How to Serve the unbanked and underbanked sector using Mobile Networks?

For these unbanked and underbanked audience, I feel the money transfer feature has a higher value/benefit than payment (mobile commerce) model. Because they are not looking to purchase their six pack of beer or clothes or pay for their mobile bill (as they are prepaid – maybe for refills but that is not a major revenue driver) using a mobile handset.

While I don’t discount the potential of mobile commerce aspect, for this particular audience, money transfer becomes the primary drive followed by mobile commerce once MMT has penetrated significantly.

If we focus on money transfer –

Currently most of these are using Money Orders or Western Unions to transfer funds across. Even Paypal doesn’t address their context in the most convenient way – bank authentication and email (which is not as prevalent as mobile).

Then how does one go about build a money transfer functionality for mobile? Well there are many ways of doing it as long as these constraints are taken into account. Here are some of my thoughts …..but have written detailed business concepts around this topic over the past year …..would love to discuss offline if there is interest ….

1. Security and Identity – build security or process in place to make sure that the person receiving the funds is the intended one. How do match someone’s identity when there is NO social security card or government issued ID? This is a critical issue in most of the emerging and developing countries.

2. Eliminate Bank account or Operator dependency – This is very critical. One could start a service and do tie ups with Western Unions and Post offices. Post offices are practically in every village, nook or corner, across the world. If Post offices don’t provide a reliable option, there are many other institutions that might save the day.

3. Make it purely mobile – no dependency on email or PC access – make it completely mobile as the target audience for such a feature might have not access to a PC or have an email account. In developing countries, mobile is lot more pervasive than email/PCs. Or at least make this optional for those who might want to benefit from it.

4. Business Model – how do you make money? There are couple of ways of doing that – You can take the “build the dependency to become a crucial backbone for this use case and make money around this experience” model OR charge your user’s directly. Considering the demographic you are going after, second option might not be the best one ….

I have ran across few companies that are focusing on these aspects but are struggling to build the critical mass and traction ….. at the end of the day this is NOT a technology problem – it is identifying those “change agents” who could make mobile money transfer pervasive in the target demographic ………it is a marketing maven’s challenge to transfer the value and emotion to the target audience.

Thoughts …..


  • Terry

    For individuals without bank accounts international money transfers are relatively expensive (fees can exceed 1% plus an unfavorable exchange rate). These transfers entail an inconvenience to both the sender and receiver of funds as both parties must travel to agent locations to send or receive the funds.

    The Privier product can potentially offer lower cost money transfers due to their reduced operating costs. Neither brick and mortar agent locations nor staffing is required when using existing ATMs as a transfer vehicle and since in most areas ATMs are more prevalent than agent locations (such as Western Union offices) the use of ATMs may prove to be more convenient.

    The acceptance of the Privier concept faces considerable obstacles:

    • The majority of ATMs still only accept envelope deposits
    • Perceived security issues will hamper acceptance of the Privier concept by conservative financial institutions
    • The cash contained in each ATM is maintained to support anticipated withdrawals – cash balances that exceed the anticipated withdrawal amounts represent a lost opportunity to the bank and increased risk. By supporting money transfers, all ATM cash balances (ATM cash on hand) would have to be increased.
    • Allowing both the sending and receiving parties not to be customers of the bank may be viewed as disincenting them from becoming customers
    • A successful launch of Privier would incur significant marketing costs and start up costs

    For a number of reasons it may be more attractive to banking institutions if the sending party has an account with the bank while the receiving bank may or may not have an account. Generally the flow of money tends to be from the more developed country to less developed country which will tend to make the sender more likely to have a bank account than the receiver.

    SMS with its convenience and pervasiveness may prove to be the technology of choice to support mobile banking money transfers to from customers to non bank customers. However, both operational and security concerns need to be addressed before SMS becomes an accepted channel for high risk transactions.