> Posted by Arielle Salomon, Account Manager, Entrepreneurial Finance Lab
Providing financial services to entrepreneurs is a challenging operation in developing countries where small businesses may be isolated in a rural village without reliable roads or internet coverage. Service providers must pay the high costs of employing staff to reach out to remote villages while capturing limited revenue from small-scale products. Yet entrepreneurs in these regions need tools like credit and insurance to make investments and grow their businesses as just as do their counterparts in more developed regions.
Mobile phones are changing the financial landscape helping to expand the possibilities of service models. With novel mobile solutions to bridge the financial access gap, innovators can provide entrepreneurs with new tools and opportunities to support their businesses.
Here are a few cutting-edge models rendering financial services more portable:
Portable Bank. Opportunity International (OI) is putting its bank on wheels. With a portable bank that offers savings, loans, and other such financial services regularly circulating within walking distance of clients’ farms or small businesses, entrepreneurs do not have to miss out on business to trek to the bank. OI is developing these portable bank branches in locations around the world. OI also offers electronic wallets that allow customers to make deposits on mobile phones. With this cashless solution, the bank reduces both the risk of client theft/robbery and also the likelihood of staff fraud. OI’s electric wallets are currently in use in Malawi and seven other African countries.
Portable Credit. The Entrepreneurial Finance Lab (EFL) is helping banks, MFIs, and other partners improve operations with portable technology. Not only can loan officers complete credit applications electronically on a mobile phone or tablet, but they can also collect photos and the precise location of their clients with the use of mobile GPS. With near-real-time scoring of the EFL Tool, an application that captures the ability and willingness of customers to repay a loan, banks have the opportunity to pre-approve clients on the spot. The improved efficiency of automated data collection and credit assessment decreases service turnaround time and increases credit access. The EFL Tool has been used in over 20 countries to date and has processed over 50,000 credit applications.
Portable Insurance. The mobile network operator, MTN, has partnered with Hollard Insurance Group to offer Mi-Life, a mobile phone life insurance, which provides entrepreneurs and their families with financial security in the case of death. MTN clients can buy life insurance, pay premiums, and initiate claims using their mobile phones and SMS. By using mobile phone technology that keeps servicing cost low, MTN can offer insurance premiums a low as $0.65 USD/month. If clients have enough money deposited, the entrepreneurs among them can also use their insurance policy as collateral when applying for loans. Mi-Life is available to MTN Mobile Money users throughout Ghana.
Portable Asset Financing. Portable asset financing enables entrepreneurs to invest in costly assets by making small installment payments with a mobile phone. This financial tool opens a large range of opportunities to enable low-income consumers to access utilities and investments. Former head of Vodafone’s Global Payments and M-PESA founder, Nick Hughes, helped develop a company called M-Kopa. M-Kopa enables Kenyans to acquire a device, like a d.light solar home system up front and pay for its use with affordable installments. M-Kopa operates with small computer chips integrated with M-PESA that are inserted into the devices allowing customers to make electronic payments.
Image credit: Entrepreneurial Finance Lab
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