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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
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