With the advent of mobile technology we have the capacity to significantly reduce barriers of distance, speed and cost. Tens of millions of people are embracing mobile technology, doing their first ever non-cash transaction through the mobile phone. These numbers will only increase as the mobile technology spreads its wings far and wide and becomes increasingly cost effective for the low-income groups to have access to it.
As new digital products are on the horizon promising accurate, enforceable digital access to financial services, there is a need to realize that this technology will only be deemed a success if it is able to address a significant number of real problems faced by low-income workers. For this to materialize a few things have to be understood:
Technology does not Guarantee Variety in Financial Products & Services
Digital payments have helped to tackle liquidity and flexibility but there is still a need for diverse financial products, services and applications that solve real problems, especially those of low-income workers.
Operational Delivery Matters
Technology can improve the efficiency or efficacy of operations but it cannot put boots on the ground, grow management capacity in a customer service organization, or do the ‘hard yards’ of running a business. At the end of the day it is all about how the service is delivered, how local conditions are taken into account and the positioning of that service in the minds of the customers. And it goes without saying that commitment and strong leadership are needed to make change happen. These are hard things to do that must be addressed.
Developing New Understanding for New Customers
As we know today the low-income workers or those who are unbanked have distinctly different requirements as compared to the traditional customers. In order to get these unbanked customers, it is important to develop an understanding of the complex needs of these customers otherwise, you end up devising financial products and services that only appeal to banked customers and the objective of greater financial inclusion takes a massive hit. Technology can be used only once we have established a clear understanding of the needs of the unbanked community.
Recognizing Value across Different Value Chains
Technology has made peer-to-peer lending and crowd funding possible as new viable business models. Other mobile money agent networks have been successful where others in the value chain have had an opportunity to do well. But the models which have only focused on traditional linear service provider to customer model have not done so well. As technology blurs the lines between customer, enterprises and communities etc.; value will be created in a variety of places and it will be more distributed. Therefore, recognizing that and embracing it is the key to success otherwise the potential improvements from technology will not be fully incorporated into the system.
The rapid technological developments are good for the financial industry but can only be fully leveraged if the focus of the providers is in providing viable solutions to customers’ problems rather than waiting and hoping that technology will magically address these issues.