How to make Mobile Banking Work for the Poor
If you know the numbers, you will agree that mobile banking is no-where close to enjoying the wide adoption and penetration that everyone expected.
Same Ol’ Same Ol’
Predictably, I don’t think the problem is the “mobile” part. I think the problem is the “banking” part: I think the biggest mistake made in mobile banking is the fact that essentially, standard banking products are repackaged to work through mobile. But these banking products are designed for different environments and they ignore fundamental insights, realities and needs that are prevalent on market segments defined by scarcity.
Yes, people who are banked already do enjoy some awesome extra benefits that come with mobile added on. But otherwise mobile banking has kind of failed to bring banking benefits to people who would otherwise be un-bankable. Mainly the poor. This is definitely the case with mobile money as we know it (MMAWKI), in spite of the success of mPesa in Kenya and Tanzania.
So What is the Solution?
I don’t know how the solution looks like, but I am convinced the solution will not come out of the Banking Industry. Essentially, it is very unlikely that the banking industry will solve this problem – they are too much hung up on traditional banking fundamentals (and infrastructure, and revenue models), that they will be unable to approach this problem laterally. What we need in this space is a bit of full-stack innovation, not linked to the banking industry. Uber was not created by the Taxi industry. Netflix was not created by Big Cable. The car was not created by the horse-and-carriage business.
The bad news? this full-stack solution will probably bypass incumbents which means traditional banking will probably take a hit, while a nimble start-up will take control of an entirely new consumer experience.
Another certainly is that whatever form this full-stack solution will take, it will certainly fall afoul of/ challenge traditional regulation. Current regulation has evolved around traditional banking and traditional banking products. The smart move is to update regulations rather than use regulations developed before the mobile was even invented, as a way to choke innovation in this space.
So here is my advice to donors/ influencers in this space: stop looking for solutions within the banking industry/ telcoms. Look instead for signs of a full-stack start-up and invest in that. And use your influence with governments to update and smarten up regulations.