Posts tagged ‘Mobile Banking’

Tear down that (mobile garden) wall

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.

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

News In Brief, Aug. 13, 2009

This week’s research focuses on technology infrastructure for emerging markets. As usual I pick up other things along the way.

I’m keeping tabs on banking trends that go beyond microcredit to other financial services.

  • The topic got my attention at Microfinance California 2009. Slides from the panel on “Beyond Microfinance Lending: New Consumer Products” are available. Sarah Gordon of CSFI reminded us that 40 million people in the US are un- or under-banked, and that underbanked isn’t subprime (pdf). The panelists (Prosper Marketplace, Progreso Financial, Community Financial Resources, and Pacific Community Ventures) touched on debit cards, bill paying, health care reimbursement, savings, and investment services.
  • This week, the Gates Foundation announced $350M in grants for international projects to help the poor build savings. Poor rural people incur large expenses to put their money in distant banks. Or, they attempt to stockpile cash, jewelry, extra building materials and spare animals – but “stuff gets stolen, animals die,” and informal savings lose a fifth of their value. Instead, these projects will let people store and access cash deposits via their local post office, lottery outpost, or cellphone account.

And this afternoon, Thursday 8/13, I’ll be at PARC to hear Marissa Mayer speak on “Innovation at Google: The Physics of Data.

Technologies for sensing, storing, and sharing information are driving innovation in the tools available to help us understand our world in greater detail and accuracy than ever before. The implications of analyzing data on a massive scale transcend the tech industry, impacting the environmental sector, social justice issues, health and science research, and more. When coupled with astute technical insight, data is dynamic, accessible, and ultimately, creative.

August 13, 2009 at 11:56 am Leave a comment

Even in 3G, it’s the Internet through a straw

Digital market researcher comScore releases a new report: Mobile Financial Services: The Market Today and Opportunities for Tomorrow. Although the July 30 webinar is already fully subscribed, and the report is available only for purchase, some details are to be found in the press release.

comScore’s emphasis is on the US market and on more capable phones (smartphones and 3G phones). The statistics leave me wanting detail on methodology  – not to mention error bars. But since comScore can tap a consumer panel of 1 million in the US, let’s assume sample size makes these differences significant, and go from there.

    Mobile Banking Access by Device Technology
    March 2009
    Source: comScore Mobile Financial Services Report
                          % of Smartphone    % of 3G Users
                             Users Who        Who Mobile
                            Mobile Bank          Bank
    Via Internet Browser       44.1              53.3
    Via Application            40.6              48.1
    Via SMS                    25.0              41.0

First, a result that will be no surprise to iPhone purchasers (and weary AT&T network engineers): faster network and better user interface drive demand for services. 3G phone users do more mobile banking than smartphone users.

Then the intriguing bits. You might predict that smartphone users, impatient with graphical display, would preferentially resort to text messages (SMS) for m-banking. Instead, smartphone users do less with SMS banking than with other interfaces. And they do drastically less SMS banking than do the 3G users. Are 3G users more likely to have an all-you-can-eat plan? Or are 3G users more in the habit of reaching for their phone no matter what their location, choosing SMS if their network is spotty or slow?

Finally, even though “there’s an app for that,” more people use a browser than a dedicated application to access their financial information. But here too, details matter. How well is the app designed? How painful is it to switch from browsing to the app? How many people even have the app loaded?

Oh, to be a fly on the contextual-inquiry wall.

Here’s another interesting bit: people at home with access to a personal computer still use their phone to bank. 31% do their primary m-banking at home, not on the road:

    Q: Where do you primarily access your financial accounts via
    your mobile phone?
    March 2009
    Source: comScore Mobile Financial Services Report

    Location            Percentage of Mobile Financial
                               Services Users
    At home                          31%
    Running errands                  25%
    Commuting                        15%
    At work                          11%
    Away on vacation                  9%
    Away on business travel           8%

Again, I suspect task switching costs. If you’re at the kitchen table wanting to quickly check a balance, it may take longer to wake up a computer than to pull the phone out of your pocket. But for that monthly statement reconciliation, it’s worth the trek to the home office.

comScore summarizes usage patterns for current m-banking applications. But better mobile app development and mobile-specific web development are sorely needed. The Nielsen Norman Group’s report on Mobile Usability documents the rough state of the art. Research summaries from July and February 2009 preview some detail. The studies combine data from user testing, diary studies, and expert design review, and cover a variety of applications beyond finance.

  • The average mobile task success rate is a “miserable” 59%, lower than the 80% seen on PCs.
  • Using a mobile makes you a disabled user.” Restricted field of view and excessive scrolling mimic the experience of low vision users on desktop websites. Long page load times, big images, and JavaScript crashes compound the frustration.
  • Using a mobile-optimized site increases success by 1/5:  64% to 53%.
  • Users are escaping their carriers’ walled gardens. They are increasingly likely to get to a mobile site via search, which takes longer.
  • Therefore, mobile-optimized sites need to be easy to find and should present streamlined functionality. Auto-detect the mobile device, and provide the option of a link back to the full site.
  • Large businesses may consider multiple mobile-optimized designs, one for feature phones with small screens and one for smartphones + full-screen phones.
  • Mobile apps can drastically cut task time. “An iPhone user … had a weather application installed on the phone and used it to get the weather forecast in only 18 seconds (1/3 of the fastest speed from 2000).”

July 29, 2009 at 11:38 pm Leave a comment

Mobile phones in microfinance

Missed an excellent Twitter #MifiMon (Microfinance Monday) on July 20. Fortunately there’s a summary.

Microcredit began as character lending. People with no collateral banded in small groups and became jointly responsible for paying back loans. This is the village model of microcredit most familiar to the public.

But when is technology erroneously substituted for human contact, that face to face accountability which ensures timely loan repayment? And when is it used effectively to connect and empower clients? Credit SMS is about to launch a pilot program in which microloan officers receive weekly payments via SMS, rather than traveling to meet all borrowers.

Lively #MifiMon discussion continues on Facebook,  July 27, starting at 8:30 AM Central.

Also, I enjoyed Tapan Parikh’s lecture [iTunes movie] on appropriate technology for the developing world. In his experimental system, paper procedures for microcredit loans are augmented by mobile phones, which are used for data capture through keypad entry and camera image capture. (Mobile phone + wooden box to stabilize phone above paper = scanner!)

Mobile phones work in environments where people are only intermittently connected to the network and to electric power.

Key elements of Parikh’s system:

  • Paper based, using forms with scan codes.
  • Uses numeric input. Intermediaries read and write on behalf of the village borrowers, but the borrowers themselves are numerate. They can recognize that the number in “their” cell of the paper worksheet is accurately recorded.
  • Provides audio feedback in the local language. This fosters group participation, and also reassures the borrower that their transaction was correctly recorded in the system.

There’s good video of the system at the 32 minute mark, and a summary starts at 42 minutes.

July 24, 2009 at 6:53 pm Leave a comment


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