Archive for: Customer adoption

Bill Maurer and Olga Morawczynski’s blog post from a few weeks ago discussed a topic that seems to be on everyone’s mind: innovation in mobile money…or the lack thereof. This has generated a lot of comments and even follow-up blog posts, like one by Bill Barhydt from m-Via. Bill and Olga made some good points about the nimbleness that MNOs and other players have to exercise in order to stay competitive and generate innovation. However, I’m not so convinced that there is a lack of innovation in mobile money because MNOs are partnering with banks. I’d say that there is at least as much of a lack of innovation in mobile money because MNOs are simply trying to copy M-PESA. The link-up between Tameer and Telenor (a bank and an MNO) in Pakistan has received big acclaim for innovation. It’s easy to blame the regulators, as Bill and Olga say, but it’s also quite easy to blame the banks.

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The UN estimates that there are approximately 800 million illiterate consumers worldwide and in addition not all consumers use products that support their primary language. To what extent do designs need to cater for, or specifically design for the illiterate?
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For many living on the edge of the grid, power comes in the form of a car battery which in domestic contexts can last up to one month to run a light bulb or two; keep a radio and mobile phone charged; and for occasional television use. Refrigerators are not worth purchasing unless there is continued access to electricity. Charging a car battery take ~3 days: one day to pick up and drop off; a day to charge, and this can take significantly longer if the locale where it is normally charged does not itself have electricity.

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Is it possible to experience the core benefits of mobile phone ownership without having a mobile phone?

In contexts where income is highly variable people living on the poverty line are more likely to be forced to sell off assets in order to buy essentials such as food. The mobile phone is such an asset. The net result is that there are people with a sufficient technological literacy to understand what a phone can do, a nuanced understanding of the communication norms, own an active SIM card but no mobile phone and most likely live in a community where people understand the variability of income and ownership. In these contexts it can be socially acceptable to ask peers, even strangers to borrow their phone, take out their SIM, insert their own and send off text messages or make calls – since the monetary costs are passed on the SIM card owner.

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A few weeks ago, CGAP released a study comparing the prices of 16 branchless banking pioneers and 10 traditional banks across eight use cases. We found that the average monthly cost of using a branchless banking service is $3.90 (PPP adjusted) compared with US$4.80 when using a traditional bank. The conclusion: branchless banking is cheaper than traditional banking, but the gap is not as wide as some may think.

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Not all transactions are created equal: the very last dollar in your wallet has a higher value than when there’s a stack of notes; an online transaction completed at home has different security implications than one completed in an internet cafe. Service designers have long recognized the need for extra checks and balances for ‘risker’ transactions - and these are typically reflected by levels of authentification. From a user’s perspective we’ve found it useful to frame transactions in terms of thresholds of concern and thresholds of alarm.
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You want proof mobile money can make money? Look to M-PESA, which according to Safaricom’s annual financial statements released just a few days ago accounted for 9 percent of company revenues in the last fiscal year, for a total contribution of USD 94.4 mil (Ksh 7.56 bil). M-PESA revenues grew 158% over last year’s figure of USD 36.6 bil (Ksh 2.93 bil).

M-PESA as percentage of Safaricom's data revenue. ©CGAP analysis

It’s not just the gross revenue amount that is surprising. Two more things caught my eye.

First, Safaricom is lauding 78% growth in data revenue as the main engine behind the overall 37 percent growth in company profits (to USD 261.9 mil). And M-PESA now accounts for 48% of all data revenues, and 70% of the total growth in data revenue last year. In other words, this year M-PESA was the single biggest driver of new profits for Safaricom. Goodbye SMS as the #2 revenue source, at least for this mobile network operator.

Second, M-PESA may be delivering even more to the bottom line. A little guesswork is involved. The service is 3+ years old. Safaricom still incurs variable costs of agent commissions, marketing, HQ staff. But if they’ve paid off the original large, lumpy front-end investments in the M-PESA platform, the huge initial marketing blitz and no doubt a few high-priced lawyers to help sort out regulatory treatment… well, it would not surprise me if a substantial portion of M-PESA revenues now flows directly through to profits. Let’s say it’s half; in other words, USD 47.2 mil in profits from M-PESA. And we know Safaricom’s overall profits for 2010 were USD 261.9 mil. In this scenario M-PESA is generating 18% of all Safaricom profits.

Not bad. Not bad at all.

-Mark Pickens

Following on from last week’s post on the concept of ‘mediated use’ - asking someone to complete all or part of a task that the user is unable, or unwilling to do - how motivated are agents in helping customers complete all or some of the task?

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Last week at the Mobile Money Summit I had the pleasure of moderating a discussion with Daryl Collins (co-author or Portfolios of the Poor) and Olga Morawczynski (now with Grameen Foundation’s AppLab in Uganda  — Olga and I also co-authored a brief on M-PESA customers last year, based on Olga’s PhD research).

I worry some mobile money providers won’t see the volume of transactions they want to justify the investment, unless they go beyond offering a simple liquid wallet and mobile remittances. If they can get traction with a value proposition like Safaricom did, with 45% of the population signing up — then great. But Kenya was a market where everything aligned just right, not least of all the very poor competition M-PESA faced from banks, bus companies and the post office. We’re seeing that few countries offer such dramatic opportunities.
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Textual and technical illiteracy is often cited as a barrier to the adoption of services and by default the benchmark for success is often set at ‘understanding and completing the task by oneself’. However if there are ‘literate’ people nearby to what extent does it matter that the user is illiterate?
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