Mobile Banking for the Unbanked

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In many developing countries it's common for a person to have a mobile phone but not a bank account. In fact, more than 1 billion people fit this description, and the number is only likely to increase. To that end, many companies are considering how to give residents access to banking services via their handsets. The GSM Association predicts that by 2012, nearly 300 million of the previously "unbanked" will be using some form of mobile banking. "The mistake a lot of us make is to look at the folks at the base of the pyramid and assume that they must need the same types of services we need." The Harvard Business School case study Mobile Banking for the Unbanked explores two very different examples of mobile financial service models: WIZZIT, a third-party startup that teamed with a major bank to provide standard banking services via mobile access to impoverished residents of South Africa; and M-PESA, an initiative launched by the mobile network operator Safaricom (in conjunction with Vodafone) to offer a new type of financial service to the poor residents of Kenya. Ultimately, the more successful of the two, M-PESA, realized that the intended customers didn't really want bank accounts at all—they wanted effective ways to send money home to their families. The case's key lesson is the importance of meeting the real needs of your target audience, not the needs as you perceive them, says professor V. Kasturi "Kash" Rangan, who authored the case with research associate Katharine Lee and teaches it in his second-year elective course Business at the Base of the Pyramid. "The mistake a lot of us make is to look at the folks at the base of the pyramid and assume that they must need the same types of services we need," Rangan says. "Everybody needs food. We need education, and so do the poor. We need banks, so they must need banks. But that's the wrong way of approaching it. The ecosystem in which they live is very different from ours. They're on weekly or even daily...
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