The World Bank estimates that about 2.5 billion people worldwide lack a formal bank account at a financial institution. In most of the countries where development organizations operate, the need for safe and affordable financial services is quite high. At the same time, mobile phone ownership continues to expand rapidly: Recent estimates by GSMA Intelligence put unique mobile phone subscriptions at more than 3.6 billion people globally. It is no wonder that articles in The Wall Street Journal and The Economist have recently proclaimed that mobiles offer a promising path for the world’s unbanked to gain financial inclusion.
More than 100 experts gathered at the Mondato Asia Summit last week in Singapore to discuss mobile financial services in emerging Asia. Participants heard from big names like Google, MasterCard, Visa, Discover, Amazon, MetLife, Uber, the U.S. Agency for International Development (USAID) and the Consultative Group to Assist the Poor, as well as from several companies that you may not have heard of yet but will likely soon, such as mHITS, a global mobile money remittance service, and Gatecoin, the first global digital currency exchange.
Speaker after speaker at the summit emphasized the importance of putting the customer first — commonly referred to as human-centered or user-centered design — in the development of any mobile financial service. It seems fairly self-evident that products should be designed based on what users want. Apple was touted as the gold standard for designing products based on an acute understanding of their customers’ wants, needs and aspirations. Yet, as anyone who has ever found themselves desperately trying to speak to a live person on a bank’s automated phone system knows, this is not always the case.
Most participants were optimistic about the likelihood of mobile financial services becoming embedded in the products and services we use today. This could result in a situation in which users won’t even think about the mechanics of using a mobile financial service. Instead, a mobile service will just operate in the background, providing an easier way to do ordinary things, such as buying a coffee by shaking your phone. Participants seemed less in agreement on the potential of decentralized “crypto-currencies,” such as Bitcoin, to transform the way the poor transact and save.
The Social Impact of the Year Award for Mobile Financial Services in Emerging Asia highlighted the benefits of mobile financial services. The award recognizes products and services that delivered measurable social value in their given market in South or Southeast Asia from 2013 to 2014. The top award went to BanKO for its mobile-based microsavings, insurance and loan products that have brought financial inclusion to close to a million Filipinos. The fact that BanKO offers a full suite of banking services to people via their phones was cited by the judges as a unique characteristic in a field where many of the services are primarily mobile money transfers.
The summit conversation will continue at the Mobiles for Development Forum Asia, an event sponsored by USAID and FHI 360 in Bangkok, January 20-21, 2015. The purpose of this forum is to catalyze conversations and actions to create a more holistic and inclusive approach to mobiles for development, one that results in lasting and genuinely impactful interventions. (You can apply to attend at go.usa.gov/scZw.)
Whether mobile financial services ultimately lead to full global financial inclusion remains to be seen, although it is difficult not to recognize their potential for positive impact. As people become more comfortable with digital technology, such as mobile phones, and the many conveniences they offer, the appeal of cash, with all of its risks and inconveniences, will fade. Of course, mobile and other forms of digital financial services have their own risks and roadblocks. The question is not whether they are perfect, but whether they are better than the alternatives.