On one of my trips to Silicon Valley last year, Matt Perez invited me to go along with him to a one-day conference on The Future of Money. Throughout the day people made presentations looking at innovations they were working on that would redefine money in years to come.
The ideas ranged from the trivial, like the bank that had “the world’s first social credit card” – it was social because you can like it on Facebook – to the insanely ambitious, like the guys that are “going to replace the world’s banking system with tweets!”
I was disappointed that through the entire day, there was only one presentation looking at where the future of mobile money is going to come from – Africa.
That picture is from Jan Chipchase’s great presentation called Designing Services for Financial Inclusion, which you can download here.
Chipchase just put out a book called Hidden in Plain Sight, which recounts what he’s learned after many years of studying how people use technology around the world. Much of his work has taken place in developing countries, and there are definitely technologies that are world-leading coming from those places. Mobile money is one of them. Here is what he says in the book:
However, when it comes to cutting-edge technologies that haven’t yet been implemented in the community or country you’re interested in, it helps to go elsewhere, to the early-adopter places. They aren’t always the most tech-savvy cultures, just the ones that took a particular step first. For next-generation display technologies, Seoul is the place to look. For mobile money services, Kenya provides the dominant model. Tokyo, as discussed at the top of this chapter, is good for looking at highly integrated services across ticketing, noncash payments, and location-based services. “Cutting-edge” can mean many different things when it comes to mobile phone use, and San Francisco, Tokyo, Afghanistan, Ghana, Kenya, and India are all worth a visit to understand their mobile ecosystems.
Today, Kenya’s M-Pesa is considered one of the most successful mobile banking services in the world. And Uganda Telecom has since launched their formal mobile wallet offering, M-Sente. The informal practices around airtime transfers and converting airtime to currency played an important role in this growth: building literacy around mobile use; generating trust in the process of transferring abstract things (airtime, money); making it easier to identify areas for improvement; and ultimately priming expectations as to what could be.
He goes on to explain one of the main reasons that mobile banking is taking off in Africa – in countries with little formal banking, cash is dangerous to carry:
The gap between developed and developing countries in terms of access to financial services is striking: about 49 percent of households around the world have deposit accounts, but that ranges from close to 100 percent in Japan to less than 1 percent in the Democratic Republic of the Congo and Afghanistan. Access is growing, but the numbers don’t always add up to significant gains. For instance, from 2008 to 2009, the nation of Burundi (population 8 million) doubled the total number of ATMs across the country—from 2 to 4 (using an ATM as a signifier of more formal banking services). In contrast, Canada, with the highest concentration of ATMs per capita, had about one for every 458 adults. But regardless of nationality, people are driven by the same basic motives when it comes to their money. The difference is that, in a place like Canada, if you ask someone why he puts his money into bank accounts, he might say, “Because that’s where it goes,” whereas if you ask a Burundian with no bank account why he sews his money into the lining of his coat, his response is paradoxically more likely to tell you about the essence of banking: he wants his money to be safe, until the very moment that he needs it.
That’s a much more compelling reason to store your money in a phone than we’re used to hearing.
I love that there are people in Silicon Valley trying to replace banks with tweets. It might sound nuts, but so did being able to make a video call to anyone in the world with an internet connection for free. When you’re in a place with lots of people with ambitious ideas, every once in a while one of them hits. If we look at the scale of ambitions from “like the social credit card on Facebook” to “replace banks with tweets,” it’s great to have more people working at the ambitious end.
However, it’s also possible to get too caught up in the world you know. That’s why I love Chipchase’s work – he’s out on the edge. As John Hagel and John Seely Brown have told us, the edge is where innovation takes place:
Edges are powerful sources of business innovation because they are places of potential and friction, where traditional products and practices are no longer adequate to address unmet needs or unexploited potential. Much tinkering and experimentation occurs on the edge, as well as heated debate about the most promising options to address emerging needs, intensified by the diverse backgrounds, skill sets, and perspectives of participants gathering on the edge. By playing a part in this experimentation, companies participate in rich flows of new knowledge, flows that are the primary sources of innovation.
There are a few things that you can do to find the edge. First, test your assumptions. It’s an assumption that being on a social network makes your credit card “social” – an assumption that I think is false.
Second, as Nilofer tells us, travel, read and meet people. She talks about these as ways to fuel personal growth, which is true. But these are also ways to find the edge – they take you place you haven’t gone, and give you new ideas. If you never get out of Silicon Valley, you can’t find the cutting edge of mobile money in Kenya. If you’re reading widely, you can at least learn about it.
The future of mobile money is happening right now in Africa. Where is the future of your industry happening?
Note: If you want more from Chipchase, check out his book – it’s definitely worth the read. And you can also watch his TED talk from a few years back: