Mobile Money: Development’s New Banking System?

One of our classes this week focused on mobile phone case studies and some of the impacts of mobile phone implementation in rural populations. One of the studies, “Mobile Phones and Economic Development: Evidence from the Fishing Industry in India” by Reuben Abraham, was about Indian fishermen using mobile phones to check market prices of fish, coordinate with buyers, etc. The study concludes that there is some positive effects on reduced waste of fish, and a small increase in profits for fishermen, but overall the impact of the phones in the studied community was nothing super amazing. Abraham also asserts that information gaps in markets can be remedied by the creative use of technology, which inspired me to find some creative uses of mobile phone technology that might have a serious impact on development.

When I found the Mobile Money for the Unbanked program from the GSMA, I thought there might be some real potential in it. The basis of the program is to support mobile providers in rural and undeveloped areas to offer banking services to their subscribers. The reason that this is such an intriguing idea is that it uses the mobile platform to provide a service that is already so established in its standard form. The banking system in the US has adopted credit cards, debit cards, and even apps that allow you to check your accounts, but this program is a form of banking that is very new in is conception.

Mobile Money allows subscribers to load money onto their SIM card and use the money to pay for things like taxis or groceries. They can also withdraw cash from it at one of their provider’s locations. This is a great solution to the lack of banking in rural areas, and because of mobile provider recognition many people already trust these companies. The program also gives GSMA great data measuring tools for financial indicators, which is otherwise very hard to collect from people without any documented transactions. The website provides a really cool tracker tool that shows where they have employed the program and where they are planning to.

The Mobile Money for the Unbanked program is one of the really cool and successful examples of taking an existing technology and using it in a non-traditional way to improve ICT4D. I am really excited by the potential for mobile banking, and though there are now apps like Venmo, which allows people to make quick bank/credit transfers, making the mobile providers the bank is a very different approach all together. I will be interested to see if this catches on in the West, or remains in the developing world.

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One response to “Mobile Money: Development’s New Banking System?

  • veggiemunster

    I feel like mobile banking can have a lot of problems–its similar to micro-finance. In micro-finance schemes there is a lot of corruption, income gains are modest and clients still move in and out of poverty. The only reason the fisherman research worked was because it was natural–they were buying the phones and using them on their own. This one seems almost like an NGO but they don’t say specifically on their website. How will mobile banking help with development? To me it just seems like another way to hurt the poor.

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