The AudienceScapes project, launched by InterMedia with seed funding from the Bill & Melinda Gates Foundation, conducted national surveys in Kenya in mid-2009 and Tanzania in mid-2010 which included questions about use and knowledge of mobile money. Researchers have highlighted the significant differences between Kenya and Tanzania in geography, population density, economic development and access to financial services, which put Tanzanian m-money service providers at a relative disadvantage. Indeed, at the two-year point, the surveys showed that only 11.5 percent of Tanzanian adults had used an m‐money service, versus 56 percent of Kenyans.

Building and managing a cash merchant network is the least scalable component of a mobile money scheme, as stores need to be sought out, evaluated, contracted, trained, branded and supervised individually. And driving sufficient transaction volumes through that channel is critical in order to make sure that the cash merchants continue to invest sufficient working capital to maintain liquidity and promote the service. We use a metric of 50 transactions per agent per day as the kind of metric that makes a store truly dedicated to the mobile money proposition, or rather a point-of-no-return.

The Financial Services for the Poor team at the Bill & Melinda Gates Foundation sees as its core objective in its mobile money work stream to help develop scalable, profitably sustainable and internationally replicable models that bring high volume, low value transactional platforms to the communities where poor people live and work. We believe this can be an effective mechanism to deliver convenient, safe and affordable savings services to poor people, which in turn can help them better deal with the socioeconomic opportunities, life cycle events, uncertainties and risks they face.

The diffusion of M-PESA in the Kenyan economy has been rapid and deep. While M-PESA was seen early on as a no-frills, if somewhat hi-tech, product aimed at the unbanked, it was initially adopted more widely by the better off. However, over a short period of time the service has spread to households who are poorer, less well connected to the financial system, and located in more remote areas. This pattern of technology adoption mirrors that of other product and service innovations, which are often first used by the better off. But the speed at which the service has reached less well-off Kenyans, and their apparently high valuation of it, is unprecedented, especially in the developing world.

Due to its timing at the end of the conference, the day-long Leadership Forum was a good venue for distilling some of the big-picture regulatory questions that emerged during the preceding sessions. Fairly quickly, Leadership Forum panelists and participants converged on three broad areas of consensus. First, high-quality, accountable agents are necessary for successful mobile money deployments. Second, proportionality in applying customer risk management rules is essential. Third, engagement with financial regulators is a critical success factor for mobile money deployments. The challenge in the Leadership Forum was to discuss just what these broad points meant at a more granular level.

Finally, M-PESA is connecting with banks in Kenya. And with a big bang too, as two big players in the financial inclusion scene in Kenya are joining forces: Safaricom (the mobile operator behind M-PESA) and Equity Bank are launching M-KESHO, a co-branded suite of financial products that will ride on the M-PESA transactional ‘rails.’ Three years ago, there were 2.5 million bank accounts in Kenya, out of a population of 39 million.

A low-income woman walks into a bank branch in Bangalore, India, with the intention of opening a bank account. Mubeena Taj does not speak or read English, but the bank account opening forms are bilingual, so she can manage with her limited Hindi reading. She is a very low-income customer and not one who helps the bank’s profit margins, but the Reserve Bank of India has mandated that all banks make available a No Frills Savings Account which requires zero minimum balance and can be opened with reduced KYC requirements.

During the summer of 2009 , an extensive research initiative led by mChek was conducted amongst low-income urban and rural residents in Southern India. Its goal was to understand the processes of managing day-to-day costs in a cash-only environment, and investigate the degree to which branchless banking and mobile money could reduce transaction costs and improve livelihoods.

As regulators confront the challenges of regulating branchless banking, protecting the consumer is often their primary concern. And for good reason. Branchless banking is a new service targeting the least sophisticated customers and introducing new actors such as mobile network operators and retail agents into a sector formerly reserved for well capitalized and regulated commercial banks. As a result, there can be an understandable tendency to err on the side of caution.

But compliance with regulations comes at a cost – and that cost is ultimately passed on to the consumer…

This is a guest post, from Amitabh Saxena. Amitabh started the Alternative Channels workstream at ACCION in 2006 after spending several years in developing credit card products for Capital One’s Innovation Center. He has worked in strategy and implementation of various channels, particularly prepaid cards and mobile, for ACCION’s partner microfinance institutions (MFIs) in Latin America, Africa, and Asia.

Last week in this space was an insightful blog post on the intersection of Mobile Money and Microfinance. I spent a number of years at a leading microfinance network called ACCION International, managing a new workstream I started called Alternative Channels, and last month wrote a comprehensive paper on how microfinance institutions (MFIs) can be a more active stakeholder in the m-banking space. So why and how can mobile operators approach these entities?