What is the Myanmar Microfinance Digitization (MMD) platform?

MMD is a participant-governed, shared and open platform for financial institutions to more easily and cost effectively transact with each other. Participants include microfinance institutions (MFIs), mobile money operators and banks. MMD’s use cases focus on payments that most effectively serve the underbanked.

Our mission is to drive financial inclusion by providing low-cost rails to connect the financial institutions that serve Myanmar’s financially excluded populations. Our aim is to include low-income Myanmar citizens in the digital economy by transforming Myanmar MFIs into digital financial institutions through industry-wide projects.

We do this through shared services on a common infrastructure operated as a not-for-profit utility rather than a for-profit entity trying to monetize transactions fees or other people’s data. As an open system, each new MFI or wallet participant does not require additional work from other participants.

Our initial emphasis is on real-time MFI loan repayments from wallets and agents.

How it started?

The platform grew from the desire of the Myanmar MFI industry to provide real-time loan repayment through a diverse set of mobile money service providers. MFIs wanted to provide their clients with choice, as different mobile money operators are better suited for different regions and branches, and even different customer segments within their client base. They saw the value in sharing some of the costs to develop and expand this new service, as well as their ability to maintain control.

Leading MFIs discovered that a standard product offering would reduce cost and simplify the education of loan officers and customers, making transaction scale possible. The integration into each new mobile money platform is costly and time consuming, and impossible for some of the smaller MFIs, even when they are ready. It isn’t just the integration though, it’s the ongoing costs of reconciliation, settlement, dispute resolution, fraud, and all of the other business operations functions required for the new channel. These would be easier with a standard product and some of them could be shared.

Finally, the MFI industry, which serves more than five million clients, realized that it could provide better and lower cost services through collective action. The MFIs know that the system will only work with the wallets that are also incentivized to participate, so they were invited to join the governance as well.

As the platform will be funded as a utility for the industry, the capital expenditures are being supported by donors such as the Bill and Melinda Gates Foundation and UNCDF. Therefore, the platform only needs to recover operational costs, and can pass on those savings to participating financial institutions and their clients.

Where it is going?

The vision for the platform is much bigger than loan repayments, however. The industry leaders quickly realized that the shared integration platform that they needed for loan repayments could provide additional use cases in the future. Therefore, we selected Mojaloop, a technology suited for that expansion. The platform will soon add additional use cases, including loan disbursements, savings deposits, and savings withdrawals — at agents, wallets and ATMs. There are two ongoing initiatives to incorporate cross border remittances to the platform which would enable banked clients abroad to send funds to savings accounts and wallets, and even repay loans. All of this with minimal additional integration and leveraging the same shared services of the platform.

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