5 Ways an Emergency Mobile Wallet Can Lead to Financial Inclusion
In the run up to the first-ever World Humanitarian Summit in May, UN Secretary-General Ban Ki-moon called for the use of cash transfers as the default method of helping those in desperate circumstances.
It makes sense. Cash offers recipients more choice and dignity than other forms of aid as they have the ability to decide where they want to spend their money. Thus, it is an effective way of helping vulnerable populations rebuild local communities and markets. Yet, cash transfer systems face challenges.
Photo Credit: Thanhhai Nguyen, 2015 CGAP Photo Contest
One of the major challenges is security. Transporting large amounts of banknotes and coins in a crisis zone can be dangerous, and recipients who have to travel some distance to pick up their payment are potential targets. The extra security needed comes with extra expenses. Also, cash is prone to leakage from corruption and bribery.
The digitization of cash transfers offers charitable organizations an opportunity to fix the above mentioned problems, while also offering potential access to financial services that could help the poorest and most vulnerable cope and weather shocks in the future.
However, many digital payment schemes used so far are not living up to this potential. They tend to be either one-off or limited-purpose systems, custom built for the humanitarian agency and not connected to the broader payment ecosystem, providing a limited to negligible use case for end-users. As a result, they can be expensive to deploy with little to no use beyond that deployment: a disappointing return on investment.
Could a mobile wallet built for emergencies turn this problem on its head? At the World Humanitarian Summit this year, Ericsson, in partnership with and support from the Bill & Melinda Gates Foundation, committed to build an Emergency Mobile Wallet that can be deployed in the immediate aftermath of disasters or crises to support humanitarian organizations and affected populations. This seems like a good first step: a well-designed mobile wallet could open up new opportunities for affected communities and not only improve relief efforts but also offer longer-term access to financial services that can help coping with future negative shocks. Its success, however, will rely on a design that is adaptive to multiple contexts and customer needs.
A mobile wallet that makes access to emergency aid faster, cheaper, and more transparent is a must. Yet, as we discussed in a previous post in this blog series, for such solutions to lead to meaningful financial inclusion, they need to generate a positive end-user experience by providing the necessary convenience and value in the short and longer terms.
Applying that framework, we posit that a sustainable positive impact of an emergency wallet will be intensified if:
Recipients are given choice and autonomy. They should be able to decide how they use the mobile wallet, particularly in terms of providers, agents, and merchants they choose to transact with in order to access their money or other services.
The wallet offers transparency to donors and regulators. For example, application program interfaces can be structured in such a way that data can be used for monitoring and evaluation by both the humanitarian actor and regulators. At the same time, recipient data should be handled responsibly and be adequately protected.
The wallet integrates with national or donor ID systems. This will allow faster registration and re-registration in cases where recipients have no ID documents or have lost them.
User interfaces are designed to be simple and customizable. These interfaces should provide convenience through easy familiarization; transparency through clear and understandable disclosure of fees, terms and conditions of use; and simplicity that maximizes the user experience while minimizing common errors and risky behaviors.
The wallet can integrate with or link to additional financial and nonfinancial services. Consumers may get access to and start using other financial instruments as livelihoods, communities and markets recover.
Designing such a wallet must be a collaborative effort. Other players in the mobile money ecosystem who want to use, support and leverage the tool, whether to improve emergency response now or build household resilience in the long term, will have a role to play in getting these aspects right, whether within their individual institutions or via powerful public-private partnerships.