January 06, 2011 | By Bill Gates
Mobile Phones + Savings: A Powerful Pair
I first wrote about digital money 15 years ago in my book “The Road Ahead”. These days, I'm excited about financial services being offered in Africa over mobile phones. They provide an easy, safe and affordable way for millions of poor people to send, receive and store money.
When I visited Kenya last December I had a chance to observe M-PESA, which is a mobile money service that is being used by more than 13 million people for storing and transferring money. Services like M-PESA are exciting because financial services of any kind have been available to only 10 percent of the 2.5 billion people who live on less than $2 per day. M-PESA showed me a new world of possibility brought by that great piece of technology, the mobile phone. A recent study found, among other things, that M-PESA allows users to maintain steady levels of consumption, particularly of food, through shocks such as job loss, illness, harvest failure and livestock deaths.
This sense of promise and excitement came through loudly in a recent foundation-hosted Global Savings Forum, which explored a number of approaches to solving the micro-savings challenge.
I participated in a panel discussion about the types of partnerships that can take financial services to every household in developing countries. We discussed how technology-enabled models can allow service providers to focus on particular services or customer segments, and scale them up quickly.
The panel included representatives of different kinds of financial service providers, including a national commercial bank (Equity of Kenya), a global association of community-based banks (World Council of Credit Unions), a promoter of informal village-level savings and loan associations (CARE), and the mobile phone company behind the most successful deployment of mobile financial services to date (Safaricom of Kenya). The panel also included representatives of a global online payments provider (PayPal) and solution providers (MPower Labs and Obopay).
The discussion began with the dynamic duo of Michael Joseph, outgoing CEO of Safaricom, and James Mwangi, CEO of Equity Bank, talking about their prominent M-KESHO partnership. They have developed a jointly-branded service that connects Equity Bank accounts with M-PESA’s powerful network.
I was interested to hear from both Mr. Joseph and Mr. Mwangi about the challenges involved in such a competitive yet cooperative joint product offering. Both are extremely protective of the powerful brands they have created, and putting them together without diluting either is a concern. I very much welcomed their challenge to other telcos and banks to be bold in their approach.
I was also struck by how Brian Branch, CEO of the World Council of Credit Unions, recognized that scale is a problem for the smaller community-based banks he represents, but also an opportunity. They are seeking ways to band together to find common technology solutions and partner with bigger players with national payment platforms such as Safaricom. This way they can remain true to the interests of the local communities they serve, offering more services at a lower cost.
Technology can be a major force to advance financial inclusion, which can help improve the lives of the poor in the developing world. This is an important focus of the foundation’s efforts. At the Global Savings Forum, we pledged $500 million over five years to help create access to savings accounts that will help increase the financial security of the world’s poorest.
I’m personally very excited about these efforts, which have the potential to replicate in other key markets. As I mentioned at the forum, I look forward to seeing similar partnerships replicate at scale in big countries such as India, Ethiopia and Nigeria.