I just reread a couple of CGAP (World Bank) blog postings on the supposed lack of innovation in mobile financial services.
I don’t understand the point of these articles. Yes, I believe innovation for the sake of innovation is a good thing. But in financial services it’s a huge uphill battle to encourage blind innovation because of the complex ecosystem of players (sorry I will use that word whether anyone likes it or not) and because of the incredibly complex regulatory environment surrounding financial services. m-Pesa was unique in that several regulatory hurdles were removed to their benefit.
Putting the onus solely on MNO’s and banks to innovate or to solve the problems of the financially underserved is not realistic. They are inherently “me too” organizations by design. Everyone buys from the same radio wave spectrum, all banks play under the same regulations, etc, etc. Carriers all sell the same phones. It’s like innovating if you build nascar stock racing cars. Good luck. It takes small nimble groups focused on real validated problems to truly innovate imho. On the other hand, Microsoft and Google spend a fortune on pure research related to product innovation. What are the pure research budgets for Vodafone or Citibank? They are all but non-existent.
The more interesting question to me is who really understands what problems people face when it comes to managing and dealing with money in any market, developing markets or otherwise? Who is trying to tackle these problems? Who is validating that these problems exist? What is the inherent value of these problems to both the consumer and business solving them? I would like to see the people complaining about innovation in mobile money clarify what these consumer problems are, what the opportunity cost of solving them is and insights as to how to solve these problems that can encourage the kind of innovations that they say is lacking.
Everyone I speak with working in the mobile money arena assumes that the unbanked need to be banked. Really? Why? We need more talk about what people’s problems are and how we propose to solve those problems and less silly talk about more innovation. If there is a viable opportunity cost associated with real problems then there will be real solutions and hence real innovation. Innovation doesn’t have to be profitable but to see it through there has to be some motivation.
My colleagues and I have spent weeks interviewing people in remote villages only to realize that some of our assumptions as to their real problems were completely wrong and some were underestimated or undervalued. We’ve watched consumers use mobile money services and realized that some problems that we undervalued were big and real and some problems that we overvalued are non-existent in their minds.
As an aside, I see plenty of innovation just reading the comments to the CGAP blog entry I mentioned above. So perhaps from that perspective this blog was a good thing.
