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Gadgets Mobile Phones as Banking Tools for the Poor
Kristy Erdodi - February 26, 2009 7:22 AM
Print 13 comment(s) - last by Raidin.. on Feb 27 at 10:01 AM
Bill Gates' charitable foundation has pledged $12.5M in efforts toward helping poor people worldwide gain access to banking through mobile phones.

In partnership with the mobile phone industry, Bill Gates’ charitable foundation aims to help provide a basic service that local banks are unable or unwilling to give.

The concept of this service revolves around the idea that approximately one billion people in the world are without a bank account, but have a mobile phone.

 Gates’ foundation has pledged $12.5M to help poor people worldwide have access to banking services and says that extending these services to the poor is significantly important in achieving economic progress.

 Research done by consultants McKinsey shows that the mobile money market for people with no bank account may have the power to reach an estimated $5B over the next three years.

 Rob Conway, chief executive of the mobile phone industry trade body, the GSMA, explained the significance of the plan; "This represents a huge opportunity and mobile operators are perfectly placed to bring mobile financial services to this largely untapped consumer base…We believe that mobile money for the unbanked has the potential to become a multi-billion market opportunity over the next three years."

 The Bill & Melinda Gates Foundation sees this approach at banking services as a vehicle in assisting people to "manage life's risks and build financial security". The foundation has also allocated funds for 20 projects in Africa, Asia and Latin America.

 A related system in Kenya, M-Pesa, has been a success. This system, which was set up by Vodafone and local communications firm Safaricom, consists of a network hosting over 7,000 agents (the majority of which are shopkeepers). M-Pesa account holders have the ability to authorize payments using a PIN code on their mobile phone and to take deposits and issue cash. The system even allows for money to be sent to people without M-Pesa accounts. These recipients will simply receive a text message asking them to contact their local M-Pesa agent.

 Eden Zoller, an analyst at research group Ovum, supports the idea of implementing systems similar to M-Pesa in other locations.

 "There is already strong evidence that mobile payments in emerging markets can be successful for all parties concerned," Zoller explained.

Vodafone is working on expanding the M-Pesa system to reach other countries, such as Tanzania and Afghanistan. In January alone, a total of five million M-Pesa users transferred over $50M.

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Vultures?
By Fireshade on 2/26/2009 7:57:40 AM , Rating: 5
quote:
"This represents a huge opportunity and mobile operators are perfectly placed to bring mobile financial services to this largely untapped consumer base... We believe that mobile money for the unbanked has the potential to become a multi-billion market opportunity over the next three years."

I know corporations and banks are in the business to make money. But gods, we're talking about a project targeted at the poor, and this is just vultures already feasting on the near-dead. Surely, he could make a more ethical-sounding statement.




RE: Vultures?
By bankerdude on 2/26/2009 8:20:30 AM , Rating: 2
There's no ethics in business. That's why banks went out and made "liar loans" to thousands of people when they knew they wouldn't have the capacity to pay them back. That's also why, despite best efforts at regulation, someone will alsways find a loophole and exploit it.


RE: Vultures?
By Steve1981 on 2/26/09, Rating: 0
RE: Vultures?
By bankerdude on 2/26/2009 10:56:10 AM , Rating: 2
quote:
In fact, I'd say that any business that desires to be successful in a long term sense must act in an ethical manner for the simple fact that in general people don't like to do business with liars and cheats.


Ah, but you're missing my point: Regulations exist due to the need to force companies to act (or appear to act) in an ethical manner, because as history has shown on numerous occasions, when left unchecked, companies will push through the ethical barrier in the pursuit of profit and increasing shareholder return. It is nice to imagine that companies would always act in an ethical manner, just because it's the right thing to do, but the unfortunate reality is quite the opposite, I'm afraid.


RE: Vultures?
By Steve1981 on 2/26/2009 11:10:44 AM , Rating: 2
And you're missing my point.

How good of a business decision was it to make those liar loans, regulations or not?

Any shareholder concerned about long term performance of the companies he invests in ultimately must want those companies to act ethically, not because he is being forced to, not because its the "right" thing to do, but because there is a point where ethics and business coincide.

To put it another way: take a tale of two car salesmen, Honest Abe and Larry the Liar. Yes at the start, Larry the Liar might make some fraudulent sales and come out on top. In the long run however, Honest Abe will assuredly win the battle. If Larry gets in trouble for his fraud, so much the better.

Ultimately, regulations on business/laws dealing with fraud exist not because of any goals of legitimate business, but because of hucksters who are out to make a quick buck and retire in Hawaii.


RE: Vultures?
By Steve1981 on 2/26/2009 11:18:08 AM , Rating: 2
Note that some of my argument has to do with a bit of semantics:

I'm all in favor of retooling laws to deal with new forms of fraud that pop up as people find new ways to take advantage of the system.

"Regulation" on the other hand tends to be a dirty word.


RE: Vultures?
By bankerdude on 2/26/2009 11:35:19 AM , Rating: 2
Point taken. True, unethical behavior is part of what has led the financial institutions into their current dilemma. True, no one wants to knowingly deal with a company who has made money through fraudulent or dishonest means. However, I simply can't put that much faith in "Honest Abe's" ability to remain on the sidelines while Liar Larry is killing him in market share, reaping in the profits, and laughing all the way to the bank. The same happened in the financial industry. At first, only a few institutions dabbled in the shadier sub prime deals and overly complicated ABS transactions. However, as the housing market continued to expand and these risky investments started paying off in big ways, more and more banks got in on the action. They didn't just stand on the sideline saying " Those loans are unethical. We know the customer can't pay that back, so we're not going to do that" If they had, the current housing meltdown and overall economic crisis would be not nearly as devastating as it is.


RE: Vultures?
By Steve1981 on 2/26/2009 11:39:05 AM , Rating: 2
What can I say; fraud,lies, and utter stupidity are at every level of this mess.


RE: Vultures?
By bankerdude on 2/26/2009 12:07:27 PM , Rating: 2
Agreed!


RE: Vultures?
By Raidin on 2/27/2009 10:01:03 AM , Rating: 2
It could be said that ethics are only needed when a business would risk losing its customers due to unethical behavior. If a business doesn't have that risk, they can be as unethical as they want within the boundries of the law.


RE: Vultures?
By tastyratz on 2/26/2009 9:26:49 AM , Rating: 2
Think about it.
What good would a mobile banking project and effort be without backing from any financial institutions??

They are an essential part of the project. They aren't being vultures by filling a void. They would be vultures if they took advantage of the situation and tried to pick these people clean with fees and there is no evidence of that. Given the service though I think if they tried to do that they would just not have anyone who chose to bank with them (aka it would be a bad business plan).


By acase on 2/26/2009 9:17:04 AM , Rating: 2
I can see it now...

"Can you pay me now? ... Good!"




Great, I can see it now:
By bigpimpatl on 2/26/2009 6:54:21 PM , Rating: 2
Windows mobile being hacked in a matter of seconds. There goes your data, your bank accounts, your credit, your "sound financial investment" lol like that means anything to these dirty banks. Sounds like a ticking time bomb to me. I guess the banks have already sucked us in, why not let them ruin other peoples lives. Oh wait...




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