Background notes on interview with Mr. Konstantin Peric, Deputy Director, Financial Services for the Poor, Bill & Melinda Gates Foundation
Host: Emmanuel Daniel, Chairman, The Asian Banker
Guests: Konstantin Peric, Deputy Director, Financial Services for the Poor, Bill & Melinda Gates Foundation
Opening access payments and financial services to the poor:
How is the foundation helping to deliver digital payment solutions driving financial inclusion?
Best practice case studies from Nigeria, Indonesia, Pakistan, India and Bangladesh
Progress based on the Bill & Melinda Gates foundation GoalKeepers Report 2020:
Interoperable Digital Financial Services for Credit Unions in Indonesia and the Philippines (October 2018 – December 2020):
Konstantin Peric’s Profile:
Konstantin Peric, deputy director, Financial Services for the Poor leads the team that focuses on digital payments. He is a technologist, and his interests lie at the point of fusion between technology, finance and innovation. From governance through business models to technology - from ideas through architecture to development: he oversees the strategy and grants to deliver digital payment solutions for the poor. Current focus countries include Nigeria, Indonesia, Pakistan, India, Bangladesh. He is leading the Level One Project initiative to foster deployment of payment platforms to serve the poor (http://leveloneproject.org), and the open source Mojaloop software (http://Mojaloop.io).
Prior to joining the foundation in 2013, he was the chief architect of SWIFNet, SWIFT’s global secure network connecting 10,000 financial institutions and corporates in the world, and co-founder of Innotribe, SWIFT’s initiative to enable collaborative innovation in financial services.
Peric holds a master’s degree in computer science from Free University of Brussels, Belgium. He is the author of The Castle and the Sandbox, a book on how to innovate in conservative companies using open innovation.
Bill & Melinda Gates Foundation profile:
The Bill & Melinda Gates Foundation works to help all people lead healthy, productive lives. In developing countries, it focuses on improving people's health and giving them the chance to lift themselves out of hunger and extreme poverty. In the United States, it seeks to ensure that all people—especially those with the fewest resources—have access to the opportunities they need to succeed in school and life. Based in Seattle, Washington, the foundation is led by CEO Mark Suzman, under the direction of Bill and Melinda Gates and Warren Buffett.
In 2019 the foundation funded grantees in 48 states and the District of Columbia. Internationally, it funded work in 135 countries.
Funding Allocation for Financial Services for the Poor (2017-2019)
|Financial Services for the Poor||$109.65 Million||$116.28 Million||$128.440 Million|
Source: Gates Foundation Annual Reports
Relevant news on Bill & Melinda Gates Foundation:
Google and Gates Foundation to help spread digital payments in developing countries
6 May 2020
For more than a decade, Kenyans from the bustling capital of Nairobi to far-flung farms have had access to a digital payments service that was ahead of its time. M-Pesa, introduced in 2007 by Vodafone and Kenya’s Safaricom mobile provider, lets users send and receive money on their mobile phones, providing bank-like services for millions who had relied on cash and informal networks.
By 2012, Kenyans had registered 17 million accounts. And by making saving easier and small businesses more efficient, M-Pesa had helped lift 194,000 Kenyan households out of poverty, a study in 2016 concluded.
Now, a coalition of nonprofits and tech companies including Google and the Bill and Melinda Gates Foundation want to repeat those outcomes worldwide by making it easier for developing countries to build real-time digital payments systems. On Wednesday, they announced the formation of the Mojaloop Foundation, which will develop and promote a free, open-source real-time payments platform intended for nations and central banks. The Mojaloop Foundation’s founding sponsors also include the Rockefeller Foundation, the philanthropy and investing group Omidyar Network, and the financial technology startups Coil and ModusBox.
The initiative would help tie together a growing array of digital financial services. M-Pesa, which has expanded from Kenya to countries including Ghana, Egypt, and India, has inspired hundreds of imitators worldwide. But these largely privately-run systems are fragmented.
“Systems [like M-Pesa] are silos,” says Kosta Peric, deputy director of financial services for the poor for the Gates Foundation. That can mean friction and high fees to transact between systems. “Imagine a mobile phone system where you can only talk to people connected to the same provider. It’s useful, but only so much.”
But national payments systems based on Mojaloop, as the new platform is called, may be even more beneficial because they would connect many different banking and payments systems. That could allow M-Pesa to interact seamlessly with other digital wallets, traditional bank accounts, or remittance services like Western Union, likely enhancing the value of existing payments services rather than competing with them.
Beyond individual impacts, expanded digital payments could also boost the global economy. A 2016 McKinsey study concluded that widespread and affordable digital finance tools could grow the economies of developing nations by 6%, or a total of $3.7 trillion, by 2025. That would be the equivalent of adding another Germany to the world economy.
Mojaloop is modeled on digital fast-payment systems such as the U.K.’s Faster Payments Service and Australia’s New Payments Platform. Building those systems, however, often involves big up-front technology development costs and politically difficult negotiations among a variety of players. Those challenges have slowed or stalled digital banking advances not just in developing countries, but even in the United States.
Mojaloop is meant to reduce such roadblocks by providing a standard digital-payments blueprint. The software, which is publicly available via Microsoft-owned software repository GitHub, includes a directory for identifying account holders, a transfer system for routing payments, and a clearing and settlement layer that transfers funds among users’ financial institutions. The routing system relies partly on a technology called Interledger that was originally developed by Ripple, a company that aims to use Bitcoin-derived blockchain technology to connect banks.
Providing that technology isn’t a magic bullet, though. Building systems also requires navigating national regulations, training staff, and making sure new financial tools are accessible to people who need them, according to ModusBox CEO David Wexler. So in addition to the software, the Mojaloop Foundation will connect experts with countries and development agencies to tackle problems and help guide government policies that promote privacy and other user-protection measures.
Mojaloop-based systems are intended to be hosted by each country’s governmental or financial authorities. But because they use a shared standard, Peric says the systems could eventually become interoperable across borders, further easing the global flow of funds.
Rodger Voorhies, president for global growth at the Gates Foundation, says the current pandemic shows how powerful expanding fast-payments infrastructure could be. “In times of crisis, [poor people are] pushed deeper into poverty.” That’s often answered by local and international charitable donations, but the coronavirus is disrupting international relief and conventional remittance payments.
But digital payments can rapidly deliver funds directly to people in need. “You [would] have a way for social engagement,” says Voorhies, “You could send money to protect people in times of crisis, really rapidly.”
Source: MORRIS, D. Z. (2020, May 6). Google and Gates Foundation to help spread digital payments in developing countries. Retrieved November, 2020, from https://fortune.com
Global Organizations Join the Mojaloop Foundation to Advance Financial Inclusion
16 Sept 2020
The Mojaloop Foundation announced that India’s leading digital payments platform PhonePe and enterprise blockchain solution provider Ripple have joined as Sponsor members, the highest level of the organization. In their role as Sponsor members, they will join the Mojaloop Foundation Board of Directors and help provide the strategic vision, governance, and technical guidance to ensure the long-term health and growth of the Mojaloop open source software and development community.
The Mojaloop Foundation also welcomed new Promoter members to support the advancement of Mojaloop, including: Giori Digital SA, a Swiss company providing central banks with a unique digital banknote form of retail Central Bank Digital Currency (CBDC) to drive greater access to safe currency for the underserved; and Sybrin, a leading global provider of payment solutions, financial services solutions, and a low-code development platform for digital transformation.
To achieve universal financial inclusion, digital financial services need to be affordable and accessible to all. Despite mobile money services emerging in nearly 100 countries, 1.7 billion people still lack access to digital financial services, according to the World Bank’s Global Findex. Many payment providers struggle with the high cost of creating no-fee or low-fee, cross border payment systems that interoperate with others. The Mojaloop Foundation’s newest members will support the advancement of Mojaloop as a public good, enabling different types of digital financial service providers – large and small – to use the open source blueprint to help lower the cost and technical hurdles involved in creating interoperable payment models that serve all.
“Mojaloop Foundation’s financial inclusion mission has resonated loudly with many organizations. We are very pleased to welcome our newest members, including PhonePe and Ripple as Sponsor members, and Giori Digital and Sybrin as Promoter members,” said Paula Hunter, executive director of the Mojaloop Foundation. “We continue to advance and support Mojaloop open source software, collaborate with our community and hold convenings to serve as a path forward for organizations creating interoperable payments platforms to connect all digital financial providers and customers within an economy. We welcome any organization that has an interest in advancing digital financial inclusion to join the organization.”
With the support of Mojaloop Foundation Sponsor and Promoter members, Mojaloop open source software will serve as a model for how to simplify and reduce the cost of payment interoperability. If more payment models were interoperable, more banks and other digital payment providers could develop digital financial services that meet the needs of emerging markets and the unbanked. According to McKinsey Global Institute, if widely adopted, interoperable digital financial services could provide more of the population with access to important financial tools, while adding $3.7 trillion to emerging countries’ GDP by 2025.
“Our vision of universal financial inclusion is a world where everyone, everywhere, can access and use the digital financial services they need to build economic security and resilience,” said Kosta Peric, chair of the Mojaloop Foundation and deputy director of the Financial Services for the Poor program at the Gates Foundation. “The work of the Mojaloop open source project will thrive with the talent, innovation and leadership from this dynamic and growing group of member organizations, in service of our shared mission to benefit underserved and low-income communities.”
PhonePe, which means “on the phone” in Hindi, is a leading digital payments firm in India. PhonePe CEO Sameer Nigam will serve on the Mojaloop Foundation’s Board of Directors.
“If we want to make the world a more financially inclusive place, we need to work together, as institutions, governments and technology companies, to make payment systems interoperable,” said Sameer Nigam, CEO of PhonePe. “We are looking forward to collaborating with our fellow members to advance Mojaloop’s mission of financial inclusion. Together, we can help organizations understand how to build interoperable digital payment systems, provide low-cost access and feel confident in creating systems that work across borders.”
Ripple’s corporate social impact program, Ripple for Good, is designed to support mission-driven organizations to dramatically expand the number of people who fully and equitably participate in the global financial system. Ripple’s Head of Social Impact Ken Weber will serve on the Mojaloop Foundation’s Board of Directors.
“Creating economic fairness and opportunity for the unbanked and vulnerable populations is Ripple’s highest social impact priority—a natural extension of Ripple’s core business, which is making cross-border payments faster, cheaper and more reliable and accessible for hundreds of millions of consumers and businesses globally,” said Ken Weber, head of Social Impact, Ripple. “Ripple has been involved with the Mojaloop project since the start, providing technical advice and engineering support and are proud to continue to collaborate with fellow Mojaloop Sponsor members in working toward a more inclusive future where everyone, everywhere can access digital financial services needed to connect to the global economy.”