Mobile phones have made the headlines this year due their role in political organizing the world over, from the aftermath earthquake and environmental protests in China to political campaigns here in the United States. Now, what many have recognized as the true power of mobile technology is being realized in Africa. In Tuesday’s Guardian, Richard Wray writes that “the dramatic spread of the handset is revolutionising the way money circulates.”
For consumers in developed markets, using a mobile phone for banking services is a smart add-on to a bank’s branch network. But to people in the developing world, the arrival of mobile banking – or m-banking – is potentially revolutionary.
If money is an economy’s lifeblood, improving its circulation plays a critical role. Many Africans living in rural areas, for instance, rely on money sent home by members of their family who work in towns and cities. But getting that cash to a village that could be hundreds of miles away is a tricky business. In Kenya, for example, workers in urban areas hand wages over to bus drivers, who promise to stop off at the worker’s home village en route to their destination.
Even those who do have a bank account – and they make up only a few per cent of Africa’s 950 million population – are restricted in what they can do with their money because of the dearth of branches in rural areas.
But the dramatic growth in mobile phone use in Africa – phones now outnumber cash machines by several thousand to one – is paving the way for a new set of services that turn the humble handset into a banking tool with the potential to transform Africa’s economy.
Services have sprung up that let people transfer cash by text message to other mobile phone users and give Africa’s vast number of “unbanked” their first access to financial products. Instead of using a bank branch, these services rely on local retailers who already sell mobile top-up cards.
“We wanted to offer something that would work,” explained Mung Ki Woo, who heads Orange’s m-payments division. “Instead of giving people a plastic card, why not use something many people already have: a mobile phone? And instead of doing transactions at a bank branch, why not let people go to their local retailer to deposit and withdraw cash?”
The article goes on to discuss the proposed creation of m-banking systems that allow access by all users, regardless of cell phone carrier. It also discusses the expansion of this technology to microfinance, which would potentially allow these small loans that have changed the lives of millions for the better to be expanded to many times more people.
M-banking is truly revolutionary, and a broad-based implementation that allows mobile technology to substitute for visits to banks will have dramatic economic development impacts. The emergence of technology that enables bottom-up politics and banking may yet be the beginning of a new era of prosperity and engagement that will be felt globally.