Mobile Technology: Banking and Beyond?
SOURCE: Wired.com Innovation Insights
Mobile devices are changing the way the world does its banking, and no market, no matter how seemingly isolated, is immune. In June, Gartner released a report which predicted that worldwide mobile payment transaction values will increase in volume and value, growing an average of 35 percent a year through 2017. That means there will be over 450 million users worth $721 billion within the next five years.
The marriage of technology and banking has the potential to broaden access to financial services, and in no place is this opportunity greater than in emerging markets via mobile phones. A recent Bloomberg Businessweek article spotlighted the successful implementation of M-Pesa, a mobile banking service launched in Africa in 2007, which created a $61 billion market in 2012, with more than 55 million people using their phones to make money transfers. Across the Atlantic, in countries like Haiti, the need and potential for formalized cash-transfer systems are arguably even greater.
There, not everyone uses banks. Following the earthquake in January 2010, more than a third of Haiti’s banks and cash machines were destroyed. With so few banks scattered throughout the country, Haitians have to travel great distances to wait in long lines to complete a transaction that take less than ten minutes only to turn around and travel back the great distance to their homes. To complicate matters further, getting money is not just inconvenient -- it can be life-threatening. ATMs not broken or empty are scouted by thieves looking to rob people after they fill their wallets. While only 10 percent of Haitians had bank accounts in 2011, 80 percent of households had access to a cellphone. And so TchoTcho Mobile, the first mobile-banking service in Haiti, was born.
After the earthquake, the Bill & Melinda Gates Foundation partnered with the U.S. Agency for International Development (USAID) to launch the Haiti Mobile Money Initiative (HMMI), a challenge (with incentive funds) for operators like Digicel and Voila to establish mobile money services in Haiti, a country with one of the lowest rates of access to financial services in the world. TchoTcho Mobile, a partnership between Digicel, Scotiabank and YellowPepper, was the first to launch, allowing subscribers to perform basic banking transactions -- withdrawals, cash deposits, money transfers and bill payments -- without needing a traditional bank account.
TchoTcho Mobile generated over five million transactions in its first two years alone, but the process remains challenging. Logistically, providers are tasked with extending technology to remote regions of the country while also working to identify and qualify bank agents, both of which must support the mobile money services. On the user side, service providers must bridge the gap between registered and active users which depends on educating consumers and providing them with reasons to trust mobile-banking services.
The last two years have taught us much about pricing, promotion and customer acquisition within a new market. What we’ve learned has been invaluable and has helped set the stage for TchoTcho Mobile’s re-launch last month. We had to stop and listen to the various constituents in the Financial ecosystem about why the service was not sustainable as it was crafted. There were structure adjustments that needed to be made, and a technology platform migration that was required in order to manage the very diverse number of requirements that we needed to support. We wanted to be interfacing with many different types of partners and need to have technology that enabled us to do out-of-the-box. Studying the market is incredibly important, as is learning where the cash movements are and partnering with large networks who can help give credibility to a new Mobile Money Brand.
Through this, there has been much learned. What we still know for certain is that the need for this service has never been greater. Think about this: According to The World Bank, there are currently 0.58 ATMs per 100,000 adults in Haiti -- compared with 173.43 ATMs per 100,000 adults in the U.S.
While it's still a process of refinement -- as is the introduction of a new product/service in any market -- and the stakes are high for these developing nations and the operators developing the technology, the potential positive impact is worth it. Mobile technology could transform banking, yes. But can you imagine the impact for people where basic infrastructure is lacking on education, transportation or healthcare?
WHAT's keeping the world off the internet, and what are we going to do about it?
SOURCE: Wired.com Innovation Insights
The rapid spread of broadband is transforming the world. Perhaps nowhere are these changes more profound than in emerging markets where connectivity will help to catapult social and economic progress.
Last month, global business leaders gathered in New York for The Next Billion: A forum about the connected world, hosted by Quartz, to discuss accelerated rates of internet use and trends among this new wave of users. It was estimated that by 2016, more than 2 billion internet users in the developing world would be getting online using their mobile devices. According to Zach Seward, Quartz senior editor, these emerging markets will lead the next wave of internet users, defining “what mobile internet really is.”
This is a huge shift. Yet billions of people still aren't getting online. As far as we've come in recent years, the digital divide is still prohibitively vast in emerging markets -- an issue that telecommunications providers have the ability and responsibility to address.
The Choices We Make
Telecommunications companies can choose to make their services accessible or not. Expanding access in the developing world is a huge opportunity, and providers are finding ways to make the transition mutually beneficial for themselves and their consumers, through efforts like:
- Partnering with handset makers to provide smartphone technology to customers at an affordable price point.
- Reducing roaming fees, giving pre- and post-paid customers the freedom to use their phones abroad as they would at home, without having to worry about the fees.
- Calibrating data plans to allow for the broadest accessibility, moving from traditional plans, to voice, text and data bundles.
Embracing Transition
The industry has had great success in getting mobile devices to populations who would otherwise not have had them. The challenge now is getting them online. As we work to close the digital divide, businesses and technologists are coming together by forming some very smart, and arguably unprecedented, partnerships.
In global projects like Internet.org, technology leaders, nonprofits, local communities and experts have joined forces to find solutions in what they consider three key opportunity areas: affordability, efficiency and business models. Members like Facebook, Ericsson and Samsung are working together to develop technologies that will lower the cost of delivering data, and introduce business models that will give people more ways to get online.
On a separate track, the Alliance for Affordable Internet (A4AI), is working closely with governments, tech companies and civil society organisations to make policy and regulatory changes that get the currently unconnected population onto the Internet.
With more than 30 members, including Digicel and other organisations from developed and less-developed countries, A4AI aims to down the price of internet access in developing countries to less than 5% of monthly income worldwide, a target set by the UN Broadband Commission. This would enable billions more people to get online.
The will is true, as is the understanding of the opportunity and need. Companies that fail to address these changes are likely to fall behind in the marketplace.
As the technology industry attacked and solved the issue of voice penetration, we must work together to solve the issue of digital connectivity -- making universal access a reality for all. The opportunity is too great to ignore.