1 Mobile Phone Innovation, M-Business and SMEs in Developing Countries Richard Duncombe WTO Workshop on E-commerce, Development and SMEs April
2 M-Business is part of a bigger picture e-commerce/ m-commerce B2C (eg. retailing) B2B (eg. supply chain) Business G2B (eg. information) B2G (eg. procurement) e-business m-business e-government C2B (eg. price comparison) C2C (eg. auction) Customer C2G (eg. tax) Government G2G (eg. coordination) G2C (eg. information)
3 M-business Local Drivers Increasing device performance/price ratio: processing power, functionality Growing bandwidth: as mobile technologies move up through the generations (2G, 3G, etc) Handset culture: a new generation of young "mobile natives" who have grown up used to having mobile devices Service economy growth: the steady increase in services as a share of GDP in developing countries Vendor push: the strong advertising and wider marketing drive from mobile operators and manufacturers to "go mobile". Growing population mobility: rural/urban drift, increased domestic/global migration and trade
4 M-Business Value Added Properties/ Advantages Ubiquity. Ubiquity means being available at any location at any time Convenience. Mobile computing devices are increasing in functionality and usability while remaining the same size or becoming smaller Interactivity. Delivery of services requires a higher level of customer support and communication Personalization. Largely owned and operated by a single individual Localization. Knowing where a user is physically located at any particular moment
5 M-business Landscape Technological Foundations Commercial Capabilities m-business Applications - Personal - Local Mobile Devices Infrastructure Software Services Wireless Networks - Metropolitan - Wide area Value-Added Properties - Ubiquity - Convenience - Interactivity - Personalisation - Localisation Local Drivers - Technological - Commercial -Socio-cultural -Innofusion - Mobile Finance Case 2 - Shopping - Advertising -Content/information provision - Intra-business - B2B and SCM - C2C Case 1 - Personal services - Location-based services
6 Innofusion innovation intermediaries Innofusion (Fleck, 1993) is required in markets that are less developed in terms of awareness, capability, mechanisms for cementing trust and completing transactions Not a front loaded process of laboratory-based research and application development, but a continuous process that allows innovations to diffuse Innovation intermediaries that link core innovators with consumers adapting and domesticating new innovations Innovation and diffusion processes are inextricably linked in developing markets.
7 Case 1 C2C Auction sites M-commerce Opportunities Cell Bazaar in Bangladesh 5 million users/84,000 registered sellers/1000 new posts per day Country-wide penetration among ordinary citizens, and the ability to access product/service information via SMS Affordability even though both buyers and sellers have to pay to use the service, those charges are set at a very low level combined with the low level of SMS charges Network effect of existing mobile phone users via its association with Grameen Phone, the dominant established provider of telephone and banking services that is a trusted institution in Bangladesh.
8 Case 1 C2C Auction sites Limitations on Innofusion Unlike ebay, which dominates the trading of second-hand items in the developed countries, CellBazaar is only a match-making platform that brings together buyers and sellers Does not support the completion of transactions, offers only initial search facility providing only basic information about a product that is for sale. This highlights some key innofusion limitations first, the completion of transactions online through trusted electronic payment systems; second, sophisticated feedback systems that can establish an online reputation for both buyers and sellers; and third, secure and reliable delivery of items purchased.
9 Case 2 Mobile Finance M-commerce Opportunities M-Pesa reaches 9.0 million registered customers/60% of Safaricom's customer base, 23% of the entire population, and 40% Kenyan adults, 16,900 retail stores half are located outside urban centers. US $320 million per month in person-to-person (P2P) transfers. There are 27 companies using M-PESA for bulk distribution of payments. Safaricom itself used it to distribute dividends on Safaricom stock to 180,000 (out of 700,000) individual shareholders. Since the launch of the bill pay function in March 2009, there are 75 companies using M-PESA to collect payments from their customers. The biggest user is the electric utility company, which now has roughly 20% of their one million customers (including SMEs) paying through M-PESA. New innovative services e.g., M-Shwari - customers sign up directly through M-Pesa menu. There are no forms to complete or need to visit a bank branch. Eligibility for loans based on the individual customer s M-Pesa transactions and savings history. Leveraging of FIS for credit scoring/targeting and risk profiling for credit products.
10 Case 2 Mobile Finance Enablers for Innofusion Achieving scale and traction in individual markets network effects, effective distribution (agent) channels and empathy and trust within the system Agents were given some freedom to innovate themselves addressing particular consumer demands, inc forms of subcontracting, managing their cash floats and dealing with local crime/security risks Some of these innovations were re-absorbed by Safaricom who attempted to create greater standardisation in their distribution networks However, innofusion processes are becoming an ever more important enabler for integrating value added services such as M-Shwari.
11 Conclusions Supporting Local Inclusive Innovation Little progress in Internet-based e-commerce over the past 10 years major developments driven by Mobile networks, devices and applications Most successful environments (e.g., Kenya and Bangladesh) for development of m-business have strong emerging local collaborative innovation systems Indigenous technological capability (e.g., research labs, hubs and enterprise incubators) are important But need to be supported by policies for inclusive innovation that focus on encouraging product/service innovation for base of the pyramid markets, with a focus on innofusion (refer to paper)
12 References Duncombe, R.A. (2012) Chapter 9 Finance in G. Sadowsky (ed) Accelerating Development Using the Web, Empowering Poor and Marginalised Populations, World- Wide Web Foundation,, SF, Cal. Duncombe, R.A. (2012) An evidence-based framework for assessing potential for mobile-finance in sub-saharan Africa, Journal of Modern African Studies, 50(3): Fleck, J (1993) Innofusion: feedback in the innovation process, in F.A.Stowell, D.West & J.G.Howell (eds) Systems Science, Plenum Press, New York, pp Foster, C. and Heeks, R. (2013) Analysing policy for inclusive innovation: the mobile sector and base of the pyramid markets in Kenya, Innovation and Development, 3 (1): DOI: / X Mas, I. & Radcliffe, D. (2010) Mobile payments go viral, M-PESA in Kenya, Capco Institute's Journal of Financial Transformation, 32 PESA_Kenya.pdf Turban, E., King, D., Lee, J., Liang, T.-P. & Turban, D.C. (2010) Electronic Commerce 2010, Pearson, Upper Saddle River, NJ Zainudeen, A., Samarajiva, R. & Sivapragasam, N. (2011) CellBazaar: enabling m- commerce in Bangladesh, Information Technologies and International Development, 7(3):61-76.
ELECTRONIC COMMERCE 9 CHAPTER PREVIEW One of the most profound changes currently transpiring in the world of business is the introduction of electronic commerce. The impact of electronic commerce (ecommerce,
White paper The Global Adoption of Real-Time Retail Payments Systems (RT-RPS) Contents Executive summary...3 Background on payments clearing and settlement...4 Rise of real-time digital payments...4 What
Technology that matters Harnessing the technology wave in banking Using new technology to reshape your bank for the future Up to two thirds of the profitability uplift required to be a high performer of
EUROPEAN COMMISSION Brussels, 6.5.2015 COM(2015) 192 final COMMUNICATION FROM THE COMMISSION TO THE EUROPEAN PARLIAMENT, THE COUNCIL, THE EUROPEAN ECONOMIC AND SOCIAL COMMITTEE AND THE COMMITTEE OF THE
THE JOURNEY TOWARD CASH LITE Addressing Poverty, Saving Money and Increasing Transparency by Accelerating the Shift to Electronic Payments Commissioned by BFA acknowledges the helpful comments received
2014 State of the Industry Mobile Financial Services for the Unbanked MOBILE MONEY MOBILE INSURANCE MOBILE SAVINGS MOBILE CREDIT The GSMA s Mobile Money for the Unbanked (MMU) programme works to accelerate
www.pwc.in Logging into digital banking Creating access, transforming lives Foreword from TRAI I am happy to learn that ASSOCHAM is organising its 2 nd National Summit on IT and Mobile Banking, with the
Mobile Commerce as a Solution to the Global Digital Divide: Selected Cases of e-development By Nikhilesh Dholakia and Nir Kshetri Abstract Capabilities of accessing, delivering, and exchanging information
+ MAINSTREAMING MICRO-PAYMENT SYSTEMS AND THEIR APPLICATION TO MOBILE NETWORKS MICRO-PAYMENT SYSTEMS AND THEIR APPLICATION TO MOBILE NETWORKS Examples of Mobile-Enabled Financial Services in the Philippines
State of the Industry Mobile Financial Services for the Unbanked Claire Pénicaud & Arunjay Katakam Acknowledgements This report was written by Claire Pénicaud and Arunjay Katakam. The authors would like
Copyright 2007 World Resources Institute. All rights reserved. Data copyright International Bank for Reconstruction and Development/World Bank Group A co-publication of World Resources Institute and International
Annual Report 2011 Uniquely positioned to deliver the promise of the digital world Business overview Gemalto Annual Report 2011 Highlights In an increasingly connected society, Gemalto is the leader in
Non-life insurers are being left behind by the rapid changes in customer expectations. How can digital innovation help them to engage more closely with customers and what untapped commercial opportunities
The Mobile Economy 2015 Copyright 2015 GSM Association About the GSMA The GSMA represents the interests of mobile operators worldwide, uniting nearly 800 operators with more than 250 companies in the broader
Promoting Local Content Hosting to Develop the Internet Ecosystem Michael Kende and Karen Rose January 2015 With thanks to Executive Summary In many developing countries and emerging regions the vast majority
UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-K (Mark One) È Annual Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the fiscal year ended
OPEN DATA FOR ECONOMIC GROWTH June 25, 2014 Transport & ICT Global Practice 1 Table of Contents Acknowledgments:... 3 Summary... 4 Introduction... 4 The Size of the Potential Prize... 5 Unique Characteristics
Open Open Open Open Digital High Street 2020 Report Digital High Street Advisory Board March 2015 POST LIBRARY BAKERY Digital High Street Advisory Board Chair: John C Walden, Chief Executive, Home Retail
Government ICT Strategy and Action Plan to 2017 June 2013 Forewords From the Minister of Internal Affairs The Government has brought the challenge of managing ICT front and centre. We are serious about
More than making things A new future for manufacturing in a service economy A Knowledge Economy programme report Andrew Sissons March 2011 More than making things 1 Contents Executive summary 3 Introduction
Bima Poa A PROVIDER-DRIVEN HEALTH PLAN IN KENYA Introducing Bima Poa Bima Poa, which means cool insurance in Swahili, is a provider-driven health plan in Western Kenya. It combines health insurance for
Identity and access management as a driver for business growth February 2013 Identity and access management (IAM) systems are today used by the majority of European enterprises. Many of these are still
Mobile Usage at the Base of the Pyramid in South Africa December 2012 An infodev Publication prepared by Research ICT Africa and Intelecon Mobile Usage at the Base of the Pyramid in South Africa December