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Mobile wallets?

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To be honest, at the time I was told that my project in Compartamos would be to investigate and / or assess the viability of enabling mobile banking as an alternate channel for financial services offered by Banco Compartamos, I never imagined the amount of social barriers that I would encounter regarding the application of new technologies. Without doubt, one of the characteristics of the Mexican society is its conservative nature and somewhat idiosyncratic culture that influences businesses, the economy, finance and politics. Nonetheless, I thought,  after experiencing such remarkable and rapid economic growth in recent decades, the openness of the economy would translate in “open thinking” .

Mexican Woman

Speaking of microfinance, Mexico has also been known as pioneer in providing financial services for the poor and as the Compartamos´ slogan says they have become the true “specialists in microfinance” . Being a role model and the leading bank in its market, Compartamos in Mexico is expected to take innovative initiatives in regards to new technologies applied to microfinance and alternative models for providing more and better services to their beneficiaries. After nearly a month in the department of Distribution Channels, I have seen from first hand Compartamos venture and operations in what is known as branchless banking. The dilemma  in this area is simply how to increase overall financial inclusion by allowing more customers to access their credits and make their payments more conveniently. A solution already in place has been the institution of agreements with non-banking channels like commercial establishments where customers can make payments and get their loans. Although the operations and services are more efficient, the insecurity and hassle customers undergo when they travel long distances to pay and get their loans is still a significant problem that must solved.

 Although it has been a great challenge, it should be noted that there are developing countries in India and Africa where mobile banking has emerged as a viable alternative to bring financial services to more people without much hassle. About 80 percent of new connections for mobile banking were generated in African countries and most were low-income consumers. Experiences like M-Pesa in Kenya, G-Cash and Smart in the Philippines certainly serve as success stories.

 By no means, however, one should think that the model used for Mobile banking in microfinance is the typical Mobil banking model that many of us know. To provide a cost effective and efficient service to the poor, there is obviously no need to spend in a costly high-tech phone, any basic cell phone is enough. The model for this type of mobile banking service is commonly known as mobile wallet. This is a transformational model where the mobile phone is not  only used as an additional channel to an account but rather constitutes  a source of value, just like a prepaid card with its own credit balance.
With the rise and expansion of existing international mobile wallets is accurate to think that this would be a viable alternative for Latin America. However, my question is whether it really is feasible taking into account the social, cultural and idiosyncratic beliefs so ingrained in the way of living of most popular sectors.

How can one teach an entire community to make transactions using texts (sms) when most of the people living in marginalized communities can not read or write?

How can one restrict cash flow and create mobile consumer networks in communities that depend on their own closed community-led value chains?

How is mobile banking a solution when the success of women solidarity groups depend on the weekly meetings they held to collect the cash?

How to insist in creating a savings culture when the poor produce just enough to cover their basic needs?

I propose these questions for your analysis and reflection.

One thought on “Mobile wallets?

  1. mobile banking is easy way to reach financial inlusion in india….. lleteracy people using mobile phone fraud activity happen through retail agent .. give solution for this problem………..

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