Mobile banking and financial inclusion go hand in hand, as recently revealed by a survey (summary posted by GSMA Blog) that examine the adoption of the famous branchless banking solution in Kenya, M-Pesa. William Jack and Tavneet Suri from Georgetown University and Sloan School of Management analyzed data from 2008 and 2009 and made a few pleasant, yet expected discoveries:
- The mobile banking solution (M-Pesa) was not introduced as a service purely for the poor, yet its initial penetration into middle-class households was quickly followed by mass uptake by poor households, both in urban and rural areas,
- When comparing usage growth, there was a proportionately greater increase in use by lower income households than upper income households,
- Women are quickly becoming active users of the mobile banking service (a little under half the users are female).
Jack and Suri point out that the mobile banking service’s rapid penetration was accompanied by a speedy increase in M-Pesa’s distribution network.
We learn that cash-in and cash-out agents developed a relationship with clients based on a high level of trust, which can partially explain the rapid uptake of the service in rural areas.
The authors also explore the value proposition put forth by the mobile banking service, which are linked to reduced cost of sending money over large distances and security of funds.
Another major finding was that the financial management of the M-Pesa mobile banking service improved during hard times, perhaps owing to precautionary savings and ability to seek funds from others who are in a better financial situation. You can read the detailed blog post about the survey results here, (original survey results are no longer available).
In conclusion, we see mobile banking is fulfilling its vision of financial inclusion in the developing world, whether the parties drawn into the financial network are upper, middle or lower class groups. Certainly, the service can be used as a tool in spreading the benefits of microfinance to people far and wide.
