Michael Tarazi
| Organization type | International Organization |
|---|---|
| Country | United States of America |
Michael currently coordinates CGAP’s work in financial innovation for smallholder families. He has formerly led CGAP’s efforts in the area of branchless banking regulation and has worked with regulators around the world in developing regulatory frameworks. He has worked in Nigeria, Rwanda, Haiti, and led CGAP’s regulatory efforts in the Maldives. Michael has taught branchless banking at the Boulder Institute for Microfinance. He also was chosen as a Young Global Leader by the World Economic Forum and is a member of the Forum’s Dialogue Series on Access to Finance through Technology. He is a co-author of Putting the Banking in Branchless Banking, Regulating Banking Agents, Regulatory Approaches to Nonbank E-Money Issuers and Islamic Microfinance: An Emerging Market Niche. Prior to joining CGAP, Tarazi was a corporate attorney in private practice and served as the European General Counsel to a U.S. company providing finance-related technological services to developing countries. He also served as an advisor to Israeli-Palestinian peace negotiations. Tarazi holds a bachelor's degree from Harvard University and a law degree from Harvard Law School. He speaks English, Arabic, and French.
This member participated in the following Forums
Forum Forum: ICT enabling rural financial services and micro-insurance for smallholders
Question 5 (opens 28 May) What are the regulatory challenges faced in ICT and rural financial services?
Submitted by Michael Tarazi on Thu, 05/30/2013 - 19:49
In response to the quetion from Michael Riggs, there are an increasing number of countries where regulators are removing obstacles to, or perhaps better phrased "enabling", nonbank e-money issuers. Nonbank issuers are permitted in many East African and East Asian countries and we are seeing it about to launch in areas where tradionally it has not been allowed. In South America, I understand Brazil and Peru are about to permit nonbank issuers (or may have done so already), and in the Arab world Jordan has done so (and may be followed by Morocco). There are still some highly populated countries with large rural and financially excluded populations where nonbank are still not permitted to issue e-money directly: Nigeria, India and Pakistan. Pakistan has quite a thriving branchless banking sector even though only banks (including microfinance banks) are permitted to offer the service (though it must be said that in the case of one microfiannce bank offering mobile financil services, a controlling interset in it was purchased by an MNO - one way MNOs can enter this space if they can't be licensed directly.)
Submitted by Michael Tarazi on Thu, 05/30/2013 - 05:00
Another key area for regulation is whether nonbanks such as Mobile Network Operators can issue electronic money directly - or whether they have to rely on a bank partner. MNOs are experienced in managing networks of retailers specialized in low-value, high-volume transactions (airtime resellers) so are uniquely positioned to use agents and process the type of low-value payments poor people might make. Although M-PESA is a successful example of these nonbank models, most regulators are still uncomfortable allowing nonbanks to take the lead, arguing that electronic money is effectively banking and requires a bank license. This can sometimes result in forcing MNO-bank partnerships which often don't work (often as a result of being unable to agree on how to divide revenue and who owns the customer). But allowing nonbanks to enter this space could increase competition and result in more successful outreach. CGAP has also published a Focus Note on Nonbank E-Money Issuers and how they can be regulated: http://www.cgap.org/publications/nonbank-e-money-issuers
Submitted by Michael Tarazi on Thu, 05/30/2013 - 04:53
When we are talking about reaching rural populations with mobile banking, agent regulation is key. Banks simply cannot serve rural populaitons effectively through branches which are expensive to build and maintain. By using agents, often retailers - sometimes very informal ones, to serve as cash-in and cash-out points, the cost of reaching rural populations can be greatly reduced, making business models viable. But to use agents effectively, regulation must permit a wide range of actors to act as agents. If agent regulation is too restrictive, agent networks will be too difficult to develop- ultimately impacting customer take up. Many regulators have gradually become more liberal in permitting the use of banking agents - taking comfort in the fact that the service provider (the bank or MNO) is ultimately liable for agent actions undertaken in the course of their agency. CGAP has written a number of publications on agent regulation including "Regulating Banking Agents" located at http://www.cgap.org/publications/regulating-banking-agents
Question 1 (opens 20 May) How are ICT being used in operations of rural finance and micro-insurance providers?
Submitted by Michael Tarazi on Mon, 05/20/2013 - 16:03
I'm really encouraged by all the emerging uses of technology to meet the financial services needs of smallholders. I'd be interested in hearing more though on the key obstacles. For example I understand in Kenya, M-PESA is still too expensive for many smallholders. Is cost the only obstacle or are there others? Any first-hand insights would be most appreciated.