Developing Countries Leading the Way in Mobile Innovation?


It is estimated that, globally, mobile phone use stands at about 96%.  It’s a startling statistic which really highlights some huge opportunities for innovation and the way we interact and conduct business and our day-to-day lives throughout the world.

This democratisation of communication has already led to some amazing innovations in surprising places.  Take mobile payments, for instance.  The biggest revolution isn’t taking place in London, nor New York, nor Tokyo, nor any of the major money capitals of the world.  It has taken place in Africa.

More Africans have access to a mobile phone than to clean drinking water(Nielsen).  But, in some areas, these phones are making real and positive changes to peoples’ lives.  In Kenya, for example, 90% of the population has a mobile phone.  And 96% of those mobile phone users have used a handset to make a mobile payment or for mobile banking.

It is due, in large part, to the development of the M-Pesa scheme by Kenyan mobile operator Safaricom.  Developed in response to a consumer-driven trend to swap airtime as a means of transferring credit, the solution allows users to pay bills, deposit and withdraw funds, transfer money with both users and non-users, and purchase airtime.

This well-documented and popular scheme has created a ‘branchless’ banking system which has transformed personal financial system in Kenya and spawned a host of similar schemes across the continent and further afield.

Tanzania has been slower to adopt M-Pesa, but Rwanda, Uganda and Swaziland all boast similar schemes.  Mobile money transfer has even been used as a key tool in fighting corruption in the Afghanistan police force; enabling a more transparent system of paying wages.

Vodafone went on to launch the M-Paisa in India in 2011, although the service differs considerably from the original Kenyan M-Pesa service.  The Bank of India has strived to ensure that mobile money is essentially a bank-led service, rather than the telco-led service it is in Kenya, and that Know Your Customer (KYO) rules are adhered to.

What’s clear is that international variances in regulation and consumer perception of risk will influence the form and successful adoption of these schemes. Certainly, the clear demand for such a service in Kenya appeared to circumvent the trust issue.

In countries like India, where good regulation is in place but much of the population is ‘underbanked’, a new model will have to evolve.  Part of this may include the opening more banks, for instance or finding new ways of establishing financial institutions that will be of significant help to the ‘underbanked’.

It may be a far cry from mobile payment’s original ‘branchless’ roots, but here, too, mobile devices can lend a hand – as Kallol Karmakar, a Senior Business Analyst at Misys, the international developer of financial software applications, explains:  “There are other effective ways to reduce cost and make rural branches profitable. For example, banks can use mobile handheld devices – like tablets for branch systems.

Tablet devices, unlike desktops, are mobile and do not require power supply or a desk. This makes them flexible – and even easier to carry than a laptop. The use of tablets would help bank staff to commute easily between different locations.”

If banking adoption is to keep up with demand in these rapidly developing economies, local knowledge and a fresh approach to banking and money management will be required and, it seems, this is something that mobile devices are making possible.

It will be fascinating to see how innovations in mobile money are matched by strides forward in other areas like healthcare and education.

1 comment

Add yours
  1. Isaiah Lule Mbeta

    What is your view on the impact of mobile money on economies of developing countries. There are argument that mobile money provides channels of uncontrolled money sneaking into the economy, thing of the terrorist money gotten in the sea, drug business money and other market. There are no strict control on this kind of money getting to the economy as opposed to money regulated by the bankers.

Comments are closed.