Tuesday, April 14, 2015

The Ends Justify the Menial

Among the world's most influential foundations (Gates, Rockefeller, Grameen, etc.), there's little doubt that digital financial services are a benefit to the world's poor. Local and national banks, which were stunningly slow to see the opportunity advocated by MFIs and mobile money services like M-Pesa, are now getting with the program. Government reaction ranges from actively supportive to behavior that would make an ostrich blush. But what do poor people think about digital financial services? As the MasterCard Foundation recently stated, they're "trapped in a cash economy," but are they even aware that digital alternatives are possible?

Well, sending a few mBucks back to the family in the village is certainly cheaper and less risky than taking a long bus ride with a pocket full of cash. And small-scale efforts to, for instance, deliver training per diems or pay school fees through mobile money have been well received by consumers and their institutional partners. Many such initiatives are part of a concerted effort to build a digital financial services (DFS) ecosystem that supports a wide variety of transfer, payment, savings, and insurance programs. In their 2015 annual letter, Bill and Melinda Gates made it clear they would be among the drivers of this effort. And when organizations with the power to move the needle as much as the Gates Foundation begin talking about creating an ecosystem, it doesn't take a bloodhound smell an opportunity.

A robust DFS ecosystem in Africa, Asia, and Latin America would serve three billion people who, for a variety of reasons, have been largely ignored by formal financial service providers like banks and insurance companies. People at the bottom of the pyramid are eager to smooth out the shocks of inflation, currency devaluation, political turmoil, crop-killing droughts, or monthly bus rides to the village. A healthy, comprehensive DFS ecosystem would serve this purpose, but creating it will require a lot of heavy lifting. Some members of the value chain can be relied on to pursue a profitable new market. Back-end networking and data firms, credit and payment companies, aggregators, and programmers will be on board. But the big players - government agencies, formal financial institutions, mobile operators - may need more convincing that an inclusive DFS ecosystem is in their best interest. The development community can influence this process through advocacy and by supporting research, innovation, and scale. This is not a trivial commitment. It means a whole lot of hot taxi rides, endless meetings, menial data collection, aggravating partnerships, roadblocks and course reversals, trial and error, followed by trial and success. In short, it will require all the sustained, determined effort that gets people into development work to begin with, because the result will be helpful to millions and millions of people.