Four Lessons from the Gates Foundation’s Mobile Money Portfolio

Amolo Ng’weno and Dan RadcliffeMay 2010

Punza’s Cash Flows

Income

Expenses

Collins, Murdoch, Rutherford, Ruthven Portfolios of the Poor

Revenue

Expenses

All Lives Have Equal Value

FSP’s Strategy in a Nutshell

The poor demand savings services and are bleeding money using inadequate toolsThe poor demand savings services and are bleeding money using inadequate tools

Branch-based models are too expensive to bring savings services to the poorBranch-based models are too expensive to bring savings services to the poor

Agent-based models are the only way to take enough cost out of the equation…and these must be built on the back of an e-payment system

Agent-based models are the only way to take enough cost out of the equation…and these must be built on the back of an e-payment system

Lesson #1: The “WOW FACTOR”

From a customer’s perspective, this is a screwy system

(S)he has every incentive to wait

Focus first on the service that solves such a big cash pain point, that customers say:

“Wow – I’m willing to try that service TODAY”

Does savings have that “Wow factor?”

Remote payments?

Very difficult to move cash across distances

Immediate verification

Lesson #2: Mobile Money is a Retail Play

Extensive network of stores that can be converted into cash-in/out points

Hungry channel – mobile money commissions won’t be that high

Two-way liquidity management

Active, on-site store supervision

Does this require a dedicated mobile money channel partner (e.g. Top Image)?

Lesson #3: At first, everything works against you

Network effects

Chicken and egg problem (two-sided market)

Trust

Then, once you reach a critical mass of customers, everything turns in your favor:

Customers want to sign up

Existing customers pull-in new customers

Stores want to sign up

Lesson #4: The “Big Push” Hypothesis

You can’t build these systems incrementally

At some point, to break through these barriers, you must dive into the deep end

HEAVY above-the-line marketing (TV, radio) – PULL

Create a buzz

Build trust in a new system

Grease the channel ($1.50 per registration) – PUSH

Ensure stores are aggressively promoting the service (it’s an intangible service in a cluttered store)

Requires deep pockets ($20m-$30m)

THANK YOU