Can Mobile Banking Improve The Lives Of The Poor?

It feels to me like mobile banking is arriving. Whether its M-PESA in Kenya, Venmo in the US, or Bitcoin around the world, more and more people are using mobile services connected to the cloud to store and exchange money with other people and businesses.

And one of the big potential impacts of this trend is on the unbanked, those people who traditional banks won’t service.

The Verge’s Ben Popper and Bill Gates wrote a piece in The Verge this past week about the potential of mobile money to improve the lives of the poor. It’s a good read.

Bill Gates wrote this in his annual letter:

By 2030, 2 billion people who don’t have a bank account today will be storing money and making payments with their phones. And by then, mobile money providers will be offering the full range of financial services, from interest-bearing savings accounts to credit to insurance.

That’s 15 years from now, a long time for sure, but the part of that prediction that is the most important is the “don’t have a bank account today” part. That’s a huge number of people who will have the basic infrastructure in place to allow them to consume other financial services. That feels like a massive market opportunity to me. And it feels like a massive life improvement opportunity to me too. Doing well by doing good. There isn’t much better than that.

#hacking finance#Uncategorized

Comments (Archived):

  1. Richard

    Biggest painpoint – duration mismatch

  2. Nicholas Bagg

    The crux of the argument is that these basic financial services are at the core of planning and getting past the basic state of surviving. Once people are able to make plans, they can focus not on the next meal, but on educations, careers, etc.

    1. Drew Meyers

      Yup, microfinance institutions are on the ground level on this.

  3. pointsnfigures

    Big, big opportunity. Have seen some startups in this space. is one that was in Also think that as governments around the world mismanage their own finances, their people will have a choice. If you are a citizen of a country like Argentina, Venezuala-what’s your local currency really good for? Bitcoin eventually will be more secure and a better medium of exchange for a lot of people. I am encouraging all startups to at least begin thinking about Bitcoin and how mobile Bitcoin fits into their business model. is another one that is thinking hard about it.

    1. JoeK

      What good is a local currency? Simple. The government pays for services, and accepts tax revenues, using the local fiat, only. And that ultimately trickles down into every aspect of the local economy.

  4. William Mougayar

    Also, EasyPaisa in Pakistan is on that same list question is will it be the likes of m-pesa and easypaisa that will enable this (and their Telco & government control proxies), or will it be a truly peer-to-peer decentralized set of services with Bitcoin at its core?

  5. Tommy

    This is going to happen, I think two things that are worth thinking about around this topic:1. Stellar. Not because I’m a Stellar fanboy, but because the Stellar Foundation is SPECIFICALLY focused on solving this issue. I think it’s a huge, underrated, misunderstood issue and their mission driven nature around this massive blank space is important.2. Underbanked. The US financial system generally has a different problem than the unbanked, which is that it is absolutely terrible and hard to use. Are new banks going to fix that? No: only 7 banks were chartered between 2009-2013 http://www.federalreserve.g…. It’s not changing and innovators can’t charter new banks.However, there are folks utilizing EXISTING banks to build new, more flexible interactions between existing FDIC insured banks and the public to serve the UNDER banked. I think is actually an underrated one (full account opening/management), is another (data/account agg/ach auth with online banking), and others that will help innovators build mobile access to the US financial system.

    1. pointsnfigures

      Dodd-Frank has killed community banking. More and more people that have low assets can’t afford to use a bank-and many people really don’t need the services a bank provides.

      1. Brandon Burns

        “Many people really don’t need the services a bank provides.”I certainly don’t. I could survive with a credit card linked to my Venmo account. I honestly do not need a bank at all.Which is crazy now that I think about it.

        1. pointsnfigures

          Exactly. I was on a panel at the Chicago Urban League. I met so many people that were trying to start lifestyle businesses that would have improved their lives, and the lives of people in their community-but banks can’t lend them/won’t lend them the money. Huge hole in the market, and Bitcoin can fill it. Pre 1900, we didn’t need investment bankers in the US either-in the digital age we have less use for them too.

          1. Brandon Burns

            I hadn’t thought about lending, as I would never think to go to a bank for money. Except for maybe a mortgage (which I don’t have).The mortgage is probably the last stronghold of banks.But if the blockchain could give preference to lenders in a way that, say, someone gives you a mortgage, and then whenever you earn money the first dollars get automatically sent to the lender until that month’s payment has been met, then not only would that be the nail in the coffin of banks, but the decreased lending risk would drastically change how credit works.

          2. PeterisP

            The “nonbank” creditcards you talk about are definitely issued by banks. Macy’s cards are issued by “Department Stores National Bank” that seems to be part of Citibank group. Virgin runs several banks as its subsidiaries in various markets, Virgin Money UK is the largest of them. For pretty much all “non-bank” consumer money products, they pretty much have to have banking licences or at least money transmitter licences to do proper business, so technically they’re banks but with different branding. For example, Paypal doesn’t look like a bank but is one in EU and a licnsed money transmitter (all the same regulation sans fractional lending) in USA.

          3. Rick

            So then Bitcoin and these other types don’t fall under those banking requirements?

          4. PeterisP

            If you want to be a company providing this kind of services, then you fall under those licencing requirements no matter if you use dollars, e-dollars, gold, goats, bitcoin or pieces of string. If people do it directly, *then* it’s a different matter.In cluding all the mobile payment schemes described in this thread – right now many of them restrict themselves to payments only, but as soon as they want to do lending or try to attract deposits with interest[1] then they need to pretty much become (or create, or buy) a full bank.[1] Paying interest to consumers is not particularly relevant at this point of historically low interest rates as you can’t make a big difference compared to plain old “keep what you have” rate, but it will be relevant when global inflation is pushed back on track.

          5. LE

            but banks can’t lend them/won’t lend them the money. Huge hole in the market, and Bitcoin can fill it.Is the bitcoin connection because that way you can get your idea (that is probably going to fail) to be crowdfunded? Otherwise I’m not seeing the bitcoin connection to “banks won’t lend them”.Banks don’t lend money without assets or recourse to back up the loan. Maybe SBA is a different animal but generally banks are not in the business of loaning money to speculative ideas that’s what VC’s and angel investors and friends and family typically do. Because it’s a gamble. And you know as well as I do that these people trying to start lifestyle businesses weren’t anywhere near a sure bet (if they were you’d give them money, right?)

          6. pointsnfigures

            I think you have to look ahead ten years. Bitcoin should be a huge platform by then, bigger than a LendingClub, unless Lending Club incorporates Bitcoin. Huge distributed supply curve.

          7. Rick

            I think Bitcoin will be history in ten years. The first many times had to be sacrificed for the next to make it.

        2. Rick

          I need a bank to get the dollars I carry. Now if the fed is willing to let me print my own dollars… Well then…

          1. Brandon Burns

            You need to receive money and distribute money.If someone can’t Venmo me, while I can’t deposit a check into Venmo, I can mail the endorsed check to my credit card company and have them add the funds to my account.And I can pay anyone via credit card, or use it to take out cash if needed.So, yeah, I don’t *need* a bank.I’m not going to say a bank isn’t convenient. And I’m not leaving mine. But I clearly can live without it. And if you think about it in the right way, you probably can, too.

          2. Emily Merkle

            do people use checks anymore?

          3. Rick


          4. Emily Merkle

            they aren’t necessary. I have not for probably 5-6 years. direct deposit, EFT…

          5. Rick

            Right. But I’ve seen them around within the past couple years.

          6. Emily Merkle

            sure. but. they can go away. that’s a bank savings.

          7. Rick

            Yes electronic payments are all about benefits for the banks. But that’s OK with me. I think they can pass some of that on to the customer.

          8. Emily Merkle

            my EFTs are free.

          9. Brandon Burns

            I send checks via Chase online banking every now and then, maybe 2 or 3 times a year. But actually writing a check? Nope. At least not me.Though I receive checks all the time. That’s the nature of consulting work.

          10. LE

            Though I receive checks all the time.And you have to admit that there is something that gives you a bump when you receive that physical check with your payment in the mail vs. something deposited electronically. Go ahead tell the truth it feels good to get a check in the mail.

          11. Emily Merkle

            nope. that means I have top put on snow boots and trudge to the bank.

          12. Brandon Burns

            Lol. You’re right. It does feel good to get checks. I even usually hold on to them for a bit. It’s like keeping cash under a mattress.Also, 95% of the books I read are printed, and 95% of the notes I take are with a pencil. The only things I buy online with any consistency are plane tickets and hotel rooms; clothing, almost never. If at home, I will almost always call (like, as in actually dial the phone number of) the car service I’ve been using for 7 years before I click-click for an Uber. Fly Cleaners is terrible, so I walk my laundry two blocks for drop off.Seamless is an addiction, though. But then again, its no more than 15% of my meals.Call me old fashioned, I guess.

          13. Rick

            “Call me old fashioned, I guess.”.I’ll call you what you are – intelligent! What you’re talking about is for people who like the finer things in life. Moving fast and working fast is good for emps (while at work)..I read ebooks but love to hold a printed book while reading. I also use paper and pencil. Try using some really nice hand made paper and an expensive pen. It makes you feel great! People are losing track of the best things in life because they are always in the fast lane.

          14. Brandon Burns


          15. LE

            Pro tip: Deposit the check, keep the “trophy” envelope (attached).

          16. Brandon Burns

            That pic is better than porn.

          17. LE

            I got into the habit many years ago of keeping envelopes. You know why? Because one day the bookeeper (in another business iirc) left a check in the envelope and threw it out in the trash. Hence requiring all envelopes to be kept for a double check. (That’s the Brian Williams version that I will go with here).

          18. Rick

            Right. Probably most companies don’t pay six-figure bills via credit card. Don’t lie Brandon we all know you get six-figure checks on a daily basis.

          19. Rick

            I think you’re saying you don’t need a “bank store front.” But the situations you are describing are more or less all done via a bank.

          20. Brandon Burns

            The point that’s being missed is that while a lot of this is done by banks, it doesn’t *have* to be to be.Many people can use a mobile payment app and credit card to do 100% of their transactions, and skip the bank entirely, if they decide to recognize and seize that opportunity.But whether you see it or not, it still exists.

          21. Rick

            But credit cards are issued by banks… no?

          22. Brandon Burns

            All of mine are, so you’ve got me there!Though not all are, namely ones issued by retailers (i.e. Macy’s) and prepaid cards like Virgin’s. I’m pretty sure they’re not tied to banks, but I could be wrong.

          23. Rick

            I always thought you had to be a bank to issue a credit card. I could be wrong. In other words I thought that even if say Macy’s wanted to give out store only cards they had to start a banking business.

          24. PrometheeFeu

            I think that if you have a service that holds your money and provides you with a number of financial services, it is for all intents and purposes a bank.

        3. PrometheeFeu

          Venmo accounts aren’t insured by the FDIC AFAIK, so I for one would not be satisfied with merely a Venmo account

      2. Tommy

        I think the effect of that shift will be interesting – banks that enable fintech in a safe, compliant, but easy to use/transparent way are going to be winners (as are consumers). This shift is just taking time and would be easier if chartering a new bank wasn’t basically impossible. Interestingly enough: my understanding is the Collison’s wanted to start a bank when they were starting Stripe but realized they basically couldn’t.

        1. pointsnfigures

          Dodd-Frank made it impossible to compete. Starting a new stock or commodity exchange is extremely expensive now too. Government regs generally help incumbents and put up roadblocks to competition. is an example of a company that filled the gap in a unique way.

  6. Rohan

    I wonder if it is going to be mobile banking and the ability to move money via a mobile phone or whether it is going be mobile banking enabling easier access to small amounts of capital and loans.They’re two very different problems and I seem to think the latter is the more important problem.

  7. gregorylent

    how does this work if there is a kill switch? with #nsa. with data sold to insurance companies. with absolutely no privacy about one’s money … zero underground/informal economy which is how those two billion function now ..

  8. Brandon Burns

    “It feels to me like mobile banking is arriving.”Arriving? Its here, and has been for a while.Anecdotally, I’m pretty sure that the the app with the highest penetration among my friends, after Facebook and pre-loaded ones like YouTube, is Venmo. Probably even above Instagram.Also, Venmo is already a savings account for me, and many of my friends. We purposefully don’t cash out our Venmo payments (which would send them to an outside account linked to my Venmo) and instead let them sit in Venmo, which makes it more like a saving account than my one at Chase. All 3 of my Chase accounts are linked, and they pretty much operate like one big account; that defeats the purpose of a savings account, which you’re not supposed to touch too often so you can, you know, save. Venmo is the only place where I stash non-investment cash and forget about it in that savings account manner.And should Venmo start giving me, say, a $5 Amazon gift certificate for every $100 I leave in Venmo monthly, that effectively makes it an interest earning savings account. They could flip that switch tomorrow.Bill Gates’ 15 year prediction is off by 15 years. Its already here.

    1. fredwilson

      just because you have it doesn’t mean it has arrived. the penetration of Venmo is high in NYC and among certain age groups. venmo isn’t even a top 200 app in the app store and is barely top ten in the finance category. i think it will be a top 25 app in time but it isn’t there yet.

      1. Brandon Burns

        Fair. “The arrival” is definitely closer than 15 years away, though. Going from a top 200 app to a top 20 app can happen in a week’s time when triggered by the right event.Long term growth trends are often times rooted in a few big events that spike traffic, as long as the company can retain it. Just look at how Duck Duck Go benefited from Snowden-driven privacy scares. Or Twitter’s rise via various big news events. Or the way Veronica Mars, Zach Braff, et. al. brought so many new users to Kickstarter.Venmo and mobile banking in general are maybe 2 or 3 trigger events away from being declared “arrived.” That’ll take 2 years, max. Definitely not 15.

    2. Richard

      The conversation is conflating tools for wealth creation with tools for transactional ease. The era of savings accounts is over. Internet rates are Negative. The purpose of liquid accounts today are to insure yourself against income disruption and unexpected expenses.

    3. LE

      which makes it more like a saving account than my one at ChaseIf it doesn’t earn interest it’s more like a checking account.

    4. LE

      a $5 Amazon gift certificate for every $100I think you need to adjust that example that would be 60% per year earned.

      1. Brandon Burns

        Why should I adjust the example?I threw it out there hypothetically, but it could actually happen if you think about it. Many, many companies would very likely offer $5 coupons to Venmo users for free; such activities are everyday marketing tactics.This is why I said it “effectively” makes it an interest earning account. To the coupon issuer, its an ad buy. To the end user, its free money that smells like interest but better because, like you said, the value is much higher than actual interest. And to Venmo its a little of both.

        1. LE

          Coupons and discounts are a great idea that works. Only thing is you need something where there is either margin [1] or someone is trying to gain a customer and is willing to take a hit. Amazon isn’t either of these. They have no margins on their average items and everybody already uses them.What you are suggesting sounds similar to the type of things that the credit card company allows me to do with my 2% bonus points. The only thing is getting the cash is almost always the better deal. They don’t give you any more if you take gift cards they just pocket whatever discount they have negotiated from the company giving the gift cards in exchange for the points.[1] For example I get coupons from office depot however the 20% discount always excludes the items that they make no money or are price controlled. They are happy to give me a discount on something with high margins.

          1. Emily Merkle

            to acquire I like

          2. Brandon Burns

            True.Though I think the big thought here is that the value of interest can be delivered in non-interest vehicles. Coupons, points, etc.And that those non-interest vehicles are an easy and fast way for mobile banking platforms to offer interest-feeling accounts to their users, who might even find them to be a better alternative.And this can be done today. There’s no need to wait 15 years.

    5. Greg Kieser

      There are still some 2.5 billion unbanked in the world. Millions of them in NYC.In my opinion, mobile “banking” will be here when you don’t need a bank account or credit card at all to participate. This means the last mile needs to be disrupted, which I can only see happening with bitcoin, etc.

      1. Brandon Burns

        I think we all need a common definition of what “arrived” means.There are many more than 2.5 billion people in the world who aren’t on Facebook. Though no one would say social networking hasn’t arrived.I’m also not sure not needing an account or credit card is a goal to work towards. Or one that’s even possible. You’ll always need an account-ish place to put money and a vehicle though which to access credit.Those places may be a bitcoin wallet or something on the blockchain, but the constructs of accounts and credit cards (or at least what they stand for) won’t go away, ever. You simply can’t pull money out of thin air. 🙂

        1. Rick

          “You’ll always need an account-ish place to put money and a vehicle though which to access credit.”.Umm… Nope! I think one of the reasons certain people push electronic transactions is because so much cash changes hands and cannot be tracked. I’ve been moving more to cash over the past few years. A friend of mine said “If I carry cash I can be robbed.” To which I explained “With cash you can only be robbed of that amount. With a credit card someone can rob you of more than you are carrying. Not only that but if they steal your cash it can’t be traced. So the robbery is over and done. If they steal your credit card they need time to use it. Which means they might want you out of their way say by eliminating you.”

          1. Brandon Burns

            “Umm… Nope!”Oh?How, specifically, can you store money or credit but not have a physical or digital place where they reside?If they reside nowhere, how do I access them?

          2. Rick

            Well you can’t store credit. That’s like saying you can take an hour out of each day and put it away for the future..What I mean is there is a huge “cash only” economy going on in the world. People have operated in that economy for centuries. You said account-ish and credit. But the cash only economy works differently.

  9. CedFunches

    How many unbanked people do you personally know?

  10. Benji Rogers

    Have been super impressed with HelloDigit which was my first time using SMS banking for savings.

  11. Saleh Mohammad

    In Bangladesh, there has been a mobile banking revolution with the introduction of bKash (Bill and Melinda Gates Foundation is an investor in bKash) and several other platforms owned by the banks. These services are making banking very accessible to the poor. The adoption rate of these services has been quite remarkable.However, my concern is that at present these services are not interoperable and all of them are trying to create a “walled garden”. It will be interesting to see whether the industry will be dominated by a few closed platforms, or maybe in the future we will get a more decentralized peer-to-peer system through regulation or further disruption.

    1. fredwilson

      bitcoin is the smtp of this sector

      1. Saleh Mohammad

        I agree. However, it will be possible in the long term. In the short term, the volatility of bitcoin’s value means people (and regulators) in developing countries will remain skeptical.Until then, competition for customer acquisition will mean that people will be incentivized to use several services simultaneously, depending on specific use cases. It will be similar to how people use multiple messaging apps (Whatsapp, Viber, Line etc.) for different situations.So, a few walled gardens of different sizes will coexist. But I don’t think this will be a winner-takes-all situation.

  12. Guest, India’s earliest player, powers millions of dollars in transactions every year. Gates backed them early on too. Allowed ordinary people to open accounts and transact through ‘kirana’ (small mom n’ pop) stores as we call them back here in India. It’s pretty amazing to see how they were able to scale with minimal funding.

  13. Kelly Roots

    Mobile Banking only improve Businesses

  14. Salt Shaker

    Thought Gates wasn’t a BTC advocate? I’m paraphrasing, but he said something to the effect the poor shouldn’t have a currency whose value dramatically goes up and down compared to their local currency. He also said if a mistake is made in who you pay, then you need to be able to reverse it, so anonymity is a prob.

  15. Emily Merkle

    just the doing well by doing good. applies everywhere

  16. laurie kalmanson

    better than payday loansharking stores; they were scattered across the city when i lived in chicagobetter than charging an ATM fee for accessing your own money, when if you make $8/hour * 40 = $240/week, a $3.00 fee is about $1% of your weekly pay — if you make $100k, weekly pay $2k, that 1% fee of your paycheck for using the ATM would be $20 every time you go to the machine; crazy, right? yet that is what life is for poor people.

    1. LE

      yet that is what life is for poor people.Don’t forget the cost of cigarettes, lottery tickets and liquor.

      1. Rick

        Right! It amazes me how people with little money are big on wasting money.

        1. LE

          Vices sooth pain and gambling gives hope.Also, I forgot casino gambling and sports betting from my list.. And add eating shit comfort food (abundance of fried chicken places in poor neighborhoods) to “sooth pain”.

          1. Emily Merkle

            psychological coping mechanisms not limited to the pooor.

          2. Rick

            Right! Alcohol and drugs have always been the poor person’s entertainment. They can’t afford to do better things so they go with the cheap escape.

          3. Emily Merkle

            no, not right. Plenty of rich ass drug addicts and blingin’ boozers. lots of wealthy overeaters. try not to catch yourself in those tropes.

          4. Rick

            I understand but you’re not understanding. The two are not mutually exclusive. Alcohol and drugs have always been the poor person’s way to escape. That doesn’t mean rich folk don’t also use them. People with money have the opportunity to use other things to escape that the poor can’t afford.

          5. Emily Merkle

            No, I am understanding quite well; you were not precise. You are correct in the latter part of your last statement.

  17. Tom Labus

    They’ll need some cash to put in there too. Let’s hope this wave doesn’t go crazy but it does seem a pattern with financial institutions.

  18. LE

    And one of the big potential impacts of this trend is on the unbanked, those people who traditional banks won’t service.The conventional wisdom over the years as far as why people don’t have bank accounts is that they live “from hand to mouth” or in other words “from paycheck to paycheck”.Poor people (in the US) pay plenty of money in bank like fees. Typically at the check cashing agencies that dot their neighborhoods (like the taprooms).

  19. Matt Kruza

    Access to banking helps a little.. but the real issue is wages / wealth accumulation. I would almost argue the unbanked in the US is a bigger problem to solve. Clearly this is not technological in the US, but instead an issue of it not being profitable serving those who make substantially below a stable, living wage. (one study showed those unbanked often spend up to $1,900 in fees, pay day loans, fines etc). So yeah mobile banking helps a little, but the bigger overall issue overseas is infrastructure, economic capacity and wages. Ironically Bill gates foundation would have a bigger effect by helping / addressing the unbanked in the US I think (particularly if partnered with non-profits and or religious organizations who would invest human capital in terms for helping these people become banked for the first time)

  20. James Ferguson @kWIQly

    @fredwilsonafraid you got it wrong again.”Doing well by doing good. There is’ nt much better than that.”I’m fact there is nothing better than that.Good post!

  21. DanielHorowitz

    Inventure is doing interesting stuff here.

    1. Emily Merkle

      yes am looking at them for else

  22. Michael Preston

    Of course a huge unbanked/underbanked audience is youth – FDIC data show that these rates go down by 20% for every decade of age. (And there’s wide variation within that by SES.) As more youth enter the workforce out of pure necessity or to have an internship, etc., they need some sort of mechanism through which to receive money. One thing most of them do have is a phone, probably at a much higher rate than they have a government-issued ID.

  23. Mario Cantin

    Will greatly transform the face of philanthropy as well, as peer-to-peer philanthropy takes hold.

  24. BillMcNeely

    So I am in this boat for the moment.When you are poor you are likely to have an over drawn account and get hit with fees You are afraid to put money in the account as the fees just make it evaporate.I have had to drive 1 hour 1 way to give my soon to be former wife actual cash before. I did not mind doing but it was a pain in the ass.For the moment I use my etrade account but I forget the pin number to the card and am afraid to order another because I will be out of money until a new one arrives.I had a Favor customer tip through Venmo.I use a laundry mat that is in a safe area and I can leave my clothes while I do other stuff. But the laundry mat’s change machine is notorious for not working.How can I use mobile pay or credit cards to build a solution for this?

  25. Akshay Mishra

    There is a major hurdle which mobile-banking still has to surpass to service the poor in the same way traditional banking does. One related to identity.Most government-schemes designed to help the poor (such as transfer of benefits) rely on an ID of some kind and a vast number of the poor, especially in the emerging/frontier markets, don’t have that. Traditional banking helps by providing KYC services (mandated by regulation) and, in many cases, bank cheque books/pass-books/statements substitute for IDs.There is no reason mobile banking can’t do that – but it is an area which is not being actively looked into, as far as I know. Also, traditional channels of monetary policy and basic financial products such as insurance do not directly affect users of mobile banking (which is primarily a transaction/value-storage mechanism). This is also one avenue that needs to be explored.An example is the recently launched “Jan Dhan Yojna” (People’s Money Scheme) in India which has focused intensively on these issues – ie those of financial inclusion.And I firmly believe mobile banking will have a major role to play – but KYC-focused products in the mobile-banking arena need to be developed first.

  26. Richard

    Bill Gates hasn’t exactly been the best forecaster the last 15 years

  27. karen_e

    Good question, Canadian James (CJ). Let me know what u learn.

  28. PrometheeFeu

    First, unbanked people have access to credit. Also, the issue with this segment of the population accessing financial services is likely more due to them having very little money than with not being able to make it to the bank.

  29. Daksh

    The mode of delivery in “Mobile” Banking can actually mean two things -:1. Banking made mobile to reach where it is needed. Initiatives in India (from where I am) have included elements like Vans driving to remote locations for basic banking requirements, talks of well-distributed Post Offices to become more akin to banks etc. All this is in parallel with concepts like micro-lending etc. 2. Banking made available through Mobile devices. What is interesting here is that the distribution model of Mobile devices, the reach of Mobile services like Voice and SMS, the price points of Mobiles are all owned and defined by Private playersThat this is a big market opportunity is clear, but there are other soft aspects which prevent this from becoming a direct Sales opportunity. There is a long Sales cycle of Education and trust which might take a generation (or maybe half). For eg. Online shopping is taking a generation to get adopted here though Web Commerce has become big time.C.K.Prahlad spoke about fortune at the bottom of the pyramid. It is just that the mode of making this work will not follow the typical Monthly / Quarterly / Annual cycle initially. And some businesses may not want to exploit this market because of this very reason

  30. Daniel Silvermintz

    I think the bigger impact will come from mobile platforms aimed at making remittances easier and less expensive, such as TransferWise.

  31. alg0rhythm

    It seems to me the best solution is to do longitudinal, multi year personal finance classes starting in elementary school, maybe even replacing math with something more practical, real world, but with the same skills, and you could put in a currency that could be spent for smaller items, and let people invest, and see what the outcomes were.

  32. alg0rhythm

    I do think mobile banking is helpful, since I think the concept of money becomes different with long term unbanked- there is a significant sub-set of people who carry 1500+ in cash in a wad with them at all times- a different concept of money all together. I think there is probably also great opportunity with small business finance applications.

  33. Chimpwithcans

    This needs to circumvent the powers that be, otherwise it won’t change diddly squat. The much publicised M-PESA is making the ruling elite rich beyond most of our wildest dreams in Kenya.

  34. Been there

    On a different note ,This is a great idea and is well over due . However I know for a fact that banks use proprietary algorithms to monitor accounts . I sincerely believe that this new market needs to be aware of the banking industry and its potential bias practices. These people cannot afford these types of errors in their lives .Having secure control of funds in a emerging country futher empower the individuals to improve in their lives and community.

  35. mypoolin

    Aiming to make a dent in the same domain. Starting point – emerging economies 🙂

  36. CedFunches


  37. fredwilson

    isn’t this exactly that?

  38. awaldstein

    Does providing an infrastructure solve the problem is the answer.I had an opportunity to work with Green Dot at the beginning but passed. It was great business but the service it was providing was a dept mechanism for economically challenged populations at retail and I just couldn’t get my heart into it.

  39. William Mougayar

    well, if they can tap loans or outside help from their phone, then that would be helpful. i think step 1 is financial autonomy and the ability to move money. step 2 will be more added-value services on top of that.but i’m with you that corrupt and inept governments in the middle of these countries are the biggest stumbling blocks to eradicating poverty. it’s a shame that the rest of the world keeps putting up with bad governments that rob their people and economies.

  40. LE

    I agree with what you are saying.However, part of the problem (if you want to call it that) is that Billionaires (and celebrities) don’t do things like that in the US [1] they are to busy flying over to Africa and helping people over there.Further to that point, this week there was a Shark Tank episode about some young couple helping people in Uganda [2] to pursue their college dreams. All touchy feely pulling at the heart strings and all. Nice idea however I wondered why they aren’t doing that type of thing in poor neighborhoods in the US? The reason is simple it’s cooler and sexier to help people in a foreign country than in your own back yard (with the exception of people like you of course .. firmly rooted in Lancaster PA..)[1] At least not that I hear about.[2]

  41. James Ferguson @kWIQly

    Charlieit depends whether you can do well while doing good.. It may be that they are mutually exclusive but only when we’ll is defined in monetary terms.reference rich men eyes and needles. At very least there is a challenge.IF doing well is well defined then doing good and doing well are corollaries of one another.

  42. Donna Brewington White

    Do you believe that access to the Internet, and maybe even more so mobile, provides a necessary part of the solution?

  43. Matt Zagaja

    I would argue that the lack of banking is one of those structural and systemic causes. Not a silver bullet but I think having banking services will help.

  44. JamesHRH

    What is the single greatest structural cause of poverty Charlie?

  45. awaldstein

    I’m with you and Fred that this is a good move generally, globally. And it does provide a framework for a broader good potentially.I don’t think that to portray this as ‘goodness’ is really what it is though.Does this really provide financial autonomy? From what?

  46. LE

    but i’m with you that corrupt and inept governments in the middle of these countriesForget about getting rid of that and take it as a given that needs to be worked around. People in those types of countries have mastered, like the mythical mafia, the art of scratching backs to get what they want. Everybody plays that to an extent even here (look at the Port Authority of NY/NJ) you aren’t going to get rid of that type of behavior just keep it in check (like you aren’t going to get rid of crime same thing..)

  47. Brandon Burns

    Poverty is tied to the inability to acquire value (money), not the lack of a place to put it (accounts).*thinks for a second*But then again, maybe mobile payments are a potential part of fighting poverty? Maybe they provide a connection to more ways to receive money, and thus accumulate it?

  48. William Mougayar

    In the post that Fred linked to, it implied that for women, it gives them some financial autonomy from their husbands apparently. But overall, there are 2.5 Billion people that are un-banked, which means they couldn’t move money around. With this, they will be able to do that, as well as receive money.

  49. SubstrateUndertow

    Maybe it is not so much”financial autonomy? From whatas it is “financial autonomy? To do whatan analogue to the difference between”the freedom from”and “the freedom to?

  50. Rick

    “it implied that for women, it gives them some financial autonomy from their husbands apparently”.Breaking down family bonds is today’s way to divide and conquer. Married couples are supposed to be a team. Working together to make their world better. This approach to destruction of a society is working quite well. The US has a 50% divorce rate. I find it hard to believe that 50% of married couples can’t stay together. But then I think about how marriage is attacked at every turn today and I realize it will be difficult for them to stay married..Back on topic… Where is the opportunity for the average William? Can anyone offer these money moving services or do they have to be licensed or something? In other words is the playing field level or stacked?

  51. awaldstein

    I’m a believer in the changes that this infrastructure may have. For the better as it disenfranchises control to some degree.We define common good a lot differently that is all.

  52. Rick

    I don’t know anything about Green Dot but if a group is moving up and you want to make money from them forever. You need to get in on the ground floor. You need to get them used to using credit and paying interest. If you can keep them on the verge of defeat then they will work hard at making money for you.

  53. Rick

    I think mobile payments is a way take a pinch off of every transaction. This would be big money! If you feel sure that this large group of people who don’t have a bank account will jump on board with mobile payments in large droves. Then a pinch off every transaction is a great opportunity!.The question really is can anyone get in on this at ground level or will there be someone that you must pay tribute to just to play the game?

  54. LE

    Maybe they provide a connection to more ways to receive money, and thus accumulate it?Nope. Will take forever for the cultural influences to work their way out.

  55. Donna Brewington White

    Exactly.One of the greatest contributors to poverty is lack of access. The Internet provides a potential solution to at least that part of the problem. But that is huge!

  56. Rick

    I’m thinking poverty is the lack of opportunity. Not the lack of seeing a situation that could be an opportunity. But the lack of the ability to take advantage of that situation..So if we stay on topic and look at mobile banking as a situation that could make millions for us. Do we have the resources to take advantage of the situation making it an opportunity? If it will cost a few hundred thousand dollars just to get set up with license etc. and we don’t have that money. Then it’s a situation not an opportunity. If someone else has the money or has access to the money then the situation is an opportunity for them!.So I think lack of opportunity or the decision to not take advantage of opportunity is what creates poverty.

  57. William Mougayar

    agreed that we can’t totally eradicate corruption, but in those countries the levels are alarmingly high, and the poor still gets the short end of the stick.

  58. Rick

    I’ve always wondered why people hate their fellow US citizens so much.

  59. Matt Zagaja

    I think it was also notable that they pointed out labor prices there were comparable to China whereas employing people domestically would probably be more expensive.Domestically both Mike Bloomberg and Bill Gates are doing quite a bit, I think Bloomberg a bit more and Gates projects focus mostly on education. In Connecticut we have billionaires and millionaires funding some interesting projects related to job training/pipeline in inner cities. Many mid-tier philanthropists do not need or want publicity. They do not need to convince other donors to get on board with their projects because they fully fund them.

  60. LE

    I think the distance also is exotic and allows you to write off travel (as only one example) and being far away limits your need to attend rubber chicken dinners or be bothered by someone from the wrong side of the tracks that is located close by. Hypothesis of mine not backed by any facts.Pictures of yourself walking through a village like some kind of emperor is nice as well. I have a picture when I was on vacation in Jamaica one time next to a buggy we rented with some poor kids milling about at a local school. One of my favorite pictures wouldn’t be the same thing if shot in the badlands of Philly (and I’d have to fear for my life as well).

  61. Emily Merkle

    doing well: depends on your definition of well for you. personally. to me doing well by doing good means in one scenario being able to support myself in a studio, living expebnses modest, in NYC.

  62. William Mougayar

    Let’s not take this out of context. Quoting from the article: “Theft was a constant concern, and many of the women interviewed reported their husbands misappropriating their savings.”

  63. Donna Brewington White

    Access to banking will not destroy a strong marriage. But it might make a weak one more livable and provide a sense of empowerment and satisfaction that will make some of the dissatisfying aspects less debilitating.If access to banking destroys marriage then the problem is oh so much deeper.

  64. LE

    I find it hard to believe that 50% of married couples can’t stay together. But then I think about how marriage is attacked at every turn today and I realize it will be difficult for them to stay married.You’ve either never been married or have never been in a bad relationship or a relationship where one party changed over time. Or been in a relationship with money “problems”.There are many reasons that people divorce. Money actually is one of them. With money in theory you have more creature comforts and less things to fight about. And can stay healthier. More education all of that. Different friends. Doesn’t mean that bad things don’t come if you have money of course they do.Let’s take Fred for example. Fred spent part of his life with little money (from what I’ve read that he has said) but the minute he made some money Gotham Gal said “so we can move back to Manhattan?”. So they moved into a nice townhome and now they have vacations homes all over the place and are spending the cold weather season in LA presumably enjoying themselves. You don’t think that somehow is good for their relationship vs. if they were living in some shitty row home in Staten Island? I think it does.Separate though is that many people who have money also stay together when they find out that if they divorce they lose half of what they have (man loses more typically). So if you have nothing it’s easier to break up as long as you have enough to actually live separately.

  65. Emily Merkle

    it is. not limited to poor. think abused.

  66. Rick

    There ya’ go. More divisive talk. Another example of an attack on marriage. Both men and women misuse money. It’s not a problem with the marriage and no need to say husband or wife. The problem is with the person who doesn’t have the discipline to control their behavior. Also if you’re married you should protect your spouse by saying you need to work with them to help them learn better financial budgeting not out them in public..BTW… I email ya’ but no response. Are you upset because I don’t care about online profiles?

  67. Rick

    No but thinking that a team somehow needs to be divided to be stronger will help break up the team..The problem is marriage being under attack. Women are the target because they are the ones that have more *new* things to acquire. Just take some time, look around and watch as people tell married couples to scrutinized their marriage. That’s not how its suppose to be. It sell marriage topic books and magazines. But in reality married people are suppose to support each other in going out into the rough world. The marriage and home life is where they are suppose to go to hide from their problems. Not try to find problems in their marriage.

  68. SubstrateUndertow

    I think that’s so right !A good/strong marriage is founded on mutual respect/equality that including a healthy sense of each other’s cooperative autonomy.

  69. Rick

    The solution is for people to start caring about the people around them. People should not try to help others until their own house is in order. That means if they see problems first hand with the people nearest them. They should work on those problems. Only after all those problems are fixed should they go far and wide looking for more problems to fix.

  70. Rick

    What you are describing is surviving. Doing well is moving up in the world. Getting out of working from paycheck to paycheck. Having enough money in the bank that you can start working on helping others.

  71. Emily Merkle

    what’s the logic there? often helping others’ lends one agency to then help themselves.

  72. Rick

    But there are problems when going far and abroad. Local economies are unique and not understanding that makes it difficult to provide what’s needed..It’s much better to know the market you’re investing in and servicing. That’s why most companies add local offices to help with growth in a particular local.

  73. Emily Merkle

    doing well is relative. to me doing well is surviving with a sense of safety, medical, and some wiggle room for modest entertainment (art, technology). doing well does not always equate to everyone as MAKING BANK. though it could.

  74. Rick

    The logic is that helping the people closest to you means you are more in touch with how they can be helped. Also if you can’t organize your own self then how will you organize another?

  75. Rick

    I agree that people will see doing will differently. I think the words you used, safety and wiggle room, are the first indications of getting out of survival mode.

  76. Emily Merkle

    again, agency is lent through helping others, which helps you help yourself.

  77. Matt Zagaja

    My federal income tax textbook from law school is rife with examples of individuals finding creative ways to use the tax code to finance foreign travel. I don’t think your thoughts are on the wrong track at all.

  78. Rick

    OK but let’s take an example. If a person can’t balance their own check book. How do they figure they can help someone else balance their checkbook?

  79. Rick

    “For the better as it disenfranchises control to some degree.”.How does it do that?

  80. LE

    I had a customer who wanted to buy a domain name from a woman in the Netherlands. He told me he was going to fly over there to have a meeting with her to try and convince her to sell it to him. I thought that was an odd use of time and money but then I realized that he was simply using it as an excuse to take a trip there and deduct the cost.. As it happened he took his son on the trip as well. He did end up getting the name and striking a deal but even if he didn’t, he had enough communication with me by email (he also paid me a fee) to back up that he was serious about why he needed to travel there to get the deal done.

  81. Rick

    Hmm… So then it may all just be a way to save money by saying “I’m going there to help people?” You go have someone take some pictures of some poor people. Then have someone photo shop you into those pictures and viola your vacation is a tax write off..Nice! I’m likin’ it!

  82. Rick

    My question is answered..The next question is how do I join that club?!!!

  83. LE

    Next time you want to go away on vacation find some product or service that you can sell to a business in the location that you are traveling to. Then make some cold calls and get some customers even if you have to give away the product.Of course this assumes that you make enough money that you actually end up having to pay taxes meaning it matters if the expenses are deductible. Really not that hard to do although T&E is typically (by anecdote) well scrutinized on tax returns so you may have to bury the cost in another category so as not to raise any red flags. I don’t deduct any T&E even though I could nominally – not worth the risk.

  84. Rick

    What about T&A? Can I deduct T&A?.Just kidding. That was a joke in the movie Wolf of Wall Street. Which btw is my new favorite movie. I’d really like to find people who are busting their asses to make boat loads of cash like the characters in that movie. That movie gave me hope for America.

  85. Rick

    “Gates projects focus mostly on education”.Is he doing free education for all via the internet? If not whatever he is doing is short of what is needed.

  86. Matt Zagaja

    The auditors at the IRS tend to apply more scrutiny than that.

  87. Rick

    I’ve never been married. But lived with women in the past. I’ve never selected a women that puts money above the relationship. I’ve had women that were poor and women that were doing fine financially. I’ve also never put money above the relationship..I guess I’ve just been fortunate enough to not hook up with people who were so low of character that they put money above the relationship..I know that people have problems because of money issues. But what both need to understand is that if just one of them lets money problems bother them then both will be unhappy..If you notice in your post. You say Fred’s wife asked if they could move back to Manhattan. Sounds to me like she was putting the relationship above money. She didn’t bail on Fred just because the money wasn’t there!.Some people love money and some love well… their loved ones.

  88. Rick

    But not all do. When I post that people should look at marriage as being one. People say no. When I post that people in a marriage should be individuals. People say no..What have we learned?

  89. Rick

    I think it’s just that most people aren’t of a level of intelligence that they can leave money behind for better things in life. I know that money is needed to buy things. But you can’t buy love. You can buy lust and companionship..I just find it amazing how married couples will let others invade their marriage and cause problems. How stupid must one be to not see that someone or something is dividing them?

  90. LE

    Well not speaking specifically about Fred and Joanne but more in generalities so we can use “Fred and Joanne”, ok? Joanne is a go getter and she hustles and is smart. No doubt in my mind that she saw potential in Fred and that got her interested in him at some point. I don’t think she would have married him if all she thought was that he could end up as a letter carrier or UPS driver. Or working for the Port Authority of NY/NJ. She pushed him to go after certain goals (as far as what Fred has said on this blog in the past) and he was smart and capable enough to do those things. So you can’t really separate what she thought was possible and what took some time to actually happen. Consequently she was happy with wherever they lived (and it wasn’t “poor” by any means) and willing to wait and besides even if she wasn’t willing to wait she may have stayed in the game anyway (nobody disputes that).Money isn’t a problem for you now (I have no clue about your age) because I will assume that you don’t have kids and the types of money issues that having kids brings to a relationship as well as the stresses. [1] Once you are there, if you are ever there, you will possibly see the world differently.Also, many women, once they have families and once they are married change their views on money because of what they see others have. People change. All the sudden where you live matters because if you don’t live in a “good” area your kids will go to crappy schools that might even be dangerous. And so on.[1] For example when you don’t have kids and when you aren’t married you are avoiding an entire amount of conflict that you end up having just because you are married and have kids. So it’s certainly easier to keep a relationship together w/o those two stresses.

  91. Rick

    It’s all about discipline. If you can’t discipline yourself to not need money to be happy. Chances are you won’t have the discipline to ever get money..The times I’ve come up with the best of ideas was when I wasn’t thinking about how much money they would make. I love talking about money and making money. But to me money is just a game.

  92. Emily Merkle

    obviously you help when you know or are pretty sure you can

  93. Emily Merkle

    and if that lack of opportunity is flow then = poverty

  94. William Mougayar

    It’s more than 1 reason. But if there was one, I would say “Corruption at the top of these governments”. i mean…how difficult is it to build roads, bridges, phone lines, internet access, purify water, put schools, factories, etc… The whole world is an open book now. Just do it, but don’t steal it.

  95. alg0rhythm

    Not sure we can be too smug about “corruption at the top of governments” or our commitment to infrastructure. There are grandparents who weren’t born the last time the subway got even a paint job.

  96. JamesHRH

    Agreed that there is far more than 1…..but I think the top cause is human nature.

  97. Joe Cardillo

    Obv agree re: multiple reasons, but would suggest that biggest is actually lack of agency / ownership over one’s own situation. Can see this when you look at the people who have succeeded in spite of great obstacles, they’ve been able to grab some agency and/or had someone assist with getting them there.

  98. Joe Cardillo

    Agree – reminds me of a Quora question I saw the other day which asked “How do you know you are living up to your potential?”It’s a sort of subtle thing, because both our current structures on the web and our tendency as humans is to answer that from our own perspective when the real answer is: when you get to define that potential + how/when you’ve reached it. It’s that ownership/agency over one’s life that makes all the difference (I taught middle school for two years, there’s no better way to get that concept hammered in). I only mention because I think that currency / trade / value, all of those things when used properly give people agency over their own lives both in terms of what they do and how they structure/define “it’s going great!” as…to your overall point.

  99. Mike O'Horo

    “Those countries?” To me, it sounds just like the US, where the 1% have rigged the game to make themselves obscenely rich while suppressing wages to accelerate the rate at which the rest of the citizenry descend into poverty.

  100. PrometheeFeu

    Men misuse funds more than women. I recall a study where NGOs gave money to the husband or the wife. Giving the money to the husband had very little effect on family welfare. Giving it to the wife was very effective.If you are married to an irresponsible person who is dragging the two of you down, going to find someone better seems eminently reasonable.