PRE-CONFERENCE WHITE PAPER: Leveraging the power of mobile money and financial services in Developing Countries

Mobile money has transformed economies, enabling money to flow readily through the markets. This is especially true for Kenya, with the unprecedented success of M-Pesa, but other examples of successful mobile money implementations are now becoming more plentiful.
Mobile money platforms are important for several reasons  - not only have they changed the ‘cash only’ cultures, dispelled people’s fundamental fears and distrust in not being able to see and touch their cash, but they have also allowed the ordinary man in the street to see what is possible with mobile technologies. Because mobile money has replaced ‘cash under the mattress’, people now trust mobile technology to safely deliver money that has been sent to them and they are more receptive to other mobile solutions. It seems as though the model of paying per transaction is also acceptable (rather than fixed monthly charges being levied), and people are comfortable with the idea that mobiles can be used for more than just making phone calls or sending texts. 
Having thus safely overcome several hurdles and suspicions, the way is now paved for other transactional mobile applications to be rolled out, and combined with cloud solutions these applications have the potential to have an even greater positive impact upon the economy and lifestyle of a country than mobile money.
When integrating mobile applications with financial services, we shouldn’t forget that people have a choice of mobile money accounts, prepaid cards and traditional bank accounts; any transactional systems linked to payments need to ideally be able to interact with all of the above. Potential customers are increasingly becoming more financially and mobile savvy – swapping SIMs from one MNO to another to get the best SMS/call rates, or to incur the least commission when sending money or paying bills, has now become the norm. There will always be users that only have a single SIM card (or even share phones and/or SIM cards) and will only ever have a single mobile wallet,  but increasingly there are also users with multiple mobile wallets, SIM cards, Prepay Cards and bank accounts – so both ends of the spectrum need to be catered for.
Banks are now realising that collectively these small accounts add up to substantial sums of money, and are increasingly launching products and models that attract mobile wallet users. In Kenya, Equity Bank is launching its Agency Banking Model, whereby shopkeepers and local stores are being engaged as Agencies offering services such as withdrawals, deposits, loans, account opening and advances and integrating with MPesa, M-Kesho, Iko-Pesa and Yu-cash. Other Banks are keen to launch similar products. Agency Banking provides a prime example of how shopkeepers (agents) in rural areas can be equipped with handsets for transacting; these can be linked to the Banks’ central systems, as well as to switching services into all mobile wallets and potentially prepay card systems as well.

In summary, the Evolution to date has been….
  Firstly the widespread adoption of mobile phones for calls and texts, which had an immediate positive impact on business, especially in rural communities where communication infrastructures had been poor or non-existent.
  Then we had mobile money, initially for buying airtime and ‘send money’ propositions; later extended to include ‘pay bill’ functionality and salaries being paid directly into mobile wallets.
  The next generation of products can build upon all of the above to further extend the capability of the mobile phone as well as interface with traditional and non-traditional banking systems.
Next Steps…..
Most recent entry-level phones are capable of running java applets. They differ from Smartphones in that they are affordable, basic, robust and keep their charge for long periods of time. On top of that they are equipped with cameras, so that registration of customers, patients etc can include photographs of the individual and their ID documents. 
Immediate ways of providing transactional mobile systems hosted in a cloud environment are those associated with a financial transaction. Here are some examples :
Agricultureand Industry: Recording of deliveries or pick-up of goods (especially in agriculture) where delivery or pick-up of goods can be linked to immediate payment or credit, or request for payment, is especially beneficial. In this case cash-flow is improved, farmers or providers can be persuaded to sell their goods through the formal channels and billing is automated. Examples here would be delivery of a product (an example would be ready-mixed concrete) to a customer. As soon as the delivery is made and the transaction recorded on the delivery person’s handset, the customer’s account is debited. Or – as soon as a delivery person picks up some agricultural produce, once the quality of the product has been confirmed, the farmer can be credited with the money for the produce, directly into their mobile wallet or a prepay card. Where farmers may have previously been tempted to sell their goods informally for cash (and at a lower value), by reducing the payment lead time significantly, they are encouraged to sell their products through formal channels, thereby strengthening the supply chain and paving the way for a stronger domestic and export market.
MFI industry: The Kopesha product makes use of mobile phone technology to enable MFIs to manage their loan portfolios more efficiently. It is widely acknowledged that regular meetings of Field Officers with groups of customers and individuals are essential to ensure continued contact  and to maintain the relationship between the MFIs and their borrowers. However, by giving customers the freedom to pay via their mobile wallets or via their nearest agent or ATM, they spend less time away from their businesses. A further benefit is derived whereby Field Officers can concentrate on training and mentoring during the all-important meetings. These meetings can become less frequent, and less time consuming, benefitting all parties, because the focus of the meeting is no longer disbursements and collection of repayments. However, the group ethos and connectivity is still maintained, because the groups can still meet, but with a more productive outcome.
Field Officers derive further benefit by being able to query, whilst out in the field, the current status of loans and savings, and so they are able to concentrate on late repayments or customers with difficulties, rather than wasting time visiting customers who are keeping on top of their loans and savings.
Customers can keep track of their loans, savings and repayments by requesting information via SMS on their balances and their last five transactions. They are also able to request withdrawals from their savings account via SMS. Loans are disbursed straight into the Wagepoint prepay cards, from where they can transact, withdraw or transfer the money via Pesapoint ATMs and Agents and make loan repayments and savings deposits and withdrawals.
Administration staff benefit from improved reporting, real-time updates on what is happening out in the field and improved (automated) handling of delinquency.
Meter Reading: Instead of equipping meter readers with specialist devices, utility companies could run an application on their handsets, providing lists of meters to be read for the day and allowing meter readings to be entered. These would then automatically generate bills for customers as the readings are entered. Meter serial numbers could be checked to ensure that they have not been replaced, suspicious activity or suspected leakage reported, all resulting in real-time information being made available to the relevant persons to investigate. The following factors all contribute to the cost/benefit analysis of why transactionCRM-based applications using mobile phones out in the field make sense :
  Mobile phones are cheaper than purpose built telemetry or other specialist devices. Because they are readily available there are less capital/start-up costs.
  The systems are cheaper to run. Because they are using the MNOs’ existing networks and infrastructure, these systems don’t require specialist monitoring. W-ell written transactional IT systems will provide monitors and alerts if there is a problem
  The mobile phones are hardy and readily available, so should a phone be stolen, be mislaid, or malfunction, there is no lead time and minimal expense associated with a replacement model.
Mobile Technology: Not just for financial systems…..
Because the mobile phone provides a means of transferring data, via either SMS or, increasingly more widely available, GPRS, their uses are not merely linked to systems whereby each transaction may be linked to a payment, or payment enquiry. An example here is a system whereby health workers can maintain patient records when conducting clinics in rural areas.
By providing a centralised health system, hosted within a cloud-based environment, there is a wonderful opportunity to completely revolutionise healthcare, especially in the more rural areas. By equipping health workers with mobiles, into which they can record patient details, enquire on patient history and update information on current condition of payment, treatment and medication dispensed, the level of care and treatment can be improved upon radically.
SMS reminders could be sent to patients to remind them to attend clinics, take medication and to provide them with a means of making essential enquiries.
A comprehensive database of patient information would provide a wealth of knowledge about diseases, epidemics and trends. To fully fund and develop this system would definitely require government backing, but would result in a system that would be the envy of the world, including developed countries where centralised healthcare records are still not available for all practitioners to view.
The future….
I think by now you’ve got the picture – there are so many more examples where mobile technologies/transactional engines hosted within a cloud-based environment can completely revolutionise developing countries (and developed markets may want to sit up and listen as well……). There is room for smartphones too - especially where there is a need for GPS (meter readers or a requirement to pinpoint the location of the business or customer) or a more sophisticated user interface, but they are more expensive, less robust and have a greater chance of being stolen.
Watch this space for…….
  Mobiles with in-built NFC devices, and these becoming widely used for purchase of goods and at sports and other entertainment events.
  More widespread use of smartphones and apps in developing markets.
  A lot more integration between mobile wallets, international remittances and  other banking services.

Mobile phones have truly become the (very) portable computers written about by previous generations of Science Fiction writers. Their contribution to business, economic development and a means of making a social impact on developing countries will continue to grow in innovative and exciting ways.
Elizabeth Galpin, Payg Solutions
l.galpin@ptinternet.com