Opportunity Malawi savings client & maize wholesaler Joseph Meke uses the M'ganga service to check his account balance every day by cell phone, makes deposits at Opportunity's Ndirande satellite branch, and uses a point-of-sale (POS) device in nearby Ntcheu to withdraw cash.

Dr. William Jack of Georgetown University used a specific example of M-PESA services in Kenya as an example of technology that decreases the cost of outreach and has a lower cost than other payment services, appealing to both banks and clients. Mobile phone banking can be utilized by microfinance institutions (MFIs) to increase their range of services while extending geographically. Another topic brought up by Paul Davis of Pragma Corp. was the utilization of branchless, or m-banking, to expand bank outreach to individuals in rural areas. This focused on Latin America, and Colombia in particular, as it has already taken hold there. In 2010, 360 million transactions per month were conducted in Colombia using branchless banking. The prevalence of mobile bank usage represents a shift in attitudes towards potential rural customers. “Cracking the nut” was the first step towards reaching larger numbers and tapping into secluded markets.

In Rwamagana, an Opportunity Rwanda client accesses her funds using biometric fingerprint technology at a mobile banking vehicle.

Looking towards the future, Opportunity has begun piloting OpenSky technology, which enables field staff to verify and input account information, enroll new clients, perform cash transactions (such as loan repayments, disbursements and deposit mobilization), and record biometric information. This implementation will allow field employees to set up accounts and provide services to clients in the most isolated areas, even without direct access to electricity or internet, using the 3G services of cell phone companies. Using this innovative technology, Opportunity International is reaching rural clients, providing the financial services they need most to work their way out of poverty.

To read the post on the USAID’s IMPACTblog, click here.

Biometric fingerprint technology at OIBM is enabling more people in Malawi to access banking services.

On the impact of mobile money…

Banks couldn’t previously offer financial services to families living on a dollar a day; the costs were too high compared with the minuscule amounts of money changing hands. But mobile money alters that equation, says Bob Christen, director of financial services for the poor at the Bill & Melinda Gates Foundation: ‘The big advantage for the bank is it can take that transaction cost down from a dollar to, say, 20 cents. [The bank] is able to do smaller transactions and not lose its shirt.’

On cell phone usage in Kenya and beyond…

M-PESA has gained 14.5 million users in Kenya. The Gates Foundation is facilitating three dozen similar programs in other countries, hoping to increase savings among the poor.

On instrumental fingerprint and biometric technology at Opportunity Malawi…

Just as cell phones are standing in for banks, fingerprints are starting to stand in for identity numbers.

Widespread fingerprinting is controversial in Western nations, but in countries where births aren’t recorded, people lack official identification, and many can’t even sign their names, fingerprints might be a person’s best shot at securing a bank account.

It began in South Africa during the 1990s: Large fingerprint databases that had been used to monitor citizens during the Apartheid era were put to a more benevolent purpose–to facilitate the distribution of government financial aid. The fingerprint, in effect, became a person’s PIN, or signature for claiming payments.

Fingerprint-based ID has found its way into many other programs since. In East Africa, the Opportunity International Bank of Malawi has used biometric ID to sign up 343,000 customers since 2003. Print-reading bank kiosks travel from village to village in pickup trucks, allowing customers to deposit money in savings accounts; take out loans; and even buy funeral insurance, life insurance, or crop insurance.

Exciting innovations are expanding banking in Africa among people living at the bottom of the economic pyramid. To read more, check out the full article at csmonitor.com.

An Opportunity Malawi staff member shows a rural shop owner how to use this point-of-sale device to conduct a banking transaction.

Yesterday, the Bureau of International Information Programs at the U.S. State Department published an online article highlighting the ways in which mobile banking is reaching more geographically remote clients in Tanzania and Malawi.

According to the report, the majority of Tanzania’s 41 million inhabitants live on less than $2 a day, and only 12% have a formal bank account. But half own a mobile phone, through which they can save money and handle financial transactions without a bank account.

The phones are relatively inexpensive to purchase. One astounding fact is that they are the first technology in history to have more low-income users than wealthy ones, according to Abbie Laugtug, a policy advocate for the nonprofit CARE.

Opportunity & Mobile Banking

The article quotes Dennis Ripley, Opportunity’s SVP of programs, as saying that mobile payments make it possible for individuals to save as little as $1 or $2 at a time, amounts too small for deposits to formal banks, given the 30 cent cost of a deposit. It can also be the first step into the formal financial system for low-income Africans. “We’re working with mobile phone operators to connect their payment customers to Opportunity Bank, operated out of trucks and storage containers across 21 countries in Africa, at a cost of 3 or 4 cents per transaction.”

Malawian clients can efficiently access banking services at mobile banking vehicles.

“We equip vans and trucks as banks on wheels to go into the last little communities throughout Malawi and park there and do banking once or twice a week,” Ripley says. “Most of our clients have never been able to go into a bank because the minimum deposits are so high.”

At Opportunity Malawi, we expect to expand from our current 305,000 savings accounts to 1 million within three years, thereby banking with about 7% of the country’s population. Opportunity can reach far more people than a traditional bank and help them avoid the long $1 bus ride into the town, Ripley says.

Ripley calls systems for paying and storing money on mobile phones “revolutionary.” He reports, “The ability to take your cell phone and transfer money or make a payment, you have changed [Africans’] lives fairly dramatically in terms of their time and their cost.”

To read the complete article, visit america.gov.

Click here to watch the podcast series "Mobile Money-Mobile Banking" from the Gates Foundation.

There’s an opportunity for banking to be an innovator. To take advantage of technology that’s out there to solve the problem of how do we serve clients in a more cost-effective way, closer to where they live.
-From the podcast: “Efforts by Banks: OIBM, Part 2″ in the series “Mobile Money-Mobile Banking“

Tamara Cook, program officer, Financial Services for the Poor in the Global Development Program at the Bill & Melinda Gates Foundation, speaks about the development and growth of mobile phone banking at Opportunity International Bank of Malawi (OIBM). To access the ”Mobile Money-Mobile Banking” series from the Gates Foundation, click here.

Among the highlights: 37% of active clients now in the formal financial system through mobile phone banking were previously unbanked… Mobile phone banking is scaling faster than MFIs. This means that mobile phones will be an integral part of the future of banking in the developing world, and that the work of MFIs can complement and leverage the effectiveness of m-banking to reach more clients.

Opportunity is growing its expansion technological solutions to reach geographically remote clients. Through a grant from Credit Suisse we improve services and reduce costs of banking through the Electronic Wallet Strategy. We have been expanding mobile phone banking very successfully to our clients in Malawi, as well as Kenya. We will be able to reach millions of clients who had no previous access to formal financial services. In conference calls and in a microfinance conference breakout session, Daryl Skoog, Opportunity’s SVP of technology, reports on the innovations that are being developed.

“Bottom line: yes, the data we have shows mobile phone banking reaches the unbanked, often in significant numbers.”

Read the CGAP Technology Blog post here…

Inspired by a Sept. 2009 article in The Economist magazine, Opportunity's program manager describes the impact that microfinance services can have on clients.

Every Wednesday, we highlight an article, book or a blog in our “What We’re Reading” series. We feature works that are noteworthy, inspiring, educational or relevant to the work we do at Opportunity. We welcome your comments in the comment field below–tell us what you’re reading, or respond to the piece we’ve highlighted. The following post by Opportunity’s program manager, Annsley Scruton-Wilson, uses a 2009 article in The Economist as the catalyst for an examination of the potential impact of access to financial services for our clients in developing countries…

In late September 2009, The Economist published an article linking the effects of climate change to chronic poverty in the developing world. It indicated: “Poor countries are particularly prone to flooding… climate change is overwhelming the social and other arrangements that in the past allowed countries and people to cope with floods. National budgets can ill afford the cost of improving defenses.” This article underlines the potential impact of changes in weather as well as the need to provide innovative microfinance products to those most affected.

One only has to go as far as Brazil to imagine the effects on a potential client: Lena lived in the busy metropolis of Saõ Paulo. Working as an entrepreneur with her own candy cart, she made enough to get by. Her husband worked odd jobs, and together, they supported three little girls. When the floods came, as they do every year, there are a few scenarios for what might have happened to Lena:

Scenario A:

Because of her limited education, Lena had never learned the benefits of saving with a bank, and she lost all the Brazilian reais that had been tucked into a corner of her mattress. Unfortunately, she had not yet converted her paper money to the plasticized type offered by the government. Without savings, she was forced into prostitution and lost her husband and family.

Scenario B:

Lena was fortunate to be an Opportunity client. Despite her little formal education, she learned about the importance of saving with a bank when she took out a loan for her side business. Not only was her money safe from the gang-members that patrolled her favela, it was spared a quick and watery drowning. By the time that m-banking, or mobile phone banking, was available in Brazil, Lena was able to complete transactions electronically on her phone. Along with other Brazilian women in her poor community, she joined the ranks of wealthy Brazilians who were moving in a cashless, as opposed to a cash-based, society. Through her loan officer, she learned that electronic banking was one of the safest forms of keeping her family alive, especially in the unpredictable changes in weather that continued to hit Saõ Paulo.

Lena, although not an actual client, represents a thousand women like herself who work with Opportunity International. With electronic and cashless banking, clients can get the financial leg up that will make the huge different in this new environment of rapidly changing climates. Opportunity is not looking to just provide a band-aid solution, but they are actually encouraging poor clients to join the cashless society that is occurring all around them. That’s why Opportunity’s work is so vital. Electronic banking products can “waterproof” the life savings of a family and save them from the floods of poverty.

By Annsley Scruton-Wilson, Program Manager

The boys and girls of the Ladybird Infant and Primary School in Kampala, Uganda pose for a picture. Preschool teacher Nuulu Nankya (back row, left) and school proprietress Mariam Noah (back row, middle) are Opportunity clients in the Progressive Trust Group.

 Every Wednesday on our blog, we highlight an article, book or a blog in our “What We’re Reading” series. We’ll feature pieces or works that are noteworthy, inspiring, educational or relevant to the work we do at Opportunity. We welcome your comments in the comment field below–tell us what you’re reading, or respond to the piece that we’ve highlighted. 

This week we’re reading the September 2010 report from MediaPlanet in USA Today entitled “Investing in Women & Girls: Dedicating Resources to a Single Woman Has a Ripple Effect on her Entire Community.” It’s an independent report featuring expert editorials–from everyone from Oprah Winfrey to http://www.opportunity.org/blog/melinda-french-gates-on-the-impact-of-agriculture-finance/Melinda Gates[/intlink] to Corinne Woods, the director of the http://www.opportunity.org/blog/un-gathers-this-week-to-eradicate-poverty-through-the-mdgs/U.N. Millennium Campaign[/intlink]–with testimonials as to why it is essential to be investing in http://www.opportunity.org/womens-opportunity-network/women and girls[/intlink] on a global scale. 

In addition to the editorials and interviews, the report outlines five key steps to change the world by empowering women and girls: 

1. Provide Quality Healthcare
2. Access to Financial Resources
3. Raise Awareness
4. Encourage Gender Equality
5. Educate Girls

Here are just a few quotes and highlights from the report. Click here to read “Investing in Women & Girls.” 

Corinne Woods, director of the U.N. Millennium Campaign:

• “The Millenium Development Goals have the power to bring about tangible change in the lives of women and girls.”
• “Make sure your elected representatives know that you support the administration’s new MDG strategy and efforts to prioritize the Millennium Development Goals. Advocate for the Goals in the media and educate your friends and neighbors.”
• Go to endpoverty2015.org and standagainstpoverty.org to learn how you can do more

Opportunity Kenya client Millicent Wahiga easily uses her cell phone to access banking services and repay her loans.

“The New Businesswoman”:

• Afghan entrepreneur Masooma Habibi participated in http://www.opportunity.org/blog/opportunity-attends-the-10000-women-leadership-academy/Goldman Sachs’ 10,000 Women Program[/intlink], where she learned practical skills like accounting, human resources management, and marketing.
• After graduating in 2009, she started her own electrical engineering firm, and has managed to grow her business despite competition from male-owned companies, cultural prejudice in a predominantly male field, and security risks.
• Masooma’s goal is to start an electrical laboratory, and she hopes to establish a nonprofit organization to create job opportunities for all Afghan women.
• “A businesswoman makes her own money to support herself and change her life—but it wasn’t just to have my own business. I knew that if I had a successful business, I could help the poor people around me.” – Goldman Sachs 10,000 Women Graduate Masooma Habibi

Q & A: Melinda French Gates on the Gates Foundation’s commitment to women’s philanthropy:

• “We’re seeing tremendous momentum around the idea that investments in women save lives and help their families, communities and nations to thrive.”
• “Technology has already had a huge impact on women’s lives [in the developing world].”
• “In Kenya, more than nine million people are using cell phones to transfer money [and manage their finances]. This means that women who previously may not have had access to a banking system can now send money to their children’s schools or other family members, or set up and access a savings account. This is revolutionary.”

Oprah Winfrey, Founder of the Oprah Winfrey Leadership Academy for Girls, South Africa:

• “When you educate a girl… you start to affect her family, her community, her nation. When you educate a girl, that girl becomes a woman who understands the value of an education and educates her children.”
• “[At the academy,] we support the development of a new generation of women leaders who, by virtue of their education and service, will lead the charge to transform themselves, their communities, and the larger world around them. [...We will] help raise the next generation of transformative South African leaders.”

These are just a few of the people, organizations and topics highlighted in “Investing in Women & Girls.” Click here to read more. 

Interested in learning more about how Opportunity invests almost 85% of its donor dollars to providing http://www.opportunity.org/what-is-microfinance/microfinance[/intlink] services to women? Attend our http://www.opportunity.org/opportunity-international-conference/breakout-sessions/breakout session[/intlink]–Investing in Half the Sky: Why Women? Why Now?–at the fall microfinance conference, Oct. 8-9, in Washington, D.C. Hear stories of hope and empowerment from Alice Gasatura, director of credit support at Opportunity Rwanda; Julie Hindmarsh, member of our Board of Directors; and Ruth-Anne Renaud, our VP of women’s philanthropy. http://www.opportunity.org/opportunity-international-conference/Click here[/intlink] to see the full agenda for the conference, and to register[/intlink].

Daryl Skoog, Opportunity’s SVP of technology, develops innovations that improve the lives of our clients.

Recently, I had the chance to join a conference call with the Colorado-based Skoog to learn about the exciting strategies and products he’s working on. Some highlights from the call:

• http://www.opportunity.org/blog/cell-phone-banking-examination/Cell phone banking[/intlink] is one of the most exciting tools to bring microfinance to clients, says Skoog. In Kenya, the M-PESA product, through Vodafone and Safaricom, is reaching an estimated 13 to 14 million customers who use their phones not just for banking but to pay for fuel and food at certain vendors. An estimated 30 to 40% of http://www.opportunity.org/blog/yao-kicks-off-their-chapter-in-washington-d-c-with-guest-speaker-from-kenya/Opportunity Kenya[/intlink] clients have cell phones, and with the service they can efficiently and easily make remittances on their loans, and transfer or receive funds into Opportunity http://www.opportunity.org/our-work/savings/savings accounts[/intlink].
• Even for people who don’t have cell phones, an estimated 95% have SIM cards, and can often borrow or rent a phone in their community to use with a card.
• One obstacle to reaching geographically remote clients with cell phone banking is unreliable access to electricity. So Opportunity is partnering with manufacturers who’ve developed a solid oxide fuel cell that’s affordable and can run on virtually any indigenous, readily available fuel, like palm oil. The cell could go on the market in the next couple years. It generates one kilowatt of power–enough to run a household’s lights and a computer–and produces no noise, heat or fumes.
• Skoog says that one of the most technologically-advanced countries he’s seen is http://www.opportunity.org/blog/cell-phone-banking-malawi/Malawi[/intlink]. “They are innovative and they take advantage of programs available to them through organizations like the World Bank.”
• “We’re working on really exciting things,” Skoog says. “Smart cards [cards with biometric technology] have really taken off in Malawi. And now we’re able to switch from smart cards to magnetic stripe cards, like ATM cards in the developed world, which are cheaper but contain the same biometric technology.”
• Other ways to reach unreachable clients? “ATMs and mobile banking vehicles are expanding and reaching more people than ever before,” he says. ”Mobile banks http://www.opportunity.org/our-work/rural-outreach/access rural areas[/intlink] that don’t have bank branches, and have bank tellers with cash and ATMs on board.” Skoog estimates the return on investment (ROI) for mobile banks is less than one year.

Thinking creatively about http://www.opportunity.org/blog/top-5-posts-about-technology/technology[/intlink] and innovating is key to reaching Opportunity’s most unreachable clients. And technology is changing and expanding every day.

Learn more and explore the tech innovations that help Opportunity fight global poverty at a http://www.opportunity.org/opportunity-international-conference/breakout-sessions/breakout session[/intlink] with Daryl Skoog. At Opportunity’s Fall Microfinance Conference, Oct. 8-9 in Washington, D.C., Skoog will share the latest tech news in a session on ”Innovations in Technology.”  http://www.opportunity.org/opportunity-international-conference/Click here[/intlink] to see all breakout sessions and learn how you can be a part of the conference.

Cell phone banking and other technological innovations are changing the way people access microfinance innovations in the developing world.

Cell phone banking, smart cards featuring biometric technology, land-mapping using GPS: technology innovations are expanding the reach of microfinance in the developing world. Learn and go deeper into microfinance with five of our all-time favorite Opportunity blog posts about technology:

1. Chicago Microfinance Conference: Can Technology Innovations Transform Microfinance? (5/10/10)
2. Ask a Microfinance Expert: M-Banking (2/9/10)
3. Cell Phone Banking Technology Comes to Opportunity Malawi (5/10/10)
4. The Power of Mobile Money (10/5/09)
5. The Potential of Cell Phone Banking (7/6/10)

Blog author Mark Pickens comments, “I worry some mobile money providers won’t see the volume of transactions they want to justify the investment, unless they go beyond offering a simple liquid wallet and mobile remittances… [M]obile money providers in many markets will need a more sophisticated suite of products to attract (a) an attractively large number of customers who (b) will be active and do a number of transactions per month.” Pickens’ conclusion suggests that a variety of insurance opportunities, savings, and business training, along with mobile phone access, is what will attract customers in markets where there is heavier competition for their business and more microfinance options.

One of the surprising conclusions Pickens reaches with Collins and Morawczynski is that “the poor are active money managers.” The average family living in poverty used eight financial instruments, according to these experts’ findings, indicating that people living in poverty want and will take advantage of financial opportunities and products.

Plus, people living in poverty are willing to pay to save. In a 2008 survey of M-PESA customers, 21% said their mobile wallet was “the most important way” they save. CGAP has found that low income clients will pay on average 15% of their saving value to use M-PESA because of the confidentiality it gives them from family members and others, and security compared to storing money in a hiding place at home. “In other words,” says Pickens, “here are poor people paying for savings, without it ever being marketed to them as a way to save.”

New cell phone banking and other mobile banking products may need an innovative approach. Collins and Morawczynski found that ethnographic examinations and financial diaries are the best ways to find out how people are spending their money and where they need access to better services and products, as Collins and his co-authors published in Portfolios.

Where cell phone banking can reach the most people is in places like Kenya, where the government takes it on and champions it, as it does through M-PESA. In Malawi, too, Opportunity successfully launched its cell phone banking product in May 2010 to reach more of its population, especially those living in rural and peri-urban areas, reaching the 60% of the people who already have a cell phone.

This discussion certainly highlights that there are exciting innovations taking place in the developing world and that there are more opportunities that can be developed. When those living in poverty have access to a variety of financial products, like savings and insurance, and access via a variety of methods, like cell phone banking, mobile banking and biometric technologies, they are eager to take advantage of them.