Delivering on the Savings Promise of Mobile Money
People’s savings goals generally relate to future payments they would like to make: for school fees, housing, weddings, working capital for trading activities or health emergencies. By planning payments, households can seek to stabilize their daily circumstances, develop opportunities to improve their condition in the future, and mitigate shocks that can set their families back. Thus, the notions of savings, payments and budgeting are inextricably linked.
Yet most savings services available to the poor do not link these three elements. Budgeting is often treated as a financial education matter, not directly facilitated by savings products. And the basic accounts of many banks and financial coops often stand in splendid isolation, offering few if any payment benefits.
The innovation of mobile money has been to put payments as the first rung in the ladder of financial inclusion, but now we are observing that the step from sending and receiving money in real time to storing value over time looms large for most users. Budgeting tools may be a missing link in mobile money. To make mobile money services more relevant, they need to be packaged as elements of a broader savings proposition based around helping people budget for today and plan for tomorrow. This should accommodate the mental models that they already use today, just with better tools.
Mobile phones offer a special opportunity for integrating savings, payment and budgeting tools seamlessly for the client. The phone offers a level of immediacy and interactivity that no other kind of banking touch point can deliver. It needs to evolve from being a mere payment instrument (a card and point-of-sale terminal replacement technology) and become a tool that helps people manage their money. The phone can act as a passbook, a calculator, a channel for alerts and reminders – all at your fingertips.
The mobile user interface –the set of screens that people use to handle their finances on a mobile phone—will therefore be a key determinant of how successful mobile money turns out to be in facilitating fuller financial inclusion. How will mobile money providers present the range of budgeting tools, savings options and payment services to their clients? The product challenges in the front end (user interaction on a very limited user interface) will eclipse the traditional challenges in the back end (integration into the core banking system).
Mobile money is not just a cost reduction story; it ought to be a service creation and integration story as well. Mobile phones offer the possibility for banks to maintain a constant presence in their customers’ lives, helping them budget for today and plan for tomorrow.