Despite their simplicity and manifest usefulness, mobile banking systems have hardly developed in the world’s richest countries. On the other hand, some mobile banking initiatives have obtained resounding success in developing countries, as is the case of M-Pesa in Kenya. Among the reasons justifying their acceptance are context factors specific to those countries, and to be precise, the difficulty of accessing traditional financial services. But without ignoring these circumstances, an intelligent design during the exploitation phase is what has made mobile banking go from a fortunate concept to a successful innovation. This is why there are a priori no barriers preventing a similar process from occurring in developed countries as well. In fact, the profitability of initiatives such as M-Pesa is seducing enough to assert that, in spite of internet-through-mobile banking being available in smartphones, simple mobile banking can serve niche markets in wealthier countries such as the unbanked or those technologically weakly-equipped or weakly-skilled.

Simple mobile banking: learning from developing countries

This paper analyzes and quantifies cost structures of agent-assisted banking beyond branches
channels (ABCs) and compares them to the costs of branch channels1. This addresses a gap in the
existing literature. The qualitative review finds that ABCs maximize the proportion of variable
costs that depend on realized transactions, which match revenue flows. ABCs reduce investment
and operating costs, since existing agent business infrastructure is enhanced and shared. In the
context of downscaling, ABCs bridge the major barrier for commercial banks: the expensive last
mile to the customer. The quantitative review finds that POS / PC terminal-based ABCs reduce
transactional costs to 58 percent of branch channel costs and mobile-based ABCs to 15 percent.
Apart from analysis and quantification of cost structures, this paper develops a comprehensive
definition of ABCs. Likewise, downscaling is defined; the two research fields are linked and investigated
from a commercial banking perspective. This addresses gaps in the existing literature.

/pdf/how-do-innovative-banking-channels-reduce-costs-in-3ig435c655.pdf

How do innovative banking channels reduce costs in downscaling

Developed by Stuart Rutherford at SafeSave in 2007, P9 is a product that responds to financial constraints faced by many poor people stemming from their lack of liquidity and the inability to save. In this “lendto-save” model, clients take an interest-free loan, one-third of which is placed in a savings account. The client repays the loan at the pace she chooses, and once she repays the loan in full she becomes eligible for a larger loan under the same conditions. Her savings grows as she takes subsequent loans until eventually her savings balance covers the value of her next loan such that she is technically borrowing from her own savings. P9 offers quick liquidity to help clients deal with everyday money management needs while at the same time providing a savings mechanism. This product is part of the full suite of products and services offered by SafeSave to existing clients and can therefore be easily integrated into clients’ other accounts once their savings goals are reached.

The Jipange KuSave Experiment in Kenya

finance started a trial of a radically different savings product called Jipange KuSave (JKS). In Swahili, Jipange KuSave means to plan or organize oneself to save. What made this savings product unique was that it was accessible only via M-PESA, Kenya’s hugely popular mobile money service, and was designed specifically to help Kenyans with low, unpredictable incomes save substantial amounts of money. The idea behind JKS was to “reinvent” microfinance in a market where millions of poor people currently move their money around in digital form rather than in cash. Combining saving and borrowing in a single convenient product, JKS embraced the attributes of mobile delivery, including small low-cost transactions, personalized programs, and rapid customer-initiated progress through a structured “lend-to-save” program. After nearly 18 months and three trial phases with about 1,000 customers, the JKS product has proven its demand among low-income customers, established scalable operational processes, and shown itself to be profitable. While the initial success of JKS must now be proven with a larger customer base, its success thus far

/pdf/liquidity-and-savings-in-the-age-of-m-pesa-innovations-case-2td7i9s8wz.pdf

Liquidity and Savings in the Age of M-PESA (Innovations Case Narrative: Jipange KuSave)

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Liquidity and Savings in the Age of M-PESA (Innovations Case Narrative: Jipange KuSave)