MWC2013: Mobile Money and the underbanked


We tend to view mobile payments as a trend for developed economies. Debates such as NFC vs QR code focus on changing user behavior from one payment method to another, and value-add debates center around retail, marketing and spend.

But for billions of unbanked and underbanked people across the world, mobile payments has the ability to impart much more meaningful change. That point was made abundantly clear through the Latin American and Middle Eastern/African panels during MasterCard’s Mobile World Symposium at Mobile World Congress.

The two panels brought together seven speakers involved in all aspects of the mobile payments business. One of the most interesting distinctions made early in the seminars was the need for different strategies when attempting to bring mPayments to both developed and emerging populations alike.

“For the first segment, it’s easy to create value because they badly need this service,” Roger Sole of TIM Brazil pointed out. “Mobile financial inclusion is something that is new for a lot of these people, and it’s going to be their first experience with banking.

The highest segment, they don’t necessary feel like they need it. I’m sure that once you use it you can’t get rid of it, like all technologies. But it’s very difficult to make this adoption grow at the beginning. “

Despite speaking in a different seminar on an entirely different part of the globe, Srinivas Nidugondi of Mahindra Comviva gave a similar answer when asked to describe the state of mobile payments in Africa and the Middle East.

Nidugondi’s response was “way to go,” and it’s meaning was two-fold. In some areas, those words were meant to be read with enthusiasm as “way to go!” as mPayments have already begun to shift the market. Certain other markets lead to a reading of 
“[we have a] way to go,” as mobile payments have yet to become widely adopted in many areas in which they could be of great use.

While speakers for both panels spoke at length about business models, open vs. closed loop practices and how banks, telcos and networks co-exist in terms of bringing mobile payments to emerging markets, many of the most interesting conversations centered around education.

“The biggest challenge to me isn’t form factor, POS terminals, all those gadgets: it’s the training and education of the people. We telcos tend to talk about mobile money, it’s a great topic and everyone says it will change peoples lives, but in reality until we all put money where our mouth is and go on street and show people,” said George Held of Etisalat Group. “It’s dirty, its not elegant, it’s not pleasant … but you have to go educate.”

Held’s comment sparked an interesting debate between the speakers for the African and Middle Eastern panel, centering on whether direct education is the best method among unbanked populations. One panelist, Nick Dent, of Ooredoo, argued that populations could become largely self-educated once their introduction to mobile money was complete.

“I think there’s a very common misnomer, which is that low income equals low intelligence. I don’t buy into that at all. The lowest income people tend to be amongst the most innovative when given a chance, and as long as you’ve got a service that is fundamentally cheaper than an alternative to them, I think you’ll these groups incredibly innovative,” Dent said.

“I think you’ll be amazed at the type of innovation that will happen in these societies if you give them these tools.”

Held disagreed, and pointed out that while the need for mobile money is obviously great in unbanked markets, direct education should still be viewed as a priority.

“Africa is the center of innovation nowadays…because hunger is the mother of innovation. We see lots of African companies putting huge resources into educating consumers on the street, where a truck actually goes to a village or a university and actually shows you how to use the service” he pointed out. “Until you do this, it’s all theory.

But while the panelists disagreed on the best way to educate native populations, none undersold the potential impact mobile payments could have on their ways of life.

“This set of the population, which has not been touched by organized financial services, will they be comfortable by technology? I believe for them this is the most important piece of technology they will ever receive in their lives. It’s a question of really plugging the two of them together,” said Nidugondi. “And that’s why there’s the belief that so much innovation is coming from this region: it’s out of necessity. They need basic banking services.”

“We’re giving financial inclusion to a segment that badly needs it,” Sole said during the Latin American panel. “It’s almost a social service.”

Which method of education do you think is most likely to yield success? How would you reconcile the differences in demographics in emerging markets while introducing mobile money? Let us know in the comments below!

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