Coming to America: Mobile money. Why NGOs should care
April 9, 2013 Editor 0share
Mobile money’s wildfire spread across the developing world has been so successful that it’s about to remake the rich world, too.
That’s the observation from South African business columnist Tim Cohen. He says mobile money, which lets people trade credits directly among mobile phone accounts, will be the latest innovation from the developing world to be widely adopted in richer countries.
“Mobile money will crash into conventional banking somewhere in the future,” Cohen wrote last month for Johannesburg-based Business Day. “The question is not whether, but how and when?”
For NGOs and other do-gooders who’ve been present at the creation of mobile money, it’s a prediction worth thinking about.
Here’s how Cohen puts it:
There are lots of different ways of looking at a bank, but one way is to think of a bank as a database combined with a reputation. But there are other organizations out there that have very large, very effective databases. And they have great reputations. Some are sitting on large piles of money. They are called cellphone companies.
He cites figures from February’s GSMA Mobile for Development report on the state of the mobile money industry showing that mobile money has proved equally attractive in countries of varied wealth, and argues that the biggest predictor of its success in a country is actually regulation.
“Services such as Safricom’s M-Pesa programme in Kenya describe themselves as a ‘mobile money transfer solution,’ not a mobile banking service,” Cohen writes. “By framing itself this way, M-Pesa opts out of a small mountain of banking regulations.”
Cohen’s analysis suggests two developments that NGOs involved with mobile money should be watching for:
- A possible backlash against mobile money from conventional banks. If they throw up regulatory hurdles, NGOs will have a harder time increasing mobile money usage among poor people.
- Opportunities for new corporate partnerships as mobile companies position themselves to bring bank-like services to richer countries. If Verizon decides to start marketing itself as a mobile bank, NGOs who’ve spread mobile money through the developing world could become valuable partners.
Spreading from its East African epicenter, mobile money’s success has been “eye-popping”: The amount of money Kenyans now store on their mobile phone accounts at a given time is equal to 60 percent of their country’s GDP.
That’s too massive a trend for global capitalism to ignore. As Cohen notes, it won’t.Uganda is one of several African countries served by fast-growing mobile money service M-Pesa. Photo: Ken Banks, kiwanja.net (flickr).Related articles:Secondary Department:
- New GSMA Report: Mobile Financial Services for the Unbanked
- Time to let loose? Why lawmakers should ease up on mobile banking rules
- Kenya: New Microsoft Software Available to NGOs for Free
- Case Study on How Collaboration Drives Innovation in Emerging Economies
- Quotable: Africa alone has more mobile money users than Facebook does worldwide
- What’s Next for Mobile Money?
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