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Mobile Money for the Unbanked

By Yasmina McCarty

M-Shwari: Mobile Money Savings & Loans

M-Shwari: Mobile Money Savings & Loans

Safaricom and Commercial Bank of Africa launched M-Shwari last week, a credit and savings product for M-PESA customers. Customers can apply for a quick approval loan, open a bank account and move funds from the wallet over to an interest bearing bank account.

Looking closer at the credit side of M-Shwari, this is not the first telco-bank partnership to offer short term credit. Airtel teamed up with Faulu Microfinance in May to offer Kopa Chapaa, a 10 day loan up to 10,000 Kenya Shillings. And previously, there was of course M-Kesho from Safaricom and Equity Bank.

We wrote about airtime based credit scoring in March and had contributing posts from Experian MicroAnalytics and Cignifi who both work in this area. With the vast majority of mobile subscribers in emerging markets using pre-paid SIMs, there is incredibly rich data available on airtime purchase and usage behaviours. Couple that with the poor quality of information available at credit bureaus, and airtime based credit scoring is an attractive approach to targeting and risk profiling for credit products.

What does the launch of M-Shwari mean for mobile money? A few thoughts:

  • The design of this product suggests telcos may be waking up to the value of their data. Telcos frequently monetise their own data for internal use to design smarter talk time promotions or offer better segmented VAS.  But M-Shwari shows how telco data can be leveraged as an asset to generate external sources of revenues.
  • This credit and savings product is being offered through a telco- bank partnership rather than by the telco alone. Telcos don’t engage in direct lending or financial intermediation; rather they are focused on the high volume transaction-fee part of mobile financial services.
  • Finally, it is encouraging to see mobile money customers can now earn interest; this benefit has been withheld for too long. Safaricom says 70,000 accounts were opened on the first day alone. But will this vanilla savings offering hold enough appeal to mobilise savings deposits?  One can envision mobile money savings products which better leverage the power of mobile i.e. programmed savings, innovative mobile savings reminders, progress trackers, rewards, etc.

What’s your take on M-Shwari?  What does the launch of this new product mean to you?  Is this a game changer for financial inclusion?  What do you expect the uptake to be of M-Shwari? Share your thoughts with the MMU readers.

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