPTER 6
ACRONYMS
ADC Alternative Delivery Channel
ADSL Asymmetric Digital Subscriber Line
AML Anti-Money Laundering
API Application Programming Interfaces
ATM Automated Teller Machine
BCP Business Continuity Planning
BPR Business Process Reengineering
CBS Core Banking System
CFT Combating the Financing of Terrorism
CIG Core Implementation Group
CMS Card Management System
CVV Card Verification Value
DR Disaster Recovery
DTMF Dual Tone Multi Frequency
e-banking Electronic Banking
e-money Electronic Money
e-wallet Electronic Wallet
EFT Electronic Funds Transfer
EMV Europay, MasterCard, and Visa
EOI Expression of Interest

False Acceptance Rate, also known as False
FAR
Matching Rate
FI Financial Institution
FRR False Rejection Rate

FSP Financial Services Provider
GPRS General Packet Radio Service
GPS Global Positioning System
GSM Global System for Mobile Communications
HCM Human-Centered Design
HSM Hardware Security Module
HTML Hypertext Markup Language
HTTP Hypertext Transfer Protocol
IMEI International Mobile Equipment Identity
ICT Information and Communication Technology
ICC Integrated Circuit Card
iOS Operating System developed by Apple
IP Internet Protocol
IRR Internal Rate of Return
ISO International Organization for Standardization
IVR Interactive Voice Response
J2ME app Java 2 Platform, Micro Edition
JSON JavaScript Object Notation
KPI Key Performance Indicator
KYC Know Your Customer
LAN / WAN Local Area Network / Wide Area Network
m-banking Mobile Banking
m-wallet Mobile Wallet
ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY 7

Magstrip Magnetic Strip Card
MDM Mobile Device Management
MFI Microfinance Institution
MFS Mobile Financial Services
MIS Management Information System
MM Mobile Money
Mobile Network Operator/ Mobile Virtual
MNO/MVNO
Network Operator
mPOS Mobile Point of Sale
MTI Message Type Indicator
NFC Near Field Communication
OS Operating System
OTA Over the Air
OTC Over the Counter
OTP One Time Password
PDA Personal Digital Assistant
POS Point of Sale
PRSP Premium Rate Service Provider
PSP Payment Service Provider
RFI Request for Information
RFP Request for Proposal
ROI Return on Investment
SaaS Software as a Service

SIM Subscriber Identification Module
SMPP Short Message Peer-to-Peer
SMS Short Message Service
SSM Software Security Module
STK SIM Application Toolkit
SWOT Strengths, Weaknesses, Opportunities, Threats
TAC Type Approval Code
TAN Transaction Authentication Numbers
TCO Total Cost of Ownership
TCP Transmission Control Protocol
UAT User Acceptance Testing
URL Internet Shortcut
USSD Unstructured Supplementary Service Data
VAS Value Added Services
VPN Virtual Private Network
VSAT Very Small Aperture Terminal
VSP Virtual Service Provider
WAP Wireless Access Protocol
Wi-Fi Wireless Internet
XML Extensible Markup Language
3G 3rd Generation Mobile Network
4G 4th Generation Mobile Network

Introduction
The ambition to reach full global financial inclusion requires that we address
the challenge of delivering appropriate and affordable financial services
to an estimated 2.5 billion unbanked individuals globally. One response to
this challenge has involved the design of products such as microloans, low
balance savings accounts, micro-insurance, and mobile money transfer that
are specifically tailored to meet the needs of the often excluded low-income
mass market. Delivering these products and services on a large scale, however,
cannot be achieved without accessible channels that lower the cost of service
and increase reach.
Alternative delivery channels, defined as those result in poorly planned and implemented
channels that expand the reach of services ADC projects. The net result is a patchy
beyond the traditional bank branch channel, distribution of ADC success stories and many
have emerged as a result of innovations in disappointing experiences, with poor uptake
information and communication technology on channel platforms that are clunky, inflexible
and a shift in consumer expectations. ADCs or costly.
are transformative in nature, accommodating
The world of ADC technology, with the
the demand for access to financial services
wide range of delivery channels, technology
“anytime, anywhere, anyhow”. They rely
platforms, and communications and device
heavily on information and communication
options on offer, can be daunting, particularly
systems and devices ranging from ATMs to
for FSPs that have limited technical capacity.
mobile phones, all of which enable the instant
This handbook serves as a tool for FSPs to
transmission of financial and non-financial
increase the technical understanding of ADC
information between the customer and
platforms and to provide practical guidance
financial services providers. New technologies
on how to approach an ADC technology
increase efficiency through automation,
project. While the focus is on the technical
reduce operational costs, and improve service
aspects of ADC projects, there are a host of
quality by cutting down on waiting times and
other market and business factors to consider,
offering more convenient access and reduced
which are introduced and discussed in brief
cost to the end-consumer.
where relevant. To help orient the reader,
For Financial Services Providers, particularly each chapter first covers the relevant business
microfinance institutions, ADCs can help aspects before delving into the more technical
improve operational efficiency and cost- considerations for readers seeking deeper
effectively expand outreach. Unfortunately, insight.
many FSPs lack the technical knowledge The handbook has been organized according
or skills needed to successfully implement to a phased implementation framework
ADCs. This includes not only the skills to illustrated in Figure 1. This framework is
manage the detailed implementation of ADC based on the understanding that all ADC
projects, but also the skills needed to navigate projects must be based on a well-researched
a competitive and crowded marketplace channel strategy that guides all future steps
and build a relevant ADC strategy. Other in the implementation process. Equipped
factors beyond skills, such as a history of with a strategy, the next step for the FSP
failed or painful IT implementations, limited is to consider and select the technology
budgets, and regulatory constraints can also
10
Figure 1: ADC technology implementation process
STRATEGY 01_DEFINE 02_ASSESS 03_DEVELOP

business objectives external milieu and channel strategy
internal capacity and business case
TECHNOLOGY 06_SELECT 05_GATHER 04_IDENTIFY

the right influencing criteria available options
technology
SELECTION 07_COLLECT 08_ISSUE 09_CONTRACT

requirements RFP and evaluate the vendor
proposals
IMPLEMENTATION 12_PILOT 11_CONFIGURE 10_PREPARE

and go live and confirm the kick-off and analysis
system
platform(s) best suited to the strategy. This The handbook is structured as follows:
This framework step is a prerequisite to vendor selection, as it • Chapter 1 provides an overview of ADCs
forms an important input to the requirements
is based on the or specifications used to select the vendor(s).
and the technologies that underpin them.
• Chapter 2 offers guidelines to develop a
understanding that Once this information is available, and a
channel strategy, taking into account the
all ADC projects must vendor or partner selected, the FSP can finally
internal and external factors that impact
implement the preferred channel solution. This
be based on a well- framework will be referred to throughout the
strategy decisions.
researched channel handbook. In addition, the handbook contains
• Chapter 3 outlines the different components
of a technology platform, aiming to provide
strategy that guides a glossary to fully explain the terms used in
guidance on how the channel strategy
all future steps in the document. It may be advisable to review
can be mapped to a specific technology
this before launching into the handbook, to
the implementation refresh the reader’s understanding of the
platform.
process. key terms and concepts as a background to • Chapter 4 highlights the importance of
the discussion. Lastly, to help FSPs apply the identifying requirements and outlines the
information in this guide to real-life scenarios, steps involved in selecting the right provider
checklists are included at the end of the and solution.
handbook. These checklists will help FSPs • Chapter 5 introduces a best-practice
determine the key decisions or activities that implementation methodology and
should be completed at the strategy, selection key considerations for a successful
and implementation stages. implementation. In addition, the chapter
discusses how a channel should be
It is difficult to estimate how long an ADC monitored, maintained and scaled up after
project will take or what financial resources going live.
it will require, as institutional capacity and
context vary widely from situation to situation.
This guide should give a variety of FSPs some
fundamental direction for any ADC project
and equip project teams with the basic tools
TECHNICAL DISCUSSION
Those interested in a more technical discussion
to successfully navigate the process.
can refer to the “From a Technological
Perspective” sections included in most
chapters.
See From a Technological Perspective

CHAPTER 1
Basic concepts and terminology
ADC implementations by FSPs employ many delivery approaches and
use different terminologies, such as ‘e-banking’ and ‘branchless banking’.
These variations in approaches and terminology are in part contributing to
some of the confusion in the financial services sector about channels and
technology. Hence, this chapter aims to ensure that all readers have a common
understanding of the terms used in this handbook, and to introduce some of
the basic concepts that will be referenced as we progress through the details
of strategy, technology, selection, and implementation.
Alternative delivery channels options through which a customer can now

access financial services without visiting
As a foundation to a discussion on ADC a branch. These include ATMs, Internet
technology, it is important to clearly Banking, Agency Banking, Extension/Field
distinguish between the channel and the Services2, Mobile Banking, and more recently
technology. For this handbook, we define the Electronic or Mobile Wallets. These channels
channel as the customer’s access point to a enable customers, FSP staff and agents to
FSP – who or what the customer interacts with access banking services through technology
in order to access the financial service or bank solutions which are built either on Web,
account1. For instance, customers can access mobile or bespoke platforms. Figure 2 shows
financial services at a bank branch, which is how these channels extend the services of a
a traditional channel. With the advancement branch through systems which are connected
of technology, the term Alternative Delivery to the Core Banking System (CBS) of the FSP.
Channels denotes a broader range of
1
Given that FSPs are the target audience of this handbook, we will focus primarily on channels which are
used to connect customers to bank accounts held at a FSP, as opposed to other financial products such
as e-wallets and money transfer offered by non-bank financial services providers. An overlap clearly exists
wherein FSPs may opt to use these non-bank services as one of their channels, such as when banks are
linked to e-wallets services for cash in/out and payment purposes.
2
For the purpose of this handbook we have differentiated Extension Services from Agency Banking,
based on the user of the channel. While Agency Banking relies on use of third-party operators, Extension
Services involves equipping FSP staff with technology solutions.
12
Figure 2: ADC Ecosystem
The term alternative ATM

delivery channel
denotes a broader AN
CH
ATM IN
BR BA TER
range of options NK NE
IN T
M
through which a AT Internet
G
cafe
customer can now PO
S
access financial le r Home
services. Tel
nch
Bra
Mobile
BAN
AGE ING
K
NT
POS
HQ
Tablet
FSP Back-office system:
• CBS Agent
• CRM
• Accounting
• Risk management EFT
• Card management Internet/
switch VPN
• Agent management
• Channel management POS
• Reporting Field staff
Internet
banking
VIC ON
interface
ES
SER ENSI
MOBILE
network Mobile POS
T
EX
merchant
Mobile
app
Mobile
E
BIL
C MO KING
CENALL BAN
TER
E-WALLET

01_BASIC CONCEPTS AND TERMINOLOGY
The most commonly used channels

are introduced in Figure 3, along with Figure 3: ADC (business)
additional information on how to and
who can use this channel. As shown in CHANNEL NAME TYPE OF WHO/WHAT CUSTOMER SAMPLE
Figure 3, channels can be self-service CHANNEL INTERACTS WITH TO FUNCTIONALITY
or Over the Counter, whereby the TRANSACT OFFERED BY THE
customer interacts with staff or third- CHANEL
party representatives such as an agent
ATM Self-service ATM Cash out, balance
or merchant – dedicated or not. This
enquiry, payments,
distinction is important to bear in mind, cash deposit
as FSPs must always be aware of who
or what owns the customer experience,
and take measures to ensure that this
interaction is equal, if not better than, Internet banking Self-service Computer, phone, tablet, Enquiries, transfers,
what the customer would experience kiosk payments
if using a traditional bank branch. The
classification of a channel as either
OTC or self-service becomes somewhat
complicated for the case of e-wallets, Agent banking OTC 3rd party agent, Cash in, cash out,
since these channels typically require merchant, phone, POS, payments
some level of OTC interaction to cash in/ mobile
out and thereafter can be used in a self-
service mode.
Extension services, OTC Bank staff: loan officer, Account opening,
(field staff, mini susu collector, other FSP cash in, cash out,
branch, branch on staff, POS, mobile loan applications,
wheels) enquiries
Mobile banking Self-service Phone Enquiries, transfers,

payments
E-wallet Self-service + Phone, computer, Cash in, cash out,

(m-wallets, OTC merchant, kiosk, ATM, payments, transfers
prepaid cards, agent, card
store cards)
Call center OTC Phone, customer service Enquiries, transfers,

rep payments

Five risk areas have been identified as
If ADCs denote a point of access outside
of the traditional bank channel, then
ADC risks being particularly applicable to ADCs:
ADC technology refers to hardware An additional topic to discuss as a
devices, software systems, and the foundation for the rest of the handbook • Legal – the risk of lawsuits arising
technological processes that enable deals with the risks associated with between any of the players involved
the provision of financial products and the use of ADCs. While all FSPs in the channel (customer, agent, FSP,
services over ADCs. For instance, a POS will have existing risk management or supplier), either due to misuse of
device can be the enabling technology practices to safeguard their business, the channel, a lack of clarity of roles/
for agency banking. Whether self- the introduction of ADCs may require responsibilities, or breach of contracts
service or OTC, each channel requires a reassessment of these policies and or laws such as data protection/AML.
the customer to interact either with a the introduction of new controls • Operational – fraud/theft committed
person (that is, an agent, field officer, and risk monitoring systems. Certain via the channel, failure to manage
call center representative or a merchant) characteristics of ADCs, such as a the liquidity of agents and ATMs,
or device (ATM, mobile phone or PC). In dependence on rapidly changing unauthorized fees charged for use of
the case where the interaction is with a technology and their ubiquitous nature, the channel, poor quality of service,
person, for example a third-party agent, mean that new risks may be introduced and loss of private data.
it is typically the agent that initiates (for example, agent-level fraud). There • Technological – insecure data storage,
the transaction on a technology device is also the likelihood of an increase weak back-office security, insufficient
rather than the customer, although at in existing risks or their severity (for communication protection, poor
some point during the transaction the example, in terms of dependency on the authentication/authorization of users,
customer may also need to interact security of IT systems). A comprehensive inadequate integration between
with the same device, for instance risk review is required as part of any ADC systems/third parties, or a lack of
when entering a PIN on a POS. While project and the topic will be discussed service associated with hardware/
in some cases it is easy to distinguish at various stages in this handbook. software failures.
between the channel and its underlying Other resources, including the Risk • Compliance – the risk of fines or loss
technology, there are cases where Management Principles for Electronic of license as a result of noncompliance
the channel and the technology are Banking developed by the Basel with laws or regulations, including AML,
the same, such as ATMs and Internet Committee on Banking Supervision, CFT, Agency Banking, Mobile Money,
banking. the Global Technology Audit Guide Consumer Protection, Regulatory
series, and more channel-focused Reporting.
A range of products and services is resources such as CGAP Focus Note
• Reputational – a loss of customer
accessible over the various channels. No 75. “Bank Agent: Risk Management,
and market share as a result of
A list of the functionalities most Mitigation, and Supervision” provide
the occurrence of any of the risks
commonly offered is shown in Figure 3, deeper discussions on the topic (for full
described above.
but this should be interpreted only as an references see page 99).
example. Due to rapid innovation, the list These risks should be taken into
of functionalities that is accessible to a consideration throughout the decision-
customer over ADCs is changing almost making process, as they will impact all
on a daily basis. ATMs are now offering aspects of an ADC technology project,
money transfer services, mobile banking from channel design to mode of
allows for emergency loan applications, authentication used by the end-user.
and extension services are quickly
scaling up to offer almost all services
commonly offered in the branches.

ADC devices
The device is the physical object with
which a user interacts, such as a mobile
phone to access an e-wallet. Since
mobile phones are the newer entrants to
FROM A TECHNOLOGY PERSPECTIVE the ADC space and many FSPs now rely
extensively on them, it is useful to pay
For those readers interested in analyzing channels with a deeper technology
extra attention to these devices.
lens, the following section includes a more detailed summary of the
technology platforms that drive ADCs. For the purpose of this discussion, it Mobile phones can be classified as
is important to consider an ADC technology platform as the aggregation of being either basic, feature or smart.
four components: A basic phone has only voice, SMS,
and sometimes USSD capabilities, but
1. A physical device
no data or GPRS capabilities. Feature
2. An application running on the device phones have data connectivity in
3. A communication channel used to exchange data between the device and addition to the basic features, and can
the FSP’s host system therefore be used to connect to the
4. An authentication mode used to confirm the identity of the user of the Internet or run mobile applications.
channel. Lastly, smartphones are the most
advanced option, with processing
Figure 4 on the following page shows the options available per channel in
capacity nearing that of a computer, and
terms of device, type of application, communication, and the different types
are suitable for complex applications
of authentication modes used per channel.
or ‘smart apps’ in addition to the basic
features and Internet access. Each of
these classes of mobile phones use
different operating systems, most
commonly Android (Google), Windows
(Microsoft) or iOS (Apple). These
operating systems also apply to tablets.
ADC applications
The application layer of ADC solutions
consists of front-end applications, back-
office administration modules, and the
integrations between these systems
and the Core Banking System. These are
shown in Figure 5, with some examples
of the system or functionality available
at each layer.

Figure 4: ADC Technology Components
CHANNEL NAME DEVICE APPLICATION COMMUNICATION AUTHENTICITY MODE
ATM ATM, HSM Bespoke tech LAN (physical leased Card / PIN, bio, mobile
line, P2P satellite, VPN
over internet, wireless),
modem (GPRS, dial-up)
Internet banking Computer, phone, Web Internet (mobile, Username, password,

tablet, kiosk wireless, leased line) OTP
Agent / merchant Computer, phone, Web, POS, mobile Internet (mobile, PIN, card, bio, physical
tablet, POS wireless, leased line), ID
mobile data (GPRS,
3G, 4G)
Extension Computer, phone, Web, POS, mobile Internet (mobile, PIN, card, bio, physical
services, (field tablet, POS wireless, leased line), ID
staff, mini branch, mobile data (GPRS,
branch on wheels) 3G, 4G)
Mobile banking Phone Mobile Mobile data (GPRS, 3G, PIN, OTP
4G), SMPP, USSD
E-wallet Phone, computer, kiosk, Web, POS, mobile, Internet (mobile, PIN, card, physical ID
(m-wallets, ATM, POS bespoke tech (ATM) wireless, leased line),
prepaid cards, mobile data (GPRS,
store cards) 3G, 4G)
Call center Phone IVR Telecoms – Voice Password

Figure 5: ADC Solution Architecture: Front End, Back Office and Integration
ADC FRONT OFFICE

Web
POS Internet portal
application banking interface
interface
USSD menus,
ATM mobile app
screen interface
ADC BACK OFFICE

Customer
authentication
User
administration Customer
registration
Security
Reporting settings
INTEGRATION
API EFT
SWITCH
ISO
CORE BANKING SYSTEM
FLEXIBILITY SCALABILITY SECURITY ACCESSIBILITY

Front office from FSPs who are looking for mobile applications that are manually
applications that can be launched installed on the phone and run in
The front-office component of the ADC
independently of MNOs. Finally, almost the same way as a computer
technology platform is the software
both traditional SIM cards and skin program installed on a PC. Native
application that runs on the device,
SIMs can be used for Near Field apps will depend on the operating
referred to as the front-end application
Communication, a form of contactless system on which the mobile phone
for the purpose of this handbook. ADC
communication between devices runs, for example, Android, iOS or
applications can be based either on
which is being introduced for a range Windows. Native applications can be
mobile, Web or bespoke platforms such
of interactions, including payments developed to serve as a user interface
as POS, ATM, and IVR. For instance,
and vouchers. for staff, agents or customers. Native
Internet banking runs on the back of a
2. USSD apps – Unstructured applications are also increasingly
Web application. As with devices, mobile
Supplementary Service Data being used as a replacement for the
applications are the most complex,
applications are supported by all traditional POS devices, with the
with four main types of applications.
handsets and involve an interactive evolution of mPOS apps that typically
A more detailed comparison of these
session consisting of a two-way interact with a card reader and/or
applications is provided in Chapter 3.
exchange of messages between the printer to replicate the functionality
1. SIM toolkit – The first type of FSP’s host system and the mobile of the traditional POS device. Lastly,
application commonly referred to as phone user via an MNO network. USSD native apps can run in online or offline
a SIM toolkit, or STK, is pre-loaded sessions can either be initiated by mode to allow for data capture in
onto the mobile subscriber’s SIM dialing an MNO-defined USSD short areas of little or no connectivity,
card, usually by a Mobile Network code (for example, *100#) or pushed which is of particular interest to FSPs
Operator. The application consists by the provider to a customer’s operating in rural areas beyond the
of a set of commands programmed handset as part of an SMS. Sessions reach of mobile coverage.
on the SIM, and appears as a menu are typically limited both in terms of 4. Web apps – The last type of application
of Value Added Services. STK time and message size, with variations is a mobile website that runs on the
applications communicate using SMS existing from one MNO to another. browser of a mobile device accessed
messages sent by the application Offering applications over USSD via a URL. Web apps function very
directly to the MNO’s host system. In requires either a direct relationship much as a standard Internet website,
this same category, one can include with the MNO or a contact with an but the size and features are designed
emerging skin SIMs or thin-film SIMs, intermediary provider, sometimes to display and interact better on a
a technology that consists of a paper- called an Aggregator or Premium Rate mobile device than on a traditional
thin plastic sheet with an embedded Service Provider that is licensed by website3. The main advantage of Web
chip that can be adhered to the top of the MNOs and usually the government apps over native apps is that they
any SIM card. Touch points built into to provide services over this channel. work completely cross-platform on
the skin SIM overlay filter information all devices with a browser, requiring
3. Native apps – The third category
from and to the traditional SIM card. no installation or intervention to
of mobile application, commonly
Skin SIM technology, which originated update, as they rely on server-side
referred to as native apps, includes
in China, is attracting a lot of attention processing instead of a local, phone-
based application. However, Web
There are two types of mobile websites: Wireless Application Protocol and HTML. The first
3
is based on the WAP standard which is used to guide the design, creation, and display of
apps operate in online mode only and
a mobile website. Although it offers the benefit of running on millions of devices due to its hence are limited in terms of usability
historical use, WAP is being upstaged and therefore replaced by a newer standard, HTML5. in areas of poor or no connectivity.
HTML5 apps benefit from advancements in programming languages that mean they can
provide a range of key capabilities such as offline support, graphics and video, geolocation,
and field validation on the mobile browser. Currently, HTML5 can only run on mobile devices
with the Webkit engine and are therefore limited in coverage.

Back office the technology driving the channel. In could be over physical leased lines,
many cases, ADC solutions also require wireless connections, VSAT/satellite
While the front-office applications
multiple integrations with third parties or a Virtual Private Network. LAN/
are perhaps the most visible to users
(m-wallet providers, bulk SMS providers WAN is mostly just used with ATMs.
of an ADC, they are reliant on back-
and national switches), as well as several 2. Internet portals – Agents, extension
office applications which form a critical
in-house systems (m-banking software, services, and e-wallets may use
component of the ADC platforms. These
agency banking modules, accounting secure Internet portals to exchange
systems play many different roles but
software, and CBS). As with the back- information. Where ADCs use Internet
are typically used to drive the front-end
office components of an ADC solution, connectivity, a VPN is typically
applications and devices. They also allow
the integration software is often bundled configured to provide an additional
FSPs to administer the channel users,
with the solution, although increasingly, layer of security.
define the products and services offered
CBS providers are providing integration 3. Mobile data – Mobile applications
via the channel, control the security of
interfaces through which all external exchange information over mobile
the channel, and of course monitor
systems must communicate. The topic data services (GPRS, Edge, 3G or 4G4),
and report on the channel activity and
of integration is discussed in full in Wi-Fi connections, or satellite-based
performance. These administrative
Chapter 3. communications. For the purpose of
systems can be sold separately from
the front-end application, as is often the ADCs, mobile data services, which are
case with Card Management Systems ADC communications provided by the MNO and accessible
used with ATMs or POS, or could be wherever there is data coverage, are
All ADCs ultimately require the
bundled together with the front-end the most commonly used, although
exchange of financial or non-financial
application, as is commonly the case Wi-Fi and satellite may still be relevant
information between the FSP and the
for mobile banking and agency banking for some extension services.
customer, which typically occurs over
solutions. communication channels connecting the 4. USSD – The USSD communication
device and the back-office component channel is a standard, publically
available GSM technology, controlled
Integration of the ADC. There are currently six
by MNOs. As discussed above, USSD
communication channels for ADCs:
The final component of ADC application applications exchange information
involves integration between the various 1. Local area network / wide area over this channel. The use of USSD for
systems involved in the ADC platform. network – ATMs and extension services ADCs has achieved significant uptake
Introducing ADC technologies in most like mini branches communicate over in markets where there is high mobile
cases requires some level of integration the FSP’s LAN or WAN much like a penetration as a result of the user-
between the FSP’s back-office systems computer on an internal network. friendly, menu-based service. The
(such as CBS, Accounting and ERP) and Connectivity between these devices USSD communication channel creates
a real-time connection that is more
responsive and secure, as it does not
store the customer’s data.
5. SMS – SMS is a ‘store and forward’
communication channel that involves
4
This refers to the generation of wireless communication technology which is differentiated the use of the telecom network and
by the speed of data services available. GPRS and Edge are 2G technologies providing a SMPP protocol to send a limited
maximum download speed of 114kbps and 384kbps, respectively. 3G provides up to 3.2Mbps
and 4G up to 299.6Mbps
amount of text from one phone to
5
Note that SMTP is a different protocol traditionally used for sending email, but also another, or from one to many phones5.
commonly used for sending SMS messages via the Internet. Unlike true SMS on SMPP, SMTP The use of SMS for ADCs is extensive
does not use the telecom network, which can potentially be cheaper, but also presents issues and ranges from STK and native
in terms of reliability.

applications using SMS as the mode of
communication, to basic applications
tones during an interactive phone
call between the customer and the
Authentication
being programmed entirely using FSP. These systems are designed to The last component of ADC technology
the SMS channel, although these are handle routine interactions such as is the mode of authentication, as
typically quite limited in terms of enquiries or transactions which can illustrated in Table 1. This is of particular
functionality compared with other be relied on to follow an expected relevance, as one of the more apparent
types of applications. SMS has proven workflow. Within the ADC world, IVR risks associated with ADCs is related to
to be an effective tool for notification is of particular interest to FSPs serving fraud arising from the authentication
services regarding One Time illiterate or low-literate people, and to of a customer’s or other user’s identity,
Passwords, transaction confirmations, date has primarily been used in Latin and failures which may occur during this
or repayment reminders. A distinction America and Asia. process. Branch-based transactions can
is often made between ‘pull’ SMS rely on well-trained tellers or staff whose
7. NFC – Near Field Communication
messages, which are initiated by a judgement can be used to confirm
is being used to make contactless
customer to solicit a response from a customer identity using scanned photos,
transactions, including those for
provider, or a ‘push’ message, which is physical ID cards, signatures, and other
payment and access. NFC technology
sent to the customer by the provider. tools. However, transactions initiated
is a standards-based wireless
To request a pull message, a customer remotely through ADCs often require
communication technology that
must send a request to a short code enhanced means of verification.
allows data to be exchanged between
(for example, send text ‘BAL’ to short devices that are a few centimeters The three most commonly used
code *12345#)6. apart. Consumers can make payments factors are knowledge, possession, and
6. IVR – Interactive Voice Response uses with a wave or tap of their NFC- inheritance as shown in Table 1.
a computer application with voice enabled card.
recognition technologies and keypad
Table 1: Different Types of Customer Authentication

Factors Used in ADCs
FACTOR
DEFINITION OPTION AVAILABLE
TYPE
Something that customer Password, PIN, pattern, secret question,

Knowledge
knows image
Something that customer Bank card, mobile phone, OTP/TAN,

Possession
owns or has physical ID card
Biometric characteristic fingerprint, iris

Inheritance Something that customer is
scan
6
Note that while USSD and pull SMS both use short codes, these are not necessarily the same
code and may require that a customer enter a different code depending on which action
they wish to take.

While exceptions exist for low- For ADCs, there are three commonly use at ATMs or on POS devices. Smart
value transactions, best practice for used options for authentication: cards are increasingly being produced,
authentication over ADCs dictates that payment cards, OTPs and biometrics distributed, and used according to
two-factor authentication should be (fingerprint, voice and iris). Each of EMV® Specifications7. These EMV cards,
used, meaning that a customer must these will be introduced here and referred to as ‘Chip and Pin’ cards, are
provide a combination of two different discussed in further detail in Chapter 3 steadily replacing the older magstripe
factors to access a system or transact to present the various advantages and cards.
on it. For example, an ATM transaction disadvantages of each.
requires both a card (Possession) These card types offer differing levels of
and a PIN (Knowledge). Two-factor security based on the PIN authentication
authentication should not be confused
Payment cards method. For instance, to authenticate
with two-step authentication whereby Payment cards are perhaps one of the the PIN associated with a magstripe
a customer must go through a couple more traditional means of authenticating card, communication with a security
of steps to access a system, but where users over ADCs. Cards are typically module is required. The function of a
these steps do not necessarily involve dependent on a PIN for authentication, security module is to issue, validate,
a combination of different factors (for and users are required to remember this and store certificates in a protected
example, a PIN plus a secret question). PIN and input it as a means of verification environment. A security module can be
The level of security delivered will be at the time of accessing the ADC. Two one of two types: a Software Security
influenced not only by the number of main types of cards are used; magnetic Module or a Hardware Security Module.
factors used in authentication but also strip (magstripe) cards and smart cards. The major difference is that an SSM is a
by the relative security of the factor The former uses a machine-readable program that runs on a general-purpose
itself. Therefore, poorly formatted magnetic strip on the back of the card computer, while an HSM is a dedicated
passwords will not protect systems in to store data about the customer, while computer specifically designed to
the same way as those which adhere the latter stores similar information on function in a security role. The HSM is
to best practice in terms of complexity an embedded microchip, which includes a physical device connected to the
and frequency of change. It is for this its own operating system, memory, network hosting the ATM, and has the
reason that authentication via biometric communications interface, security primary functionality to generate the
is typically used only as a single factor, features, and the ability to encrypt PIN numbers and store the encryption
since its level of complexity makes and decrypt data. While smart cards keys required to authenticate the PIN
it very difficult for this factor to be have many uses outside of the financial number provided8. In contrast, EMV
compromised. sector, FSPs issue these primarily for cards have stored encryption details
on the chip, which allows for a local
authentication of the PIN, which is
both faster and contributes to the high
security standard associated with these
7
EMVCo was established to facilitate worldwide interoperability and acceptance of secure
cards.
payment transactions by managing and evolving the EMV® Specifications and related testing
processes. Today there are EMV Specifications based on contact chip, contactless chip,
common payment application, card personalization, and tokenization. This work is overseen
by EMVCo’s six member organizations – American Express, Discover, JCB, MasterCard,
UnionPay, and Visa – and supported by banks, merchants, processors, vendors, and other
industry stakeholders who participate as EMVCo Associates. Adopting EMV cards enables
FSPs to not only ensure the highest standard of security for card transactions, but also
opens up the option of connecting local or closed systems to external networks, either
regional or international.
8
Note that the HSM actually authenticates the PIN Block rather than just the PIN number
itself. The PIN Block is made up of customer data read from the card combined with the
encrypted PIN, generated using the ATM/POS pin pad.

There is a trend towards contactless or mathematical algorithm, whereas the with which a scan can be falsified, thus
payments via smart cards and NFC TAN uses an algorithm that is dependent preventing the use of a picture of a
technology which uses short-range on details of the transaction itself. The fingerprint.
radio signals to exchange information most common use of OTPs/TANs is
between a card or mobile device and currently within the Internet banking While biometrics is primarily used for
a terminal equipped to read this signal. channel, but is increasingly being used authentication purposes, it can also
When this technology is applied to for mobile channels. assist FSPs in performing deduplication
cards, contactless payments9 are made checks to ensure that the same person
possible without a PIN and merely This password or number is typically has not registered twice in the system.
through the ‘tapping’ of the card on generated on request, either via use of This can be particularly useful where
a terminal. MasterCard PayPass and a physical dongle or a specific security there is a risk of multiple borrowing, since
Visa PayWave are just two examples software (for example, TruID10), which the same customer would be blocked
of the applications of this technology, will require another security factor such from registering twice. Deduplication
both of which are gathering increasing as a PIN to grant access. Alternatively, checks are not immediately possible
popularity for low-value transactions the FSP’s system can automatically on all biometric systems, since it will
where payment speed is of particular trigger and embed a TAN or OTP within depend how the biometric data is stored
importance, such as on transport or an SMS message, which eliminates and the ability to search this data, which
busy merchant locations. Mobile phone the need to distribute either physical can be both a factor of data type and
operators and handset manufacturers devices or install additional security processing power available for the task.
have also embraced this technology, software.
with NFC-enabled phones and the
ability of some phones to be certified by Fingerprint biometrics
Visa/MasterCard to allow a user to link a
With biometric systems, a fingerprint
SIM to a PayPass/PayWave account.
scanner is used to capture a person’s
unique fingerprint in order to verify
One-time passwords identity at a later stage. Two major
For FSPs looking for higher levels of types of fingerprint scanners exist:
security without cards or biometrics, optical scanners, which effectively read
OTPs or Transaction Authentication a picture of the fingerprint as a visual
Numbers are an option. These work on image, and capacitive scanners, which
the basis of one authentication factor can sense differences in the ridges of
being generated only when needed, a fingerprint using electrical currents.
namely at log-in or transaction posting, Capacitive scanners, although more
and act as a single-use password or PIN. expensive, are by far the most common
An OTP is generated using either a time in the financial sector, given the difficulty
9
Contactless payment systems are credit cards and debit cards, key fobs, smartcards or other
devices that use radio-frequency identification for making secure payments. The embedded
chip and antenna enable consumers to wave their card or fob over a reader at the point of
sale. Some vendors claim that transactions can be almost twice as fast as a conventional
cash, credit, or debit card purchase.
10
TruID is a software token that creates OTPs which you use when logging on to the PortWise
Application Portal. TruID can be installed on computers, cell phones, or PDAs.

CHAPTER 2
Building a channel strategy
Our journey to implementing an ADC solution starts with the formulation of a
plan or channel strategy. This channel strategy is a critical component of the
overall organizational strategy, and as such must be guided by the business’
vision, mission, and strategy, as well as market conditions.
STRATEGY TECHNOLOGY SELECTION IMPLEMENTATION
The channel strategy is informed by and is noted that a channel strategy does not imply
meant to contribute to the general business choice of a single channel, but could result
objectives of the FSP. For instance, if a in an integrated, multi-channel strategy that
FSP’s vision, mission, and business plan are combines several channels and technologies
focused on serving SMEs, this same focus to achieve the overall business objectives. This
should be reflected in the channel strategy. is a common trend, with FSPs starting with
A well-researched channel strategy should one channel (for example m-wallet) and then
identify the channels to leverage and should linking this with other channels (for example
be accompanied by a business case that m-banking or ATM). Finally, a channel strategy
considers the financial and operational can be vastly transformative to a FSP’s core
implications of each channel. These tools business, and therefore requires strong buy-in
will serve as a guide to all future steps in the and support at the board and executive levels.
implementation process.
This chapter focuses on how to assess market
The subject of a channel strategy is worthy conditions and the internal operations of
of a paper of its own and the purpose of a FSP, and to develop a channel strategy
this handbook is primarily to show what that is in line with the business’ objectives
information must be available as inputs to the and customers’ needs. The following steps,
technology decisions that will be discussed sometimes iterative, should guide the reader
in later chapters. While our process shows through the decision-making process:
a channel strategy as a prerequisite to the
technology platform selection, in many cases 1. Define the ADC objectives
there is a feedback loop between these 2. Assess the environment
steps, so that the strategy is only finalized 3. Develop the channel strategy and business
as/when a decision is taken regarding the case.
technology or platform. It should also be
24
STEP 1:
Define ADC objectives
Typically, a business problem or This step should also result in the

challenge has triggered the need for allocation of human resources – IT,
an ADC solution. These triggers could audit, risk, and operations – in the
include operational bottlenecks, a form of a channel strategy team.
need for scale, customer demands Deciding whether these resources are
and preferences, new segments, available in-house requires assessment
or greater outreach. Alternatively, of availability and experience in the
a market opportunity could act as subject area. Resources who have
a trigger, presenting an attractive worked on similar exercises in the past
business proposition based on a clear will be better equipped to conduct the
gap between supply for and demand exercise building on experience, while
of a product/service. Identifying these the use of external consultants for this
triggers, even at a high level, offers task can bring the benefit of wider
direction and focus in the early stages market experience. The team allocated
of developing a channel strategy and to the development of the strategy is in
will help the FSP define the objectives of most cases different to the one tasked
the ADC strategy in alignment with the with implementation of the channel, as
mission and vision of the organization. the skills required differ considerably.
This step should also

result in the allocation
of human resources in
the form of a channel
strategy team.

02_BUILDING A CHANNEL STRATEGY
STEP 2:
Assess the environment
The decision to pursue a specific channel or channels must take into consideration many
internal and external factors. These factors are summarized in Figure 6, which shows
how the channel strategy is influenced by both the internal and external environments
within which a FSP operates. The channel strategy therefore involves an assessment of
each of these factors separately and collectively, as outlined in this graphic.
Figure 6: ADC Channel Strategy
INTERNAL EXTERNAL
New channel strategy
Client needs
Vision & Mission and demands
Products & services Competition
Capacity ICT landscape

FUTURE OPTIONS
IT environment Strategic partnership
Internet
Business case/ ATM Agent/ banking
Extension Merchant
revenue model services Regulations
Mobile Call
banking Center E-wallet

External assessment financial literacy and technology to
interact on a self-service basis or if OTC
responsibility to assess and understand
the obligations vis-à-vis the regulator
The market is constantly changing, channels are required. and other relevant authorities. Clearly,
influenced by innovations in ICT, regulations governing the use and
competition, regulation, and customer issuance of e-money/mobile money,
behavior – all of which are outside Competition
mobile banking, agency banking,
the control of a FSP. An assessment Assessing the competition in the Internet channels, and remote branches
of these external factors can help one market is an essential component of are the most obvious ones to consider.
understand customers’ needs and any business strategy, providing both But others, such as regulations
market demand, as well as identify an offensive and defensive strategic governing access to communications,
opportunities and threats which should context for the FSP’s channel strategy. interoperability, electronic documents
be factored into the channel strategy. The first step in this analysis is to identify or signatures, KYC, biometrics,
other companies providing similar national ID, and AML/CFT must also be
or complementary channels, and to
Customers’ needs and considered, as they may impact some
conduct a thorough analysis on what is component of the channel.
demands currently being offered, how it is being
Developing a channel strategy should offered, and at what price. The easiest In markets where no regulations exist
be a customer-centric exercise. It is the way to do this is to stage a mystery for these activities and/or where
end-user who will ultimately determine shopping exercise to experience the regulators are unfamiliar with mobile
the success of the channel strategy competitors’ offerings from a customer money or agency banking, a FSP
based on their adoption and usage perspective. Further analysis can be may need to organize a workshop
of the channels provided. Taking the conducted with media scans and or presentation with the regulator
time to really understand the customer targeted research to determine how to explain the concept and its plans.
ensures that their needs and capabilities competition might react under certain In such cases, an internal ‘champion’
are not assumed, but rather are circumstances. Lastly, primary market should be allocated the task of building
confirmed through direct interaction research with existing customers is also a relationship with the regulator to
and feedback. This assessment could a good way to get information on their ensure that it remains supportive of the
be done through focus groups, surveys, experiences with competitor products project as the project moves through
or by mining available customer data. and pricing. Once the FSP has a clear the phases of implementation. In cases
Irrespective of the tools used, this stage picture of the competitive market, this where there is no specific regulation,
serves to reach an understanding of information can be used to identify a FSP may need to consider applying
which products, features, and services gaps in the marketplace that could be for a ‘Letter of No Objection’ as a quick
are most valued by customers, the exploited by a channel strategy. and easy way to comply with regulatory
difficulties that customers may have measures.
with existing channels or competitor
channels, the customers’ capacity to
Regulation The regulatory assessment should not
interact with these, and the willingness Regulatory policy influences the market only focus on the bigger picture of
and capacity to pay for ADCs. Finally, by mandating who can do what, where, what is, or is not, allowed, but also on
by combining direct customer input and which rules apply when it comes to how some of the details of regulations
with target market analysis, a FSP financial services. ADCs are a complex may influence the implementation of
should be able to decide if customers topic for regulators, as the space is the channel. For example, the agency
are adequately equipped in terms of constantly changing. It is the FSP’s banking regulations in Kenya require the

production of a physical receipt for all the FSP’s strategy team or by external Next is to review the availability, quality,
transactions performed by third parties11, parties, can provide some insights and and affordability of the communication
meaning that a printer or receipt book is ideally would contain some additional options available to the target market.
required12. information, including which models of The FSP will need to identify which
each device are the most popular. This is communication channels are accessible
particularly important for mobile phones to the target market, considering the full
ICT landscape where the FSP will need to decide range of options, including SMS, USSD,
By definition, ADCs require users to which type of phone to cater for: basic mobile data services, Internet, LAN/
be able to access systems that are phones, feature phones or smartphones. WAN, IVR, or NFC. Market research on
remote to their location at the time of Included in this assessment should be these options should be conducted
transaction. Such access is dependent the projected future uptake of particular to identify which of these options are
on the availability of a supportive ICT devices to understand likely market reliable, affordable and have available
infrastructure for the end-users of the trends. Additionally, the cost per device bandwidth to support the traffic of
ADC. As discussed in Chapter 1, this – information infinitely easier to access the channel over time. In most cases
requires access to a physical device, an than market distribution – can provide – and unless using IVR or NFC – the
application running on the device, and a good proxy for penetration data, and FSP will be dependent on an MNO or
a communication channel to transfer will also be an important input to the other connectivity provider for this
data between the customer and FSP. As business case. component. Such partnerships can be
part of the external assessment, the FSP problematic for some FSPs, particularly
will need to analyze what is available Secondly, the FSP will need to assess where there is competition, real or
to target customers or users at each of the availability of options for the perceived, between the two parties.
these levels. application layer. Although important, This is most noticeable with the USSD
this information is less critical than option, which is well suited to host an
At the device level, it is important first the device or communication layer. ADC due to its compatibility with all
to know what types of devices – such Ideally, ADC solutions should work on types of mobile phones, but in many
as ATMs, POS, kiosks, computers and all operating systems, but the reality is markets is either restricted in terms of
mobile phones – are accessible to the that many solutions are not immediately availability, is subject to poor quality
target market. For some of these devices, cross-compatible and often require service, and/or is expensive to access.
information about distribution and additional resources that may not be This reality has forced some FSPs to
availability may be publically accessible, worth the investment. For example, consider alternative communication
as with POS or ATM networks, which knowing what proportion of the target options such as data services, STK, thin
are typically monitored by the regulator. market is using Windows phones may SIM, or IVR, so that they have more
By contrast, the statistics regarding help with the decision whether smart control over this critical component. At
the availability of personal computers apps should be built to work on this this stage of the analysis, the channel
or phones may be harder to access, platform. strategy team needs to invest time in
with only high-level statistics available. researching all of these options and
Market surveys, either conducted by
11
The Central Bank of Kenya website (https://www.centralbank.go.ke/index.php/
banksupervision#agent-banking) states: “Bank agents are required to issue receipts for
all cash deposit and withdrawal transactions. Additionally, the principal institutions are
required to have in place adequate agent identification arrangements and customer feedback
mechanisms to aid in the verification process. Further, bank customers are at liberty to verify
the status of particular agents from local branches of principal institutions before using the
services of any agent.”
12
http://www.bu.edu/bucflp/files/2012/01/Guideline-on-Agent-Banking-CBKPG15.pdf

ideally analyzing the various options as Operationally aligned
they operate in the market to develop a • The FSP must ensure that a potential
well-informed opinion regarding quality. partner is not targeting the same
During this analysis, the channel strategy customers with the same or alternative
team should bear in mind the potential products/services. In that case
for ADCs to operate in a limited offline they are competitors, not partners.
mode. Typically, this is only applicable Services should be complementary or
to OTC channels, particularly extension value-add for your customers.
It is important to
services and possibly agency banking,
• The FSP must be sure that it has done find partners that are
and for a limited range of transaction
types (non-financial transactions).
sufficient research (has ‘shopped operationally, technically
around’ sufficiently) to identify the and commercially
best partner in the market (to be
The last component of the ICT
discussed more in Chapter 4).
aligned.
landscape that should be considered
during the assessment is the availability • Partners must be willing to agree to
of grid-based electricity or other power targets for the partnership and have
alternatives to ensure that devices and the means to measure performance
connectivity options can access power. against these targets.
Designing a strategy in areas beyond • The FSP should assess the partner’s
the grid, or where the electrical supply current infrastructure on the ground,
is poor, one may need to consider and the reach and utilization/
backup alternatives to ensure continuity performance of this infrastructure to
of service. The cost of these backup determine whether there is significant
options should be incorporated in the overlap in the infrastructure of
business case. the partner organizations or if it is
complementary.
Strategic partnerships
Technically aligned
Many ADCs will require partnerships
to be formed between the FSP and a • The proposed partner’s competency
third party. These third parties could needs to be confirmed based on
be vendors, m-wallet providers, PRSPs, historical track record of delivery.
MNOs, and national or international • The technology platforms of the
switches. Irrespective of the purpose partners should be considered to
of the partnership, it is important to ensure that they could be integrated
find partners that are operationally, with the FSP’s systems (where
technically and commercially aligned, applicable).
and that revenue is generated and • Both partners must have sufficient
distributed throughout the supply compliance and controls in place to
chain13. mitigate issues which may put the
partner or partnership at risk.
Flaming, M, Mitha, A, Hanouch, M, Zetterli, P, and Bull, G (2014). Partnerships in Mobile

13
Financial Services: Factors for Success. IFC: Washington, D.C.

Commercially aligned Product and service offering an existing mobile banking platform.
• The costs being charged must Developing an integrated multi-channel
ADCs by definition are a means for
be confirmed as affordable and strategy will increase the number of
the FSP to distribute its products and
competitive in the market, ideally with touch-points for the customer and
services. As such, any channel strategy
a business case to support the fact. streamline the customer experience.
needs to be designed with the specifics
For example, an existing mobile banking
• The partner’s business viability needs of the FSP’s products and services in
platform could potentially be used
to be confirmed so that the FSP is mind. Not every product and service
to direct clients to the nearest ATM
sure that it will play its role even in the is appropriate for every channel; the
location or to enable NFC technology
initial periods when the channel may FSP should review current and planned
on the mobile for cardless transactions
not be extremely profitable. products/services to determine which
at the ATM. Lastly, the sustainability and
• There should be benefit for all parties channel options would be most
cost of implementation of the existing
that is proportionate to the respective convenient for the customer to access
channels should be reviewed not only to
contributions to the partnership, these products/services. For instance,
ensure sustainability but also as inputs
whether this is through a revenue- a customer with a savings account
to the budgets required for future ADC
sharing model and commission needs access to deposit and withdrawal
projects (for example, cost of integration
arrangement or other means of shared services from this account outside of
and resources required to manage the
value, to properly motivate partners branch hours; a self-service mobile
project).
to participate over the duration of the banking application would not meet
relationship. this need because one cannot withdraw
• Lastly, it is good for FSPs to get a money from a phone. In this case, the IT environment and strategy
measure of how important it will be to channel strategy team should consider The assessment of the internal IT
the partner and to look at the relative channels that facilitate cash withdrawals environment needs to consider several
size of the two parties. Will it be a such as ATMs, POS, or agency banking. different areas, including the state of the
priority customer, a ‘big fish’ whom CBS, the IT strategy, and any existing or
the partner will work hard to keep Current channel strategy planned IT projects that could overlap
happy, or does its relative size mean with the ADC project. In terms of the
Should the FSP have existing channels
it is a ‘small fish’ that may struggle to CBS, the channel strategy team should
in operation, it is critical that it takes
get the partner’s attention? consider the current state of the CBS,
this opportunity to assess the success
including its stability, pending upgrades,
Internal assessment of these channels. This could include an
its capacity to support a full integration,
analysis of performance (usage rates,
While the external assessment can help and whether it is decentralized or
registration rates, and valued services)
identify consumer demand, market centralized. A weak or unstable CBS will
and operational efficiency. Additionally,
opportunities, and threats, an internal quickly sabotage any ADC project, and
customer feedback should be obtained
assessment allows an organization to difficult as the decision may be, FSPs
to determine what improvements or
evaluate its position with regards to may need to postpone ADC projects
changes would be of benefit. Existing
operational constraints and strengths. until their CBS is stable to the extent
channels should also be reviewed to
This assessment should ideally include that it can support the integration of a
understand how they could complement
five areas: channel, both functionally and from a
new channels, such as linking ATMs with
scalability point of view.

CASE STUDY MicroCred Group is an investment
company, established in 2005, that
builds and manages an international
MC identified the following quality
targets: simplicity/intuitiveness,
availability, robustness, and coherence
MicroCred network of financial institutions in

emerging markets. These FIs share the
among channels to be applied as core
themes throughout the channel strategy.
common mission to provide quality To address these challenges, MC used
financial services that are accessible and a human-centered design approach to
adapted to the needs of unbanked and/ systems design and development that
or under-served people, particularly aims to make interactive systems more
micro, small, and medium entrepreneurs usable by focusing on the customer’s use
in the five African countries of Côte of the system and applying knowledge
d’Ivoire, Mali, Madagascar, Nigeria, and and techniques based on human
Senegal, as well as through two affiliates factors, ergonomics, and usability. MC
in China’s Sichuan and Nanchong empowered a cross-functional team to
provinces. design the service based on extensive
field research and observation. MC
MC’s objective is to expand its monitors the quality of service provided
distribution network and capacity to to customers, frequently releasing small
reach new customers, especially in adaptations based on constant feedback
rural areas. All MC operations have loops.
been successful and have managed to
achieve profitability using traditional Reflecting on its ADC strategy,
branches. However, the economics of Microcred’s Head of Alternative
branch channels have limited MC to Delivery Channels Denis Moniotte
a primarily urban clientele. In 2013, noted: “The modern delivery channels
MC launched a major transformation in financial services require a major shift
program supported by a multi-channel in the way we organize ourselves within
distribution network to reach mass- the bank. It pushes some functions
market customers beyond the limits that have traditionally been managed
of branches and into rural areas. The by our back-office staff into the front
multiplicity of distribution channels, line, which brings new challenges. For
accompanied by product development, example, when we implement agent
market intelligence, process automation, banking, mobile/Internet banking or an
and marketing efforts, is critical in ATM network, customers become users
supporting the delivery of innovative of our banking IT platform. It is about
products. opening new doors, and making sure
that the core processes will support the
new doors.”

The internal assessment must also of authentication used to verify a derived by the channel is also fed into
consider the FSP’s IT strategy and customer’s identity, as introduced in this new data warehouse.
how ICT will be used to deliver the Chapter 1. This typically involves a review
The internal analysis must also consider
organizational strategy. Most FSPs who of existing modes of authentication,
the financial, operational and human
are designing or updating an IT strategy be they cards, biometric or PIN/
resources available to launch and
will feature ADC technologies as one password systems to determine the
manage a channel strategy. The financial
of the business’ critical systems. While appropriateness of these authentication
resources required to introduce a new
a linkage between the IT strategy and methods to any channel. For example,
channel can vary depending on the
the channel strategy must exist, these the cost and logistics of distributing
scope of the project, and while the
are very different plans, with the former cards for FSPs looking to launch a mass-
IT systems component may be one
primarily being determined by the IT market savings product may result in the
of the larger elements of the budget,
department, while the channel strategy conclusion that biometrics, as a mode
provisions need to be made for channel
is a result of inputs across the business of authentication, is more reliable and
development, marketing, operational
as a whole, with key components which easier to administer than PIN/password-
pilots, and channel support services. The
require input and support from the IT based systems. Additionally, FSPs may
channel strategy team should consider
department. The direction outlined in wish to make decisions regarding the
the significant cost implications of the
the IT strategy must be considered in interoperability of the authentication
initial technology procurement, but also
the formulation of the channel strategy mode, perhaps standardizing the use
the running costs associated with the
to ensure that they are well aligned. of EMV cards across all channels. This
channel. An estimated budget should
Topics of particular importance will topic will be revisited in detail during
be assigned from the beginning and
be the strategy for the procurement the requirements analysis phase. At
stakeholder commitment obtained to
of IT systems, preference for different this point the goal is simply to audit the
ensure that the funds required will be
hosting scenarios, disaster recovery/ existing authentication methods, and if
allocated to this project. The subsequent
backup policies, business continuity14, relevant, decide which method is most
vendor selection process can help to
security standards, and if available, any suitable.
finalize the exact budgets required to
protocols for the integration of systems.
The final area for consideration is the finance an ADC project, but high-level
At this point of strategy formulation, it
existence of IT projects which may estimates should be considered at this
is important to review and incorporate
overlap with the timing of the ADC point based on information obtained
any existing IT policies that are relevant
project, or perhaps limit the resources from the assessment exercise.
to the channel strategy, or potentially
available to allocate to it. From a
create new policies to complement the The resource assessment should also
technical perspective, the impact and
new channels. consider the skills and availability of
potentially the integration of a new ADC
staff to manage both the channel
Either as part of the IT strategy review, will need to be considered. For example,
implementation and ongoing operations.
or perhaps as a direct assessment of if there is a plan to implement a new
Required skills include project
the existing internal security policy, data warehouse, the ADC project should
management, channel management,
the FSP needs to consider the mode bear this in mind and ensure that data
A Business Continuity Plan (BCP) is of particular importance for FSPs to enable critical services or
14
products to be continually delivered to clients despite system interruptions or disaster. The business
continuity planning process involves the recovery, resumption, and maintenance of the entire business,
not just the technology component. While the restoration of IT systems and electronic data is important,
recovery of these systems and data will not always be enough to restore business operations. The
Federal Financial Institutions Examination Council offers the IT Examination Handbook, which includes a
booklet on BCP, at http://ithandbook.ffiec.gov/it-booklets/business-continuity-planning.aspx.

IT, audit, risk, operational, finance and determined, ranging from doing nothing Ensuring that ADC operations and
accounting, and agent management (if and accepting the risk as a cost of doing technology platforms are compliant
applicable). An inventory that takes into business to applying a wide range of requires FSPs to be aware of and
account these requirements can inform specific controls. conform to the requirements and
a FSP’s need to recruit additional staff. regulations in their respective markets.
This could be a temporary requirement New channels should be thoroughly Compliance is typically enforced
for a project manager to drive the evaluated for any perceived risks and through a management process that
implementation team, or a permanent measures designed to control, avoid, identifies the applicable requirements
restructuring to manage ongoing accept, or transfer these risks to the (defined, for example, in laws,
support once the channel is in operation. customer or a third party. Liquidity regulations, contracts, strategies, and
A FSP should expect to employ an risk in cash management is particularly policies). FSPs will generally have a
operational team that will work closely relevant for ADCs. For example, some compliance officer who is responsible
with vendors, IT, audit, risk, and customer FSPs mitigate liquidity risk for ATMs for assessing the state of compliance
support, all of whom will require training by outsourcing cash management and the risks and potential costs of
on roles and responsibilities with respect to companies that specialize in this noncompliance, and for initiating any
to ADC operations. service, with armoured vehicles and corrective actions required. While
armed personnel. Developing policies governance and management controls
Internal risk and compliance and measures to mitigate these risks are established to ensure that effective
is a continual process, initiated in the information management and security
As business processes change with the formulation of the channel strategy and principles, policies, and processes are
evolution of technology and changing finalized throughout the subsequent in place, technical controls can be used
customer expectations, threats emerge steps in the process to ensure that to ensure the reliability of almost every
as new vulnerabilities are discovered. on implementation, the FSP’s risk other control in the organization. The
Introducing ADCs increases an management framework is fully updated ability to automate technical controls
institution’s overall risk profile and the based on the risks associated with the that demonstrate compliance with
level of risks associated with offering ADC. With a sound risk assessment and management’s intended information-
financial services, particularly legal, robust risk mitigation strategies, MFIs based policies is a powerful resource
operational, technical, compliance, can successfully implement ADCs that for an organization. Similar to the
and reputational risks, as discussed in will ensure the protection of assets, risk management assessment, at this
Chapter 1. Risk management involves security of transactions, prevention of point in the ADC implementation it is
a set of processes through which an fraud, protection of client privacy, data important for the FSP to identify any
organization identifies, analyzes and security, and compliance with laws and potential compliance issues and adapt
responds appropriately to risks that regulations that are applicable to digital the framework to address these. Other
might adversely affect the realization of financial services, regardless of which measures such as internal auditing
the organization’s business objectives. option is selected. For microfinance should be considered part of the long-
Risk management tools include IT practitioners, we would recommend term risk management strategy to
controls, which are selected and the “Digital Financial Services Risk continuously evaluate potential threats
implemented on the basis of the risks Assessment for Microfinance Institutions and vulnerabilities and the manner in
they are designed to manage. As risks Pocket Guide” developed by the Digital which the organization manages risk.
are identified, suitable risk responses are Financial Services Working Group15.
Digital Financial Services Risk Assessment for Microfinance Institutions Pocket Guide
15
(September 2014). The Digital Financial Services Working Group, Washington, D.C.

STEP 3:
Develop the channel
strategy and business case
The channel strategy 4. A SWOT analysis of the proposed

channels and technology.
Having defined the objectives and
conducted an internal and external 5. A recommendation, based on the
assessment, the FSP’s channel strategy analyses above, of which ADC solution
team can now define a channel strategy. to pursue.
6. An operational, financial, and
This is a project-planning document IT requirements analysis and a
that outlines how the FSP will meet recommendation of whether to ‘buy’,
customers’ needs and at the same time ‘rent’ or ‘build’.
address the challenges identified in 7. A high-level timeline and project plan,
Step 1. including roles and responsibilities of
key stakeholders or internal teams.
The channel strategy document should 8. A high-level budget, including the
specify: source and uses of funds.
1. The business goals and objectives 9. A risk analysis, including potential
that the proposed channels are meant impact and mitigation.
to address, as established in the FSP’s
At this stage, the focus should be on
business plan or strategy.
reaching consensus and eventually a
2. A market analysis, including market decision internally about which ADC
research and competitor and solutions to pursue. Specifics, such
regulatory reviews. as business projections, targets, and
3. An analysis of the proposed channels timelines can be tackled in the business
and technology (device, application, case to analyze the commercial viability
and communication) and how they of the chosen solution.
will meet business goals and customer
needs.

CASE STUDY In the current market, the most
commonly observed strategies for IT
systems procurement are either to ‘buy’,
licensed products also being stored
in the cloud for security and ease of
management. The decision regarding
Buy, build or rent? ‘build’, or ‘rent’ systems which are
defined as follows: an organization can
procurement of systems is influenced by
a range of factors, including uniqueness
purchase either a license or bespoke of requirements, security, legal and
solution from an existing vendor compliance issues, the organization’s
(buy), choose to build a customized skill and available labor, hosting
solution from scratch (build) or leverage requirements, cost, time, and vendor
Software as a Service (SaaS) to ‘rent’ availability. FSPs will need to consider
software from a vendor. This approach each of these factors carefully, alongside
to procurement is separate from the the advantages and disadvantages of
decision of how and where to install each option, which are summarized
and host the systems used by the FSP, below. Some channels, such as mobile
which could be either on in-house banking and ATMs which are used on
servers, at an external data center, or in third-party networks, lend themselves
the cloud. While there is an increasing particularly well to such models. The
amount of overlap between these two SaaS option is especially attractive to
strategies, that is, SaaS products being FSPs that are testing out new channels
hosted in the cloud, this need not for the first time and are therefore
always be the case, with in-house or unsure of the results.
BUILD BUY RENT
Custom Development Commercial System Software as a Service

• Can provide solution exactly matched to FSP • Can provide complete solution to FSP. • Shorter implementation time.
requirements. • Proven solution. • Ready solution.
• Full ownership rights to all IP and source code, • Availability of support for a full team • Lowest initial cost to FSP.
Advantages
compared with commercial software. • Option to customize with support of vendor • No hardware investment required (if cloud
• FSP will own the system. expertise. based).
• Offers full control over data. • Flexible solution and could potentially lower • Minimal IT dependency for application and
• Cost of in-house support potentially lowers costs, with more efficient workflows and hardware maintenance.
ongoing maintenance costs. added functionality. • Solutions can be easily scaled up or down
• Ownership of tangible software/hardware • Offers full control over data with little time and effort.
assets. • Ownership of tangible software/hardware • SaaS upgrades are iterative, with limited
assets. involvement required.
• Higher upfront investment, including additional • Higher upfront investment, including • Usually not customizable and limited in
hardware purchases if needed. additional hardware/software purchases if functionality.
• May take much longer to implement. needed. • May not support all required functionality.
• Fully dependent on expertise and reliability of • May require FSP to compromise to suit • Long-term cost can turn out to be higher for
Disadvantages
programming skills in-house (FSP becomes a available functionality. bigger FSPs.

software house). • Customization for specific requirements can • Control is relinquished to vendor.
• Presumes that the FSP has sufficient be costly and/or time consuming. • Potential regulatory issues about storage of
knowledge of the systems to fully extract • Dependency on IT vendor for support data/business critical systems (if cloud).
requirements and design the system well. can be a challenge, depending on upfront • Dependency on IT vendor for support
• Generally seen as more risky, as typically relies negotiations. can be a challenge, depending on upfront
on key individuals. • Upgrades can be expensive and time negotiations.
• A less agile option and CBS will always take consuming and often mandated by vendor. • Integrations with other corporate systems
preference, which may put severe constraints can get complicated; well-defined Web
on your ADC plans unless carefully managed. services should be available from vendor.

The business case 1. Assumptions based on the internal ‘reduce account opening time to two
and external analyses, such as the size hours’), or sustainability (for example,
A well-researched channel strategy
of the addressable market, growth ‘achieve operational profitability in
should be accompanied by a business
projections, transaction volumes and two years’). The Chapter 2 checklist
case that considers the financial and
values, or other cost and revenue at the end of this handbook provides
operational characteristics of each
drivers. an example of a summary business
channel. The business case can be a basic
2. Distribution of ADCs – the number of case document for an ADC, with some
five-year financial model that captures
touch points and projected growth proposed critical indicators to monitor.
the investment required, ongoing costs,
new revenue streams, and cost savings over time.
As a last step, the channel strategy
that are attributed to this new channel. 3. Cost structure, including capital
team should test the business case
While a positive financial return from expenditures, staff costs, and
against global/regional benchmarks or
transaction revenues would be the ideal marketing and IT costs.
case studies. For instance, if in a similar
output of the business case, some FSPs 4. Pricing structure and other fees per regional market, an ADC project typically
may pursue a channel strategy despite transaction type or per product for breaks even by Year 5, then a business
a poor return on the channel alone, as each channel. case that promises break-even in Year
there may be indirect benefits to the rest 5. Number and types of partners and 1 would not be realistic. Global and
of the business, such as opportunities the fees and costs accruing to each. regional benchmarks can be obtained
to cross-sell, deposit mobilization, and 6. Projected cost savings and operational through secondary research (such as
lower costs. Regardless of the profit efficiencies accruing to the FSP as annual reports or industry reports), as
motive, FSPs deploying new channels a result of the new ADC, such as a well as from experts, practitioners, and
should monitor the trend in transaction reduction in the cost of funds and vendors. Some FSPs may also wish to
volumes, as this ultimately impacts on increased staff productivity. build a separate business case for other
both costs and revenues. For instance, stakeholders, such as agents or MNOs,
a high volume of transactions has cost The financial model can help the FSP to confirm that incentives are structured
implications in terms of license fees to build KPIs and targets that can be used in a way that ensures the viability of
be paid to vendors, commissions to be during and after implementation to the channel and also to quantify the
paid to agents, or USSD charges levied assess the success of the ADC solution. investments (for example, in an agent
by MNO partners. Similarly, knowing KPIs can be centered on outreach channel) or costs (for example, USSD
how many transactions per customer (for example, ‘ADC will help reach 2 costs) over time.
are required to break even can inform million clients’), impact (for example,
marketing strategies to increase ‘15 percent of new customers will come
customer adoption and usage of the from rural areas’), market share (for
channel. Ideally, the channel business example, ‘become the leader in money
case should include the following inputs: transfer’), efficiency (for example,

CHAPTER 3
Mapping strategy to a technology platform
It is important that FSPs carefully consider the implications of using one
technology over another to ensure that the technology platform selected is
aligned with the channel strategy and therefore enables the FSP to meet its
business objectives.
Equipped with an ADC strategy, FSPs are therefore enables the FSP to meet its business
frequently tempted to select a vendor in a objectives. Determining the technology
rush or to commence in-house development platform, which requires decisions at both the
with little or no consideration for which application and device layer, needs to happen
enabling technology best suits its strategy. before a FSP can proceed to vendor selection
For some channels such as ATM or and implementation activities. This chapter
Internet banking, this approach, while not aims to guide the reader on how to identify
recommended, can still yield success, as the the right technology platform and involves
solutions available to run these channels are the following steps:
quite well defined and the technology is more
1. Identify the technology options available
or less inherited by the choice of channel. In
contrast, agency banking, extension services, 2. Confirm the criteria that will influence the
mobile banking, and e-wallets present a decision
broader suite of choices involving a host of 3. Select the preferred platform.
different technology platforms, which offer
very different user experiences. It is important For the more technical reader we will discuss
that FSPs carefully consider the implications in detail the benefits and disadvantages of
of using one technology over another to different applications and devices used for
ensure that the technology platform selected mobile-based channels, as these are by far
is aligned with the channel strategy and the most complex channels in the market at
present.

03_MAPPING STRATEGY TO A TECHNOLOGY PLATFORM
ADC technology, like most technologies, Figure 7 illustrates the range of

STEP 4: is changing at a speed that is difficult
for even the most avid technology
technology options for each of the ADCs
discussed in this handbook, depending
Identify available options expert to keep pace with. It therefore on whether the channel will require a
comes as no surprise that FSPs are third-party integration or can run on
often confused about what options are the Internet, on a mobile platform, or
available to them and for that reason through a bespoke application such
tend to pursue the cheapest platforms as ATM. As the diagram shows, some
or those touted by an aggressive channels like the ATM provide very few
vendor. To avoid these mistakes, choices, while others such as mobile
FSPs need to spend some time prior channels offer many options at the
to vendor selection researching the device, application, and communication
available options and understanding levels (for more on the components of
the benefits and disadvantages of the a technology, please refer to Chapter 1).
technology platform that they decide
The technology selection needs to be
to pursue.
somewhat iterative, reverting back to
the strategy with informed decisions
about what is available in the market,
Figure 7: Technology options for each Website
portal which will continuously change in this
type of delivery channel fast-moving ICT world.
Call
center
Website SMS USSD
Tablet
Laptop Mobile phone STK
• Smart
• Feature
PC Native app
Internet banking, • Basic
extension services –
Mobile phone mini branch, branch kiosk Tablet
• Bank led e-wallet
• Mobile banking
• SMS banking Web app
• Agent banking
INTERNET • Extension services –
field staff
ATM/POS MOBILE • Extension services
switch MNO led – bank on wheels
POS
3rd Party led INTEGRATION POS
WITH 3RD app
PARTY ATM Closed user group, shared
network
POS FSP
Back-office systems
ATM

STEP 5:
Gather influencing
criteria
Once technology options have been • Mode of authentication – Closely

identified, the FSP may consider related to the security levels, the
the following criteria about which FSP should ideally decide how The technology
technology to use: customers will be authenticated over
the channel, a topic introduced in
selection process
• Types of transactions – The financial Chapter 1 and referred to again during needs to be iterative,
and non-financial transactions the formulation of the strategy. At reverting back to the
(account opening, loan applications, this point, a final decision is required
and cash withdrawal/deposit) which to know if the channel must be
strategy
should be supported by the channel. compatible with cards, biometrics,
The type of transaction is closely or OTPs. This decision will depend
related to the size of data that needs on a series of other criteria, such
to be transmitted via the channel. For as KYC regulation, availability of a
example, account opening frequently national ID, customer literacy levels,
requires capturing of a photo or other and use of cards and availability of
image, which places a higher load on handsets within the target population.
the platform in terms of data transfer. Table 2 compares the advantages and
• Security levels – Depending on the disadvantages of each authentication
type, value, and relative risk associated mode.
with the transactions being processed, • Quality/availability of communication
the FSP needs to decide what level of channels – It is critical that the FSP
security is required from the channel. is aware of the availability, reliability,
Other factors influencing this decision accessibility, cost, and quality of the
include the security standards various communication options in its
dictated by third-party networks target market and areas of operation.
(EMV provides full specifications of This specifically means knowing
the levels which must be available to whether USSD is available, the
participate) and the reputational risk quality of mobile data services, and
to the FSP should a breach of security the extent of coverage in the target
occur. While most FSPs would always market. Additionally, the cost and
prefer the highest levels of security reliability of these services need to be
available, this decision may ultimately ascertained to prevent selection of a
become a cost-benefit analysis, as the technology platform that is reliant on
highest levels of security will always an inherently unstable network.
require the largest investment.

Table 2: Modes of authentication
MODE ADVANTAGES DISADVANTAGES
Card+PIN • Well-established process which is used • Expensive to produce, distribute and maintain
globally as the most common way to secure cards (and PINS).
financial transactions. • Not accepted widely in all markets (especially
• Possession of cards can be seen as a status outside urban centers).
symbol. • Customers have issues remembering the PIN
• Convenient for customer to store value or write it directly on card.
without carrying cash. • Cards can be misplaced or stolen.
• Introduces options for a range of card-based
products.
Biometric • After upfront investment, cheaper to maintain • Not yet as widely used across all channels
after one-off registration (bio cannot be lost so may need to be used in conjunction with
or forgotten). card/PIN (few biometric ATMs).
• Well suited to non-literate populations and • Upfront investment requires distribution of
where no national ID card exists. biometric readers which can be expensive.
• Provides additional functionality such as • Device failure/unreadable bio records can
deduplication. occur and needs to be catered for with a
• High-quality authentication factor, that is, backup process.
hard to falsify so can be used as part of a • Quality of finger prints depend on profile of
single factor authentication. customer – for example, people who perform
manual labour such as in agriculture may
have damaged finger prints.
OTP • Cheapest option from the FSP perspective as • Transaction times will be influenced by
no devices, cards to distribute. delivery time of the OTP which can be
• User-friendly workflow. unpredicatable in many countries.
• Requires all customers to have a phone which
is pre-registered with the FSP.
• Lower grade of authentication factor so must
be part of a two-factor process.

STEP 6: There will be a huge
Select the Platform
difference from one
country to another on
handset availability
• Handset availability in the market/ Equipped with a list of options and and it is imperative
target market – Knowledge of the the information to make an informed that these local
types of devices available in the decision, the FSP can now draw
market and used by the target users some conclusions on three levels: the trends are taken into
of the ADC platform is a critical input application level, the device level, and consideration.
to the decision, particularly for mobile the communications level (refer to
ADCs. In reality, this information may Chapter 1 for more information).
be hard to obtain and may require the
FSP to conduct a survey to determine, To illustrate the decision-making
for instance, what phones their process, we have worked through
customers are using. There will be a some examples for mobile and agency
huge difference from one country to banking in Figures 8 and 9. There
another on handset availability and it is no ‘one size fits all’ approach and
is imperative that these local trends readers will need to weigh and adjust
are taken into consideration. Analysis their decisions according to their best
of local differences also needs to judgement of what is most suitable for
take into account the requirement their target users.
to support multiple languages
and character sets and how this
requirement can be met by various
devices. Where the ADC platform will
be operated by an intermediary, such
as a field staff member or third-party
agent, the FSP will have more control
over the devices used and hence the
analysis will be based more on cost,
security, and durability.

Decision tree: mobile banking
For mobile banking, the communication connectivity, although this will introduce choice. For areas where data connectivity
and devices that are available to the target some limitations on the types of services is unavailable, or too expensive, the only
market dictate the technology choices. that will be available due to the size of the option is to use SMS. If we have data but
In this decision tree, we have opted to message that can be communicated. no smartphones, then a Web app running
consider the income level of the FSP’s on a feature phone would be the ideal
The second option identified is where the
target market as the initial input to the option, as it requires no installation by the
FSP’s market is purely in the lower-income
decision. The order in which these input customer.
segment, in which case the key decision
factors are applied could be switched, or
would be availability of the USSD channel, The only option that has not been discussed
indeed, considered through a different
which would be the recommended option, in this graphic is a J2ME app, which could
proxy, such as type of handset available to
as it runs on all handsets and is an easy- be another consideration where the Web
customers – smart, feature, or basic. The
to-use, menu-based application. In case app has been recommended, as both run
decision about which to use may depend
this channel is not available, and only on feature phones. The major difference
on the data available from the assessment
very basic handsets are used, then the between these two is the requirement
phase (for example, the question would
only choice is SMS, which has limitations for J2ME to be manually installed
be: “do we have a comprehensive survey
in terms of security and complexity of and updated, which for customer-level
of customer handsets?”). For those FSPs
transactions supported. solutions is not ideal.
targeting only higher-income customers,
we presume a smartphone would be Our last option on the decision tree is
available and that these users would be where a FSP wants to introduce a service
more tech-savvy and hence capable of that caters to all market segments, which
installing a native app. To finalize the again needs to consider USSD availability,
decision for these users, we would need to which, if available, should be used. If only
know the quality and availability of data data services are available from a mobile
services on the customers’ phones, which, phone and smartphone penetration is
if available, would imply using a smart high, then a smart app would be the logical
app over a mobile data connection. If data
is not available, a smart app could still be
used, but with SMS as the means of data

Figure 8: Technology Choices for Customer-level Mobile Banking
USSD APP SMS

BANKING
SMART APP
  VIA DATA
SMART APP
USSD  VIA SMS
AVAILABLE?
DATA

LOW AVAILABLE?
SMART PHONE SMART APP

PENETRATION VIA DATA
HIGH
TARGET
MARKET
USSD APP

BY
INCOME
 DATA
AVAILABLE AND
HIGH
AFFORDABLE? LOW
ALL
USSD
AVAILABLE?
  SMS
BANKING
WEB APP
VIA DATA

Decision tree: agency banking
First, the use of peripherals may be suited when only financial transactions Other types of mobile applications,
considered and this will be influenced are required, using high-security cards including J2ME and Web apps, also
not only by the level of authentication or biometrics. Alternatively, smart apps have a potential role in agency banking
required – which will dictate the need for are more appropriate when no USSD is technology, although each cater for quite a
either a card reader or a bio reader – but available. They can also be used for card specific set of circumstances and one could
also by the regulatory requirements for transactions, although the security may easily argue against using them, as the
physical receipts to be produced, which be less than with a POS device, unless primary use is when there is a preference
could introduce the need for a printer. an external pin pad or card encryption for a solution to run on feature phones.
For FSPs using cards, an important factor is used. Smart apps will also play a role Given that agency banking works with
to be considered is the level of security when a FSP wants to do non-financial a controlled group of users (agents and
or card standard (EMV) that it wishes transactions, with options to use either a staff), FSPs may decide to invest in smart
to apply, as this will impact both on the phone for small amounts of data entry, or handsets, given that the price differential
device (the need for encrypted pin pads) a tablet for larger amounts of data. between smartphones and feature phones
and on the application standards and is quickly disappearing, primarily due to
certification. Other important factors USSD also plays a role in agency the decreasing cost of smartphones.
include the amount of data captured banking, although it is limited to financial
and the functionalities for non-financial transactions and typically requires both
transactions, such as loan applications the customer and the agent, on different
and social performance data. A decision USSD sessions, to securely complete
is required if all data should be input both cash in and out (cash out would be
(“does the FSP want to go digital in initiated by the customer on one USSD
terms of data capture?”) and if any other and cash in would be initiated by the
data types (such as GPS coordinates of agent on another session). The major
client location, taking of a client photo, limitation with USSD for agency banking
signature, or biometric data) need to be is that printed receipts, biometrics, and
considered. cards cannot be used with this technology.
Using this decision matrix, it can be

concluded that a POS device is best

Figure 9: Technology Choices for Agency Banking
POS
SMART APP
EMV/HSM
CARD SECURITY HIGH

REQUIREMENT
ANY
 SMARTPHONE
PENETRATION
LOW NON-SMART
(J2ME) APP
PERIPHERAL
REQUIRED?
(CARD, BIO USSD APP
FINANCIAL
PRINTER)
 USSD
AVAILABLE  SMART
APP
ONLY
 SMARTPHONE HIGH
PENETRATION WEB APP
LOW
TRANSACTION
TYPE HIGH
DATA
AVAILABILITY
WITH SMART APP
NON-FINANCIAL LOW
ON MOBILE
AMOUNT BASIC
OF DATA
REQUIRED SMART APP
ON TABLET NON-SMART
GPS (J2ME) APP
ADVANCED
OTHER USES APP/WEB

EXCEL/MIS
ON LAPTOP

FROM A TECHNOLOGY PERSPECTIVE

For those readers interested in the more technical details, this section discusses the
applications and different devices which could be components of an ADC platform.
Applications
Apart from ATM and Internet banking channels, which have standard software, all
other ADCs operate on a variety of customisable software applications. Each of these
applications has certain advantages and disadvantages, as outlined in Table 3. Smart
and non-smart native apps have been combined as the major difference between the
two is in the choice of device and not the application functionality. While SMS has
mostly been talked about as a communication option, we include it in the analysis of
potential applications to show how it can still provide some limited functionality as
an application.
Table 3: Application Advantages and Disadvantages
APPLICATION ADVANTAGES DISADVANTAGES

OPTION
SMS • Available in all countries and relatively easy to set up. • Very limited functionality due to limit of message size and non-
• Accessible on all handsets. real-time connection.
• Lower dependency on relationship between the MNO and • Limited security, as data entered in SMS is available as clear text in
the FSP (can send to all networks unlike USSD, which is per sent messages.
network). • Delay in delivery of messages can occur and is beyond control of
• Easy to use and most customers familiar with the the FSP.
technology.
STK • No software installation required. • Requires MNO or MVNO license.

• Device independent, so will work on all handsets. • Involves issuing of SIM cards.
• User-friendly menu interface. • Updates to the application are difficult to coordinate, requiring
• Encryption keys are stored on the SIM, so applications have either reissue of SIMs or Over the Air push updates.
control over the security levels. • Customers may need to manage a 2nd SIM card (though not
• If FSP has access to STK, they can have full control over the necessarily replace their network SIM) or apply a skin SIM.
channel – (less dependent on third party).

USSD • No software installation required. • Not available in all countries.
• Device independent, so will work on all handsets. • Requires an agreement with an MNO, which is not always
• User-friendly menu interface. forthcoming.
• Encryption is in-built in channel, providing good security. • No support for peripherals, such as card readers, biometrics, or
• No information is recorded on the device. receipt printers.
• Usage is tied to a registered phone number, which aids in • Primarily supports financial transactions.
the authentication process of the user. • Limited session length.
• No offline support.
• Can be more costly than others depending on MNO
communication fees (which are often beyond the control of the
FSP to influence).
• Security (encryption) is fully dependent on the provider of the
channel.
• In many countries, the frequency of dropped sessions is high and
still charged to the customer, regardless of whether a transaction
was completed successfully.
NATIVE • User-friendly and rich user interface. • Manual intervention required to install and updates often required.
MOBILE • More functionality available – camera, signature, and GPS. • Requires support for specific or multiple devices/operating
APPS • Supports connections to peripherals: bio devices, card systems, so different versions are required (Java, Android, or iOS).
readers, and Bluetooth printers. • Security must be built in and is not automatically present.
• Can work offline/online and even in online mode can be • Multiple functionalities typically require use of external devices.
more forgiving of poor quality connections. • Compatible handsets tend to be more expensive (feature phone or
• Suited to both financial and non-financial transactions. smartphone), hence less accessible to the full market.
WEB APPS • No software installation required. • Requires good continuous data connectivity.
• User-friendly and rich user interface. • No offline support.
• Full functionality available, but limited access to peripherals. • Security must be built in and is not automatically present.
• Can be used on different devices (mobile/tablet/netbooks/ • Requires support of multiple browsers.
notebooks). • Limited access to peripherals.
• Suited to both financial and non-financial transactions. • Compatible handsets tend to be more expensive (feature phone or
smartphone), hence less accessible to the full market.
WEB • Can use CBS directly if a Web-based system is available. • Requires a reliable and continuous data connection to use (no
PORTAL • No software installation required. offline support).
• User-friendly and rich user interface. • Limited access to peripherals (Bluetooth printers and card
• Full functionality available, but limited access to peripherals. readers).
• Can be used on different devices (mobile/tablet/netbooks/ • When used on a tablet/smartphone, usability may not be as good
notebooks), with some limitations. as a mobile application.
IVR • Ability to serve large numbers of customers simultaneously. • Speech recognition makes it more difficult to navigate an IVR and
• Pre-recorded messages for consistent accurate customers will be inclined to speak with a live person.
communication of information. • Complicated menu levels and choices; it can be easy to get lost in
• Limited human intervention to maintain – enables IVR.
customers to do their own transactions without having to • Cost of hosting can be high, depending on the usage.
talk with someone.
• Hosted solutions for small institutions with limited
technology experience.

Devices
Devices, whether used by the end-customer or an agent/staff member, carry with
them many advantages and disadvantages that need to be considered during the
selection phase. Some of these are outlined below, with the exception of the POS
device, as the application and device need to be considered as one for this channel
technology.
Table 4: Device Advantages and Disadvantages
DEVICE OPTION ADVANTAGES DISADVANTAGES
BASIC PHONE • Cheapest handset/device available. • Only compatible with USSD and STK applications.
FEATURE PHONE • Still relatively low cost compared with other options. • More expensive than basic phones.
• Good battery life (compared to smartphones). • Phone features may limit its function and usability (GPS,
• Flexible in many ways: operation types, peripherals, Bluetooth, touch screen – model dependent).
multi-purpose. • Peripheral functionality is managed on separate devices (bio
• Good usability if used for small amounts of data. reader and printers) and not in-built as with a POS.
• Excellent portability. • Less popular platform for app development so may have less
• Embedded data transfer/GPS capabilities. access to other apps (if required).
• Peripherals are limited and need to be managed separately.
• Not suited to entry of large amounts of data.
• No in-built security.
SMARTPHONE • Moderate hardware cost relative to processing • Peripheral functionality is managed on separate devices (i.e. bio
capacity. reader, printers) and not in-built as with a POS
• Flexible in many ways: operation types, peripherals, • Battery life may limit some uses (Bluetooth and GPS).
multi-purpose. • Not suited to entry of large amounts of data.
• Good usability if used for small to moderate amounts • No in-built security, but can be added as peripherals or
of data. embedded in app.
• Excellent portability. • More expensive option compared with feature/basic phones.
• Embedded data transfer/GPS capabilities.
• Access to a wide variety of apps/popular
development platform.

TABLET • Flexible in many ways: operation types, peripherals, • Peripherals need to be managed separately, although some
multi-purpose. accessories such as tablet covers are available with biometric
• Good usability – including more comprehensive reader and card scanner built in.
screens – reports, and data entry. • Battery life may limit some uses (Bluetooth and GPS).
• Good portability. • No in-built security, but can be added as peripherals or
• Good battery life for specific models. imbedded in app.
• Embedded data transfer/GPS capabilities. • Relatively expensive option, although some low-cost options
• Access to wide variety of apps/popular development exist.
platform.
LAPTOP/ • Flexible in many ways: operation types, peripherals, • Requires more training/support and computer literacy.
NETBOOK multi-purpose. • Less portable.
• Excellent usability. • Potentially less battery life.
• Longest battery life for specific models. • No in-built security, but can be added as peripherals.
• Can potentially extend the use: access Web-based • Most expensive device option.
CBS and other systems directly.
• Significant computational power compared with
mobile devices.
POS • Strong in-built security. • Restricted functionality due to numeric keypad (mostly suitable
• Device is portable and durable. for financial transactions).
(DEVICE + APP) • Specialized training required for users to operate and
• Single device for multiple functions (bio, print, card
reader, SIM card) which is a must for many agent troubleshoot the devices/application.
banking platforms that require receipts. • Installation and updates support is required often, with some
• Fast operation. level of manual intervention.
• Limited misuse. • Communication capabilities are optional and influence the price
(SIM card versus cable or Wi-Fi).
• Limited offline capabilities.
• Limited vendors/developers and often have restricted access to
device.
• Cost of device.

CHAPTER 4
Vendor selection
Following the selection of channels and technology platforms, the FSP
is now ready to identify the right vendor or partner to help launch the
chosen ADCs.
Depending on the size and scale of the equipped with a deeper understanding
ADC project, the FSP may choose to of the vendor’s solution and skills before
follow a formal Request for Proposal commencing the full implementation.
process. This decision will likely be This chapter will still focus on the more
influenced by the FSP’s procurement formal, comparative RFP process,
process, the available budget and although the same points covered
previous experience. Some FSPs have could be applied to a non-comparative
found that an in-depth gap analysis or competitive selection. Regardless of
or requirements workshop with a which approach is used, this stage of
small number of prequalified vendors the project must help the FSP define
can still yield a successful selection. its needs, build consensus and obtain
While this approach typically requires stakeholder buy-in for the project, and
some consulting fees up front, it can ideally foster a rational and transparent
contribute to considerable cost savings selection process.
in the long term because the FSP will be
50
Selection overview
The selection process can be divided
into three main stages, as shown below:
Figure 10: Selection process
Ensuring full COLLECT ISSUE RFP CONTRACT THE

participation across REQUIREMENTS AND EVALUATE VENDOR
the business at the PROPOSALS
outset can help build
critical support for the »»Gather and list
the requirements
»»Shortlist the
suppliers
»»License
project and protect »»Weigh the »»Issue the RFP
»»Implementation
against selection of a requirements »»Support
»»Evaluate
system that does not »»Prepare the RFP responses »»Payment terms
adequately represent »»Calculate TCO
the full needs of the »»View demos
business. »»Check references
Initiation
Provided that a FSP has invested selection process, the scope of work
the time in the previous stages, the and selection timelines in accordance
initiation stage of the selection process with specific procurement policies and
should be quite straightforward, as the requirements. Ensuring full participation
business case and objectives would across the business at the outset can
already be known. However, identifying help build critical support for the
stakeholders and a specific project project and protect against selection
team to lead the selection process of a system that does not adequately
should ensure representation from represent the full needs of the business.
across the relevant business units (IT, This selection team typically becomes
audit, operations, and finance) so all the implementation team such that
will have an opportunity to have their continuity exists between these two
priorities considered. This project team critical stages.
will be responsible for defining the

04_VENDOR SELECTION
STEP 7:
Collect the requirements
Collect the requirements help identify the requirements, as can

research. Lastly, learning from FSPs in
1. Brief background about the FSP.
2. Business and channel strategy (may
FSPs should go into the selection process other countries that have implemented include a phased approach).
equipped with high-level requirements similar channels can be a valuable input to
for the various components of the ADC. 3. Business goals that the solution should
the requirements analysis stage. To assist address.
While some of these requirements may in this important step in the process, we
be easily identified directly from the 4. Selection process and deadlines.
discuss the most common requirements
channel strategy and/or selection of 5. Criteria for decision-making, including
including security, integration, and back-
technology platform, some additional preferences on different licensing
office systems in the technical section of
requirements, such as transactional structures (license versus SaaS versus
this chapter. For those looking for more
workflows, are not obvious, particularly revenue share).
detail on specific channel requirements,
those related to the back-office the checklist will also provide some 6. Expected content and format for the
components of the ADC solution. Taking additional information. response.
the time to identify these additional 7. Functional, technical, and implementation
requirements will not only increase the
chances of identifying the right solution,
Weigh the requirements requirements with weighting to reflect
priority.
but will directly influence the success After the selection team has clearly
of the implementation. For all systems, identified what it is they want the ADC Given the large number of systems that
a fully functional specification should system to do, it is important to make a are priced based on a user/account/
be documented at the beginning of the decision about the relative priority of transaction basis, it is useful if the
implementation stage of the project, these requirements as it is unlikely that strategy section includes projections
and it is at this point that detailed all hold equal importance. This can be so that a vendor has all of the required
configurations and decisions are made. done either through a rating scale to information to cost the solution, and
This requirements analysis stage is indicate those which are ‘must-have’ so that the FSP can analyze the full
merely to ensure that core requirements functions versus those that would be cost over a five-year period. Disclosing
are identified as inputs to the selection ‘nice to have’. This will provide valuable the criteria for decision-making will
process. In fact, it is important that these input to the vendors so they know which allow the vendor to understand the
requirements should remain quite high- items are of most importance and will organization’s priorities at a higher
level, as it is very likely that detailed assist in the scoring of proposals. level while the functional, technical and
requirements will change over time as implementation requirements should
the selection team is made aware of Prepare the Request for provide a more granular representation
available features and functionality of Proposals of what is important to the FSP. These
the proposed solutions. functional requirements should be a
Once requirements have been identified
direct output of Step 2 and ideally are
The selection team should agree on a and weighted, the FSP typically needs
formatted in a table or worksheet to
final list of requirements which can be to compile these into a RFP document
ease the burden of analysis. Where
circulated to potential vendors. Where that should provide all the necessary
relevant, it is useful to indicate if certain
the selection team has limited experience information to help vendors prepare a
functionality will be required only in
with ADCs, external consultants can suitable offer. With this in mind, the RFP
a second or subsequent phase of the
should include the following:

STEP 8:
Issue the RFP and
evaluate proposals
project, as this way, cost proposals can Depending on the FSP’s procurement How to evaluate the
be aligned to the actual timing of when
the functionality will be used.
policy, the timeline for the selection
process and the organization’s
responses?
knowledge of the market, the FSP Evaluation needs to include several
Clear directions and expectations need may choose to publish an open RFP steps to analyze the proposals received,
to be provided as part of the RFP or to invite only selected vendors. calculate and compare the financials
document so that vendors know what The latter is more efficient and can be and then to qualify this information by
should be included in proposals. Ideally achieved with a formal prequalification viewing a product demonstration and
each vendor’s proposal should include round, referred to as a Request for speaking with existing customers in the
the following: Information or Expression of Interest, or market. In cases where there are more
informally through some research into than three qualified participants, the
• Executive summary. the potential vendors. While the formal organization can choose to rank the
• Company information. prequalification round can help narrow participants and only evaluate the top
• Scope of the solution. down a short list, it requires additional three participants further.
• Requirements fulfilment (showing time for review and assessments of
how vendor systems meet the submissions. Plot, analyze, and compare
stated functional, technical and responses
implementation requirements) and Who should be invited to Scoring RFP responses is the
compatibility with back- and front-
end interface.
the RFP? most straightforward part of the
evaluation. Compute the percentage
• Proposed architecture. An Internet search is the easiest way to
of the requirements that is met with
narrow the list of firms invited to respond
• Project implementation approach consideration to the weighting of these
to the RFP. Technology conferences are
– including design, piloting, risk requirements. Usually, a 75 percent fit is
also useful, as are conversations with
assessment, audit considerations. good enough, as it is unlikely that a single
consultants and peers. The selection
• Training and documentation. solution will meet all of the requirements.
team can then contact the vendors to:
• Description of support services and This step must be done with a certain
location. amount of scepticism, as it is quite easy
1. Check if the vendor qualifies based
for vendors to indicate on paper that
• Cost for the solution, including on high-level requirements (online
they can meet certain requirements, and
license, implementation, upgrades, versus offline, and what applications/
later have difficulty demonstrating these
and support. modules are available).
capabilities or providing references in a
• Payment terms. 2. Confirm that the vendor is interested
live environment.
• References. in participating in the RFP.
• CVs of key team members. 3. Ask for the estimated price range to Flesh out the financial
make sure that the solution is within
• A copy of the License Agreement and
the budget. While not all vendors will
proposition
Service Level Agreement for support.
be willing to share this information, The cost of an ADC, just like any system,
it is usually possible to at least get a continues past the implementation
ballpark estimate of costs. phase. In comparing the costs for

04_VENDOR SELECTION
each of the solutions, it is important to • Travel and accommodation costs (if to interact with the vendor and get a
consider the Total Cost of Ownership needed). sense of the ability to respond to ad hoc
of the system over three to five years. • Hardware cost and/or hosting cost. questions. However, in this connected
While costs in the initial year are typically • Initial and recurring connectivity cost world, many vendors can provide
easier to estimate, and hopefully clearly (data, SMS, and USSD). online demos, provided that clear
laid out in the cost proposals from expectations are set regarding what
• Supporting licenses cost (operating
the vendors, costs for the second and should be covered during the course
system and database licenses).
subsequent years should anticipate of the demonstration. While it may not
• Cost of devices and/or peripherals.
enhancements to the system on top be possible to demonstrate all of the
of the annual maintenance or support • Annual maintenance (or support) fee. functionality requested in the RFP, the
fee. Additionally, it is critical that ‘like • Revenue share (if applicable). core requirements should be shown so
is being compared with like’, both • Vendor daily fees for customizations/ that the selection team can get a good
from a functional standpoint but also enhancements after the first year. impression of both the front and back
financially, where vendors have used Of course, the financial decision can end of the solution. Those participating in
different costing models. For instance, also be based on other criteria such as the demonstration should be prompted
it is tempting to conclude that SaaS or the payment terms. The FSP (based on to give feedback to the selection team,
revenue share models are much cheaper strategy and/or cash flow) may prefer noting their impressions of the system
than upfront licensing when only a solution that costs less initially as and any concerns that they have.
transaction levels for the first couple of opposed to the one with the lesser TCO.
years are considered, but these figures Obtaining references from existing
can quickly change as volumes and customers will help the selection team
usage increase over time. Computing the
Request demonstrations and evaluate the quality of the solution as
TCO compares the financial evaluation seek references well as the quality of the implementation
for the buy, build, or rent options. The proof of vendor quality lies in the and ongoing support services. A strong
ability to demonstrate the functionality demonstration without corresponding
The TCO should include the following: of the system, but also to provide clear positive references should be of
evidence of satisfied customers using concern. Nevertheless, new vendors are
• The solution’s license fee and/or the systems. This is therefore a critical emerging continuously and FSPs should
usage fee for a ‘rent’ option. step in the evaluation process and due be aware that taking a calculated risk to
• Implementation cost. care should be taken to ensure that it is go with a newcomer who may not have
• Integration cost – both to the CBS carried out properly. Demonstrations of a long list of referees can at times pay
and to any third parties that will be the systems should ideally be done in off.
included in the channel. person, as this also gives an opportunity

STEP 9:
Contact the vendor

Once a full analysis of the proposals and As discussed above, to prepare a comprehensive RFP document, the FSP would
vendors is complete, a preferred vendor need a good understanding of the technical systems involved in ADC platforms. This
can be contracted. Where a preferred involves the front-end applications, back-office administration modules, and the
vendor can be identified, the final stage integrations between these systems and the CBS as was previously introduced in
involves agreeing on contracting terms Figure 5. While this handbook is not a comprehensive guide on each of these areas,
for the product/service. Contracts need we will attempt to introduce the main areas that are relevant so that this information
to be reviewed with care, with specific can be referenced during the requirements gathering step.
attention paid to deliverables, payment
terms, responsibilities on both sides,
and support level agreements after the
‘go live’ stage. Sufficient time should be Front-end applications identified, this should also be
mentioned (that is, compatibility with
budgeted for the negotiation phase, as We have discussed in some detail in Ingenico POS or NCR ATMs).
these legal agreements typically require Chapter 3 the different technologies
review at different levels within each available for front-end applications, 2. Transaction types – The functionality
respective organization, with input from including USSD, mobile apps, Web supported by the front-end
legal teams. Commercial negotiations platforms and bespoke systems such application must be clearly stated in
can be drawn out if there is a significant as POS or ATMs. Irrespective of which the RFP so that vendors can confirm
gap between the quoted price and the technology is selected for the front end, availability of this functionality and
FSP’s budget. certain functionality and features should also gauge the implementation efforts
be present and, if deemed relevant, adequately. This would ideally include
Sometimes though, the selection reflected in the RFP. This includes: a list of different types of transactions
process may not yield a clear winner. In
expected to be supported, perhaps
this case, the FSP may need to reassess 1. Compatibility with devices/models with some phasing to show what
its requirements, by either adjusting – The FSP has to clearly state what would be deployed initially versus
these in line with what is actually their expectations are in terms later. So, for example, if the FSP
available in the market, or by carefully of compatibility of the front-end needs the ADC platform to support
considering the ‘build’ option to develop application with the devices available non-financial transactions such as
a solution in-house. in the market. For mobile-based customer registration, photo capture,
systems, this is typically stated as a and biometric enrollment, it is
compatibility with operating systems worthwhile to list these. While support
and versions of that system, i.e. for transaction types should be
Android version 4.0 and above. For provided at the front, middle and back
Web, the expected Web browser end, at this point we are considering
and minimum version supported are how the end-user interacts with the
also useful. For bespoke applications system to initiate and complete the
where the device model has been transaction.

04_VENDOR SELECTION
3. Registration – Most ADC solutions in terms of how user friendly the phone number verification step, but
need to provide some support to application should be. This should typically also involves linking the
cover the registration of users on the include any language preferences/ agent to a float account that will be
system. This is typically initiated via translation requirements and whether used as the contra account for all
a back-office administration system the interface needs to be designed for transactions posted by the agent.
and then completed through some low-literacy target markets as this can Registration of agents also involves
interaction between the front-end influence the design considerably. defining what operations they can
application and the end-user. For access on the system and very often
example for a channel such as mobile Back-office systems defines the hierarchy by which they
banking, a customer would typically will be managed- i.e. master agent,
The back-office systems for ADCs are
request access to the channel through aggregator. Lastly, the registration of
the systems which are used to administer
an online application form. The FSP’s agents, which is typically bundled as
the products and services offered via the
back-office staff would then process an agent management solution, must
channel and which support all processes
this request by putting in the details also help to define the limits that are
associated with their use. These systems
into the registration module of the applied to agent-initiated transactions
are typically accessible only to the FSP
ADC solution. and the commissions that they
staff, most often the IT department
should be paid for conducting these
FSPs should be clear about their responsible for the administration of
transactions.
expectations in terms of this the systems. Some examples of such
registration process, which typically systems include: agency management, Registration at the back office is
overlaps with the capture of the agreed an ATM device management system closely linked to user management,
mode of customer authentication or the administration of an Internet which involves the administration of
such as a biometric registration banking platform which would be used access rights and roles for end-users of
or PIN creation. Where customer- to subscribe customers for the service. the channel, as well as administrators
driven registration is required, the When considering selection of the of the system. Both back- and front-
registration process needs to carefully back-office components of an ADC office systems must adhere to best
consider the limitations of the solution the FSP should consider the practice in terms of user access roles
technology used; for example, if using following functionalities, some of which and rights to ensure that all different
USSD, the amount of data that can be are generic to all ADCs while others are types of users – from customers to
input should be minimized to avoid relevant only for some channels. agents and system administrators –
sessions being disconnected before 1. Registration – As discussed above, have appropriate access to perform
completion of the process. the functionality to register customers their roles. The chosen back-office
or agents typically involves both front solution must be able to standardize
4. User interface – Although somewhat and back-office applications. From the this user administration task, and
difficult to specify in a quantifiable back-office perspective, particularly of course ensure that all access and
way, the usability of the application for mobile channels, functionality use of the system is supported by a
needs to be considered, particularly should be available to confirm the detailed and accessible audit trail.
where end-users or third parties customer’s phone number, either
are interacting with the front-end directly with the customer or with 2. Fee management – Back-office
application. Within the RFP it may another source of information such systems should also provide the
be wise to mention any specific as an MNO database. Registration necessary configuration tools to
design criteria, usability metrics of agents may include this same administer the products and services
or expectations that the FSP has

being offered over the channel. This is 4. Device management – For certain These back-office systems provide
likely to include fees associated with ADCs, including agency banking, administrators with an operational
different transactions, and must be ATMs, and extension services, a management and monitoring system
flexible enough to cater for changes system would ideally be present to that must include reconciliation and
over time and a range of different help control the access to and usage of fraud processing. Where ATMs/POS
computation rules. Furthermore, these the devices used in the channel. These devices are part of a wider network
systems should be parameterized, systems will differ depending on the such as VISA or MasterCard, these
allowing an administrator to change technology platform used but roughly systems will also be responsible for
fees with a user-friendly interface can be divided between Mobile routing, or switching, the transactions
rather than requiring expensive Device Management solutions and to the issuing bank.
changes by the vendor with hard pure device management associated
coding. Finally, the calculation and with ATMs and POS devices. 5. Card management – For FSPs
initiation of payment of agreed planning to use cards, the major
The MDM solutions in the market help decision will be whether or not to
fees should be automated through
not only to secure the devices, but manage the cards in-house or to
integration with the CBS with the
also to monitor and support mobile outsource this function. This decision
flexibility to set payments at the point
devices deployed by an institution. will be influenced by a number of
of transaction or at a pre-defined
Such solutions can allow for a remote factors including the volume of cards
interval. Depending on the CBS in
deletion of data, which may be required, availability and costing
use, the fee calculation can possibly
particularly important if sensitive data of outsourcing options, in-house
be done in the CBS itself with the
is stored on the device as is often resources to operate card services
ADC just triggering this charge, rather
the case if solutions work in offline (applications, printing, distribution
than calculating it. In such cases the
mode. Additionally where the channel and help desk), required turnaround
requirements for the back-office ADC
involves merchants/agents or staff time for new and replacement cards,
system is reduced.
using devices remotely, functionality and the type of card that the FSP wants
3. Commission management – Specifically should be available to map a device to issue (private label vs. international
for agent management systems, to a specific user so that access is network). While no hard rule exists
functionality is typically required to tied to the use of a specific device. about which is better, an observed
define and calculate commissions This can be done either by registering trend is for FSPs new to cards to
due to the agent. Much like the fee a device serial ID or an International initially outsource this function and
definition module, this needs to be Mobile Equipment Identity code, only bring this in-house when volumes
flexible for the system administrator to which will be validated as part of the increase. Some networks supply the
adjust these settings over time, ideally log on process and used to track GPS full suite of outsourced cards and ATM
without a dependency on the vendor. location of the device. network management for many FSPs.
Rules associated with commission By comparison, the device The risk here is that the FSP does not
payments can often be complex and management systems for ATMs and have control of the ATM functionality.
while a FSP need not define these in POS are much more complex in that Hybrid models also exist whereby
full at this RFP stage, it should ideally they ultimately drive the functionality only the card production/printing is
have some idea of the calculation of the devices, controlling the screens outsourced and all other functions are
basis that will be used. and status of the machines, as well as handled in-house.
handling all processing of transactions
and the associated cash management.

04_VENDOR SELECTION
For FSPs that do decide to bring this file that is compatible with the card the channel usage and performance.
function in-house, a Card Management producer. These reports will differ per system
System will be required to support the and FSP but could roughly be grouped
following functions at a minimum: 6. Settlement and reconciliation – Any as follows:
card setup, application, production, solution that includes transactions »» Audit reports – Used to trace
management (black listing, account passing through more than one system the usage of the system and help
blocking, and card status changes), will need a reconciliation process to the FSP support team track any
setup of system codes, fees, limits, and ensure that all information is matching problems which may occur.
very often complaints management. between the various systems. While
»» Channel performance reports –
The CMS will need to be connected systems should be available to
Show the volumes of transactions on
to a HSM or SSM, which is responsible support reconciliation, the extent to
the platform, ideally by transaction
for generation and verification of which this process can be automated
type and in both a summarized view
PINs, generating encrypted card will depend on the availability of a
and a detailed listing. Additional
values such as Card Verification unique identifier stored in all of the
metrics include the number of users
Values, encryption key generation and reconciling systems. Ideally, back-
registered, transaction growth
management. The HSM is typically office systems will include such
rates, and other metrics to measure
connected to a designated printer for automated reconciliation support,
channel uptake. These reports will
PIN Mailers and typically both printer or at the minimum, the reports to
be key for management to measure
and HSM should be purchased in support the manual reconciliation
the success of the channel, based
duplicate for redundancy purposes. process.
on a set of KPIs.
CMS systems very often contain Functionality to support the »» Security/suspicious transactions
a customer management or issue settlement process will be required – The ADC platform should
management system for use by the for ADCs involving merchants or third contain reports to show any
help desk running a card center to party card transactions. Settlement suspicious transactions which
record and manage the customer can either be done manually using could be extracted, either based
service side of card services. reports as a means of identifying on AML standards or using custom
For those FSPs that opt for funds due/owed followed by manual definitions, and escalated for
outsourcing, a CMS can be eliminated transfers. Alternatively where a further analysis by the FSP’s risk
although it may still be necessary for settlement bank is in place, with all management team.
some system, either the back-office parties holding an account at this »» System administration reports –
administration system or the CBS, bank, settlement could be automated Used to show platform availability,
to record card numbers allocated to as long as rules and schedules are up time, and transaction
customers for reference purposes. clearly established between all parties. performance.
Additionally, a robust process needs Functional requirements surrounding
to be agreed on with the partner to settlement will really depend on the While the back-office systems are
ensure that the application process role of the FSP in the network and necessary to support the operations of
is seamless and completed in the whether they are the issuer, acquirer the channel, they also play a key role in
shortest possible time. If only the card or payment service provider. the risk management of the channel. In
production process is outsourced many cases these are the systems that
7. Reporting – All ADC systems need to are used to monitor the suitability of
then the CMS is still required and will
contain a suite of reports to help the the controls put in place to protect the
need to generate a card production
administrators and managers monitor channel. Risk managers and auditors

should be conversant with each of these The starting point for this discussion Several different types of APIs exist,
systems, both to ensure that they are should be the fact that integration including those based on the Web, TCP
configured according to best practice interfaces can be categorized into two communication, and direct integration
and as such do not introduce new risk, types: real-time or batch processing. As to a database, or proprietary APIs
but also so that they can extract the the name implies, real-time processing written for specific systems. Discussions
required audit reports as part of risk ensures that transactions initiated at the about APIs very often overlap with the
monitoring and testing of controls. ADC customer interface are updated in mention of messaging protocols, which
the FSP’s CBS immediately at the point are the series of rules that govern this
Integration components at which they were initiated. For batch
interfaces, on the other hand, there is a
exchange of messages sent via the API.
These rules may include the sequence in
The final component of ADC platforms delay between the point of transaction which messages must be sent and will
involves integration between the various and the time when the transaction is be defined independent of the language
systems involved in the ADC platform. reflected in the CBS. Batch integrations used to write the message. Table 5
Introducing ADC technologies in most are achieved through the transfer of files, provides some examples of APIs and
cases requires some level of integration either manually or using the File Transfer protocols that are commonly found in
between the FSP’s back-office systems Protocol, and though cost-effective, are the financial sector, the most common
and the technology driving the channel. not ideal for financial transactions. of which will be further described in the
In many cases, ADC solutions also section below.
require multiple integrations with third Real-time integrations to the CBS
parties (m-wallet providers, bulk SMS can be achieved through the use of
providers, and national switches), as well Application Programming Interfaces,
as several in-house systems (m-banking which specify how two different systems
software, agency banking modules, can communicate with each other
accounting software, and CBS). through the exchange of ‘messages’.
Table 5: Integration APIs for ADCs
EXAMPLE USED IN FINANCIAL SYSTEMS
API Web service, TCP, database level, proprietary
WEB SERVICE/WEB API REST, SOAP, XML-RPC
MESSAGING PROTOCOL ISO 8583, ATM management protocols (NDC, AANDC, DDC)
LANGUAGE XML, JSON, Java, C#, JavaScript, Delphi

04_VENDOR SELECTION
ISO8583 defined as a set of Hypertext Transfer

Protocol request messages that have
ISO8583 is a standard messaging defined structured response messages.
protocol used for exchanging electronic These messages can be written in various
transactions between financial systems, different languages such as Extensible
primarily used with card-based Markup Language or JavaScript Object
systems. The protocol provides the Notation format.
message format and communication
flow for different systems to exchange
transaction requests and responses,
EFT switches and
and consists of a series of Message middleware
Type Indicators which describes the Systems integration for financial
function of the message. For instance, institutions is increasingly being driven
the MTI0100 refers to an authorization by the use of an Electronic Funds Transfer
request. Each message consists of 128 Switch or equivalent middleware. The
fields, some of which are pre-defined to primary function of these systems is
contain certain data such as PIN, while to connect different ADC systems such
others are configurable or optional. as ATMs, POS, mobile and third parties
Several different versions of ISO8583 with the CBS. This software application
are currently in use (1987, 1993 and is specifically designed to help
2003) and so with each integration systems communicate and exchange
project the version and exact usage of information and will typically support
the protocol must be agreed between one or more of the integration protocols
the integrating parties. While ISO8583 and APIs described in the previous
provides a commonly used standard section. For many FSPs, investment
in the industry, it has some limitations, in a switch will lay the foundation for
primarily related to the exchange of multiple integrations all via the same
non-transactional data which may platform, which can help standardize
require systems integration to consider the integration approach and provide
combining ISO8583 with other APIs a single point of audit for external
to fully achieve the desired level of transactions posted on the CBS.
integration.
The switch will provide conversion
HTTP / web APIs services to translate messages received
from one system to a format that
Where integration is required not only is understandable to another. For
for transactional data and/or when example, if a FSP wants to integrate
ISO8583 interfaces are not available, its CBS with an m-wallet provider,
more open Internet-based APIs are which has an API, then the switch
typically employed. These are most or middleware would translate the
commonly referred to as Web services transaction message received via the
and can be used for two systems to API to a format that the FSP’s CBS can
exchange information. APIs are typically understand. This could be an ISO8583

standard, a Web service or a database considerably from the traditional
level integration. While communication installation on the FSP’s servers to
and translation of messages are the core external hosting in a data center or
functions of a switch, it can also provide in the cloud. Disaster Recovery Sites
other functionalities such as ‘Store has become a recommended base
and Forward’ options to ensure that practice for institutions that have the
channels remain available even while the resources to maintain an additional
CBS is offline for routine end of period environment offsite. Table 6 shows
processing. This functionality is delivered some of the details for each of these
by copying all core data required for options. Selection of an application
processing, such as customer balances, hosting option need not overlap with
to the switch and transacting against this the licensing model of the system. So
data up until the host system is available while many cloud based systems are
again, at which point these transactions on a pay-per-use basis, it is perfectly
are sent for posting. This is commonly feasible to install a licensed product
used with ATM systems to ensure that on a cloud environment.
the channel remains available during
end of day processes. Lastly, with every 2. Security – Security should be
ADC the topic of reconciliation, and considered at every level of a
in some cases, settlement, is critical. transaction system solution, from the
The EFT switch can provide either front-end application to the database
automated reconciliation, which will and CBS integration. Each of the
match transactions posted in the various available channels will have different
systems using unique transaction IDs, methods to assure the security of the
or the required reports to manually system. Below are some specific areas
reconcile all connected systems. to consider:
»» Application installation – This
Other requirements deals with how to protect against
users installing an application
While the ADC front and back-office on unauthorized devices and is
applications and integration require typically handled by a device
some specific functionality as discussed management module.
above, there are some more general »» Application access – This helps
features which must be reflected in the restrict access to only authorized
RFP and considered during selection. users (via a user login, password,
This includes: PIN, and biometric controls).
1. Hardware and networks – Clearly »» Data transfer/network security –
all software applications must be This ensures that data transferred
installed in a supporting hardware from remote devices is done
and network environment. The securely through VPNs or channel
choices regarding how and where to encryption.
install the applications have evolved

04_VENDOR SELECTION
»» Database security – This facilitates fees/commissions or it could involve

encryption of data and logic stored getting estimated efforts for adding
in a database with best practice in new channels. The FSP needs to
applied for direct database access. determine how much effort (and
»» Versioning control – This ensures cost) would be associated with
that only an approved version of such changes and be confident that
an application is circulated to users they will be able to respond to the
and prompts users to update to the market feedback on their channel in a
latest version, if applicable. reasonable amount of time. Flexibility
»» Application level controls – This should also be approached from the
refers to the processes that are customer’s perspective to ensure that
built into the system, which must any customer – regardless of which
be done in a specific manner so as handset they use or which network
to minimize risk to the FSP. In many they are subscribed to – is able to
cases this involves introducing access the FSP’s channel service.
maker/checker concepts for 5. Availability – As with all business
processes which are deemed high critical systems, the FSP needs to
risk and system-based controls protect against system down time
to minimize the risk of data entry through investment in a backup/
errors. disaster recovery strategy. The
3. Scalability – Introduction of a new complexity of these plans will vary
channel needs to carefully consider considerably from one FSP to the next,
the potential scale at which the and in general is directly related to the
channel will be expected to operate to risk associated with system down time.
ensure that the performance remains While all would like to ensure zero
acceptable as the usage increases. downtime occurs, this comes at a cost
Performance standards should be that needs to be justified by the FSP
stated both in terms of volumes and in terms of the channel importance.
transaction response times so that During the selection process, the
the FSP can confirm with the vendor FSP needs to communicate its
that the solution is capable of meeting expectations regarding continuity to
these levels. Performance will always potential vendors, particularly where
be influenced by both the hardware it is looking at a SaaS model which
and software available so for in-house means that the responsibility for the
systems, the FSP will need to ensure disaster recovery environment will lie
that the required hardware is available fully with the vendor. In cases where a
to not hinder performance. licensing mode is being pursued, the
responsibility for disaster recovery
4. Flexibility – While difficult to measure
is typically with the FSP, although it
directly, a FSP looking for a new ADC
will need to ensure that the vendors
solution must try to ascertain the level
can comply with its disaster recovery
of flexibility of the solution on offer.
plans and that all licenses will cover
This could be done through system
this secondary environment.
settings to introduce new products/

Table 6: Application hosting options
OPTION DESCRIPTION ADVANTAGES DISADVANTAGES
IN-HOUSE FSP would be responsible for the • Limited/no dependency on third • Dedicated resources required to manage
SERVERS / procurement of the servers, either parties so FSP has full control of the the hardware.
environment. • Risk that in-house resources not specialist
DATA CENTER through a direct purchase or leasing
model. Typically, responsibility for • No requirement for connectivity to in this area, opening the FSP to risk of
external hosting center and/or cloud. systems unavailability due to hardware
maintenance is in-house, although issues.
• No challenge with regulators, as
there may be potential to outsource database is stored locally; regulators • Costs are incurred upfront on
just the maintenance. are most familiar with this model, so no procurement rather than spread over
need to educate. time based on usage.
• Requires excellent planning to cater for
growth and ensure that the servers are
not limiting the system performance.
• Planning and execution of systems to
support disaster recovery lies fully with
the FSP.
EXTERNAL FSP would contract server space • Skills to manage the servers is left • Reliance on a third-party provider to
DATA CENTER through a third-party company who with specialists with no need to bring ensure that business-critical systems
maintains a physical data center that in-house. remain available. Not all data centers are
• Generally is easier to scale up equal in quality, so this risk depends on
they rent to the FSP. The FSP would
performance by just renting additional the market/vendor.
then set up a reliable connection space/processing capacity. • Regulators may raise issues with systems
so that end-users can access these • Physical servers can be visited. not being in-house.
servers as if they were in-house. • System availability dependent on
connectivity to data center.
CLOUD FSP contracts with a hosting • Skills to manage the servers are left • Reliance on a third-party provider to
company that provides access to with specialists, with no need to bring ensure that business-critical systems
servers hosted in the cloud. Like with in-house. remain available.
a data center the FSP would then • Generally it is easier to scale up • Regulators may raise issues with systems
performance by just renting additional not being in-house and not being able to
need a strong connection for end- space/processing capacity. visit the physical data center.
users to reliably access the system. • System availability dependent on
Unlike with a data center, these cloud connectivity to cloud.
servers cannot be physically accessed.

CHAPTER 5
Implementation
Following selection of a vendor, and equipped with all the information and
decisions made in the previous steps, the FSP is finally ready to commence
implementation of the channel solution and launch operations over that channel.
This phase of the project has two Implementation methodology

major components: the implementation
The methodology followed during systems
of the technology solutions and the
implementation is not specific to ADC
operationalization of that technology. The first
solutions, and may vary slightly from one
component is largely driven by the technology
vendor to the next. The diagram below outlines
vendor, who with input from the project team
one suggested implementation methodology
will work to install, configure, train and support
that could be adjusted as required to fit a
the live deployment of the ADC systems. The
particular situation. For example, if the FSP
second component will be driven primarily
has opted for a cloud based system, then the
by the internal project team and will focus on
hardware procurement (step 4) will not be
all of the supporting activities such as agent
required. Alternatively, the implementation of
recruitment, marketing, end-user/customer
a new system will always look slightly different
training, and setup of supporting structures
from a project that replaces an existing system,
for the channels, such as helpdesks and
with the latter requiring additional steps to
customer service lines. Given the technology
cater for data migration. Lastly, where the
focus of this handbook, we will put more
implementation involves the introduction of a
emphasis on the first component, although
new channel, most FSPs opt to launch a pilot
it should be clear that one without the other
initially, with a closed group of users to test
will likely result in either a failed project or one
both systems and product offering. We will
which fails to meet its full potential.
talk through each step in brief in the following
section so all are clear on what tasks should
be completed in each step, and potentially
who is involved in each task.
64
01_TEAM 02_KICK-OFF 03_REQUIREMENT 04_HARDWARE 05_TRAINING
INFORMATION ANALYSIS PROCUREMENT
10_ 09_GO LIVE 08_ 07_ 06_USER

MAINTENANCE CONFIGURATION INSTALLATION ACCEPTANCE
AND REVIEW CUSTOMIZATION TESTING
STEP 10:
Prepare kick-off and
analysis
Most financial
institutions opt The purpose of this step is to identify the of ‘super users’ or champions of the system.
to launch a pilot Core Implementation Group who will likely Where the vendor adopts a ‘train the trainers’
initially, with a consist of members from the project team approach, this group will receive this training
closed group of that participated in the selection stage, as well and be responsible for end-user training prior
as relevant representatives from finance, IT, to going live. The CIG will take most of the
users. customer service, marketing, operations and day-to-day decisions regarding the project
audit. This operational group will be involved and work directly with the project manager
in training, requirements analysis, and testing and team appointed by the vendor.
of the systems, and typically form a group
Figure 11: Project team structure
PROJECT
SPONSOR
STEERING
COMMITTEE
PROJECT
MANAGER
CIG

05_IMPLEMENTATION
In addition, a project steering

committee should also be in place,
Project kick-off wish to introduce specific policies on
change management or systems used
headed by a project sponsor to whom This is an official meeting to mark the
during User Acceptance Testing. Lastly,
final and more critical decisions should start of the project and takes place once
an escalation process should ideally be
be escalated. This person typically will the contracts with the vendor have been
discussed at this early stage to resolve
have a reporting line to the board if finalized and the team driving the project
any issues that may arise.
has been identified. From the vendor’s
the project is tracked at this level, and
side, the project kick-off meeting is an
will weigh in on decisions regarding
budget, “go live” and any other critical
opportunity to introduce the project Requirements analysis
manager and team assigned to the Throughout the whole ADC
decisions that need to be taken during
project. The kick-off meeting agenda implementation process, requirements
the course of the project. The CIG and
should focus on introductions of the
steering committee need to decide at for the solution have continually been
teams, with clear assignments of roles
the outset how decisions will be made refined, starting with the high level
and responsibilities. The implementation
and project status communicated. channel strategy and culminating with
methodology should be presented by
Taking these simple foundation steps this implementation step where final
the vendor and agreed with the internal
regarding the team structure, decision- decisions on the configuration and
team, as well as a high-level project
making process and communication plan if possible, although most vendors customization of the ADC take place.
can help prevent project delays and can only confirm on this plan after the This is reflected in Table 7 with an
disturbances as things progress and detailed requirements analysis phase example of how it is applied to a channel,
obstacles arise. is completed. The vendor may also in this case agency banking.
Table 7: Levels of requirements analysis
DEVICE OPTION REQUIREMENTS ANALYSIS EXAMPLE

CHANNEL What do we want to do? Define the products and Introduce agent banking to reach rural customers and mobilize
STRATEGY services that should be available over the channel. savings.
TECH PLATFORM Which technology is best suited to our strategy? Agents to be given smartphones running an application and
IDENTIFICATION connected to a biometric device for authentication.
SELECTION What exactly do we expect the ADC solution to do, Support both financial and non-financial transactions with
PROCESS both for short- and longer-term planning? biometrics. Provide a full agent management system. Integrate to
the CBS using available web APIs.
IMPLEMENTATION How do we configure / customize the solution for the Agents to be organized into a three-level hierarchy. Allowed
initial implementation? Define the project phases and transactions restricted to cash in / out and customer registration.
scope of each. Phase 1 with Phase 2 to include loan applications.

From the vendor’s side, the
project kick-off meeting is
an opportunity to introduce
the project manager and
team assigned to the project.
The requirements analysis work done at FSP is aware of the existing functionality be customized to meet the FSP’s
the implementation phase is typically of the system and can simply overlay requirements.
led by the vendor, as they will know new needs onto this system, thereby 4. Reporting – List of expected reports
what their system is capable of doing minimizing customization, which is from the system, ideally with detailed
and should advise on the best way to always a risky and often costly task. specification as to what information is
map this to the FSP’s products and Investing time in this initial workshop contained.
processes in a gap analysis exercise. will not only help understand fully the
For some ADC projects, particularly implications of decisions made in this At the end of this phase, the vendor
those that involve the introduction of specification phase, but will also be a should be able to provide the FSP with a
new channels, the requirements analysis foundation on which the training for final project plan, since up until this point
done in the previous stages of the UAT can build. all plans were based on assumptions
overall project will be a critical input rather than clear requirements. Many a
to this phase. If such requirements are At the end of this phase, a detailed project faces its first obstacle at this point
not available, this requirements analysis specification document should be when the vendor provides a delivery
with the vendor can easily become a available and must be signed off by date beyond the FSP’s expectation. If
prolonged exercise and at worst result in the vendor and the FSP, as it will form so, a compromise may be reached by
the vendor rather than the FSP driving the basis against which delivery will splitting the project into phases, which is
the channel implementation. Suffice to be measured in the later phases of recommended so that requirements can
say that this is one of the most critical implementation. Changes may arise at a potentially be revisited or revised based
steps in the implementation process, later point, but these should be tracked on inputs from live use of the systems.
with many failed projects attributed to separately, usually through a change For many new channels, it is difficult
a poor requirements analysis stage. It is request process. The specification for the FSP to envision exactly which
imperative that at the end of this step, the document should ideally contain the functionality will be most important and
CIG is comfortable with the functionality information listed below, and in general how users and customers will respond,
that will be delivered and whether this the more detail available the better as it and hence a phased rollout will provide
will entail configuration of existing will limit the risk of misunderstandings an opportunity to incorporate feedback
system parameters, customization of between the FSP and the vendor. from live operations rather than building
new functionality or a mixture of both. systems based on expected usage.
Appendix 1 provides some guidance on 1. Process workflows that will be used
with the system – Touches on how a
the key decisions to be made during this
phase. transaction will be initiated, validated Hardware procurement
and processed. For those ADC systems that require the
Different vendors will employ different 2. Configuration settings to be made FSP to procure supporting hardware
methods to extract the FSP’s needs; – Relates to the products, fees, or implement new networks, this
some may employ presentations or commissions, user roles, workflow, and project phase should clearly identify
demos, others may conduct a gap screens that should be configured. these requirements and follow through
analysis and others still may come with 3. Customizations – Functional with the necessary procurement. The
a blank slate. A gap analysis workshop description of how the system will specific hardware needed will clearly
is preferable, as it helps ensure that the depend on the ADC technology being

05_IMPLEMENTATION
implemented, which can typically be loans for the device to be owned by the strategy and associated business case,
split between front-end devices, used employee as a means of encouraging but may need to be revised based on
by customers and staff, versus the back- users to take care of the devices. For the final decisions taken regarding
office servers hosting the applications. agents, both models are observed and configuration/customization.
Care must be taken to ensure that the the decision will really depend on the
vendor of the ADC applications has fully types of agents that are available in ATM and other channels reliant on the
tested these devices and can confirm the market, their willingness to either use of cards will require some specific
that they are compatible with the invest some funds as a precondition to hardware ranging from the front-end
software. Additionally, with an increased becoming an agent, or their existing ATM itself to the HSM and card printers
number of options on the market, access to phones/tablets/laptops prior in case cards are being produced in-
compatibility with the vendor’s solution to signing up as an agent with the FSP. house. For all of these systems, the
or other systems in use by the FSP can FSP will need to research the available
be a serious challenge. For the back office and for ADC vendors and with inputs from the vendor,
systems that will be installed in-house, confirm on which to procure. Disaster
Procurement requirements for front-end the implementation team will need to recovery or replacement systems need
devices will also be heavily influenced identify or procure servers to host the also to be considered to ensure that the
by the strategy the FSP has decided system. While many FSPs may have channel remains reliable and available
to take with regards to the ownership requested these hardware specifications for the end-users.
of these devices. Where agents will be during the RFP process, these may be
required to procure their own devices, confirmed at this stage as it is only at
the responsibility of the FSP will be less, this point that the vendor will have a
although the issues of compatibility may very clear sense of how the FSP intends
be more pressing given that the FSP will to use its system, and hence can provide
have less control over which specific accurate sizing requirements. In the
device is used. In many cases where this preparation of these specifications
ownership strategy is desired, the FSPs and associated procurement needs,
may discover that hardware/devices the implementation team needs to
still need to be provided to agents to consider not only the hardware needed
conduct the pilot or beta testing. This for production environments, but also
will not only provide an opportunity to for backup/disaster recovery as well as
test the solution working on different training. Typically most mid to large FSPs
models but will also give these users the will require all systems to be available in
opportunity to appreciate the potential triplicate: one for production, one for
benefits that the system can bring to backup/disaster recovery and another
them, hence convincing them of the for UAT or training. Lastly, procurement
need to invest in the device. For staff of servers needs to take into account the
users, it is typically the FSP that provides estimated transaction volumes expected
the required devices, although some over this channel. Ideally this information
have created incentive schemes or staff will be available from the channel

STEP 11:
Configure and confirm
the system
Based on the output of the requirements how data will be migrated from the include both positive cases (that is,
analysis phase, the vendor may need legacy system during the requirements the system behaves as expected when
to configure or potentially customize phase. The implementation team and correct criteria is input) and negative
the ADC system to meet the agreed vendor should agree on the data to be cases (the system does not allow
specification. For the FSP, this phase may transferred, and cut-off dates. During operations if incorrect input) to ensure
not require active involvement, although this analysis, it is not uncommon that the system is fully compliant with
constant communication needs to be for some FSPs to encounter issues the FSPs requirements. Prior to this UAT,
maintained between the implementation with compatibility, particularly of some training is typically required, so
team and the vendor to ensure that authentication data such as biometric that those involved in the testing are
progress is being made as expected records or PINs. This data is normally equipped with the skills to adequately
and to handle any arising issues. By the stored as encrypted data, which may test the system. Additionally, some FSPs
end of this phase, the vendor should be complicate the extent to which the new may choose to have a smaller team
ready with a version of its software that vendor can access and migrate it to its prequalify the system before bringing
is fully configured to meet the FSP’s systems. Difficult decisions may need to on-board a larger UAT team. This can
requirements, with all configurations and be taken regarding resetting of PINs or help make the testing more efficient
customizations tested by the vendor’s re-registering of biometric data. and really focus on pulling in end-user
quality assurance team. feedback rather than have the UAT team
interrupted by critical bugs which may
Where the channel requires integrations Installation prevent it from completing its task. It is
with third parties, this step will help to For ADC systems that will be installed on important to realize that this step will
accomplish this task, which typically the FSP’s infrastructure, the installation be the first presentation of a working
requires direct communication between of systems need to be done after the system to a group of end-users, and
the ADC solution vendor and the third vendor confirms that the version is fully the way in which this introduction is
party. This integration work will require configured or customized and has passed managed will influence the buy-in and
decisions regarding integration protocols, through a quality assurance testing uptake of the system. Prolonged UAT
a topic discussed later in this chapter. and the FSP has procured the required which is constantly interrupted by bugs
devices, if applicable. This installation is and change requests will deflate the
The FSP should also prepare UAT test typically done by the vendor although UAT team and sow seeds of doubt in
cases at this stage. Test cases need to be ideally the FSP’s IT resources will be team members’ minds about the ability
as detailed as possible to avoid missing trained on how to do this installation at of the system to deliver, which will likely
out on bugs or issues. For example, a test the same time, so that for future releases propagate throughout the business.
case to check that a customer withdrawal the task can be done in-house with less
is functioning properly would outline the dependency on the vendor. UAT is a notoriously difficult exercise
expected debits and credits, any fees for both FSP and vendors to navigate.
or commissions to be calculated and Inevitably, changes or omissions from
posted, and any reports to be generated. User acceptance testing the specification stage will arise once
Once the vendor has installed the the system is in front of the users and
system, the CIG can commence testing the team can finally visualize and
Data migration (if applicable) the system to confirm it meets the interact with it directly. Assumptions
Projects that involve replacement of an agreed specifications using the test of what the system is expected to do,
existing system will also need to consider cases prepared. These test cases must and possibly cannot do, may arise

05_IMPLEMENTATION
STEP 12:
Pilot and go live
and lead to disappointment within the Whether piloting or going for a

implementation team and between replacement system with full-scale a new channel. These are typically
the vendor and FSP. Having an agreed rollout from day one, the “go live” designed to operate with a restricted
change control process from the kick- process must be carefully managed. closed group of users, perhaps staff
off meeting will help to navigate this A series of tasks needs to take place only, to gain confidence in the systems
process. Additionally, pilot projects with in a coordinated fashion to move the before introducing them to the wider
phased delivery can help to schedule final UAT version to the production public. Deploying the systems in this
issues arising to later phases, ensuring environment, which may involve third manner will also give the opportunity to
that the project can continue albeit parties doing similar migrations at the test the systems fully before expanding
with some compromises in terms of same time. Once this migration has been them to the mass market, and will
functionality in the early deployment. done, a final check should be performed provide time for in-house support teams
Lastly, clearly establishing the objectives to ensure the systems are still working to ensure that they are fully equipped
of the UAT exercise at the outset of as expected and that nothing has been to support the end-users of the ADC.
this step will help ensure buy-in to the lost from the migration process. Where The duration and success criteria for
process and provide guidance should applicable, existing systems will be the pilot should be pre-defined with the
issues arise that perhaps could derail switched off and services migrated vendor and project team so that all are
the task. to the new platform. This may require clear on how it will be measured and
some outage time for the channel, what will be required to migrate to a
fully live environment.
Training which should be communicated to users
in advance. Depending on the decisions
Following UAT, the system is ready
taken regarding migration, customers
Maintenance and review
to be introduced to the end-users, The end of the implementation journey
may be required to reset their PIN or re-
which could be staff, agents or
enroll for the channel, all of which has is the beginning of a new journey to
customers depending on the ADC
to be communicated and coordinated support, maintain and enhance the
being implemented. For customers,
during this phase. system over time. Transitioning from
this training should be presented in an
project implementation mode to
easily accessible format, either through ‘Go live’ typically requires all hands on ongoing support must be managed
marketing materials that guide them deck, both from the FSP and the vendor. carefully to ensure that end-users,
on how to register and use the channel Initial usage of the system needs to whether customers, agents or staff,
or online tutorials for channels based be carefully managed to ensure that receive prompt feedback to channel-
on the Web. Field demonstrations by nothing has been overlooked in the related issues. Additionally, ADC systems
staff or temporary sales teams are testing and that if any critical issues
very effective. Irrespective of how it is very often need some adjustments in
arise, they are dealt with promptly to the early days to cater for feedback or
delivered, users will need not only initial avoid end-users reaching conclusions
training but ongoing support for use enhancements identified by the users.
that the channel is unreliable. Clearly if the “go live” was just on a
of the channel, and this need has to be
catered for ideally through a dedicated A “go live” approach based on an initial pilot basis, these enhancements can be
help desk function as well as a customer pilot can provide many valuable lessons pulled into subsequent phases of the
support service if the end-user is a for a FSP, particularly those launching project or at the time of full commercial
customer or third party agent network. rollout.

Projects don’t end with “go live” but
rather transition to a new phase that
Implementation tips adjust to new processes, and also to
give customers and other end-users
will require daily operational monitoring Implementation of new or replacement IT time to react to the changes and
and support. This phase often sees systems is a notoriously difficult process to incorporate their feedback into
the vendor migrate the project from and unfortunately ADC systems are no subsequent phases.
an implementation phase to a support different in that respect. Fortunately
4. Be sure to define fully the business
contract, whereby a dedicated helpdesk many lessons have been learned about
processes surrounding the new
team is available to respond to the FSP’s how to manage the risk associated with
technology prior to taking decisions on
issues. At this point the implementation these projects. While the next chapter of
configurations and/or customizations.
team conducts a post-implementation the handbook presents the wider ADC
lessons learned, here we discuss some 5. Do not underestimate the time
review to derive lessons learned, assess required to integrate with third parties
the work that is still outstanding and of the implementation-specific lessons
that a FSP may wish to bear in mind as it and be sure to consider the impact
to evaluate the project against agreed of the CBS and any planned projects
objectives. It is important that all embarks on these projects:
for that system before you start
parties are open in this review and work 1. Take time to be trained on the software integration
towards mitigating project challenges you have purchased to understand 6. As with all projects, UAT is critical and
and risks in the future. A support team how it works and what features are/ conducting this phase diligently will
should assume the responsibility of aren’t there. While many are keen to help protect the FSP from systems
actively monitoring the system to see the system live in the shortest not behaving as they need to on initial
ensure that the system is operating period of time, investing a decent launch, which can be damaging in
effectively from a technical standpoint. amount of time in these preparatory terms of reputation and uptake of the
A set of reports and metrics can be used stages will not only help safeguard channel.
to support this role. Most institutions against a failed implementation, but 7. ADCs will in almost all cases require
also have a business team in place to can make subsequent steps in the setup of a help desk or support line
monitor the operational and commercial process more efficient. for customers to contact in case they
performance of the channel and 2. Hold workshops and meetings have difficulties using the channel. For
measure the performance of the channel internally to gain consensus on some channels, this support may need
against a set of pre-defined metrics aspects of the implementation to be available outside of office hours,
or strategic goals, which should refer process. Project teams must have particularly for card-based channels.
back to the ADC strategy discussed in representatives from operations,
Chapter 2. These teams should report credit, finance, and audit, as well as IT,
back to the implementation team or to ensure all angles of the business are
project sponsor with results of their considered during implementation.
analysis and any recommendations for
3. Where possible, try to phase the
improvements or enhancements based
deployments to allow staff time to
on their observations.

05_IMPLEMENTATION

During the course of the implementation, and particularly during the requirements
specification step, some key decisions need to be made. Table 8 lists some of the
bigger decisions to be made during the implementation process of ADCs.
Table 8: Decisions made during the

implementation process of ADCs
TECHNOLOGY KEY IMPLEMENTATION DECISIONS

• Which bulk SMS provider to use for both sending SMS and short code (required for pull mesages).
• Confirm maximum message length for SMS from the bulk SMS provider.
• If short code needs to be accessible across multiple networks, need to identify which authority can allocate a single
number.
• Where to store customer’s phone number: in CBS / mobile banking system or other system.
• How to register / subscribe customers for the service? Automatically versus on request.
• Where to configure fees if charging for the service: in CBS of mobile banking solution.
• SMS message definition – decide what text to send, when to send it and in which languages.
• How to add / change messages over time.
• Join existing third party ATM network or launch own.

• Closed user group or integrate to other payment networks: national switch, Visa, MasterCard.
ATM • Which system to apply the authorization policy and the rules of this policy.
• Which system to store business logic such as limits and fees.
• If own network: decide re hardware procurement, device management systems, liquidity management.
• Configuration of card management – card production, administration, support, authentication management, HSM,
card printers.
• Reconciliation and settlement – policy and systems used to support.
• Definition of screens and states (and in what languages).
• Setup of an ATM help desk.
• If joining other network: how to integrate> What connectivity required and how to test and settle / reconcile.

• How to do customer authentication: one factor, two factor, security tokens, TANs, pictures, passwords.
• How to register customers for the service.
• What systems to support on-going administration of channel i.e. help desk.
• Workflow automation for processes originated via internet – check book requests, loan applications, high value
transactions, currency exchange.
INTERNET BANKING
• Whether to print transaction receipts or use SMS .

• How to manage the devices used by remote users: MDM versus other device management system.
• How to manage agents including limits, commissions, access rights, liquidity and float accounts.
• Whether to support both online and offline processing: offline for non-cash, all cash online.
• If offline, what criteria to use to sync data: loan officer, region, other.
• KYC implications on remote account opening.
AGENCY
• How to match incoming payments to the correct customer account i.e. which identifier: phone number, national ID,
account number.
• What business rules to apply to incoming payments: overpayments, group accounts, split to savings.
• Outward payments – how to validate a customer’s phone number: one-off registration versus confirmation at time of
sending.
• How / when to reconcile payments between the systems: automated versus manual, daily.
• Receipting payments received via M-wallet: manually versus SMS versus no receipt.
• How to handle group loans over this channel: individual versus batch.
M-WALLET
INTEGRATION

05_IMPLEMENTATION
• How to register customers for the service.

• Where to store customer’s phone number: CBS or m-banking system.
• How to support PIN setup and administration.
• Where to configure fees if charging for the service.
• Process flow per transaction type.
M-BANKING
• Enrollment process – new and historic customers.

* Using biometrics in any business requires
• Maker / checker versus one person enrollment.
an appreciation of the performance metrics
• Accessibility of bio verification across all systems – CBS
by which the systems are measured,
+ channels.
particularly the False Acceptance Rate and
• Exception process – what happens if it does not work.
False Rejection Rate. FAR, also known as
• Deduplication process – when to run these checks,
False Matching Rate, is the rate at which
process to follow up if duplicate found.
the system incorrectly accepts the wrong
• Which fingers to capture.
person at the point of verification. By
• Which model of reader to use.
contrast, FRR is the rate at which the right
• Number of allowed attempts to authenticate.
person is wrongly rejected by the system
• FAR / FFR thresholds*
due to a failure to match their authentication
BIOMETRIC CARD • Catering for change to business process: who to capture,
details with the stored record. FAR and FRR
cashier processes.
rates have an inverse relationship with one
• Different types of cards – smart, mag, EMV.
another. In other words, the more selective
• Card administration as the application, processing and
the biometric system is (a better FAR rate),
on-going management of the card for the customer.
the more likely it is that the system will also
• Card production is the physical creation of the card,
begin to occasionally reject the correct
which is often done by an entity other than the one doing
fingerprint. Biometrics systems will need to be
administration.
configurable to decide the best setting to use
• First decision is who will administer and produce the
to balance these two rates, which is both a
cards.
function of the size of the database as well as
• Pre-printed versus customized-pros / cons.
some individual system factors that a vendor
• PIN management – HSM, PIN mailers.
will need to advise on.
• Card helpdesk support.
• Registration.
x x x x • Who / where to reset PINS.
PIN

Integration
Given that most ADC solutions require integration of different systems and that this integration can
often pose problems during implementation, we wanted to focus on the topic in more detail. We
introduced the types of integration in Chapter 3 as either batch or real time, but now want to dive
into more detail of the real time integration options, explaining at a high level the protocols that
exist, how each of them works and their pros and cons. Table 9 provides an overview of how systems
integration can be achieved either via bespoke protocols specifically designed to exchange certain
types of data, such as ISO8583, or through more generic formats which we roughly class as APIs.
Table 9: Systems integration protocols
FORMAT / EXAMPLE ADVANTAGES DISADVANTAGES

PROTOCOLS
File transfer (local or FTP) Various file format batch or semi- • Typically easy to organize and • Errors on upload typically requires follow up
real time. to maintain. manually resolution.
• Low cost. • Dependent on the file structure work.
• Typically lower security as the files can
be compromised as they are waiting for
processing.
Low level TCP Such as ISO 8583, SMPP, SMTP, • Immediate notification in case • The standards are implemented in various ways
ATM management protocols (NDC, of errors. by the vendors.
AANDC, DDC), HSM protocols. • Fastest network integration • The communication is not human readable
protocol. which makes it difficult to trace problems.
• Dependent on constant network availability.
Database Usually stored procedures. • Immediate notification in case • Requires access and deep understanding of the
of errors. database.
• No requirements for additional • Lower security due to the access to the
middleware / system. database.
• Dependent on the database type / dialect.
HTTP-web services Such as REST, JSON, XML, SOAP. • Immediate notification in case • Not suitable for big data processing (relatively
of errors. slow).
• Not dependent on the • Dependent on constant network availability.
programming language. • It is adding processing overhead.
Other API’s Usually integration with vendor • Immediate notification in case • Usually propriety.
libraries (DLL, operating system of errors. • Requires vendors to provide detailed
API). • As it is provided by the vendor documentation.
it should be the best and most • Hard to trace problems as it acts as a ‘black
robust way to integrate with box’.
the system. • Very often it is dependent on the programming
language.

05_IMPLEMENTATION
Ultimately the decision of which 2. Identify the functionalities supported

protocol to use will be a negotiation by the interface either through a
between the two integrating parties, review of available documentation or
which could be the FSP and a third through consultation with the CBS
party or the ADC solution vendor and vendor. Check that both financial
the CBS provider. In general, a FSP and non-financial operations are
need not be heavily involved in these supported if required for the channel.
technical decisions regarding protocols 3. Understand how existing licenses will
as long as it is assured that the required be affected by use of an API/Interface.
information is exchanged at the agreed
frequency. In general, often one of the While agreeing protocols is one of the
integrating parties will be limited in more important steps for integration
terms of the types of integration that projects, it is only the first step in
they can support and hence this factor actually connecting up systems. Once
ends up dictating the integration for the the protocol is agreed, the business
other party. logic governing the interface must also
be discussed and may contain topics
All ADCs require some type of CBS such as how to handle exceptions or
integration and so FSPs need to be rollbacks, fees and rules associated with
aware of what format or protocol the two channels and how reconciliation
its CBS supports. The market is and/or settlement will be done. For
increasingly seeing CBS containing APIs example, for ATMs this business
as a standard which makes for easier logic must describe how the systems
integration, although FSPs should be should behave in case a transaction
aware of costs associated with the use is interrupted without completion.
of these APIs and limitations of the Equipped with this information, which
APIs since the mere fact that one exists should be supported by a signed
does not imply that it will support the document between the parties to lay
required functionality. To help gather out the responsibilities and agreements
information about CBS integration, reached, the parties must configure
the FSP should ensure it is equipped their systems. Once this is completed
with the following information before it both parties must work together to test
commences any integration: the various messages that will be sent
over the interface, to ensure that both
1. Determine the types of integrations systems respond as required during the
supported by the system (real-time or exchange of information.
batch).
»» If real time, what protocols are
supported?
»» Obtain documentation on these
APIs.

Conclusions and lessons
learned
This final chapter provides some of the observations or lessons learned with
regards to ADC projects so that FSPs benefit from the experiences of others
who have travelled ahead of them in this area. These are compiled from the
authors’ experiences across multiple projects, several continents, and from a
range of different types of FSPs. The intention is only to share some insights
based on institutional knowledge gained from past ADC projects rather
than dictate ADC strategies or projects, and these lessons must be applied
carefully to the context of the FSP embarking on ADC projects.
SON Use existing
1
networks/
LES
platforms to test
out new channels
Where possible, build on existing networks decision of whether to rent, buy, or build. SaaS
rather than launching your own, especially models can provide options to test out new
if this is the first foray into ADCs. This may channels using partner platforms, which make
mean looking for integrations to third-party commercial sense while transaction volumes
networks/providers such as ATMs, agents or are low. However, one should be careful of
m-wallets rather than launching these services lock-in periods which are sometimes applied
yourself. Integrations to existing networks are with these costing models. Nevertheless,
not only cheaper in terms of technology, but establishing a proprietary network may be
also allow you to observe responses from the justified when customer experience with
market to see if the uptake warrants the larger existing networks is poor, for instance due to
investments required for proprietary solutions. poorly trained agents, high prices, or frequent
This same lesson could easily be applied to the network downtime.

06_CONCLUSIONS AND LESSONS LEARNED
N
SON Challenge SO Pick partners others, and hence must be considered
2 3
your current carefully in the formulation of any partnership.
LES
LES
While it may be challenging to strike
processes successful partnerships in MFS, other
to maximize ADCs such as outsourced ATM/POS
impact networks provide good examples of
how partnerships can be designed to
work for all involved. FSPs need to
To get maximum benefit from ADCs, a Most ADC projects require some invest time and resources to critically
FSP must be ready to really challenge type of partnership between the FSP assess compatibility, strategic focus,
existing processes or ways of doing and other parties, such as m-wallet and commercial alignment to create a
business and to include business providers, USSD aggregators, MNOs, win-win partnership.
process reengineering as part of the or a technology vendor. The success of
SON Prioritize
implementation process. FSPs need the the ADC may ultimately depend on the
4
courage to leave old processes behind strength of these partnerships, making it
flexibility and
LES
in order to enhance the customer a worthwhile investment to spend time
experience and take full advantage in the initial selection process and to
scalability
of potential cost and time savings, as continually review these arrangements
well as to optimize operations. This over time. A critical review of four MFS
is especially necessary for extension implementations around the world
service channels whereby third parties revealed the importance of ensuring Although flexibility is important in all
or remote users are now embedded in that the business model for the channel IT systems for FSPs, it is perhaps even
processes that were either branch or sustains all parties involved and of more critical with respect to ADCs, as in
paper-based before and now have the ensuring that competitive forces are many cases the FSP does not yet know
potential to be fully digitized. Change aligned for the greater good of the how the market will respond or what
management is critical for such projects partnership. The same study showed will be needed in future. Parameters
so that key users and decision makers that partnerships must be both patient such as fees, commissions, and types of
are involved in the redesign process and enough to cope with slow growth operations can be altered over time in
buy into the need to change the status initially and yet flexible enough to adapt response to feedback from the market.
quo. Despite the tendency to blame and scale in response to the market A foundation infrastructure built around
failed ADC projects on technology, in over time. Additionally, partners need a centralized integration platform or
many cases deeper investigation often to consider both direct and indirect switch can ease the burden of adding
reveals the root cause as poor change value that may arise from the ADC, such new channels or integration partners
management, with internal factors as the additional revenues earned by over time and give the FSP assurance that
preventing the overall success of the agents who find customers purchasing integrations are done against a common
project. Addressing this resistance to goods from their shops/kiosks at the standard. Having catered for this level of
change, which may exist within the time of cash out. Lastly, the role of flexibility, it is important for the FSP not
organization at the outset of the project regulations and the restrictions they to adopt new technology too quickly,
and continually through implementation, impose on partners can undermine but rather take the time to see which
will help minimize the risk of project a partnership, providing competitive technologies are proving themselves
failure due to a lack of buy-in from advantage to some partners over in the market before incorporating
within the FSP.

CASE STUDY
analysis, AMK developed a channel performance of the channel, constantly
strategy to launch an agent network listening to feedback from the agent
that would offer customers convenient network and tweaking the system based on
AMK Cambodia access to savings accounts as well as a

money transfer service for both account
lessons and suggestions for improved client
experience.
and non-account-holding customers. The
objective was to increase outreach to the After three years in operation, the agent
unbanked, provide a convenient savings network raised the suggestion of upgrading
product to the rural clientele, and create a the agent mobile solution to a smartphone.
$
LOG
value-added service (money transfer). This Many agents had their own smartphones
IN new agent banking channel was not only and were only using the feature phone for
intended to facilitate transactions, but also AMK transactions. This change represented
to enable remote account opening at the an opportunity to upgrade the mobile
local agent, including distribution of ‘no application to a smart app to offer a better
name’ magstripe cards linked to a PIN for user interface. It was also an opportunity
customer authentication. to reduce the upfront cost of setting up
Angkor Mikroheranhvatho Kampuchea is an agent with a transition to a ‘bring your
a microfinance institution in Cambodia, When selecting a technology platform, own device’ model for the agent network.
operating 30 branches and 109 sub-branches AMK was faced with the challenge of a While AMK could not have predicted the
to serve more than 400,000 customers. fragmented MNO sector, with 12 major penetration of smartphones at the time
In 2011, AMK identified a challenge in providers in operation. This, combined with of its technology selection, the flexibility
mobilizing savings in the rural communities the absence of a USSD aggregator, ruled out to respond to this request enables AMK
due to a lack of convenient access to cash in the possibility of a channel based on USSD, to continue expanding the MMT agent
/ cash out services for customers in remote as that would mean setting up separate network to meet the objectives of the
locations. The existing operational model USSD lines with each of the operators. On a channel strategy.
of visiting customers on a weekly basis for positive note, the large number of providers
scheduled loan repayments did not provide meant that there was relatively high mobile While maintaining regular operations, AMK
sufficient access to savings customers, coverage for both phone and data services has proceeded with the implementation
who desired a more convenient means to available. Given that AMK was launching of other delivery channels. In 2013, AMK
access their savings without having to go a proprietary agent network, it had the launched an ATM pilot powered by an
to the branch or wait for a loan officer to EFT switch solution and complementary
control to determine which handset would
pay a visit. AMK assessed the market and card management system. AMK now
explored the potential channel options be used by the agent and selected a low-cost
Nokia C1 feature phone, which has the offers its customers a broader range of
available, concluding that an agent network
capacity to run a J2ME mobile application. outlets to transact, using a personal debit
that provided customers with greater access
to their accounts in remote areas would card to access an AMK account. AMK has
achieve both organizational objectives and In December 2011, AMK launched its implemented an SMS solution to deliver
meet client demand, and would be cost agent banking system with a network of alerts and notifications to staff responsible
effective to implement. local agents empowered by a secure mobile for monitoring the ATM network and
application and through branch offices via is expanding the functionality of this
Although there was an m-wallet provider a complementary Web-based portal. As of application to increase communication
offering money transfer and bill payment October 2014, the MMT network consisted with customers via SMS. Today, AMK is
services via a network of agents in the of 1,020 agents serving 26,663 AMK considered an innovator in delivery channels
market at the time, a partnership with this customers, transacting an average of 85 for microfinance and has plans to continue
organization was not feasible due to its deposits and 102 withdrawal transactions enhancing the delivery of appropriate and
exclusivity agreement with a multinational a day. Once the MMT system was up and viable microfinance services to improve the
bank. After considerable research and running, AMK continued to monitor the livelihoods of customers.

06_CONCLUSIONS AND LESSONS LEARNED
these in its ADC solution. A balance change strategy should evolve with
needs to be struck between staying in the clients’ needs and expectations,
touch with the market demands of the the business and the external market
customers and ensuring a stable and in which it is operating. This does not
reliable transactional platform on which mean reinventing the channel strategy
to extend services. on an annual basis, but rather making
adjustments and enhancements
SON Consider to existing ADCs to align with new
5
conditions. These reviews should be
the context
LES
supported by pre-defined performance
carefully metrics or KPIs, which measure use,
user satisfaction, volumes, down-time,
and other relevant statistics which can
be extracted via tools and reports that
monitor channel operations over a
FSPs should remember that there is no
period of time to compare trends and
‘one size fits all’ in terms of channels.
benchmark with other market data.
FSPs need to consider both the
Depending on the results of these
external and internal environments, as
reviews, FSPs may need to go back to
discussed in Chapter 2, and care must
the drawing board periodically to adapt
be taken to not presume that what was
to changes in technology, demand, and
successful in one place will necessarily
competition. The technology that makes
be successful in another place.
up the ADCs should be dynamic and
flexible enough to support this evolving
channel strategy.
SON An ever-
6
LES
evolving
strategy
As with all strategies, periodic reviews

There is no ‘one size fits are recommended to assess how the
institution has performed against its
all’ in terms of channels. goals and whether the strategy needs to
be adjusted based on technology trends,
changes in customer expectations,
and other relevant feedback from
the market and operational results. A

Checklists
To help consolidate the information provided throughout the handbook,
checklists have been prepared for each of the phases of the project. These are
designed to be practical tips on what decisions or tasks need to be conducted
at each phase and step of the project.
Chapter 2 »» Automate business processes and service

Channel strategy delivery to gain efficiencies.
»» Leverage existing infrastructure (mobile
or retail) to target new markets.
These guiding questions can help draw some »» Enhance the security of existing systems
conclusions as you navigate through the through user authentication.
ADC strategy formulation process. Some are
3. Who will be part of the channel strategy
more general and others are relevant only as
team?
FSPs investigate the potential to use specific
channels.
Step 2: Assess the environments
Step 1: Define the business within which the FSP operates
objectives 1. External environment
1. Confirm the vision, mission and business »» Customers’ needs and demands – Existing
strategy of the FSP. and new customers: execute client
2. What is motivating the consideration to engagement exercises. What is client
implement a new delivery channel? What feedback communicating? Are customers
are our strategic objectives? What is satisfied with the current quality of
the market opportunity we want to take service? What value is put on the product/
advantage of? service? Suggestions for improvement?
»» Improve efficiency (no more batch What is the capacity to self-serve? Once
processing, lower errors, instant you have a channel strategy in mind,
processing, single-step data collection, or come back to the client – does this meet
digital document management). the client’s needs? Is this in demand or
»» Reduce costs (no more driving around can demand be created? What benefits
with cash, and no more manual parts). are available for the client?
»» Scale operations (serving people in new »» Competition – Who is the competition?
areas, particularly remote and rural areas, What is currently being offered? How is
but also in security-poor urban zones). it being offered? At what price? What
»» Extend more convenient and/or more are your customers’ impressions of the
affordable financial services. competition?
»» Reach new customers through agency »» Regulation – What regulations exist for
banking to serve unbanked individuals. channels: mobile, agent banking, KYC,

07_CHECKLISTS
or signature requirements? What of these channels, are upgrades 2. A market analysis, including market
indirect regulation could impact the or customizations required, what research, competitor, and regulatory
design of a delivery channel (for costs should be considered (for reviews.
example, signature, biometric, or example, if paying per user, will 3. An analysis of the proposed channels
national ID)? each new agent be considered as and technology (device, application,
»» ICT landscape – What a new user)? How does the current and communication) and how they
communications are available: SMS, IT strategy impact the channel will meet business goals and customer
USSD, mobile data services, Internet, strategy and what internal security needs.
LAN/WAN, IVR, or NFC? Review the policies should be incorporated? 4. A SWOT analysis of the proposed
availability, quality, and affordability How will the customer’s identity be channels and technology.
of the communication options authenticated?
5. A recommendation, based on the
available to the target market. What »» Capacity – Financial: what is analysis above, of which ADC solution
devices are accessible to the target the budget allocated for this to pursue.
market? Is there electricity and project (inclusive of technology
6. An operational, financial, and
connectivity in the locations where systems, marketing, operations,
IT requirements analysis and a
your target market is based? and support)? Resources: what
recommendation of whether to ‘buy’,
»» Strategic partnerships – Are there is the capacity of the IT team and
‘rent’, or ‘build’.
existing providers that we could IT infrastructure? Should the ADC
7. A high-level timeline and project plan,
partner with? Are potential partners technology be bought, built, or
including the roles and responsibilities
operationally, technically, and rented? What human resources
of key stakeholders or internal teams.
commercially aligned? and skills are required to support
the project implementation and 8. A high-level budget, including the
2. Internal environment
continue operations? source and uses of funds.
»» Product and service offering – What
»» Internal risk and compliance – What 9. A risk analysis, including potential
transactions, products, or services
additional risk do ADCs expose the impact and mitigation.
are currently offered, or do you
have plans to offer in the short to organization to? How can these
The matrix in Table 10 provides channel-
medium term? Should these be self- risks be mitigated, controlled, and
specific questions and considerations
service or OTC? monitored? Are there any potential
for each of the channels discussed in
compliance issues which should be
»» Current channel strategy – How are Chapter 1. The selected channels will
considered? To what extent will the
existing channels performing with be justified by the channel strategy
business use paper versus digital
regards to use and efficiency? How document, which summarizes the
for the operations supported? Do
are we performing against our goals objectives, market analysis, and initial
we still use paper account opening
with the current channel strategy? project plan detailing the operational,
forms, do we need paper receipts for
What are the opportunities for financial, and IT requirements and a
transactions? What do regulations
improvement? What bottlenecks high-level project plan.
say about going paperless?
exist in the current operations
that would be resolved or reduced
by an alternative channel? What Step 3: Define the channel
adjustments are needed in the strategy
operations to make it happen? Define the channel strategy, which must
»» IT environment and strategy – Is the include the following information:
CBS stable, centralized, and capable
1. The business goals and objectives that
of integration (is an API available)?
the proposed channels are meant to
How will the CBS support the addition
address.
Table 10: Channel-specific Considerations
CHANNEL MODEL QUESTIONS AND CONSIDERATIONS
ATM n/a • Availability and cost of joining existing third-party networks.

• Number and location (branch-based versus public) of ATMs currently available in market.
• Interoperability available or desired (that is, proprietary system, open but with closed user group, national
or international).
• Resources to manage proprietary network.
• Card production and management (Who is available to do this? Should you do in-house or outsourced?).
• What types of cards (EMV or other) to use.
• Cash servicing: in-house versus outsourced.
Internet banking n/a • Access to Internet and Internet-enabled devices.

• The proportion of the market that represents SMEs who typically have a higher demand for online
banking from PC rather than mobile (for example, processing bulk payments for salaries).
• Clients involved in value chain that require online transaction facility.
• Regulatory position on initiating and securing transactions done over the channel.
Agent/merchant n/a • Availability and quality of existing third-party agent networks.

banking • Availability of potential agents considering factors such as float/cash, infrastructure, training, and security.
• Investment required for agent recruitment, branding, training, and support.
• Liquidity/float management: options available to ensure agents have access to cash/float.
• Communication infrastructure at potential agent locations.
• Existing devices available at potential agent sites (that is, PC versus mobile versus POS).
• Customer acceptance of transacting with third parties.
• Availability and cost of bulk SMS and short codes.
• Client literacy levels and handset availability.
• Market acceptance of SMS as an alternative to a physical receipt.
• Security level required for this channel: risk of information going to wrong person.
• Regulatory requirements and impact on services.
Extension Field staff • Ability to handle cash operations versus non-cash. What functionality available from this point of service?
services • Communication infrastructure: the need for online versus offline.
• Physical devices available/affordable.
• Security environment: will users be safe carrying tablets/phones/cash.
• Printing, signing, and authentication requirements.
Mini branch • Ability to handle cash operations versus non-cash. What functionality available from this POS?
• Communication infrastructure: the need for online versus offline.
• Existing devices available at mini-branch locations.

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Bank on wheels • Number of locations and potential clients that could be serviced (Where would the vehicle go? How
often?).
• Communication infrastructure: the need for online versus offline.
• Level of security required both in terms of the vehicle and the escorts required for cash security.
• Existing devices available at mini-branch locations.
Mobile banking n/a • Availability of mobile devices with clients, with percentage of smartphones versus feature phones.
• Availability of USSD in country: is this service interoperable, what is the cost, what is the quality, and who
will provide access?
• Availability of payment and channel aggregators to have a single point of contact to connect to all MNOs
and frequently used billers.
• Client comfort level with mobile: will they know how to use it?
• Linkage/dependencies to other channels: withdrawal from m-wallet requires customer-initiated
transaction, hence m-banking required.
• Willingness of clients to pay for the service.
• Revenue model of m-banking service providers: SaaS, revenue share, on-premise solution.
E-wallet n/a • Availability, quality, and cost of existing m-wallet providers.

• Services (both client side and FSP side) available from existing m-wallet providers considering P2B, B2P
as well as reconciliation.
• Types of integration supported by m-wallet provider.
• Quality of existing m-wallet providers’ agent network (agent numbers, location, and level of activity).
• Willingness to partner.
• Motivations and regulatory requirements to introduce bank-led m-wallet.
Call center • Access to phone services and coverage in the markets.

• Availability of IVR in local languages of target market.
• Cost of services by IVR vendor.
• Client’s comfort level with phone banking.

Step 4: Define the business of up-selling/cross-selling. Identify the
non-monetary benefits, including a)
case faster loan turn-around time; b) higher
Create a business model with high- customer satisfaction/convenience;
level financial scenarios based on c) better quality of evaluations; and
initial assumptions related to the d) smooth introduction of product
operational model, partnerships, a updates.
product roadmap, customer adoption 4. Costs: This section provides a
and usage projections, and technical snapshot of potential costs for the
platform costs. Business and financial channel(s) for the FSP to quantify all
models differ widely by institution, so it costs, including information obtained
is very difficult to recommend a specific from the external analysis component
template. However, all implementers to reflect actual costs (for example
need to understand the key drivers – license and transaction fees).
often transactions – and their costs and
5. Net revenues: This section helps
revenue potential. Ultimately, regardless
assess and compare the net revenues
of the model used, the channel strategy
accruing to the FSP vis-à-vis its
document should include a summary
partners and vendors. Net revenues
table for at least five years, with the
for other partners are based on what
following details:
the FSP is expected to pay to each
of these potential partners for their
1. Key indicators: This section should
services.
give an indication of the use and
growth of the proposed channel(s) 6. Analysis: Evaluate the financial impact
over time. in terms of ROI, IRR, and the break-
even point.
2. Pricing: Identify the payment and
pricing models.
Test the model to ensure it is generating
3. Benefits: Quantify all benefits, appropriate outputs.
including a) the reduction in
administration costs; b) the reduction Consider multiple scenarios based on
in the cost of funding; and c) the the profile of the agent: staff, managed
additional revenue from a higher rate network, and third party.

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Table 10: Channel Business Case Summary
CHANNEL BUSINESS CASE SUMMARY TABLE Year 0 Year 1 Year 2 Year 3 Year 4
KEY INDICATORS
Core customers/accounts (#)
Customers/accounts using the channel (#, %)
Number of access points/outlets/ATMs/agents (#)
Txn per customer per day/week/month (#)
Txn per channel per day/week/month (#)
Average txn volumes per day/week/month (#)
Average txn values per day/week/month ($, LCU)
REVENUES ($, LCU)

Financial revenues – from loans
Channel revenue – from commissions and fees
Interest on float
Other cost savings
COSTS ($, LCU)

Financial expenses – cost of funds
Channel expenses – from commissions and fees
Interest on float
CAPEX (investment costs)
OPEX (operating costs)
NET REVENUES – ECOSYSTEM

FSP (Insert name)
MNO partner (Insert name) if applicable
Agent/merchant (Insert name) if applicable
Aggregator (Insert name) if applicable
Vendor (Insert name) if applicable
Switch (Insert name) if applicable
Acquirer (Insert name) if applicable
Issuer (Insert name) if applicable
Partner (Insert name)
Partner (Insert name)

Chapter 3 Step 2: Understanding the
Technology platform influencing criteria Chapter 4
selection 1. Types of transactions – What Vendor selection
These guiding questions can help draw transactions (financial and non-
some conclusions as you decide which financial) will be offered over the
technologies are most appropriate for channel(s)? These guiding questions can help draw
your channel strategy and operating some conclusions as you navigate
2. Security levels – What means of
context. through the ADC strategy formulation
security will be implemented to
process. Some are more general
protect both the client and the
and others are relevant only as FSPs
Step 1: Know what options institution from risks such as fraud
investigate the potential to use specific
are available and theft of identity, information, and
channels.
value?
1. What applications are available –
3. Mode of authentication – What will
For the channel(s) selected, review
we use to identify and confirm the Step 1: Initiation
the options available in terms of
identity of both customer and agent • Identify stakeholders from relevant
software applications. What are the
if we do proceed to use ADCs: bio business units and establish roles and
benefits and disadvantages of each
versus card versus PIN? What existing responsibilities.
option in your specific context?
infrastructure can be leveraged to • Engage with stakeholders to establish
Are any automatically ruled out
facilitate identification? a communication channel within the
due to regulatory requirements,
socio-economic conditions, or 4. Quality / availability / cost of group and ensure alignment. Define
communication limitations? communication channels – Review the selection process, the scope of
the quality, availability, and cost of the work, and selection timelines.
2. What devices are available – For
communication channels available.
the channel(s) selected, review the
options in terms of devices available
Read the fine print. Reach out to Step 2: Identify functional
partners to improve the quality of
in the market and/or already with
service where needed.
and technical requirements
the target users of the channel. What To assist with the extraction of
are the benefits and disadvantages 5. Handset availability in the market/
target market – Research the types requirements for the functionality
of each option in your specific components of ADC solutions, Table
context? Are any automatically ruled of devices available in the market
and used by the target users. Base 11 lists some of the common areas to
out due to regulatory requirements, consider and questions to ask during
socio-economic conditions, or the analysis on cost, security, and
durability. Who will provide the device this requirements identification process.
communication limitations?
to the user?
3. What types of communications
are available – Determine what
communication infrastructure is Step 3: Select the platform
available to support the channel(s). Decide which application, device, and
What are the benefits and communication are best suited to the
disadvantages of each option? channel. Multiple options may exist at
each level to fully cater for the market
and the range of users that will be
targeted.

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Table 11: Questions to assist with general

functional requirements
REQUIREMENT RELEVANT FOR DESCRIPTION

WHICH ADCs?
Registration Potentially all 1. How will customers be registered to transact over the channel?
2. For mobile, how will the customer’s phone number be confirmed?
Fees Potentially all 1. What types of fees should be charged for registration and transactions on the
channel?
2. How are fees calculated and applied?
3. Where will these fees be configured?
Settlement and All 1. Which systems will need to be reconciled?

reconciliation 2. What type of reconciliation is required?
3. What will be the rules governing settlement?
Interoperability Primarily mobile and ATM 1. What level of interoperability will be required from a user’s perspective?
2. What operating systems should be supported for mobile and Web platforms?
3. If biometrics are to be used, how to ensure compatibility?
Reporting All 1. How will the channel activity be monitored?
Scalability All 1. What are the expected transaction levels with projections for five years?
2. What number of users will be accessing the system?
Flexibility All 1. What is needed in terms of flexibility?
Standards All 1. Does the channel strategy dictate any specific standard that must be adhered to (for
example, EMV or ISO)?
Online/Offline Potentially all 1. For extension services, what systems, or functions, should be available in offline
mode?
2. What should be the behavior of the ADC when/if the CBS is offline for end of day/
month?
Integration/ All 1. What front-office and back-office systems will need to be integrated?
2. What type of integration? Batch or real-time?
Middleware 3. What functionality must each interface support?
Security All 1. What systems are required to support the preferred mode of customer authentication?
Are these systems going to be external from CBS or within it?
2. How will the physical devices used for data entry be secured (agency or extension
services)?
3. How will the communication networks required be secured?
4. What security measures are expected from the ADC back-office systems?
5. What support is required to fully audit the ADC and monitor the controls in place
(system-based controls, audit reports, and additional systems – AML)?

REQUIREMENT RELEVANT FOR DESCRIPTION
WHICH ADCs?
Agent Agent/merchant 1. In which system will the agents be defined?
management 2. How and where will limits on agent transactions be defined?
3. Will float accounts be used and if so which system will be used to define these
accounts and then map them to the agent user?
4. What commissions will be due to agents, where to define these and when to pay?
5. Is there a hierarchy that needs to be enforced in the agent network?
ATM/POS ATM (in-house) 1. Which system will drive and manage the ATM/POS devices?
management 2. What system will be used for CMS?
3. Which Security Module will be used? HSM vs SSM?
Step 3: Vendor selection • Which vendors have a reputation requirements, the financial costs, and
for providing the type of product/ feedback from demos /references.
1. Prepare the RFP
services that are required?
• Brief background about the FSP.
• Confirm with the vendors who will be Step 4: Contracting
• Business and channel strategy (may participating and clearly communicate 1. Review the contracts with due care
include a phased approach). the timeframe for the process so they and pay specific attention to:
• Overview of project: objectives, can plan accordingly. • License terms
scope, and related projects. 3. RFP issue • Project deliverables
• Selection process and deadlines. • Decide who to invite to the RFP and • Milestones
• Criteria for decision making, including whether they should be pre-qualified. • Payment terms
preferences on different licensing • Issue the RFP with clear instructions to • Responsibilities on both sides
structures (license versus SaaS versus vendors on the information required
revenue share). • Support level agreements after ‘go
and the deadlines. live’.
• Expected content and format for the • How will the responses be evaluated?
response. 2. Negotiate and sign the required
Specify the criteria before the process contracts with the vendors, considering
• Functional requirements with begins so there is no bias. both initial implementation and
weighting to reflect priority. • Request an estimated price based ongoing support. It is advised that
• Technical requirements (overview of on the requirements in the RFP to FSPs allocate sufficient time for
CBS and current infrastructure). test financial proposals against the contracting. This process typically
• Project timing. business case. takes longer than expected and
• Expected services from the vendor. • Request contract templates to get can delay the project start if terms
2. Vendor shortlist familiar with payment, service, and cannot be negotiated in a timely
• What criteria are being used for pre- support terms. manner. FSPs should consider that
qualification? 4. Evaluation not all vendor contracts are identical
• Which vendors are serving or have a • Calculate the scores based and contracting multiple technology
presence in this market, most likely on proposals, references and vendors will require a resource to be
working with your competitors or FSP demonstrations. responsible for vendor management.
peers? • Evaluate the proposals received
considering the match to the

07_CHECKLISTS
Chapter 5 »» Defining and helping to achieve the • Confirmation on parameterization of

Implementation project outcomes
»» Identifying the priorities in the
the system.
• Identification of new system
project – where the most energy processes.
These guiding questions can help draw should be directed • Identification of any required
some conclusions as you navigate
»» Identifying potential risks customizations.
through the implementation process
»» Monitoring risks
and plan for ongoing maintenance, In order to analyze the requirements,
support, and evaluation. »» Monitoring timelines
a concerted effort should be made to
»» Monitoring the quality of the project gather all of the relevant requirements.
as it develops We suggest the following methods and
Step 1: Project team »» Providing advice (and sometimes categories to be included in the process:
formation making decisions) about changes
Identify the full project team which to the project as it develops. • Methods used for gathering
includes: requirements
Step 2: Project kick-off »» Brainstorming
• Project managers – Each implementation Project kick-off establishes the »» Focus group
project that uses an external solution foundation for effective business »» Business process reengineering
should have a minimum of two project requirements gathering by aligning exercises
managers, one for the FSP and one expectations and engaging the
for the vendor. These individuals are »» Obtain and analyze relevant
people who have knowledge of the documentation
responsible for liaising directly on all business needs and can determine the
matters as the primary communication »» Interviews
requirements. Recommended steps are:
channel and for communicating with »» Active observation
their respective teams as needed. • Introduce team members and »» Prototyping
• Core implementation group / assign responsibilities to create »» Requirements workshop
implementation team – Includes accountability. »» Use cases – maps user interaction.
representatives from finance, • Agree on a high-level strategy for the • Requirements categories
IT, customer service, marketing, solution.
»» Institutional information
operations, risk, compliance, and • Agree on an implementation process
audit. »» Client information
and a high-level project plan.
• Project sponsor – Heads the steering »» Credit management
• Establish relevant processes, such
committee and serves as direct line to as project governance, change »» Deposit management
the board in most cases. management, and escalation. »» Accounting process.
• Steering committee – Provides The output of this process is a Functional
support, guidance, and oversight Step 3: Requirement analysis
Specification Document, which outlines
of project progress. Members do This step is best completed with the the following:
not usually work on the project vendor on site, as it is an opportunity to
themselves. Responsibilities include: show the vendor the FSP operations in • Executive summary
»» Providing input to the development detail. Activities to include are: • Document purpose
of the project, including the • An overview of the products for • Definition of key terms
evaluation strategy the core team to begin learning the • Information sources
»» Providing advice on the budget system. • Solution overview
• Solution components

• Assumptions and dependencies, risks, Back-end considerations • Perform a minimum of two sample
and controls data migrations to confirm all
»» What servers are required to host
• System users/players migration scripts are working as
the system?
• General navigation required.
»» Preparation of all environments:
• Core processes and workflows production, testing, and disaster
supported recovery Step 6: Installation
• Configuration settings »» Additional channel-specific • Request confirmation that the solution
• Customizations required hardware (for example, HSM and has passed quality assurance testing
• Reports description card printer)? before the system is installed.
• Implementation considerations • Include IT in the installation process to
gain familiarity with the system.
Integration requirements Step 5: Configuration /
• Install the system on all required
customization environments.
• Which systems need to be integrated?
Which parties will actually be involved While the system is under configuration/
customization, the FSP will need to do Step 7: User acceptance
in the channel? (Third-party entities:
bulk SMS providers, m-wallet systems, the following: testing
payment aggregators, and national or • Request regular status updates to • Focus on completing all test cases
international interchanges.) monitor progress. (regardless of the success rate) so
»» What type of integration(s)? • Provide prompt responses to inquiries that the vendor is aware of all issues
»» What protocol/format to use for from the vendor to avoid delaying or bugs in the first round of testing.
real-time integration? configuration or development. • Provide details of how you discovered
»» How will settlement and/or • Participate in communications any issues and ensure that this can be
reconciliation be done (automated between vendors, partners, and third recreated for investigation.
or manual)? parties. • Compile a list of all change requests
• Prepare UAT test cases to verify the and enhancements to be completed
Step 4: Hardware exact functionality and expectations of as a separate project once this release
is delivered as expected.
procurement the system according to the functional
requirements documentation and Step 8: Training
This depends on the ADC technology
agree to a test plan with the vendor.
being implemented and includes: • Who will attend the training? How
will this training be delivered/
Front-end considerations Step 5b: Data migration (if communicated to the end-users?
• Who is furnishing the devices? required) • Consider using a ‘training of trainers’
»» FSP For those systems that require approach.
»» Third party migration, the following tasks need to • Train a helpdesk for users – internal
be completed: and external.
»» Client
• Compatibility • Decide on a data migration strategy Step 9: Go live
»» Testing hardware with software – how data will be extracted, loaded, • Consider a pilot to test the channel
»» Testing with peripherals and reconciled between the source and technology with live data to
system and the new ADC platform. receive feedback from clients/end-
users.

07_CHECKLISTS
• Consider how the customer • Create system support and a

experience will change and prepare to maintenance plan with a monitoring
engage with clients and be attentive schedule and criteria to ensure that
and responsive to questions and the system is operating effectively.
learning to encourage uptake – first • Understand the helpdesk protocols
impressions have a lasting effect. and vendor support availability.
• Gain confidence in the systems before • Conduct a post-implementation
introducing it to the wider public. review to see what lessons were learnt
and what work is still outstanding, and
Step 10: Maintain and start the assessment of whether the
project has met its goals.
enhance • Schedule regular maintenance of
• Distribute relevant documentation, hardware and software items to
user manuals, and administrative ensure optimal performance.
manuals. • Establish reports and metrics to
• Offer continuous training and support measure the performance of the
to ensure adoption and use. channel against a set of predefined
• Allocate resources for adjustments metrics or strategic goals to track the
and additional support in the early performance of the channel.
days to cater for feedback or • Identify opportunities for improvement
enhancements identified by the users. based on client feedback.

Glossary
TERM DEFINITION
3rd Generation Mobile Third generation of mobile telephony (cellular) technology. 3G telecommunication networks support services that
Network (3G) provide an information transfer rate of at least 200 kbit/s and a maximum of 3.1Mbps.
4th Generation Mobile Fourth generation of mobile telephony technology, succeeding 3G and preceding 5G. As opposed to earlier
Network (4G) generations, a 4G system does not support traditional circuit-switched telephony service, but all-Internet Protocol-
based communication such as IP telephony, and provides higher download speeds relative to 3G.
Agent A person or business contracted to process transactions for users. The most important of these are cash in and cash
out (that is, loading value into the mobile money system, and then converting it back out again); in many instances,
agents register new customers too. Agents usually earn commissions for performing these services. They also often
provide front-line customer service, such as teaching new users how to complete transactions on their phone.
Typically, agents will conduct other kinds of business in addition to mobile money. Agents will sometimes be limited
by regulation, but small-scale traders, microfinance institutions, chain stores, and bank branches serve as agents in
some markets. Some industry participants prefer the terms ‘merchant’ or ‘retailer’ to avoid certain legal connotations
of the term ‘agent’ as it is used in other industries. (GSMA, 2014).
Agent banking Banking services, often limited, carried out by an agent.
Aggregator Servicer provider with existing integrations to a number of MNOs and/or PSPs to facilitate billing, technical, and
operational relationships and interfacing across operators via one link to the aggregator, as opposed to separate
integrations with each provider.
Alternative Delivery Channels that expand the reach of financial services beyond the traditional branch. These include ATMs, Internet
Channels (ADCs) banking, mobile banking, e-wallets and extension services.
Android A Linux-based mobile operating system originally developed by Android and currently developed by Google. With
a user interface based on direct manipulation, Android is designed primarily for touchscreen mobile devices such
as smartphones and tablet computers.
Anti-Money Laundering/ AML/CFT are legal controls applied to the financial sector to help prevent, detect, and report money-laundering
Combating the activities.
Financing of Terrorism
(AML/CFT)
Application A method of specifying a software component in terms of its operations by underlining a set of functionalities that
Programming Interfaces are independent of their respective implementation. APIs are used for real-time integration to the CBS/MIS, which
(API) specify how two different systems can communicate with each other through the exchange of ‘messages’. Several
different types of APIs exist, including those based on the Web, TCP communication, and direct integration to a
database, or proprietary APIs written for specific systems.

Automated Teller An electronic telecommunications device that enables the customers of a financial institution to perform financial
Machine (ATM) transactions without the need for a human cashier, clerk, or bank teller. ATMs identify customers via either a magnetic
or chip-based card, with authentication occurring after the customer inputs a PIN number. Most ATMs are connected
to interbank networks to enable customers to access machines that do not directly belong to their bank, although
some closed-loop systems also exist. ATMs are connected to a host or ATM controller using a modem, leased line or
ADSL.
Basic phone The most basic type of mobile handset available on the market. This phone has no data or GPRS capabilities and for
MFS is only compatible with USSD and STK applications.
Branchless banking The delivery of financial services outside of conventional bank branches through the use of retail agents and ICT. For
the purpose of this handbook we have considered this term to be equal to ADC and e-banking.
Call center A centralized office used for the purpose of receiving or transmitting a large volume of requests by telephone. In
this context, as well as handling customer complaints and queries, it is also used as an alternative delivery channel to
improve outreach and attract new customers via various promotional campaigns.
Card Management The system used by businesses to manage the full administration and support associated with payment cards. A CMS
System (CMS) will typically provide functionality to manage card product definition, application processes, production, and issuing,
blocking, and managing transactions along with the card balances, if required. A CMS will be required for any FSP
that wants to use either POS or ATMs with cards as the means of customer authentication.
Channel The customer’s access point to a FSP, namely who or what the customer interacts with to access a financial service
or product.
Core Banking System The core system used by a FSP to manage all of its key business processes, including front- and back-office
(CBS) components. Most CBSs provide CRM functionality, loan portfolio tracking, accounting, and reporting. For the
purpose of this handbook we have used the term synonymously with Management Information System.
Core Implementation A group of staff from the FSP charged with making the day-to-day decisions regarding the ADC project
Group (CIG) implementation. This group will be involved in training, requirements analysis, and testing of the systems and typically
form a group of ‘super users’ or champions of the system.
Electronic banking The provision of banking products and services through electronic delivery channels.
(e-banking)
Enabling technology For the purpose of this handbook we refer to the enabling technology as the underlying technology platform used
to drive an ADC. It includes the hardware devices, software systems, and the technological processes that enable the
provision of financial products and services over ADCs.
Europay, MasterCard, EMV stands for Europay, MasterCard, and Visa, a global standard for the inter-operation of integrated circuit cards
and Visa (EMV) (IC cards or ‘chip cards’) and IC card-capable POS terminals and ATMs, for authenticating credit and debit card
transactions (Wikipedia, 2014).
E-wallets/e-money Short for ‘electronic money’, it is stored value held in virtual wallets or cards. Typically, the total value of e-money is
mirrored in bank account(s), so that even if the provider of the e-wallet service were to fail, users could recover 100
percent of the value stored in their accounts. Bank deposits can earn interest, while e-money cannot.

Extensible Markup A markup language that defines a set of rules for encoding documents in a format that is both human-readable
Language (XML) and machine-readable. The design goals of XML emphasize simplicity, generality, and usability over the Internet.
It is a textual data format with strong support via Unicode for different human languages. Although the design of
XML focuses on documents, it is widely used for the representation of arbitrary data structures, for example in Web
services.
Extension services Field-based banking services often performed by FSP staff. This includes remote data capture, mini branches and
branch on wheels.
Feature phone A mobile handset that is more advanced than a basic handset by the fact that it contains embedded data transfer/
GPS capabilities. A feature phone can be used to connect to the Internet or to run mobile applications dependent
on data connectivity. Unlike smartphones, feature phones have no in built security and limited peripherals and
applications.
Financial Service A provider of financial services including credit unions, banks, non-banking financial institutions, microfinance
Providers (FSP) institutions, and mobile financial services providers.
General Packet Radio A packet-data technology that allows GSM operators to launch wireless data services, such as e-mail and Internet
Service (GPRS) access, via a SIM card. This is a 2G grade of wireless communication with maximum download speeds of 114kbps.
Global Positioning A space-based satellite navigation system that provides location and time information in all weather conditions,
System (GPS) anywhere on or near the Earth where there is an unobstructed line of sight to four or more GPS satellites.
Global System for An open, digital cellular technology used for transmitting mobile voice and data services. It is the most common
Mobile Communications standard for mobile communication, with over 90 percent market share.
(GSM)
Hardware Security A physical device used as part of the payment card issuing and authentication process. The HSM is connected to the
Module (HSM) network hosting an ATM or POS, with the primary functionality of generating PIN numbers and in some cases storing
encryption keys required to authenticate the PIN number provided.
Hypertext Transfer An application protocol for distributed, collaborative, hypermedia information systems – it is the foundation of data
Protocol (HTTP) communication for the World Wide Web. Hypertext is structured text that uses logical links (hyperlinks) between
nodes containing text.
Interactive Voice A technology that allows a computer to interact with humans through the use of voice and DTMF tones input
Response (IVR) via keypad. IVR allows customers to interact with a company’s host system via a telephone keypad or by speech
recognition.
International Mobile A unique 15-digit serial number, assigned to every single mobile phone. It can normally be found on the back of the
Equipment Identity phone, under the battery. IMEI consists of four groups of numbers. The first group identifies the type approval code,
(IMEI) the second the manufacturer, the third the serial number, and the fourth group is a single digit (usually a zero).
Internet banking An electronic payment system that enables customers to conduct financial transactions on a secure website
operated by a FSP.
iOS The operating system used with devices manufactured by Apple.
J2ME app J2ME is a Java programing platform designed for building applications to run on mobile devices. It is commonly used
to build mobile apps that need to run on devices with limited memory, display, and power capacity, such as feature
phones.

JavaScript Object An open standard format that uses human-readable text to transmit data objects consisting of attribute–value pairs.
Notation (JSON) It is used primarily to transmit data between a server and Web application, as an alternative to XML.
Kiosk A computer terminal featuring specialized hardware and software that provides access to information and
applications for communication, commerce, entertainment, and education. Integration of technology allows kiosks to
perform a wide range of functions, evolving into self-service kiosks.
Know your customer Rules related to AML/CFT that compel providers to carry out procedures to identify a customer and that assess the
(KYC) value of the information for detecting, monitoring, and reporting suspicious activities.
Local Area Network/ LAN is a computer network covering a small geographic area, like a home, office, school, or group of buildings.
Wide Area Network WAN is a computer network that covers a broad area (for example, any network whose communications links across
(LAN/WAN) metropolitan, regional, or national boundaries over a long distance).
Magstripe/ magnetic A type of plastic card which stores data about the customer on a machine-readable magnetic strip on the back of
strip card the card. Magstripe cards have been used with ATMs and POS devices, although they are slowly being replaced by
EMV/ chip and pin cards.
Merchant A person or business that provides goods or services to a customer in exchange for payment.
Microfinance Institution A financial institution specializing in banking services for low-income groups, small-scale businesses, or individuals.
(MFI)
Mobile banking The use of a mobile phone to access banking services and execute financial transactions. This covers both
transactional and non-transactional services, such as viewing financial information on a bank customer’s mobile
phone. Sometimes called ‘m-banking’.
Mobile Financial A general term referring to the use of mobile technologies to access financial services. This includes mobile banking
Services (MFS) and mobile money / m-wallets.
Mobile Money A service in which the mobile phone is used to access financial services (GSMA, 2014).
Mobile Network A company that has a government-issued license to provide telecommunications services through mobile devices.
Operator (MNO)
Mobile Point of Sale A mobile application designed to mimic the same functionality offered by a traditional physical POS device. mPOS
(mPOS) applications typically interact with a card reader and/or printer to replicate the full functionality of the traditional POS
device.
Mobile wallet (m-wallet) An e-money account that is primarily accessed using a mobile phone that is held with the e-money issuer. It is
typically linked to a unique mobile phone number.
Native apps Mobile applications that are manually installed on the phone and run in almost the same way as a computer program
installed on a PC. Native apps can be categorized by the operating systems running on the mobile phone, with the
most common being Google (Android) and Apple (iOS), and Windows for smartphones and Java/J2ME apps for
feature phones. Native applications can be developed to serve as a user interface for a variety of business uses,
including mPOS, agent apps or field-based data capture apps. Native apps can operate in either online or offline
mode, depending on the design of the application and the quality of the communications available.
Near Field A method of contactless card payment (without a PIN), which uses short-range radio signals to exchange
Communication (NFC) information between a card or mobile device and a terminal.

Offline Offline means not connected to the Internet or network connection. Some programs or applications are configured
to operate offline or have the option to work offline when the connection is lost so that data entry is not interrupted,
meaning the software continues to function on the device and stores data locally. However, no data can be
transmitted to or from the device on which it is operating until a connection is established. Offline data can be
synchronized with an online or central database when connectivity is re-established or the device is tethered to
transfer data.
One Time Passwords A security protocol that works on the basis of one factor of authentication being generated only when needed,
(OTP) namely at log in or transaction posting, and acts as a single use password or PIN.
Over The Counter (OTC) Channels that require the customer to interact with a member of the FSP staff or a third-party representative to
transact.
Point of Sale (POS) Electronic device used to process card payments at the point at which a customer makes a payment to the merchant
device/terminal in exchange for goods and services. The POS device is a hardware (fixed or mobile) device that runs software to
facilitate the transaction. The hardware used may vary.
Premium Rate Service An intermediary provider, licensed by the MNOs and usually the government, to offer bulk SMS, USSD, and short
Provider (PRSP) code services. The regulation governing these businesses will vary from country to country, with some places
allowing for only a direct relationship with the MNOs for these services. Where regulations for PRSP exist, a FSP will
need to contract with these parties in order to access bulk SMS and/or USSD channels, although these services will
still require a tripartite agreement between the FSP, MNO, and PRSP. For this handbook we have considered a PRSP
as the same as an Aggregator.
Request for Proposal A solicitation made by a company to initiate a bidding process to procure a commodity, service, or valuable asset
(RFP) from potential vendors who are requested to submit business proposals. The RFP should provide all the information
and requirements that a FSP has identified as necessary or desirable to assist vendors to prepare a suitable proposal
for their services and products.
Self Service Channel A channel that is available to customers without any other human interaction.
Short Code Short codes (also known as short numbers) are special telephone numbers, significantly shorter than full telephone
numbers, that can be used either to initiate a USSD session or to request a pull SMS. Short Codes are issued either by
the communications authority, MNO or, where applicable, the PRSP.
Short Message Peer-to- An open telecommunications industry standard protocol designed to provide a flexible data communication interface
Peer (SMPP) for the transfer of short message data. It is used to process bulk SMS messaging.
Short Message Service A ‘store and forward’ communication channel that involves the use of the telecom network and SMPP protocol to
(SMS) send a limited amount of text from one phone to another, or one to many.
SIM Application Toolkit A standard of the GSM system which enables the Subscriber Identity Module, or SIM, to initiate actions which can be
(STK) used for various value-added services.
Smart app An application software designed to run on smartphones, tablet computers and other mobile devices.
Smart card A smart card, chip card, or integrated circuit card is any pocket-sized card with embedded integrated circuits.
Smart cards can provide identification, authentication, data storage, and application processing via an embedded
microchip.

Smartphone A mobile phone that has the processing capacity to perform many of the functions of a computer, typically having
a relatively large screen and an operating system capable of running a complex set of applications, with Internet
access. In addition to digital voice service, modern smartphones provide text messaging, e-mail, Web browsing, still
and video cameras, an MP3 player, and video playback with embedded data transfer/GPS capabilities.
Software as a Service SaaS is s software licensing delivery model in which software is licensed on a subscription basis and made accessible
(SaaS) via the Internet as a hosted service, instead of installing and maintaining software.
Transaction A security protocol that works on the basis of one factor of authentication being generated only when needed,
Authentication Numbers namely at log in or transaction posting, and acts as a single-use password or PIN. The term is interchangeable with
(TAN) One Time Passwords.
Unstructured A protocol used by GSM mobile devices to communicate with the service provider’s computers/network. This
Supplementary Service channel is supported by all GSM handsets, enabling an interactive session consisting of a two-way exchange of
Data (USSD) messages based on a defined application menu.
User Acceptance Testing The testing process that occurs at the end of a software development process whereby the actual software users test
(UAT) the software to make sure it can handle the required tasks in real-world scenarios, according to specifications. In this
context, the ADC system would be tested to confirm it meets the agreed specifications and requirements of the FSP.
Virtual Private Network A private data network that makes use of the public telecommunication infrastructure, maintaining privacy through
(VPN) the use of a tunnelling protocol and security procedures. It enables a computer to send and receive data across
shared or public networks as if it is directly connected to the private network, while benefiting from the functionality,
security, and management policies of the private network.
Web API A set of HTTP request messages that have defined structured response messages. These messages can be written in
various languages such as XML or JSON format.
Web app A software application that is created in a browser-supported programming language (such as the combination of
JavaScript, HTML, and CSS) and runs in a Web browser relying on the browser to render the application. Web apps
function very much as a standard Internet website using a URL, but the size and features are designed to display and
interact better on a mobile device than on a traditional website.
Wi-Fi Local area wireless technology that allows an electronic device to exchange data or connect to the Internet using
radio waves.

Reference documents
Basel Committee on Banking Supervision (July 2003). Risk Management Principles for Electronic
Banking. Bank for International Settlements Communications, Basel, Switzerland.
www.bis.org/publ/bcbs98.pdf
Global Technology Audit Guide ‘GTAG’, Fraud Prevention and Detection in an Automated World
(December 2009) and Information Technology Controls (March 2005). The Institute of Internal
Auditors Inc. (IIA), 247 Maitland Ave., Altamonte Springs, FL 32701-4201, United States of America.
www.theiia.org/
CGAP Focus Note No 75. Bank Agent: Risk Management, Mitigation, and Supervision (December
2011). Kate Lauer, Denise Dias, and Michael Tarazi.
www.cgap.org/publications/bank-agents-risk-management-mitigation-and-supervision
Digital Financial Services Risk Assessment for Microfinance Institutions Pocket Guide (September
2014). The Digital Financial Services Working Group, Washington, D.C., United States of America.
https://lextonblog.files.wordpress.com /2014/09/dfs_risk_guide_sept_2014_final.pdf
Flaming, M, Mitha, A, Hanouch, M, Zetterli, P, and Bull, G (2014). Partnerships in Mobile Financial
Services: Factors for Success. IFC: Washington, D.C., United States of America.
http://www.mastercardfdn.org/wpcontent/uploads/Partnerships+in+Mobile+Financial+Services.pdf
http://www.ifc.org/wps/wcm/connect/113c8880418993f38c15bf8d8e2dafd4/
Partnerships+in+Mobile+Financial+Services+PDF.pdf?MOD=AJPERES

Geraldine O’Keeffe
Geraldine is Chief Operating Officer and co-founder of Software Group, a company
focused on providing delivery channel technology to the development finance sector.
Geraldine has worked globally with financial service providers to consult, design,
build and deploy technology solutions with the aim to improve efficiency, outreach
and expand access to financial services. Previous experiences includes consulting
for Arthur Anderson and CMP in London, IT manager for an MFI in Uganda, Director
for an MIS vendor, and independent consultant. In the last 13 years, Geraldine
has completed over 50 consultancy assignments and 30 successful software
implementation projects. Geraldine has a Masters in Management and Information
Systems from the University of Manchester and graduated with distinction.
Charlene Bachman
Charlene Bachman is a development finance professional working as the Business
Development Manager for Software Group in Asia Pacific. With experience working
with financial institutions across Latin America, Asia and the Pacific, Charlene
promotes the use of delivery channels and technology solutions that aim to expand
the reach of financial inclusion, increase operational efficiency and facilitate access
to financial services. Prior to joining Software Group, Charlene worked in Global
Investments at Accion International where she supported multiple impact investing
funds targeting the MFI and Fintech sectors with a range of business development,
investment analysis and portfolio management activities. Charlene holds dual
bachelor degrees in Business Administration and International Studies from American
University in Washington, DC.
Omoneka Musa Oyier

Omoneka is an Operations Officer in the IFC Financial Institutions Group Advisory
Services team, and manages advisory projects for IFC clients looking to scale up
mobile money and agent banking across Africa. Omoneka has a background in
management consulting with experience providing technical assistance to banks,
microfinance institutions, mobile financial services providers and policy makers.
Omoneka has a Master’s Degree in International Relations and Economics from
Johns Hopkins University’s School of Advanced International Studies (SAIS).

The Partnership for Financial inclusion
The Partnership for Financial Inclusion is a $37.4 million joint initiative of IFC and
The MasterCard Foundation to expand microfinance and advance mobile financial
services in Sub-Saharan Africa. It brings together the intellectual and financial
capital of the Foundation with IFC’s market knowledge, expertise and client base.
The Partnership is also supported by the Bill & Melinda Gates Foundation and the
Development Bank of Austria (OeEB, Oesterreichische Entwicklungsbank AG), and
collaborates with knowledge partners such as the World Bank and the Consultative
Group to Assist the Poor (CGAP). An important objective of the partnership is to
contribute to the global community of practice on financial inclusion, and to share
research and lessons learned. This publication is part of a series of reports published
by the partnership. To find out more, please visit www.ifc.org/financialinclusionafrica
Software Group
Software Group is among the leading global vendors of delivery channels solutions
for Microfinance Industry with experience in over 50 countries. They are helping their
clients to address the financial inclusion challenge by providing a variety of innovative
delivery channel solutions that helps expand outreach and improve efficiency. Learn
more about Software Group’s products and services at www.softwaregroup-bg.com
The MasterCard Foundation

The MasterCard Foundation is an independent, global organization based in
Toronto, Canada with over US$9 billion in assets. Through collaboration with partner
organizations in 49 countries, it is creating opportunities for all people to learn and
prosper. The Foundation’s programs promote financial inclusion and advance youth
learning, mostly in Africa. Established in 2006 through the generosity of MasterCard
Worldwide when it became a public company, the Foundation is a separate and
independent entity. The policies, operations and funding decisions of the Foundation
are determined by its own Board of Directors and President and CEO. For more
information on the Foundation, please visit: www.mastercardfdn.org
IFC
IFC, a member of the World Bank Group, is the largest global development institution
focused exclusively on the private sector. Working with private enterprises in about
100 countries, we use our capital, expertise, and influence to help eliminate extreme
poverty and boost shared prosperity. In FY14, we provided more than $22 billion
in financing to improve lives in developing countries and tackle the most urgent
challenges of development. For more information, visit www.ifc.org.
CONTACT DETAILS
Anna Koblanck
IFC, Sub-Saharan Africa
[email protected]
www.ifc.org/financialinclusionafrica

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b ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY

ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY 3 CHAPTER 6

4 ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY

CONCLUSIONS AND LESSONS LEARNED 77

ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY 5 CHAPTER 4

ADSL Asymmetric Digital Subscriber Line

AML Anti-Money Laundering

API Application Programming Interfaces

ATM Automated Teller Machine

BCP Business Continuity Planning

BPR Business Process Reengineering

CBS Core Banking System

CFT Combating the Financing of Terrorism

CIG Core Implementation Group

CMS Card Management System

CVV Card Verification Value

DTMF Dual Tone Multi Frequency

e-banking Electronic Banking

e-money Electronic Money

e-wallet Electronic Wallet

EFT Electronic Funds Transfer

EMV Europay, MasterCard, and Visa

EOI Expression of Interest

FRR False Rejection Rate

6 ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY

GPRS General Packet Radio Service

GPS Global Positioning System

GSM Global System for Mobile Communications

HCM Human-Centered Design

HSM Hardware Security Module

HTML Hypertext Markup Language

HTTP Hypertext Transfer Protocol

IMEI International Mobile Equipment Identity

ICT Information and Communication Technology

ICC Integrated Circuit Card

iOS Operating System developed by Apple

IRR Internal Rate of Return

ISO International Organization for Standardization

IVR Interactive Voice Response

J2ME app Java 2 Platform, Micro Edition

JSON JavaScript Object Notation

KPI Key Performance Indicator

KYC Know Your Customer

LAN / WAN Local Area Network / Wide Area Network

m-banking Mobile Banking

m-wallet Mobile Wallet

ALTERNATIVE DELIVERY CHANNELS AND TECHNOLOGY 7

MDM Mobile Device Management

MFI Microfinance Institution

MFS Mobile Financial Services

MIS Management Information System

MTI Message Type Indicator

NFC Near Field Communication

OTA Over the Air

OTC Over the Counter

OTP One Time Password

PDA Personal Digital Assistant

POS Point of Sale

PRSP Premium Rate Service Provider