Can you Really Use Mobile Money for Microfinance: Lessons from a Pilot

This case study seeks to highlight lessons learned from a pilot partnership between a mobile network operator (MNO) and an MFI in Uttar Pradesh, India. It examines the evolution and mechanics of this partnership, and discusses how MNO-MFI partnerships could be made mutually more rewarding in the context of mobile money deployments. The paper states that the partnership between MFIs and MNOs is a symbiotic relationship as it enables MFIs to eliminate cash from their systems addressing many of the associated risks, and enables easy cash and account reconciliations. On the other hand, through such partnerships, MNOs gain a large captive client base making regular transactions. The paper notes that these benefits are hard to come by for both partners individually. Key highlights from the paper include:

• Changing the customer interface from human to a mobile based platform, requires a behavioral shift in MFI clients;
• Partnerships between MNOs and financial service providers at bottom of pyramid should be preceded by detailed deliberations about the specific roles each partner will play;
• It is important to set reasonable and realistic expectations between collaborating partners;
• Unfavorable agent-level business economics can be a major challenge hindering the success of such partnerships.