Last week Maria Otero, Undersecretary of State for Democracy and Global Affairs and former CEO of ACCION International, initiated the second iteration of Tech@State: Mobile Money, a daylong event that is part of Secretary Hilary Clinton’s 21stCentury Statecraft Initiative. The theme of the conference echoed growing discourse on financial inclusion and asset building strategies globally of which mobile technology is an increasingly integral component. With 5 billion mobile phone owners and only 1.6 billion people with bank accounts, there is undoubtedly vast scope for mobile technology to facilitate financial transactions and promote financial inclusion for the bottom of the pyramid (BOP), while advancing efforts in food security, the transfer of remittances, transparency and security (all themes discussed at the conference). However, despite the palpable excitement for mobile’s promise to seemingly improve all development efforts, conference participants also expounded the many exogenous factors (on both the supply-side and demand-side) that challenge the reach of mobile banking for the BOP globally.
Among the most pervasive issues affecting the supply of mobile banking services, are varying and context specific, institutional and regulatory factors. At the conference, Ms. Carol Realini, CEO of Obopay, maintained that regulatory environments differ across countries, but are critical to mobile banking; as in India, a highly complex and somewhat unclear regulatory environment has made the supply of mobile banking an up-hill battle. Additionally, forming partnerships between banking institutions and mobile carriers, while also fostering cooperation and operational capability between them, is difficult to say the least. Again, in India mobile service companies must partner with regulated banks to deliver mobile banking facilities, the complexities of which have deterred the provision of those services. Last, the poor technological and wireless infrastructure in developing countries, particularly in rural areas where network coverage is limited, has further challenged the supply of mobile banking to the financially excluded.
While supply side challenges in mobile banking are well known and often debated, understanding and promoting the demand for mobile banking among financially excluded users is often overlooked. One of the speakers at Tech@state, Mr. Jan Chipchase, the Executive Creative Director of Global Insights for frog design, maintained that “users with financial constraints will choose the path of least resistance,” suggesting the importance of providing easy access to mobile technology. As such, where corner stores in developing countries have traditionally served as small grocery stores and social hubs, they are increasingly becoming popular vessels for offering mobile services (i.e. recharging pre-paid phone cards) and should be considered potential easy-access application stores for mobile banking cards and related services. Mr. Chipchase also stated that ownership is not the same as “use.” For example, devices with text heavy interfaces can prevent illiterate people from using mobile banking applications. Thus, understanding the communities that are being designed for, such as low-income women, teens, and micro-entrepreneurs, is critical in both meeting and creating demand for, and value-added in, mobile banking products.
Reflecting on these various supply and demand issues leaves me with more questions than answers, but one significant take-away stands out: context matters and there’s not a specific model that should be replicated globally. In other words, Kenya’s M-PESA, is the exception and not the norm, so while it has been hugely successful, countries must look to their own regulatory environments, target populations, and institutional barriers when designing the most effective and efficient mobile banking product to reach the unbanked globally. Will we soon see mounting tension between the lightening-speed expansion of mobile banking and the need for context-specific approaches?