07 December 2010

In Praise of Mobile Banking

Nick Kristof wrote this weekend in the New York Times about the "Future" of development; mobile banking saying,
That’s why the most powerful idea in microfinance isn’t microloans, but microsavings — helping the poor safely store their money. And mobile phones offer a low-cost way to make microsavings feasible and extend financial services to the poor. About three-fourths of Haitians have access to a mobile phone, and similar numbers are found in many poor parts of the world.
Kenya has been a leader in mobile money, but many other developing countries in Africa, Asia and the Americas are now jumping on board as well. For the poor, mobile telephones could have as profound an impact on finance — on banking the unbanked — as they have on communications.
Having used M-PESA in Kenya, I am a bit of mobile banking nut.

A quick story.

One morning, I jumped in the matatu to make a day trip down to Kisumu.  I left early and in a hasty manner since I wanted to be as efficient as possible knowing that it would be roughly 2 hours each way.  An hour into the trip I realized that I had forgotten a slightly important piece of leather that carried plastic which would in turn allow a machine to produce money.  Sitting on next to my bed was my wallet and I did not have even have enough money to pay for my return far, let alone pick up necessary items at Nakumatt.  Fortunately, a quick call to my roommate a trip to an M-PESA agent solved my problem in an instant.

M-PESA was my most significant form of 'banking' in Kenya and it saved me from being stranded in Kisumu.  So, I too have seen the future of development and agree with Mr. Kristof that mobile banking has the ability to increase access to microsavings and could potentially transform the way that aid is delivered.