Street-level innovations in mobile money are sparking advanced, mobile banking business plans… a catalyst for providers of banking and telecommunications to reach the remaining 3-or-so billion humans who don’t own a mobile phone (1 in 2 of us, roughly). The personal, convenient nature of mobile phones – which, according to Jan Chipchase, Nokia’s chief usability researcher, “transcends space and time” can leap the hurdles of illiteracy, poverty and distance.
Today, mobile phone makers such as Nokia and mobile operators are acting as de facto banks, because of their Trusted Brand status. The percentage of citizens in developing countries (e.g., Central and East Africa) who have a financial identity (“banked citizens”) stands at about 2%, whereas about 10% of citizens are mobile-connected. Here’s where the street-level innovation comes into play.
Obopay, which uses text messaging and mobile internet access, charges users a fee to send money or to top up their accounts. Simpler still, though, is the Phone-as-ATM idea: purchase of a pre-paid calling card and subsequent transfer of its credits to be converted into hard cash currency. Chipchase recently profiled examples of this wherein money is sent from one family member, the wage earner living in a city, to another family member living in a “one-phone” village. The guardian of the single phone, banks the rest of the phone time, keeps a small commission, and gives its cash equivalent to the recipient.
International pre-paid calling cards are getting closer to hard cash currency in a simply elegant way, too. We see service providers such as RegaloCard presenting simple, free solutions for money transfer that rely upon pre-payment and secure-access PINs thus providing traceable use of funds sent from one country to another. RegaloCard’s 1-2-3 instructions point out the ease of use and trustworthiness of the service. It’s a boon for immigrants used to pushing large sums of money to their homeland without knowing how the funds are being spent, and paying high fees. A boon, also, for merchants at both ends of the chain: fees are paid to issuing merchants in the country or origin while commissions are earned from sales resulting from the card’s usage in the destination country.
RegaloCard is driving real-time, high-velocity, low-value-but-all-cash-based transmissions… a plum of a business plan for any industry. This vital service will likely up-end such traditional money transfer services such as those offered by Western Union.
Where are the hot spot markets for mobile financial services? Those with the greatest near-term growth are our globe’s emerging markets, the underdeveloped and poor countries — we don’t hear that statistic too often — with of course our developed markets ripening in the longer term.