This is the first of three-part series of blogs titled “Mobile money”. The authors explore and explain all about mobile banking and how it can make a difference to the rural population.

-By Ignacio Mas-Ribo, Deputy Director, Financial Services for the Poor, Bill and Melinda Gates Foundation

Think about how hard it must be for a poor, undereducated person to get her head around mobile money. She is likely to be new to banking, and may never have used her mobile phone for anything other than talking into.

Now she is told that, to deposit money into this new type of account, she must go along to the corner shop where she buys her rice and cooking oil and which now seems to sport a flash new logo of a bank she may not have heard about, she must give the clerk her phone number and her cash, she must wait to get a text message on her phone, and then she can just walk away. When she wants to retrieve her money, she can just go back there, press buttons on her mobile phone, but this time she must remember a secret code (she needs to prove that the account really is hers), and the store clerk will give her the cash – really, he will!

In positioning a mobile money service with prospective customers, the provider faces four key challenges: explaining what it does, why it’s better than the alternatives, and how it works, all while reassuring them that indeed it can be trusted to work. All this without direct contact with the customer.

This is possible. M-PESA in Kenya signed up 9 million people, or 40% of the adult population, in just three years. (See this paper for an analysis of M-PESA’s success factors.) Here are some emerging lessons from the global experience.

Market the service on the basis of one or two very specific use cases that represent clear pain points in people’s lives (e.g. M-PESA’s “send money home” tagline) and avoid broad “bank in your pocket” or complex Swiss army knife type of propositions. Search not only for a customer need that is large but also immediate.

Customers need to hear the story from the mobile money service provider directly, through fairly pervasive advertising and promotional activities. Once customer interest is piqued, the local shops acting as Business Correspondent (BC) can step in and help them.

Incentivize retail shops acting as BCs amply to ensure they are hungry to promote the service and careful in explaining how it works to new customers. Give them a generous customer registration commission upfront to give them an early source of cashflow, but swap them over to transaction-based commissions over time so that they promote usage and not just registration.

Rather than scattering your BCs randomly through the territory, cluster them in busy locations where people congregate (main street, market square, bus station, road intersection). That will give users a stronger sense of convenience (“I see it wherever I go”) and choice (no lock-in to stores you may not like or trust).

Try to make the customer experience as tangible as possible, for example by having the BCs record transactions in log books. And make sure that it always feels like the same process at any BC outlet. Without consistency in the user experience, customers cannot build up and test their own expectations about the service, and hence cannot develop trust over time.

BCs need to be supported and supervised often. Beyond training, they need ongoing advice on how to optimize their agency business: how much cash and liquidity balances to hold, how to explain and promote the service, new service features. Visit them at least once a month, they’ll appreciate you wanting them to succeed.

Associate with brands that resonate with and are well trusted by the poor, unbanked customer segment. Mobile operators may be particularly useful here, since they already have many of these people as their customers, and it’s a lot easier to cross-sell into an existing customer relationship than to create entirely new ones.

Sure, there’s technology, call center and cash logistics to worry about too in mobile money deployments, but the success or failure will hinge on winning customers’ hearts and minds.