Report from the Mobile Money Summit (Part 2) – Product Innovation to Reach the Poor
Building Relevant Products
After regulation, market structure, and platform backbone (covered in part one of this report), we get to perhaps what is most interesting and critical in the short term for the base of the pyramid: mobile money products that are actually relevant to the poorest of the poor, the people for whom financial services to smooth consumption ability and protect against income shocks could make the biggest human difference.
Moderating a panel at the Mobile Money Summit on the fiancial strategies of the poor, Mark Pickens of CGAP teased out the real question here: mobile operators and have been helping people move money across space – across huge distances and even national borders. But most of what people want to do is move money across time – from when they get it to when they will need to spend it, and at the intervals that will allow them to finance their personal, consumer, or business needs.
This is the level of sophistication that mobile operators are not at yet – though many people are trying to help them. The findings of Portfolios of the Poor were covered by Daryl Collins (pdf) to provide the basis for discussion of savings instruments used by the poor at the Mobile Money Summit, while Olga Morawczynski of the Grameen Foundation’s AppLab in Uganda described her work (pdf) doing intensive field research around the needs of the poor to craft pilot mobile apps.
The AppLab approach is a good demonstration of the kind of focus that will be required by mobile operators, microfinancial institutions, or traditional banks if they are going to design savings products that will get people onto mobile platforms and keep them there.
For example, if many people use group savings circles, but mobile platforms only offer individual options, will people change behavior to be able to convert their cash into electronic format? If not, will a microfinance institution or a mobile operator identify a way to move group savings onto mobile platforms?
The capacity for and receptivity to this kind of research by the companies and banks at the MMS remains to be seen. There is certainly room for creativity – I’m not sure it made a big enough ripple in the audience when these experts on savings mechanisms pointed out to banks and mobile operators that the poor will accept negative interest rates for savings, simply to be able to save their money securely.
Innovating in Mobile Money
Beyond the core architecture of mobile money platforms designed by operators and banks, in many ways it is up to other players to determine how widely and how quickly mobile money and the possibilities it can open up will reach the poor.
Before the poor can directly use mobile transfers, e-wallets, and the like to do more than send and receive remittances, other institutions need to start accepting mobile payments. Bridge International Academies is one example – they have started accepting payments for school fees via mobile phone – which may not create the ability to pay for school out of thin air, but can certainly smooth the way. If linked to savings products and e-wallets that store money electronically, it could help parents save and store money for school fees, just as specialized college savings accounts help people do the same in the U.S.
But this can be more than a convenient way to pay for things – this may even be a way to bring whole new products to the poor using mobile phones, rather than an extensive on-the-ground collection system, to provide consumer finance. Or to use (as Equity Bank is doing through M-KESHO) money transfer histories associated with a SIM card to build a credit profiles for people who otherwise lack them in order to provide microloans. SIM cards are thus becoming an electronic anchor for people who lack an address, a bank account, other forms of modern electronic identity, or perhaps even legal existence in the first place.
It is companies and organizations operating in disparate communities and market niches that will know best the potential applications of mobile money in those places. By the same token, mobile network operators are not going to build the applications for these niches – it will need to depend on the initiative taken by the companies and organizations who see the opportunity reach the base of the pyramid via this new medium.