Tips on Mobile Money Product Design from Uganda

Hi Mark,
Interesting post. I think your examples are nice illustrations of what people will do/pay in order to constrain their own spending and sock away value for a later date.

It will be interesting to see how mobile money will evolve to meet client needs, whether they be needs to constrain spending or other needs. Mobile moeny players may try to develop commitment and other more tailored product features themselves. I would think that mobile money providers will eventually begin to see their role as a platform provider, linking insitutions offering these kinds of services to clients in a way that benefits both sides. As our recent paper documents, this may already be happening in Kenya.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1830704

Thanks again for the post,
Jake

hanks, everyone, for the first crop of comments.

Kevin, I definitely thought of “Nudge” after talking to these clients in Uganda. Sadya, definitely worth looking at incentives vs. penalties. For mobile network operators, airtime has an effective marginal cost close to zero. I wonder about matching client deposits with a % of airtime?

Jake, your comment points at something quite important: branchless banking providers don’t have to go it alone with product design. Nonbanks can partner with banks better positioned to offer deposit or credit products, for instance. But we find that often other players which might have more regulatory permission to offer other products can also be missing insights about what low-income consumers want.

There is definitely work to be done generating insights about consumers and converting those into innovative products to test.

A nice illustration though let me point out some few observations.

A nice platform, aggressive agent acquisition and a successful go-to-market strategy are the key things to ensure the successful launch of any mobile financial inclusion project.

Mobile money transfer and mobile banking are two different things.
Mobile money transfer has evolved into mobile financial services, but many people don’t distinguish between MMT/MFS and mobile banking.
The amount of money/time wasted in funding the development of new platforms, if channelled to funding existing mobile money schemes we could have made very big strides in bringing the under-banked population closer to accessing financial services.

Rollout technology is very critical if the target market is to reach and win the less banked population. Surely telling my grandmother to download a java applet on her phone so as to enable her receive menu which will make her receive the $3 I sent to her…

Other key things to consider are how friendly the regulation is.

So next time before one jumps onto that plane to Dubai/New York/Miami or Amsterdam for a mobile money conference, one should stop and think who really is our target customer?…

Perhaps one should wear mud boots and venture into Kibera slums in Kenya/ Koko village in Delta state in Nigeria and witness how a simple and easy to use STK based platform can change millions of people lives…

Mark, I like the way you have articulated the notion of moving money over time relative to moving money over distance. Good challenge you raise.

Sadya, my first thought when I read this was that they were already intrinsically motivated to save so the answer would be a reasonably priced, sustainable instrument that enables them do so.

What I mean is that the future reward for these particular folk seems clearly defined, and what they want, most of all, appears to be that the barrier that stands between the press of immediate needs and that future goal. Which suggests to me that what they need most is a trustworthy accountability partner in working towards a goal that they are already very determined to achieve.

My two cents.

I agree with Alex that there are certain “must haves” in any mobile money service: your platform must be stable on the back end and usable on the front, agents must be aggressively recruited, money must be spent on marketing, obviously regulations must be complied with.

A sizable portion of mobile money plays which have not achieved volume are guilty of poor execution on one or several of these fronts.

But, how do we explain those implementations that do get the prerequisites right, and still don’t see big uptake from consumers?

Increasingly I suspect there is weakness in the product. Put differently, basic P2P and liquid wallet is not proving interesting enough to a sufficiently large slice of consumers. This is my leading candidate for why 78 out of the 104 branchless banking services live in the world today have fewer than 1 mil registered users (not active, just registered).

To attract enough consumers, providers might need to appeal to several segments by offering 2 or 3 initial products. This might include the basic P2P/liquid wallet, but also a saving product, or other that market analysis shows demand for. Should this be surprising? It would be just on more thing about M-PESA’s success that’s peculiar to Kenya and needs to be adapted to make mobile money work in other markets.

Mark, a very interesting blog post! Two thoughts:

(1) A second reason for the cumbersome saving methods of Richard and Jennifer, besides creating a barrier against temptation, might be safety: Money kept at home obviously is at higher risk to theft than money kept in a bank account. But if you don’t have a bank account, your best option is to find innovative ways of hiding your money. This is what Richard and Jennifer did. Clearly, a mobile-phone-based savings account would provide the safety that Richard and Jennifer may be looking for.

(2) You propose a mobile-phone-based savings account that would discourage withdrawals in the same way as Richard’s and Jennifer’s savings methods did. The implementation of such an account might, in fact, be straightforward: Enable convenient deposits via a mobile phone, but require a visit to a bank branch in order to make a withdrawal. This solution would make it reasonably difficult to withdraw money, while still allowing emergency withdrawals.

This is an insightful blog, thanks! Indeed, the poor are willing and read to save for their development and providing commitment incentives could enhance their ability save for emergencies and the acquisition of critical assets. A purely saving product in the mobile money ecosystem is desired exactly for this purpose.