Recently I counted the number of mobile money launches by mobile network operators in 2009 and those confirmed for 2010. I included only those with a focus on low-income consumers. (Some, perhaps most, also target other segments, looking for the widest base to achieve the fastest uptake, which seems quite reasonable.)

For 2009 and 2010, I count 15. That’s twice as many as in the previous 8 years combined. Mobile network operators have clearly heard the news, and are responding with a bevy of mobile money launches. That’s a win for all of us who have been talking about branchless banking for several years, and believe it can change the landscape of financial services for the poor.

But I was still a little disappointed last month in Barcelona at the GSM World Congress. Many operators seem to be talking about products that walk, talk and sound like clones of M-PESA. In short, the state of knowledge about designing mobile money products seems to have hardly evolved in the last several years.

And this despite growing evidence that low-income consumers will pay for more than just money transfer. In fact, we know they will take the initiative to repurpose and reuse mobile money in ways that were never advertised.
When asked how M-PESA rated against all the other financial instruments Kenyans use (bank accounts, savings cooperatives, informal saving clubs, the mattress), a whopping 21 percent said M-PESA was their “most important” way to save. This came from a survey financed by FSD Kenya.

If we take the most recent figure of 8.5 million registered users, say that 70% are active users, and 21% of those use M-PESA as their main way to save, it comes to 1.24 million Kenyans – larger than all but 2 of the country’s banks. Clearly, there’s a great deal of demand for the kind of convenient, affordable way to store funds which M-PESA represents (even if Safaricom has assiduously avoided ever advertising M-PESA as a way to save, for regulatory reasons).

Data from Philippines and Brazil suggests this isn’t a peculiarity to Kenya. In the Philippines, without any marketing and with a poor network of agents in many areas, 1 in 10 unbanked mobile money users already stores an average of US$31 in his or her mobile wallet. They report this amounts to one-quarter of their household savings. When asked what additional services they would be likely to try beyond mobile money, more than half of existing mobile money users said savings (54%).

In Brazil, our agent research shows that though rural agents do nearly as many transactions per day as urban ones, deposits and withdrawals to bank accounts make up a much larger proportion of transactions (38% of the transactions in rural agents, compared to 8% in urban agents).

Yet most mobile money services are going to market without any focus on savings. Part of it is operator confusion about how to monetize demand for savings. Do you charge for deposits? Does that then mess with the free cash-in many offer to encourage money transfer? There are valid questions that have to be worked out. But when I talk to them, I hear little effort from operators to really think freshly about their products. Maybe it’s the rush to get to market.

But not all mobile money launches will get the response M-PESA did. In fact, it’s clear that was an outlier. M-PESA-like services in other countries may well have to do more, and try different things, if they want to hit for six (to use a cricket term, or hit a homerun, for my fellow Americans).
I’m surprised more operators are not launching with a multi-product push to try and pick up several kinds of consumers – those who will pay to send money, those who want to save, etc.
What would explicitly-designed saving products look like? That’s a topic for a whole research agenda, and something CGAP might look at more closely. But its clear to me that we should be start totally from zero in designing saving products, for three reasons:

1.    Replicating what most banks have offered is unlikely to be a recipe for success. They typically require large minimum opening balances, often slap on un-transparent fees. But we do know other saving products and instruments which are attractive to the poor. To take just one in West Africa, people pay susu collectors the equivalent of 1/30th of their savings in return for doorstep pick-up and delivery by a roving susu collector, and the illiquidity of not being able to access funds for a month (which actually has a benefit if one is trying to shield savings from daily temptations and demands of family and friends). Why haven’t we seen an m-susu product yet?

2.    Mobile makes it possible to have immediate, two-way, continuous nearly free communication between customer and provider in a way that never happened with bank branches because 99.9% of our lives is spent not in front of a teller, and when we are there it is very costly for the bank to have us there (a global average for the price of a teller window transaction in a developing country might be $4 per transaction… compare that to USD 0.02 for a SMS in the Philippines). How can we use this to boost the relationship between consumer and provider so that services delivered electronically are trusted and do a better job of helping consumers articulate their needs, get tailored products and achieve their goals? We know from Dean Karlan’s work that its possible to improve the rate at which poor people achieve their saving goals by doing things as simple as sending them a monthly reminder of their saving goal, or if it’s a refrigerator they want to purchase, sending them a piece of a picture of one that they can assemble and display at home to keep their eyes on the prize. Why couldn’t a provider send regular sms messages to help their clients achieve their goals?

3.    There is a growing cohort of people thinking about these questions who can help providers. Nokia’s Jan Chipchase is increasingly looking at mobile financial services. The Institute for Money, Technology and Financial Inclusion at the University of California (Irvine) is supporting more than a dozen researchers out in the field and has become a clearing house for some really mind-bending information about what poor people do with their money. They recently released a study with 11 principles for designing financial services that use technology to get to poor consumers. It’s well worth a read.  To borrow one idea IMTFI had, why not design a product for Muslim clients saving to make the pilgrimage to Mecca, which earns them status as a devout person? Better yet, why not let them build up a list of friends and family who they want to know, and send those people regular text messages to keep them up to date?
There’s a ton we could be doing with mobile saving products, starting with fresh thinking about how to design them.

-Mark Pickens