Leo Tobias

NexThought Monday: Why the Mobile Phone Might Not Be as Inclusive as You Think

Financial inclusiveness is a core tenet of our work at Grameen Foundation. Utilizing mobile phones for financial services has gained a lot of traction as a sustainable and scalable solution to serve the 2.5 billion people who do not have access to formal banking services. But does this solution really enable us to reach all of these people?

As part of a pilot program to implement mobile money at CARD Bank, a microfinance-oriented rural bank in the Philippines that is a member of CARD Mutually Reinforcing Institutions (CARD MRI), a survey was conducted to gather basic knowledge about people’s access to mobile phones and their usage of mobile money and other financial services.

Of 104 center members interviewed, 98 percent had access to a mobile phone within their households. Great news, right? But when we looked further, only 78 percent owned their own mobile phones.

So what’s the problem? A previous study conducted by Grameen Foundation at Cashpor, a microfinance institution (MFI) in India, revealed there are significant access, convenience and security issues associated with customers not having their own handset or the knowledge to operate the technology themselves.

If we extrapolate from our small sample size to CARD MRI’s 1.87 million clients, 22 percent – or approximately 410,000 members – may not own their own mobile phones, which either excludes them from the mobile money solution or makes them vulnerable to security risks if we encourage them to use a handset that is not theirs.

Though we are optimistic that mobile technology will play a large role in providing financial access, we must continuously monitor how the phones are actually being used, and continue to develop alternative methods of participation for those do not have easy access to their own phone.

On the race to rapid adoption, there have been too many examples of customers handing their phones over to someone else to complete transactions for them. There also are those for whom the specific implementation doesn’t fit their environment or lifestyle. This is where we need continued innovation and where we shouldn’t settle for a “one size fits all” model. Ingacio Mas makes the same point when he says, “When people do something with your product that you don’t want them to do, the reaction shouldn’t be ‘educate!’ but rather to see what about the product can be changed to accommodate the behavior of the customer in a better way.”

In our pilot, we’re modifying our design to test payments and cash-in transactions using the mobile phone as a way to confirm rather than initiate. We’re not sure if it will be successful, but we’ll explore the option to chip away at the 22 percent.

What do you think? How can mobile services be improved to provide financial inclusion for all?

Leo Tobias is a Technology Program Manager at Grameen Foundation.