Mobile Money’s Innovation Crisis

Dr. Bill Maurer is Professor of Anthropology and Law at the University of California, Irvine, and the Director of the Institute for Money, Technology and Financial Inclusion. Dr. Olga Morawczynski has spent the last five years studying mobile money applications. She has undertaken research in numerous countries including Kenya, Tanzania, Uganda and India. Currently, Olga is with the Grameen Foundation (AppLab) in Uganda. She is developing and testing applications to increase the adoption and usage of mobile money products amongst the poorest segment of the population.

Back in March, Mark Pickens wrote an interesting blog about innovation in the mobile money space. His main argument after attending the Mobile World Congress in Barcelona—not much has changed in the industry. The majority of mobile network operators (MNOs) are introducing clones of M-PESA and not too many of them have gone beyond payments. After attending the recent Mobile Money Summit in Rio, we can confirm that Mark is right. There are plenty of new players in the industry, but what is really new aside from the recent launch of M-KESHO? More interestingly, why are we not seeing more innovation in this space?

Our position is that if MNOs focused less on creating the right “ecosystem” (the buzzword of the moment, Jan Chipchase reminds us) and more on thinking about and piloting new products, things would be very different. There may also be one partnership in particular that could be hampering innovation—that with the banks. Historically, these two players have taken very different strategies for new product development, especially in resource poor countries. People are quick to fault the regulators for stifling innovation. But the regulator is really a scapegoat when the traditional partners in the ecosystem engage in anti-competitive practices.

MNOs and device manufactures have been excellent at innovation and product design. Oftentimes taking the lead from poor customers, they are quick to spot new trends and to harness them into new products and services. They quickly realized that if their products were to be scalable the pricing structure would have to be suited to the erratic income inflows of this segment. So they introduced pay as-you-go services, which allowed individuals to top-up when they had cash but did not exclude them from the mobile system when they didn’t. This is quite different to the minimum balance and monthly fees required by banks. And it was the MNOs who rocked the financial landscape by bringing mobile money to the village and the slums—locations which few banks have dared to enter. Given these very different focuses and ways of doing things, it is no wonder that MNOs have become less innovative as they expand their network of financial institution partnerships.

So what can be done then to really spur new product ideas in this space? Unless banks and financial institutions are ready to start thinking more creatively – and we do not doubt that some are – we have to look for ways to allow innovation to come from the rest of the ecosystem: from customers at the bottom who set devices and services to new and unexpected purposes; from creative new entrants who go it alone before seeking partnerships; from operators concerned less with the leverage potential from banking the unbanked and more with people’s everyday livelihoods, real needs, and creative interventions.

-Bill Maurer and Olga Morawczynski