Responsible Finance Forum

Mobile Money Services – Design and Development for Financial Inclusion

Rajiv Lal and Ishan Sachdev
01 July 2015
Source:  Harvard Business School

Mobile money services are being deployed rapidly across emerging markets as a key tool to further the goal of financial inclusion. Financial inclusion, the development of novel methods to enable individuals at the base of the pyramid to access formal financial services and become part of the formal financial system, is considered a key pre-requisite for lifting these populations out of poverty and for driving economic growth.

There have been some notable successes, such as Vodafone / Safaricom’s M-Pesa in Kenya. Within five years of its launch, M-Pesa had 15 million customers, equivalent to 37.5% of the country’s population, and was processing $10 billion annually. However, the success of mobile money services more broadly has been limited – in its 2012 Mobile Money Adoption Survey of mobile money services in emerging markets targeting the unbanked, GSMA identified only 14 “sprinters,” or those services which were scaling rapidly, out of the 150 total such services. Even replicating successful services in additional geographies has proven challenging, including efforts by Vodafone to take the M-Pesa model to other countries in which it operates, such as South Africa. In addition, mobile money operators do not seem to have, a-priori, a good sense for which factors will determine the ultimate success of a deployment. Yet, the pace of new deployments is only accelerating, and given these past results and the apparent challenge in learning from them, it is likely that many new deployments will also prove less than successful.

Therefore, in this research, we analyzed an array of mobile money deployments from across the emerging markets to attempt to understand which characteristics are critical for the success of a mobile money service, particularly at launch. Our research covered five successful mobile money deployments – Telesom ZAAD in Somaliland, Dialog eZ Cash in Sri Lanka, Econet EcoCash in Zimbabwe, SMART Communications SMART Money in the Philippines, and Globe Telecom GCASH in the Philippines – and five less successful deployments – Vodacom M-Pesa in South Africa, MTN m-money in Uganda, Eko Financial Services in India, and the broader situations in Nigeria and Brazil.