Mobile Money for youth & children?So close, yet so far!

Aflatoun International meetingJuly 2013

Tonny Omwansa, PhDUniversity of Nairobi

@tomwansa

• “Book tells a tale of innovation, disruption, and transformation”

• A comprehensive book on mobile money innovation in Kenya and beyond!

Background- 50% of the adult’s world population is unbanked

- 75% of the worlds poor is unbanked

- Mobile penetration is in the tune of 80%+ across the world

- Models: - Telco Led (dominant), - Bank Led, - Hybrid, - Independent

- Bank account is optional

Background- People interpret mobile money in multiple ways:

- Accessing core bank accounts- Money transfer- As a store of e-money- Mobile payments- Mobile wallets

- Become a sophisticated financial grid

Background

African mobile connections and penetration rates

Economic Development

Wireless intelligence, ATKearney, GSMA

pre-paid Services

significant price reductions

low-cost handsets

Rollout of mobile network

Background

Drivers of MM adoption

High penetration of mobile phones

Aggressive MM providers, particularly MNOsLimitations

of a cash society

Huge demand for domestic money transfers

Less developed formal financial sector

Demand for services beyond P2P

Large agent network for cash-in-cash- out

Trusted brands gain traction faster

Transaction cost

Flexibility and convenience

Background

The poor struggle to save and achieve lump sums The poor deal with irregular, small and unpredictable incomes The poor and un-banked live sophisticated financial lives They need appropriate financial services, not just formal.

We have learnt about the poor

E-money loop is generally short for the poor

Mobile money is only a channel, bundling it with a service or product is crucial to the poor

Telco-led financial services are more flexible

Uptake

• More mobile money accounts than bank accounts [Kenya, Uganda, Tanzania and Madagascar…]

• More mobile money agents than bank branches [>28 countries in SSA]

• More MM users than twice number of FB users in SSA

• Most SSA countries have MM deployments [34 of the 47 countries]

Uptake

• Daily MM transactions in Kenya outnumber Western Union transactions globally

• Kenya's financial inclusion levels now at 80%, with mobile money contributing 57% [CBK Reports]

• Day before the schools open, is the busiest day of M-Pesa

• The largest single client of M-Pesa is a group of schools

Innovations

Bill payments

Fund Raising

Micro-Credit

Micro-Loans

Pay-as-you-go

Lease-to-own Mobile Layaway

Micro-Insurance

Micro Savings

P-2-P

Airtime

B-2-P

P-2-B

Payments Aggregation

Developments

Discussion on child friendly MM product in advanced stages

Several financial institutions launched child friendly products

Interest to conduct research on youth & mobile money growing

School bank projects being piloted

Challenges

Not much published on youth and mobile money

Child friendly accounts have not linked to mobile

Need for identification to register a mobile phone & transact

Regulatory discussion for children mobile money is limited

Making it happen/possibilities

• Must invest to understand financial lives of the target market

• Must segment and develop unique strategies for different markets and contexts

• The youth and kids receive and spend money, but we do not entirely understand their money patterns

• Institutions receive and keep money on behalf of students (can be done by mobile)

Making it happen/possibilities

• While out of school, the students can access their proxy accounts through mobile

• It going to take partnerships/synergy between telcos, financial institutions, academic institutions, NGOs, youth groups, educators

• Its going to take serious education and awareness

Thank you!

Aflateen conference, July 2013

Tonny Omwansa, PhDUniversity of Nairobi

@tomwansa