Male-dominated Mobile World Congress is Missing a Great Business Opportunity – Women

When you look at the sea of people at Mobile World Congress – it is mostly men with a few scattered women in the crowd.  So it is not surprising that this male dominated industry is missing out on a massive marketing opportunity –women.

Visa, Cherie Blair Foundation, GSMA and Bankable Frontier Association collaborated on primary research whose results were presented on Tuesday at the Mobile World Congress. They looked at getting women access to mobile phones and mobile financial services. The question I have is why was this held in a small seminar room instead of the large conference area. It was a much more important and interesting session than any of the keynotes so far.

It is not a surprise that women are not as connected as men in the world.  This is definitely a mobile gender gap – 21% fewer women than men own a mobile phone in low- to middle-income countries. In Sub-Saharan Africa, the gap is estimated to be 23%; in the Middle East, 24% and in South Asia it rises to 37%. Lots of reasons – higher illiteracy, no access to energy, less money, sometimes the reason is simply their husbands don’t want them to have a phone. The result is a mobile phone gender gap estimated to be 300 million women in the developing world without access to this potentially empowering tool.

Why does Cherie Blair, wife of Tony Blair, care – and she cares a lot. She personally knows what technology has done for her. She contrasted her use of technology and Tony’s – saying he still is satisfied with an old Blackberry where she had a number of state-of-the-art devices including an iPad mini critical to her engagement in the world of politics and business. Simple put – it empowers her and she thinks it will empower “resource-poor” women to make a better life for themselves and their families.

Mobile World Congress is an amazing conference – since so many people from around the world involved in mobile congregate in one place. Nonstop short meetings, tons of content, formal and informal networking. But the weakest part of the event is the large audience panels. The topics can be interesting – like the Next Billion keynote – but the actual presentations are weak. It is mostly top-level male exec’s promoting their latest marketing messages.

Mobile is transforming the planet. And these people are at the epicenter of what is happening. It is time for the discussions to be more in-depth and less self-serving. It is time for the key topics – like women’s access – to be center stage. Most panels are dominated by men, actually most panels are all men.

It is time for change. Mobile is too important. Apple distinguished itself as a powerful market force focusing on empowering consumers. They did an incredible job and ushered in the great era of Smart Phones.

Now half the world is women, and many of those women live in emerging markets and work hard everyday to support their families and micro-businesses. Those approximately 1.2 Billion underserved women are a great opportunity for the mobile industry to distinguish itself. With focus and Apple-like consumer empowerment approaches – those women’s lives could be transformed. Mobile access, mobile finance, life empowering applications are all possible now.

And if the mobile industry focused on this – then it would not only be good business – it would be good for the world. But they would have to move this to center stage in the big tent, get some women on stage, and talk less about short-term market position issues, and more about their customers. In doing so, they would be following the lead of the great innovators, like Steve Jobs, and focus on customer empowerment – with a deep commitment to delivering value that delights women and empowers their life and work.

Cherie Blair Foundation, Visa, USAID, GSMA, Bankable Frontiers Association, Qtel– thank you for this research on Women and access to Mobile Financial Services. Follow this link for the full report. http://www.gsma.com/mobilefordevelopment/unlocking-the-potential

But let’s up the bar – next year this needs to be center stage verses an interesting side show.

Interview with Mobile Money Pioneer Jojo Malolos

The potential of mobile phones to bring banking services to the traditionally underserved is now becoming better understood by many. Financial Inclusion at the bottom of the pyramid is a topic for many – including luminaries like Bill Gates, Pierre Omidyar, and Hilary Clinton.

But it is not a new topic for telecom leaders in the Philippines. They started in 2000 to transform the local landscape with mobile financial services. Even the Kenya leadership went to Manila in 2005 to study the pioneering work of Smart and Globe Telecom before they got started with mPesa.

I got the opportunity to catch up with the former Smart Money executive, Jojo Malolos, recently and ask him about what he learned over his decade of work on financial inclusion in the Philippines.

Jojo told me “Smart started with an approach that built on their experience with telecom. In the beginning Smart could see telecom realizing extensive communications reach – where everyone would have access to communication through mobile phones. Key innovations –prepaid accounts vs. post paid billing, electronic distribution of prepaid minutes (elimination scratch cards), vast retail networks for distribution – were dramatically changing the communications landscape.

And as we saw the “communications gap” close, we saw the other impact it had in the Philippines – it did more than connect people, it meant social and economic good.  So while we had built a highly profitable telecom business reaching everyone, at the same time we created new jobs, added new tax revenue for the government, and grew the economy of the Philippines.

When mobile telecom entered Philippines the  typical person did not have a landline. There were fewer than 2 Million landlines in a country of approximately 75 Million people. Mobile Operators understood that the telecom success required a well designed “ecosystem” which included a vast retail network. This retail network created efficient reach to all people which enabled Smart Telecom to profitably serve even the small customers. Average Revenue per User, “ARPU”,  is $3.25 a month in the Philippines in 2012 (Indonesia $3.07, India $1.62, Malasia $13.20, Singapore $34.00, China $10.52)  This retail channel has to be  “mutually beneficial” to scale, meaning the business model work for all involved –each business in the value chain no matter what size, financially benefitted from participating.

What was amazing about this telecom success was that it created new businesses and jobs. Some of the retailers existed and they benefitted with new revenue opportunities.  But there were many retailers that were new businesses. This created hundreds of thousands of jobs; Smart, just one of the mobile operators, had 1.2 million retailers enabled to provide telecom services.

In addition to job creation, mobile telecommunication empowered people’s lives and their work. Consumers and small businesses were given great service at a low price. This addressed a massive communicate gap – benefits included greater business efficiency, greater security, enhanced family and friend communication, and on and on.

 

As the communications gap was being addressed, Smart decided to leverage their assets to tackle another hard challenge – and set out to address the banking gap. When they started only 25% of the adult population had bank accounts.

The other leading operator followed suite, and in 2004 Globe Telecom launched a competitive offering. So in 2004, before the rest of the world even noticed, both mobile operators were actively marketing mobile financial services targeted at the traditionally unbanked.

When we set out to add mobile financial services to our product set, we felt if we used the same principles that enable scale in our telecom business, we could achieve the same results. Scalable profitable services that reached everyone and benefitted all in the value chain. We aspired to solve a hard problem – give underserved people affordable access to banking and electronic payments. At the same time, we knew this too would bring social, economic and government improvements to the Philippines.

This was a bold and visionary step. In the next blog Jojo will talk about the dynamics of managing the relationship between the bank and the telecom company. For as anyone involved in mobile financial services knows, this is one of the biggest challenges.

My letter to Jamie Dimon

In November of last year a group of payment innovators from Silicon Valley (including me) had lunch with Jamie Dimon, CEO of JPMC. After meeting Jamie, I wrote him a letter with an idea for how JPMC can help improve financial services to the underserved. Here is that letter. I’ll let you know if anything comes of it.

 

Jamie – thank you for the lunch. It was great company and conversation. Since then I have been thinking about how Chase can help serve the underserved. First of all, the Chase Liquid prepaid program is an excellent product that allows low–balance customers to benefit from an account and debit card without the costs associated with a DDA or frequent NSFs.

 

Second, assuming that Chase will likely not offer underbanked transactional services at scale, such as check cashing, money orders, short-term credit and international money transfers, through its branch network or online, a big contribution Chase can make to improve the position of the emerging middle class is through a specialized debt facility.

 

In 2011, $44B of payday loans were issued.  These, and related forms of short-term credit, are expensive, don’t offer risk-based pricing, and serve only a derogatory contribution to building credit (even if paid back as agreed).  While they clearly serve a need, they represent an effective barrier to economic mobility, even to the majority of consumers who repay responsibly and on time.

 

A $500 million to $1 billion debt facility targeting profitable, but responsible payday alternatives in the US, would allow Chase to partner with leading innovators (instead of develop the expertise in-house, along with associated head-line risk), would bring better priced and better structured products to millions of consumers (and represent a path for upward mobility), would stimulate broader industry changes through commercial incentives (vs regulatory over-reaching), and would generate strong financial return for the bank.

 

This “responsible short-term consumer debt” facility would be limited to commercial opportunities which are in compliance with state and federal lending laws, are able to scale efficiently, can demonstrate track record, and offer credit based on several “responsible” tenets (such as risk-based pricing, full-file credit reporting, full amortization, term flexibility).  The facility would need to offer competitive rates to funding sources which support incumbent products, approximately 6-11% APR.  

 

Potential targets include California-based Progreso Financiero (Hispanic focused), BillFloat (direct, third party distribution), FairLoan (employer distribution), and NeoLoan (near-prime auto); potentially Texas-based Think Finance (online) and US-based Wonga (online), with some changes to current offerings.

 

Core Innovation Capital, a venture capital fund that specializes in financial technology for the underbanked, has direct access to these and other potential targets and its principals are happy to discuss this concept in further detail, should there be interest.  Arjan Schutte, its managing partner, can be reached at arjan@corevc.com or 646-580-0046. 

 

Again, thank you for the lunch. I will be happy to discuss this and other ideas about serving the underbanked with you or your team. 

Reblogged from Carol L. Realini:

A Simple Great Idea

This is such a great time in the history of technology. So many things are changing for the better – and we have only just begun to experience it.

 

Today there are 6.4 billion wireless connections in the world reaching 85% of the total population of 7 billion people. 2.27 billion people have access to the internet, and this is increasing rapidly with the proliferation of smart phones in the developing world. Technology has never reached or impacted as many people as it does today. And this is changing everything – the way we interact, shop, learn, bank, heal, stay healthy, entertain, and live.

 

What is also amazing is here at home in the United States, the underserved are adopting smart phones and mobile banking at a faster rate than the general population. In 2011, 45% of adults in U.S. had a smartphone, 72% projected by 2016  – Javelin Strategy & Research 2011. For the underbanked, 91% of underbanked consumers have a mobile phone, 57% of underbanked consumers have a smartphone – which is 12% higher than the general population (CFSI, 2012). Mobile banking use higher in underbanked: 29% of underbanked, 21% of all consumers  – #CFSI, 2012

And yet one of the most important money services for many people is sending money home to family and friends. Globally, international money transfers by immigrants is forecasted to reach an all time high of $399B in 2012 according to the World Bank – and it will grow 17% a year after that. Latin American & Caribbean migrants make 250M money transfers to home countries.

 

In Kenya with domestic money transfer, mobile changed everything. Now in the US, mobile is quietly changing how people support their loved ones at home. Some things are staying the same – they are still sending monthly support to one family member – that is the 250M money transfers in the Americans – and also many millions of money transfers go to India, Philippines and China (and other countries).

 

What is quietly changing is small value transfers are increasing dramatically. In addition to sending money once a month to one family member, now people are sending small amounts – in the form of mobile phone minutes – to multiple family members and friends.

 

International “top up” of mobile phones isn’t really replacing money transfers, it is adding a new dimension to support the people back home. Immigrant previously went to a store tp buy international phone cards to get low cost calling time so they can call home. Now instead they top up their own phones for their outgoing calls, but also top up the phones of the people that need to call them – Mom, Dad, siblings, spouses, girl and boy friends. A nice gift and a nice way for people to stay close to loved ones.

 

And because it is not regulated like money transfer the administration is simpler and the cost is less. So now someone who use to send $300 home to Mexico once a month is in addition doing up to three top ups during the month to mobile phones of their loved ones.

 

Turns out it is hard work behind the scenes because there are many mobile carriers around the world, and companies doing this need to integrate with each one so they can provide top ups to billions of phones. In addition, since a lot of  people who send money home, are cash preferred – there is also a need to have relationships with many retailers so people can purchase with cash at a store near them.  Companies like Prepay Nation, Transfer To, More Magic, EZTop do the hard work to make this all possible.

 

So a simple idea – send minutes home to loved one’s phone – is a great idea that is taking off.

 

Thoughts on my trip to Afghanistan

Some things you just say yes to. I have been struggling the last year and 3 months to get my life back to normal after a serious bicycle accident. It was a tougher recovery – it took more of a physical and mental toll on me than I had expected.

 
Recently I have started to think about what I will do next, and while I was going through that process I get a request from USAID to go to Afghanistan. At first I was taken back – thinking I had no intention of going to a war zone. But the opportunity grew on me. All the key players would be at the meeting – government, mobile operators, banks, regulators. And the topic was compelling – how to make mobile money work in Afghanistan including move the government payments to electronic.

Afghanistan is one of the most unbanked places in the world – according to the conference attendees, it is 4% of the population that has bank accounts. Many people live to far from a bank branch, others don’t trust the bank or have habits around cash.

So, despite the advice of many, I said yes. The Mobile Money Executive Seminar was great and resulted in increased momentum for the effort. Many key players were there and the cross section of top level attendees enabled important dialogue about collaboration and execution issues.

I also lead a women’s workshop the next day.  Top women business leaders, ~20, attended. It was heartening to see their strength and experience their energy for building their businesses and improving Afghanistan. Their resources are limited and they are doing all this despite an anti-women culture.

There were times before and during my trip I was worried about the danger. The fact is it was dangerous. Now that I have safely arrived at my next destination I have a few observations.

-       Mobile money has huge potential but there is much work to be done. The Mobile Operators need much broader agent networks to support their aspirations. Today their top-up agent networks is pretty limited.

-       Government can leverage mobile money infrastructure to increase efficiency, safety and transparency.  It will be a big win for the country, the government, and the people of Afghanistan.

-       With all the work that needs to be done in Afghanistan it is tragic that women are so held back. The country needs the energy, drive, and productivity of the women. Unfortunately their culture and some of their laws make women’s contribution a small fraction of what it could and should be.

-       Many differences exist, but I also felt the commonality with the people I met.  The experience and connections I made will stay with me as I move into my next phase.

I am so glad I went.

Government Applications of Mobile Money – Keynote Speech at the Mobile Money Executive Seminar in Kabul – Part II

What are the Government Applications of mobile money?

(picture from Jan Chipchase Aug 2010 trip to Afghanistan)

With mobile money being established in countries across the globe. This also creates an environment where there is an opportunity to change how government payments are done. This opportunity is multi-dimensional including Government to Person payments – for example government salaries, social payments, Person to Government like Utility payments, tax collection. As well as Government to Business and Business to Government.

 

When we look at payments between people and the government they are normally characterized by a very large number of transactions of relatively small value.

 

This is a perfect fit for Mobile money. In addition – government use of mobile money will also add to the overall success of the Mobile money ecosystem through creating key use cases, and lower cost of funds into the mobile accounts.

 

Mobile Money has a special role in helping governments evolve G2P payments to reduce the use of cash, checks and paper based payment methods. Before Mobile money, Government use of electronic payments seem impractical in many places in the world because of low bank adoption and the lack of reach of the physical infrastructure like ATMs, POS terminals and bank branches.

 

So as the landscape is transformed by mobile money that doesn’t rely on this traditional infrastructure –

 

Much of the infrastructure being built by MNOs and Banks for mobile money is applicable to government payments from disbursements, collections, business transactions, and intra-government payments.

 

The challenges are many but the benefits are great. To illustrate, I’d like to focus on a specific recent example of eliminating a traditional cash disbursement method and replacing it with a mobile powered method.

 

 

Globe GCASH: A government disbursement case study from the Philippines

 

Kenya gets all the global attention for mobile money, because nowhere else in the world do we see the scale that has been achieved in Kenya. But from the beginning of mobile money, the Philippines has been the pioneer. As early as 2001, they were rolling out innovative functionality to promote mobile commerce.   So it is not surprising that one of the best examples of government application using mobile money can be found there.

 

 

There are two leading mobile network operators in the Philippines; Smart and Globe. Both offer mobile money solutions which include complex behind the scenes cooperation between banks and mobile network operators. My discussion was with G-Xchange, Inc. (GXI), the mobile commerce subsidiary of Globe,  about a new government disbursement application.

 

Paolo, who heads up this business, told me their first “experiment”  doing disbursements for the government was a few years ago for the Cash for Work Program of the United Nations World Food Program.  So they had some experience before they tackled their government disbursement challenge.  The national government wanted to improve the Conditional Cash Transfer (CCT) Program (known locally as Pantawid Pamilyang Pilipino Program or 4Ps) that provides cash grants to extremely poor households to improve their health, nutrition and education, particularly of children aged 0-14. It has dual objectives, one is Social Assistance which aims to provide cash assistance to the poor to alleviate their immediate needs (short term poverty alleviation), and second is Social Development which intends to break the intergenerational poverty cycle through investments in human capital. The CCT grants are traditionally distributed through the branch counters of Land Bank of the Philippines, a state-owned bank, or through its cash card. This worked adequately for recipients in urban areas or first class municipalities but was problematic for those in remote rural areas. Majority of the Filipinos also remain unbanked therefore crediting to their account also posed as a problem for the government.

 

So previously the government had to transport cash by land, and even renting helicopters, to the remote areas. It was hard for the national government to give the cash grants on time.  And it would take around a month to know how much had actually been distributed – sometimes longer.

 

In addition, a recipient receives an average of 2800 Pesos, but in most cases, recipients would have to spend 900 pesos traveling to pick up their cash.  It sounds unusual but the Philippines has many out of the way places, in some locations, travelling took 3 days by boat, and some areas were not even visible on the map therefore disbursement and accessibility was a problem for the government.

 

 

So when Globe worked with the government to tackle the challenge of improving the rural disbursements, it was too ambitious to expect that all the recipients could have bank accounts, even a mobile phone. The Globe team had already invested in assets in the rural areas that could be leveraged. Since they had rolled out mobile money – they had field agents in the rural areas who were trained and ready to do know your customer (KYC) , cash liquidity management, and cash out. And Globe could already electronically distribute value to all their agents in a secure, transparent way. All the agents needed in the field was their mobile phone – and it could be a regular phone – no data services or smart phone required.

 

So Globe worked with the national government to design a system where when the disbursements happened, Globe’s GCASH team, along with their agents were mobilized to get all the rural recipients their funds in 3 days or less. Here’s how it worked.

 

The government would notify ahead of time how much would be needed and where. The agents would travel to the local municipalities. Globe already had cash liquidity methods worked out to ensure enough cash was on hand. Yet this new application would test that system since so many payments were done in such a short period.

 

Now since these payments went to the poorest of the poor in rural areas, it was unrealistic to require them to adopt mobile money to receive these payments. So most recipients used the Globe GCASH agent as a branchless banker who would distribute the cash to them in their local municipality. The agent would be in a safe municipal building. The recipient would come, the social workers were also there to validate they should receive their money – giving the recipient their one time use verification code. And all the  money was distributed quickly.

 

It was tested in 3 rural areas first with 10,000 recipients. Then rolled out broadly by the end of 2010. Within four months 200,000 recipients received money this way. Now it is reaching 700,000. Talks are underway in using this method to supplement the urban system – which is primarily done via state bank branches. Once that is done, the potential is for majority of the 1.8 Million recipients to use this method.

 

Benefits include better tracking, on-time faster disbursements, lower government cost, eliminating political strong-arming of recipients by local governments, and lower travel costs for the recipients.

 

Challenges were there but since they used an existing working mobile money agent application and network – that worked easily. They added government specific reports which were not a significant execution challenge but were very important to the government.

 

The know your customer process including checking government issued IDs and logging verification codes, tracking in real time – all worked really well. And the people didn’t have to make big changes to use the system. They didn’t have to have a mobile phone, adopt a bank account, use an ATM, etc. Those things are available and will continue to be an option – but it is not a hurdle.  Travel cost is now 100 pesos or less. All recipients had ID cards already and they were able to continue to use them with this new approach.

 

 

Globe GCASH earns a fee but it is significantly less than old government costs. People love it – it’s faster, there’s less travel and  no political pressure.

 

 

 

In Closing

 

You can tell I am excited about these real world success stories. The Philippine government disbursement is a great example of how things can improve dramatically for the government and the recipients, and it is a great example of the ecosystem coming together that combines banks, mobile network operators, government, agent networks, even the social workers to deliver an improved service. This is just the beginning. Once the ecosystem is established it will have many uses. Just like the mobile phone or the internet – it started with a few simple use cases – like make a call, or look up a fact – but that was only the beginning.

 

So I don’t underestimate the difficulty of putting the infrastructure in place in Afghanistan. I have been involved in too many countries, even Kenya, to think this is easy. It is challenging – takes investments, requires change, collaboration between parties not necessarily collaborating today. Each country is different and has its unique challenges.

 

But it is worth it. The short term benefits, like what we see in Kenya or Philippines are great and the long term potential is even greater.

 

I am especially enthusiastic today to see who is in this room. To see the many government agencies is especially heartening. The government of Afghanistan has an important role to play. You will be leaders in establishing key infrastructures like ID and interoperability through national payment switches. You also will bring utility and momentum to mobile money through government payments. And it will pay you back by providing more secure, transparent, and efficient government payments.

 

Thank you for your time.