Mobile money for the masses: Do the numbers add up?
Day four of Mobile World Congress saw an assembly of the mobile money working group. Flush with $12.5m from the Bill and Melinda Gates Foundation, it’s working towards the GSMA's target of getting 20m of the 1bn people who have a mobile phone but do not have a bank account onto the first rung of the financial ladder. Ignacio Mas …
This will move the last few remaining holdouts of people using real money and getting it for making real goods onto the great and wonderful world of virtual money. As a result there will be a larger base for financial instruments and a larger base for the money of people like the Billigatus of the Borg to grow. On top of that all this will be happening outside the realm of those pesky financial regulators which have recently gone trigger-happy as a result of Madoffs, Stanfords and the ones that they cannot even touch in bigger banks.
20 odd million for that? Bwahahaha... Charity? Bwahahaha.... It is the Billigatus foundation all right. I have yet to see one case where its investments did not have at least one way to provide the foundation donors with substantial return on investment.
"but really they didn’t know how to count."
It's not a matter of counting, it's a matter of cost accounting ... Someone, somewhere, is going to pay. Unfortunately, it's not going to be anyone with a few bucks to spare making that payment.
The world goes on, as usual.
Is this the City's new plan for solving the economic crisis - borrow from people who earn two dollars a day?
But seriously is mobile banking what these people need?
Nice article. :)
I find the development of these 'mobile economies' very interesting, indeed. It is really one of all the ongoing transformations of society that eventually will have a huge impact on the way people live in the next decades, and it is probably also going to shift some massive financial power from today's institutions to emerging new players, whoever those may be.
There's a good talk about this on the TED Conference website by Jan Chipchase, who is a Nokia researcher, if anyone wants to hear more about how these things actually works out there in the 'wild'. You can find it here: http://www.ted.com/index.php/talks/jan_chipchase_on_our_mobile_phones.html
"Without access to banks they are very vulnerable."
As vulnerable as people *with* access to banks?
A similar problem to the one described in the article was faced by weavers on the Isle of Lewis in the mid 20th century: they would have to take a day off work to travel to Stornoway to visit the bank. The (National, now Roayl) Bank of Scotland introduced a mobile bank in a van to serve them, and the service continues today. See:
http://www.rbs.co.uk/personal/ways-to-bank-with-us/mobile-bank/history.ashx
How would a bank in a van compare to the more high-tech solution that is proposed in the article?
...for giving a clear description of the situation. Microfinance banking by mobile phone sounds like a genuinely useful thing for the Gates Foundation to be supporting. Its shameful that McKinsey have the cheek to take money for a job they can't do: surely they could do this type of consultation for free. One would also hope they have the integrity to come clean if they can't do the job.
One niggle: microfinance has remarkably little to do with either governments or mainstream banking. The concept was developed and implemented by an economics lecturer, Muhammad Yunus, at Chittagong in Bangladesh. His initiative became the Grameen Bank in 1983, a decade after its initial start. It's basis looks to have more in common with credit unions than with the banking industry or government development initiatives. Banks and governments have historically ignored the people microfinance helps because they prefer to lend relatively large amounts to almost anybody except the poor.
Far be it from me to be negative but....
...paying the world's poorest in "virtual mobile" money doesn't sound like a winning proposition
And: "For those in the emerging markets it’s the difference between eating and not eating tomorrow." to be able to pay by a mobile phone. How are they paying the leccy bill to charge the damned thing?
This stinks of groundless technofix to a social problem and mobile companies trying to get a foothold in a market. Last thing folk need is another intermediary between them and their livelihoods.
It used to be that there would be a bank opening one day a week in villages. Security costs killed those off. There are a lot more ATMs now. Even if Post Officesare closing.
These countries use mobile phones because they don't have to build networks of copper cable. Western Union did money transfer with telegrams.
It's not the tech which matters. It's the way it is used.
read the article they already have mobile phones. If you use a basic model and only use it to text not to call your buddies up for a beer at 5:00 everyday it does not use much power. lso if your read the article it is some new thing an MIT grad thinks would be great they 5m accounts out there working already,this is being done by people on the ground.
The only problem I had with the article was that micro fince is not generally govenment run. it usually privately run like www.kiva.com where you can lend $25 dollar over the net to these people
With all this moola bouncing around, someone will ask the proper question: What is the banks take. Given that these are a lot of small transactions, the monopoly bank (there must be only one for it to work most of the time), what are they going to charge?
Right now PayPal (which is a similar service, but a different market) charges 1-2% (I don't have the exact figure) of the money transfered. So, getting a piece of the action is a "good thing", and I'm sure that Bill & Melinda won't mind that their service nets a cent or two on every transaction. I surely wouldn't!
"For those in the developed world with direct debits, credit cards and financial instruments the phone-as-a-wallet, things like NFC and pay by mobile are nice alternatives."
It's not a "nice alternative", it's fucking retarded. Why the hell would I want my wallet to be accessible wirelessly?
@MahatmaCoat
Vulnerable? Yes, these are people who get paid a few times a year and have to keep the money secure to live on it. How would you feel if you had your annual salary paid once a year and you had to keep it under your matress, with all your neighbours knowig it was there and no decent locks on the door? They currently lend the money to people just as insecure as themselves and hope to get it back. Turning it into virtual money is massively more secure.
@Phil Endecott
This is exactly the model for Wizzit, it's a virtual bank based on the bank of Athens, run in south Africa. The have vans which turn up in villages "The Wizz Kids" and operate the bank, then move on to the next village, much like a mobile library.
@Chris
Phones are typically charged from a car battery, they put the battery back into a truck and run it for a bit to charge it and then go back to charging phones.
Note: I'm not certain that Mckinsey are charging, or charging full whack ($2000/day when I last heard) but I think they would have mentioned it if they were not.
Simon
A very laudible sentiment but I'm sure the target do this anyway just not as much in the "monitorable" sector. The project may be about enhancement of service but it also narrows down the options into the conventional, already established, sectors in which investment has taken place.
I know I'm paranoid but, beyond certain levels, the more concentration takes place the more vulnerable people become to the excesses of the very powerful and that, sadly, is a lesson of the history of humanity. The objective of security and wealth protection for the very poorest is great but I think, on balance, that this is an idea - just not the best.
Simon,
Having visited, lived and worked in more third world countries than I care to think about I know well the situations you describe. What I was saying is that countries with so-called safe banking systems also now starting to understand how easy it is to lose out too. Try this article in today's Grauniad for size:
http://www.guardian.co.uk/uk/2009/feb/23/police-civil-unrest-recession
"Britain's most senior police officer with responsibility for public order raised the spectre of a return of the riots of the 1980s, with people who have lost their jobs, homes or savings becoming "footsoldiers" in a wave of potentially violent mass protests."
I'm almost happy that I have no savings to lose to the criminals running the banking system.
There is something very, very wrong with the world we live in if a mobile phone is so ubiquitous that it is actually useful for something like this, yet basic amenities are not.
Cell towers are easy to build and cover a large area. Water has to be run to every individual area in expensive metal pipes(and the price goes even higher if you want sewers).
The GSMA who announced at the Mobile World Congress in Barcelona that it plans to make private communication data available to commercial third parties for advertising use, and who have been secretly collecting that data for the past year according to the Guardian without my consent, now want me to trust them with my money and bank balance too?
Aha. Aahaahaaha. Ahahahahha. Hahahahahhaha.
You are kidding aren't you?
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