mobile financial services for low-income persons

Mobile phones have experienced astonishingly rapid take-up in low-income countries. For example, the number of GrameenPhone mobile phone subscribers in Bangladesh grew 105% in 2005 and recently surpassed 10 million subscribers. The telephone coverage rate in Bangladesh, however, is still only 12%. Coverage rates and demographics imply that, globally, almost all mobile subscriber growth in the future will come in low-income countries.

Low-income persons need financial services as well as communication services. Because low-income persons often lack physical security in their living quarters and in person, they particularly need a way to store money safely and to have controlled access to it. Low-income persons also need to monitor their balances regularly and the capability to transfer money among persons and make necessarily payments at the most favorable time.

Mobile phones can be a valuable tool for providing financial services to low-income persons. In South Africa and Botswana, one-third of people who do not have a bank account have access to a mobile phone.[1] Low-income persons often use per-call phone rental and pre-paid services. However, mobile devices typically also support customer authentication and billing technologies. These technologies are valuable for providing financial services.

WIZZIT, a mobile banking service provider that began operations in South Africa in December, 2004, has already acquired more than 50,000 mobile banking customers. WIZZIT has sought to make its service attractive to low-income customers by having no minimum balance requirements, no fixed monthly fees, and lower over-all cost than established banks. In its employment policies and its marketing strategies, it has explicitly reached out to low-income persons.

A recent survey found that low-income WIZZIT customers are enthusiastic about this banking service. The survey results suggest considerable substitution from bank and ATM use to WIZZIT’s mobile banking service (see Report (pdf file), Table 3). The survey also showed that a large share of low-income WIZZIT customers were using advanced services on their mobile phones: 62% keep a diary, 64% play games, and 34% receive multimedia messages (p. 6). Those figures appear to be roughly similar to the use of advanced mobile services in high-income countries around the world.

The Consultative Group to Assist the Poor (CGAP), the United Nations Foundation, and the Vodaphone Group Foundation sponsored the survey and report. A footnote included in the report declares that the project partners “intend to make the full data set publicly available via the Web” (p. 6). That’s an excellent idea that seems to have not yet been implemented. Carefully reading of the report raises some definitional questions about the published statistics. Public access to the raw data would foster better understanding.

While the WIZZIT banking service seems to have been designed with great attention to using appropriately technology to serve its customers, the WIZZIT website seems to have been designed mainly to impress managers and funders. It’s too much like glamorous brochureware and does not provide enough support for user contributions and sharing. Check out the WIZZIT users’ comments and questions posted at the World Resource Institute’s WIZZIT page. Unlike the WIZZIT website, that page readily supports user feedback. Web 2.0 is also valuable for low-income persons!

[1] Based on FinMark Trust surveys (FinScope), as reported in Mobile Phone Banking and Low-Income Customers: Evidence from South Africa (2006) [report (pdf)].

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