Financial Sector Development in Africa: Opportunities ... - World Bank

Mobile Financial Services in Africa: The Next Generation 61
Other niche financial services providers can thrive in an environment
of widespread Internet access that reduces transaction costs for them and
their clients. This is the promise that follows the development of an
e-payment infrastructure: that other desirable financial services—savings,
credit, and insurance—will follow.
Examples of independent third-generation services in Africa are limited
at this early stage. But we see elsewhere examples of Internet-based
financial service models that focus on optimizing user experience for
niche services. Some of these are likely to arrive soon in Africa in some
form—not necessarily under their own brands, but as their service concept
is copied.
For example, Smartypig (http://www.smartypig.com/) is a U.S.-based
niche savings service launched in 2008 which is only offered via the
Internet (mobile and PC). Registered users in the United States and now
Australia can open a bank account online in a federally insured partner
bank. The Smartypig Web interface enables clients to set flexible savings
goals (in terms of the amount and period of savings) about which they
can be automatically reminded via e-mail, which prompts them to save
more. Describing itself as the leader in “social banking,” Smartypig also
enables its members to publish their savings goals on their social network
pages, enabling friends and family to contribute by clicking on an icon
that authorizes a debit from their bank account to the relevant SmartyPig
account.
Similarly, the rise of peer lending sites such as Prosper.com in the
United States or Zopa in the United Kingdom creates an opportunity for
new forms of personal and even small-business lending to emerge outside
of regulated banks. However, the success of these sites depends on the
existence of other elements of financial infrastructure, such as credit
bureaus to standardize risk assessment, payment systems to disburse loans
and collect repayments, and specialized debt collection houses that handle
defaults on an outsourced basis.
There is little doubt about the significance of mobile Internet for
mobile financial services, although there is disagreement about the pace
at which it will happen. Fundamo’s founder Hannes van Rensburg, for
example, acknowledges that the future lies in smartphones, but not in just
any smartphone: he draws on research that shows that only iPhone customers
are really active mobile Internet browsers in the United States so
far, suggesting that it will take longer than people think to see widespread
mobile browsing (van Rensburg 2010). For the argument in this chapter,
the rate of take-up of mobile Internet services is less important than the