Tear down that (mobile garden) wall

August 27, 2009 at 12:58 am Leave a comment

Hear that rumble? It’s Wednesday’s big mobile announcement. Handset giant Nokia enters m-banking.

Nokia Money has been designed to be as simple and convenient as making a voice call or sending an SMS. It will enable consumers to send money to another person just by using the person’s mobile phone number, as well as to pay merchants for goods and services, pay their utility bills, or recharge their prepaid SIM cards (SIM top-up). The services can be accessed 24 hours a day from anywhere, meaning savings in travel costs and time. Nokia is building a wide network of Nokia Money agents, where consumers can deposit money in or withdraw cash from their accounts.

The service will be first demoed at Nokia World on the 2nd and 3rd of September 2009 in Stuttgart, Germany. It’s planned to be rolled out to selected markets beginning in early 2010. But given more than 4 billion mobile phone users and only 1.6 billion bank accounts, Nokia clearly sees enormous opportunity.

As CGAP notes, Nokia had already begun moving into services in developing countries.

This isn’t Nokia’s first move into providing content to a low-income clientele using the company’s handsets. In April, Nokia announced it completed trials of its Life Tools service. It’s icon-based, which Nokia says helps reduce language and literacy barriers. Its services are geared to farmers (customizable commodity prices, weather, seed and fertilizer availability) and students (English lessons, exam prep). It works on a new generation of handsets which Nokia has targeted at value-conscious customers who want browsing on the cheap. So far, that’s two Nokia phones running around USD 100, so there’s still a lot of distance to cover in cost and range of devices. But the idea behind Life Tools is exciting: browsing at a price affordable not to the economic elite, but hundreds of millions of more ordinary consumers.

Earlier this year Nokia invested $70 million USD in mobile payment company Obopay, which is providing the payment platform for Nokia Money. But Nokia intends the service to be open and interoperable with other payment services as well.

Ken Banks of kiwanja.net notes that this challenges the exclusivity many African m-banking operators enjoy, but may lock customers into a handset rather than a carrier.

This would be a direct challenge to many existing models which require users to switch networks, or to be on the same network as the mobile service they’re looking to use. In addition, it looks like Nokia Money users can sign-up without needing to swap out their SIM cards, making up-take of the service considerably more efficient logistically. If this thing were to grow, it could grow fast.

…As if (very) successfully designing and building low-cost handsets for emerging markets wasn’t enough, Nokia continue to increase their offering of emerging market-specific services through their low-cost phones. Last year it was agriculture and education. Today it’s financial services.

I’ve never been one for predictions, but this one has certainly come true. Again, writing last November:

“…So, what next? Nokia develop a mobile payments platform and embed the client into all of their emerging market handsets? Imagine, a single company controlling the entire mobile technology value chain would make interesting viewing. It could well be the answer to the age old fragmentation problems suffered by the ‘social mobile’ and ICT4D space, but would this give the Finnish giant Google-esque powers?”

And then there’s the cost of the voice calls or SMS messages to consider. African mobile analyst Steve Song has been fierce on this issue. Even in developed countries SMS charges are large compared to the incremental cost of providing them. But in Africa, SMS charges comprise a startling percentage of income. Poor Africans spend over 50 percent of their disposable income on communications. Why? Increasingly, you need a phone even to get a ditch-digging job.

Steve takes a critical look at Nathan Eagle’s txteagle micro-work service, in which small tasks are distributed via SMS and completed at piecework rates.

In [Nathan’s] talk he points out that the Kenyan incumbent, Safaricom, will earn a billion USD in revenue this year. Minutes later he highlights the fact that his initial attempts to establish SMS-based real time blood-bank monitoring in Mombasa failed because nurses were unwilling to pay the cost of an SMS to update the database. He says:

“… if you’re working at a local hospital, a text message is a substantial fraction of your day’s wage …”

Now put those two facts together. A billion dollars in revenue and an SMS is a substantial fraction of your day’s wage [emphasis added]. Hmmm.

Nathan had to resort to paying nurses the equivalent of three SMSes for every day they updated the blood-bank. I love the ingenious way he found to make the system work but it does highlight what a throttle to innovation the high cost of communication is.

Eventually, it may be data services to the rescue as Africa is better connected via undersea cables to broadband networks. Nokia is integrating Skype into its devices. Steve Song sorts through the issues in a series tagged WGSDIA, “What Google Should Do in Africa“; recommendations include offering web-based versions of Google’s SMS services, and lobbying for better SMS rates.

In the meantime, phone users are doing their own end run on the cost of voice calls and SMS messages. Many use:

…the practice of “beeping” or “missed calling” between mobile phone users, or calling a number and hanging up before the mobile’s owner can pick up the call. Most beeps are requests to call back immediately, but they can also send a pre-negotiated instrumental message such as “pick me up now” or a relational sign, such as “I’m thinking of you.” The practice itself is old, with roots in landline behaviors, but it has grown tremendously, particularly in the developing world.

This comes from Jonathan Donner’s delightful research article on the rules of beeping: who beeps whom, who’s expected to pay for the call back, and how not to beep too much.

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Entry filed under: ICT4D, Microfinance, User Experience. Tags: , , , , , , , .

Mozilla Service Week Sept. 14-21 Carnival of Carnivals Aug. 31, 2009

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