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  • Offering Digital Financial Services to Promote Financial Inclusion:Lessons We’ve Learned
  • John Owens (bio)

Since 2004, interest has grown in using technology to provide financial services to the unbanked and underbanked.1 Much of this interest is thanks to the dramatic rise in the number of mobile phone subscribers in emerging economies, which now exceed the number of bank accounts in most countries. Increased numbers of subscribers, combined with the early success of mobile money in countries like Kenya, are driving interest in mobile money and mobile financial services (MFS) to expand the outreach of financial services. Though the excitement and interest in this sector continues, the past year has seen a shift to a broader use of technology to reach the unbanked. This new area of interest, now referred more broadly as digital financial services (DFS), takes a more comprehensive view of supporting financial inclusion by involving a much broader range of institutions.

Among the institutions that have provided and helped shape the new emphasis on DFS to support financial inclusion are the Bill & Melinda Gates Foundation2 and a wide range of public- and private-sector members in the Better Than Cash Alliance,3 which focuses on using electronic funds transfers as well as mobile money to speed the shift to DFS.

In this paper, I focus on this broader approach to improving financial inclusion via DFS and share lessons learned from a practitioner in the field point of view. [End Page 271]

Develop a Road Map

When offering DFS, it is important to plan the offering carefully by developing a road map. That map will respond to questions about the customers, the market, the regulatory framework, the institutional framework, product development, pilot testing, and product launch.


Start by considering your customers. Since many of the DFS solutions today focus on the growing number of ways to use mobile phones, it is especially important to consider the types and uses of mobile phones by the target market. The questions below are some of the most important.

  • • Do people in the target market own mobile phones, and if so, what types (feature phones, smart phones)?

  • • What do people use their phones for? Texting, calls, MMS, data?

  • • What does DFS actually offer to customers? What would customers really need and use DFS for?

  • • Could customers afford the solution being proposed? How does it compare to other options they currently use to make payments, send and receive money, or even buy and sell goods and services?

  • • Finally, are these services easy to use and user-friendly, given the level of technology literacy among those in the target market?

In our early experiences in the Philippines, we found that most clients were quite comfortable using a mobile phone and texting messaging was quite common. This made introducing mobile money payments that were based on SMS much easier than in other markets, such as Afghanistan, where people were not as text savvy.

Market Conditions

In addition, anyone offering these services must consider the unique market conditions in each country and region. Of course, it is valuable to learn lessons from earlier, already successful innovators, but the unique aspects of the operating environment are crucial, leading to the questions below.

  • • What is the nature of the financial and retail market? How developed is the payment market?

  • • How many point-of-sale machines and ATMS exist in the country? How widely are they used?

  • • What is the domestic and international remittance market like?

  • • How many existing transaction points exist for remittances or agent banking?

  • • What banking services are offered and what is the banking infrastructure like?

  • • What is the overall level of financial/electronic literacy? Are people comfortable texting and using SMS? [End Page 272]

  • • How many people have access to financial services and what is the range of these services?

In 2005, there were few point-of-sale machines or ATMs and few money transfer agent locations in Kenya, which was in stark contrast to other countries like the Philippines. This made a big difference in the value proposition of making use of mobile money to promote financial inclusion. Markets that have a more extensive payments infrastructure and money transfer network, such...


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pp. 271-282
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