Everybody loves to talk about M-PESA, the Kenyan mobile money transfer service from Safaricom. But I think we should be talking about DBBL instead.
M-PESA revolutionized mobile commerce. It became wildly successful, seemingly overnight. It brought basic financial services to the unbanked. To repeat the same success anywhere else would also require a repeat of very specific market conditions: a high penetration of mobile phones and a large population of people without bank accounts, plus an operator with a lion’s share of the market (Safaricom peaked at 80 percent, I recall) and a light touch in terms of (initial) financial regulation.
What’s more, people were already informally sending money by texting the codes from scratch cards, trading airtime instead of cash. Even Safaricom’s website had instructions on how to do it. In a way, Kenya crowd-sourced M-PESA, and Safaricom was in the right place at the right time. (Read more about the history of M-PESA from Wireless Intelligence and CGAP.)
Vary these conditions, and you need a different solution, a different approach. An initiative led by a single operator just won’t work everywhere.
Let’s spin the globe and shift our focus from Kenya to Bangladesh, a fairly typical developing country in South Asia. There are lots of people (161 million), lots of phones (56 percent mobile penetration rate in 2012; predicted to be at 99 percent by 2016), and relatively few bank accounts. (Only 17 percent of adults used a bank account to save, and only 3 percent used an account to receive remittances as of 2011 according to the World Bank). Not entirely different from Kenya, except for more stringent banking regulations at the outset.
Dutch Bangla-Bank Limited, or DBBL, launched a multiple award-winning mobile banking initiative there in 2011. DBBL cooperates with more than ten thousand agents throughout the country (usually small, independent retailers) to open accounts and provide cash in/cash out services and receive remittances. The philanthropically minded bank also cooperates with the United Nations’ World Food Programme to deliver food aid directly to beneficiaries via mobile banking. More than 800,000 new customers have opened accounts since the launch.
The service works with both USSD and SMS, so customers can use any phone across multiple local mobile operators, and they don’t need a special SIM card. (With M-PESA, you do need to replace your SIM. Operators can do this fairly easily. It’s more complex for a bank.)
As governments around the world are increasingly favoring bank-led mobile commerce models, DBBL’s story offers the more typical market conditions for banks looking to reach more customers, plus a philanthropic bent that makes it worthy of imitation.