No simple answers

After reading an interview with Nicholas Kristof on cell phones in the developing world it really got me thinking. He discussed cell phone as tools for revolutions but also a powerful force in mobile banking. He mentioned that cell phones won’t create a change, but they can assist in spreading the word. It seems when it comes to technology and the developing world there is no one magic bullet, no matter how much I wish there was. If I find a great low cost computer I’ll find a village in need of electricity. If I find a village with specially designed windmills to provide electricity I’ll find a village that needs clean water. To me, this means we have to pay attention to what the needs are on the ground and come up with ways to work within existing systems or modify what we have to solve problems. A great example of this is the work being done with SMS and mobile banking.

In the United States, banking is fairly pain free. We all have multiple options for how we deposit checks; direct deposit, ATM, or even walking in and working with a bank teller. It’s not that simple in the rest of the world where many people don’t have bank accounts and have to wait in long lines just to deposit or withdrawal money.  SMS/Mobile banking is a burgeoning solution to these problems. We talked extensively yesterday about how cell phones and PDA’s are being used to track disease and positively affect patient health. This field of SMS and Mobile banking is another exciting way existing infrastructure is being leveraged to create positive results.

Advantages of SMS Banking

1. Cut back on corruption and “skimming” – In Afghanistan, police officers are finding that their salaries are higher than they thought because of the process of “skimming” by officials. By receiving payments directly to their phone they avoid having to carry money from work to their home and additionally can ensure they receive their full salary.

2. No bank account needed – 89% of the population in Pakistan has no bank account yet 62% use mobile phone services(reference). Mobile phone companies are beginning to partner with banks in order to offer basic services to those who mobile phones but no bank account.

3. Simplified bill payments – When paying a bill is as simple as sending a text message to the correct number it potentially saves a trip to town and the hassles of bill paying with paper.

4. Eliminates long lines, waiting, and long distance travel to banks. – In Haiti, where the banking system is in tatters as the country rebuilds waiting in line can mean a day of lost wages. For those living on two dollars a day a day spent earning money vs. traveling can mean all the difference.

By no means is SMS banking a magic bullet. There are certainly disadvantages to the system, the biggest one being security. But in countries where receiving a transfer of money can involve an a long bus ride and a bag of money being able to receive funds through text is an amazing upgrade.

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