An Emerging Platform: From Money Transfer System to Mobile Money Ecosystem

Jake Kendall, Bill Maurer, Phillip Machoka, and Clara Veniard An Emerging Platform: From Money Transfer System to Mobile Money Ecosystem In the past, the emergence of new network infrastructures (canals, railroads, elec- tricity, telecommunications, the Internet, etc.) has had a profound effect on the world economy. 1 New ways of moving people and goods, energy, and information often led to waves of innovation, and over the centuries these innovations have transformed markets as existing firms restructure and new firms emerge to cap- ture new opportunities. Mobile money, while often described as a money-transfer product, is in fact a network infrastructure for storing and moving money that facilitates the exchange of cash and electronic value between various actors, including clients, businesses, the government, and financial service providers. As with many other types of network infrastructure, mobile money displays the characteristics of a platform, as it brings together financial service providers and clients and provides them with a core functionality they can use to transact, and which can be incorporated into various financial products. 2 Platforms such as the Internet, Facebook, iPods, smart phones, video games, and financial and com- mercial exchanges also have great power to stimulate innovation and change exist- ing business models. As a network infrastructure and a platform for financial serv- ices innovation, mobile money appears to have the potential to radically reconfig- ure how retail finance is handled in developing countries. There are a number of fundamental challenges to reaching the poor with financial services that have blocked market growth in the past. Perhaps the key Jake Kendall is Program Officer with the Bill & Melinda Gates Foundation. Bill Maurer is Professor of Anthropology and Law at the University of California, Irvine, and Director of the Institute for Money Technology and Financial Inclusion. Phillip Machoka is a Lecturer in Information Systems and Technology at the United States International University, Nairobi. Clara Veniard is Associate Program Officer at the Gates Foundation. The views expressed herein should be considered the personal views of the authors alone and may not reflect the views of the Gates Foundation. © 2012 Jake Kendall, Bill Maurer, Phillip Machoka, and Clara Veniard innovations / volume 6, number 4