mobile money--adding convenience or transforming lives?

Last Friday, the New York Times ran a great piece on the Gates Foundation's investments, including $11 million in bKash, a mobile money company in Bangladesh.  In the past few months, thanks in part to Bill and Melinda Gates' mention of bKash in their annual letter, the global visibility of mobile money in Bangladesh has grown tremendously.  They write,

In the next 15 years, digital banking will give the poor more control over their assets and help them transform their lives. 

The key to this will be mobile phones. Already, in the developing countries with the right regulatory framework, people are storing money digitally on their phones and using their phones to make purchases, as if they were debit cards. By 2030, 2 billion people who don't have a bank account today will be storing money and making payment with their phones. And by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance.

As they mention, the premise behind mobile money is simple: most people in Bangladesh and many other developing countries don't have bank accounts, but they have mobile phones. So if financial services, like savings, transfers, and payments, can be transacted on  mobile phones instead of requiring in-person services or a physical bank, access can improve significantly. In essence, people can have a "wallet" on their phones, and can add money to their wallets through agents functioning as "human ATMs". bKash has set up a network of 110,000 agents across Bangladesh, who serve roughly 16 million clients and enable $70 million worth of monthly transactions.

Big, impressive numbers. But what does this look like at the client level?

On Sunday I went out to Manikganj, a district not far from Dhaka (although with the crazy traffic, it felt like a long journey). I met with some women who are using bKash to deposit money into savings accounts that they have with BRAC.

The closest BRAC office is a few kilometers away--too far to walk and about a tk 50 ($0.80) rickshaw ride. The closest bKash agent is at the market just down the road.  Typically agents operate out of small shops, or set up a desk under an umbrella on a corner.

It doesn't take much to set yourself up as a bkash agent.
Just a simple storefront will do.

One client I spoke to, let's call her Shanti, deposits tk 500 ($8) into her account monthly.  She is mainly interested in long-term savings--5 years even--because she wants to make sure that she has money in case there is an emergency, and if not, then for her daughter's wedding.

Shanti is not a typical bKash user.  Bangladesh has the lowest proportion of female utilization of mobile money of almost any market--only 18% of all users are women. Leesa Shrader provided some thoughtful hypotheses on why that might be.

Like many people I talk to, Shanti doesn't understand how bKash gets the money to BRAC.  In fact, she only started using bKash because she heard about it from BRAC and so she thought it must be trustworthy.  A BRAC staff member helped her set up the account.

Every month, Shanti goes to the bKash agent, hands him her savings, and asks him to make the deposit for her.  I asked if she told the agent her PIN number and she said no, but with the type of smile that made me wonder if I was just getting the answer she knew I wanted to hear.  Talking to other people in the village, most didn't see any value to getting their own mobile wallet when they could just go to the agent and use his--there are a lot of steps to a transaction, and they worried about making mistakes. It's easier to just go to the agent and have him do it.

This guy shows us how to use bKash--one of the few people we met who could do it himself.

We met one young man who did know how to use bKash.  From his own phone, he was handling all transactions (usually sending or receiving money from relatives living in other places) for 12 family members. He was the only person we talked to (out of about 40 people in total) who felt confident doing bKash transactions alone.

I asked Shanti if she preferred using bKash to depositing money into her BRAC savings account. Definitely!  bKash saves her time and money, making the financial transaction process much more attractive.  I asked if she was able to deposit more money now, since she didn't have to spend tk 100 to get to and from the office every month. Yes, indeed. She's even set up a savings account with another local institution to save an additional tk 100 per month, to create a fund for more immediate and flexible withdrawals.

One satisfied customer!  Happy to use mobile money
through a local agent.

Shanti's story is like many I've heard--it took a big push to get her to use mobile money, but now she sees a real benefit to using it.  She has no interest in learning to do transactions herself--it's too complicated for her, so she prefers to rely on her agent. Over time, I believe she'll find other ways to integrate mobile money into her daily life beyond these savings deposits, as she discovers other opportunities that save her time and money, or other financial products that meet her needs. But unless something major happens, she'll do it all through the agent.

Is the goal of mobile money to transform lives, or just to make them easier? I think we should be happy that things are made easier for the poor, that mobile money can offer them extra time or cost savings. But financial inclusion, in a true sense, would at least mean that people understand how to use the technology and are empowered to conduct their own transactions.  For most villagers currently using mobile money, "self-service" mobile banking is still a long way away.

That doesn't make mobile money any less important as a lever for financial inclusion, as long as we stop making it out to be a silver bullet.