Last week I examined how the California-based start-up Wipit is adapting the innovations of M-Pesa for the United States, by building a mobile wallet app that is specially designed and distributed to fit the unique needs and habits of underbanked consumers.
Now let’s look beyond financial services: how are innovations from mobile financial technology permeating other industries? Consider Yaxi – a taxi hailing app in Mexico City. Yaxi connects commuters with reliable, safe taxis. Currently the app is free for drivers and costs passengers a low $1 commission when they choose to pay by credit card through their app (Yaxi collects no commission on cash fares). This all sounds straightforward but for Yaxi to scale successfully, several hurdles must be overcome : 1) taxi drivers must acquire smart phones, and 2) drivers must establish bank accounts. Neither of these things are particularly accessible to taxi drivers - a fragmented, informal, and cash-based industry.
Clearly, drivers need smartphones to use Yaxi’s technology, and in order to get phones in their hands the company is partnering with a major telecom to offer steeply discounted handsets for lease or purchase on installment. Yaxi deducts repayment, along with ride commissions, from the credit card payments that are disbursed weekly to drivers. Driver’s Yaxi revenues thereby mitigate the risk of selling them smartphones on credit- a strategy to looks alot like Safaricom’s new M-Shwari microloan product within M-Pesa. Driver bank accounts are a critical component to this entire process. First, for a small startup to cut thousands of weekly disbursal checks to drivers would be costly and cumbersome compared to electronic transfer. Second, electronic transfer enables Yaxi to easily advance payment to drivers if they face a liquidity crunch. Yaxi not only facilitates drivers’ enrollment in free savings accounts, it provide them with free basic debit cards through a bank partnership. Through Yaxi, drivers not only can increase earnings 10-20%, they can access internet-enabled smartphones, free savings accounts, and basic debit cards for the first time in their lives. In an industry where driver enrollment, loyalty, and switching costs are some of the few barriers to entry, Yaxi is creating a competitive advantage by empowering its drivers technologically and financially.
As companies like Wipit and Yaxi transition Bottom of the Pyramid (BOP) consumers into a mobile world of digitized transactions, individuals who previously existed in informal, cash based economies are building data footprints. That data can be leveraged to better understand them, sell to them, and (hopefully) empower them. InVenture is a mobile tech start-up that is doing this very thing. InVenture brings sophisticated big data analytics to BOP credit scoring. InVenture’s Insight app tracks users’ financial activity (income and expenses). It then uses unconventional metrics to assess credit worthiness of users, and shares qualified leads with financial institutions. Their analysis reduces risk for lenders, and thereby opens the door to affordable credit for more BOP customers. Could Yaxi, which is poised to accumulate detailed data on drivers’ income volume and volatility, do something similar? Only time will tell – but one thing is for sure: the BOP mobile tech explosion is just beginning, and with it will come reams of new information. Let’s hope the visionary entrepreneurs of the world seize the opportunity to use it.