Mobile money at the bottom of the pyramid
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This presentation is about how mobile technologies can be used to provide the poorest of people access to the global financial system.
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Mobile money at the bottom of the pyramid
- 1. Mobile Money At The Bottom of the Pyramid Krishan Singh Blog: http://www.strategy-digital.co.uk LinkedIn: http://www.linkedin.com/in/singhkrishan Twitter: @Krishaned
- 3. Average savings per month in Kenya is £1.8
- 6. Expand the reach of Digital Financial Infrastructure Drive Participation in the Digital Financial System Foster Better Regulation and Policies Source: Gates Foundation report Theory of Change
- 7. Driving Participation in the DFS
- 8. 1 Billion Mobile Phones
- 10. Reduce the cost of access Meet the basic Needs Critical Success Factors
- 11. Reduce the Cost of Access
- 12. Basic Services
- 13. Money Transfer
- 18. Smartphone Apps
- 20. Web Applications
- 21. Smart tagging for Information Exchange
- 22. High Illiteracy rate increases the risk of fraud
- 23. Bank Grade security hidden behind an Easy interface
- 25. The Market is Fragmented
- 29. Digital Wallets
- 32. Krishan Singh Blog: http://www.strategy-digital.co.uk LinkedIn: http://www.linkedin.com/in/singhkrishan Twitter: @Krishaned
Editor's Notes
- The bottom of the pyramid consists of the largest, but poorest socio-economic group. In global terms, this is the 4 billion people who live on less than US$2.50 per day.
- There are 2.7 Billion unbanked people in the world. Most of these people have very low income.
- For e.g. the average savings per month in Kenya is £1.8. There are other countries in Africa and Asia where poverty is very high.
- Due to extreme poverty, it becomes un-economical for traditional banks to serve these people. So, a large population on this planet is under served in terms of their financial needs.
- So, what is the solution?
- According to a report from Gates foundation, the change can be brought in three stages: Expanding the digital infrastructure, Drive participation in the Digital Financial System, and Fostering better regulations and Policies. The 1st and 3rd are driven by the Government, and my focus would be how to drive the participation in the Digital Financial System.
- Here, I will be focusing on Driving Participation in the Digital Financial System
- There are 1 billion mobile phones among those 2.7 billion un-banked people
- These mobile phones can be used to deploy innovative technology that would address the basic needs of people in developing countries.
- To succeed in this mission, we have to focus on two critical factors: Reducing the cost of Access i.e. making it easier for poor to access mobile services. Secondly, we have to solve the basic needs.
- Leverage the existing network of Telcos, FMCG and community Computers
- What are the basic service needed by the people living in these poor regions?
- Money transfer is the most used service in the rural areas. Therefore the solution needs to enable easy conversion of cash to electronic cash, and vice versa. One innovative example is use of airtime as cash in M-PESA service. One can buy airtime from Safaricom and credit it to someone’s account, who can then go to a reseller and convert airtime into cash.
- Another importantservice that can be digitized is merchants payment. Farmers need to pay for agricultural products in developing countries like India. It also includes micro payments for small purchases like groceries.
- Let’s look at some of the technical requirements for any solution catering to these bottom of the pyramid markets.
- A solution catering to the poor regions should support the most common interfaces i.e. SMS, Smartphone Apps, and Web Applications
- 1st interface: The most accessible technology in rural regions is SMS. USSD is another one.
- 2nd interface: We are not far from time when there will be a smartphone for everything. Advanced services like HealthCare and banking products can be made available on smartphones through apps.
- There is a conception that there are not many smartphones in these rural regions, but the fact is that there Increasing penetration of smartphones, which will enable introducing innovative applications; easier to use and provide more security. Many companies are putting resources to make below $100 smartphones, which will definitely bring them to many more hands.
- 3rd interface: Most of the rural areas have community center equipped with a computer where farmers can get agriculture related information. They can order seeds, determine prices, and also sell the produce in the market
- 4th interface: Smart tagging can be implemented using technologies such as NFC, QR Codes, Acoustics to enable rich information exchange. Poor people can be educated by putting a smart tag on the produce they are buying. For e.g. when a farmer buys seeds, he can scan the QR code on the pack to determine the manufacturing dates, and probably instructions to get the best outcome.
- While making solution for these markets, one should be aware of the security risks. A high Illiteracy rate compounds the problem, and increases the risks of fraud.
- The solution should strive for providing a bank grade security, but easy enough to be used by a layman.
- There are various markets in Asia, Africa and some parts of Europe Can we have a unified approach that can be applied to all the Markets?
- The realty is that these markets in developing countries are highly fragmented in terms of demographics, technology, and regulations. Standard Go To Market framework should be developed i.e. approach to work with Telcos, FMCG, or Post Offices to establish access points. A specialist approach is needed for user access though.
- The access provided to the end user will depend on the demographics, and the type of technology penetration. If majority of people in a rural region have smartphones, it makes sense to launch a smartphone app. If most of the people have feature phones, it makes more sense to launch application based on SMS or USSD interface.
- IOC 1: Consumers want Convergence.
- IOC 2: Consumers want to use their mobile phones for shopping online and in store.
- IOC 3: Digital Wallets supporting multiple modes of payment such as Credit cards, debit cards, Paypal
- IOC 4: The user interaction can be complex. It can start on a desktop, go on to a Tablet and finish on a smartphone. The solution should recognize state, and provide seamless experience across multiple devices
- IOC 5: Attractive approach for rural sector: mobile phone as the centre of all the activities. Mobile phone can act as a hub including, Money Transfer, Bill Payment, Healthcare etc. We need a solution that exposes services which can enable a mobile centric lifestyle.