In the world of social innovation, many of the smartest ideas focus on “market inefficiencies” and, in particular, ways of reducing them. As increasing numbers of mobile operators implement airtime transfer systems and mobile money functionality on their networks – particularly in developing countries – opportunities also increase for locally-run microfinance institutions and their customers at the bottom of the pyramid.
In the spirit of social innovation, Ben Lyon recognised the opportunity early. The result? FrontlineSMS:Credit – a first in laptop banking – announced last week at Africa Gathering in London.
The concept is simple:
FrontlineSMS:Credit aims to make every formal financial service available to the entrepreneurial poor in 160 characters or less. By meshing the functionality of FrontlineSMS with local mobile payment systems, implementing institutions will be able to provide a full range of customizable services, from savings and credit to insurance and payroll
The FrontlineSMS:Credit system is in essence a convergence of SMS-aggregating software and mobile commerce systems, which together provide an efficient and accessible platform for microfinance institutions (MFIs) to deliver and track loans via Short Message Service (SMS). Since FrontlineSMS:Credit utilises the widely available GSM wireless telephone network, implementing MFIs need neither an Internet connection nor a permanent office to conduct business. Not only that, MFIs will be able to make use of alternative power sources such as solar panels, allowing them to operate ‘off the grid’. This could provide a comparative advantage for those working in rural and underserved areas.
Based on the successful FrontlineSMS:Medic model, FrontlineSMS:Credit is a new venture, and Ben is currently building his team. He has a range of vacancies for anyone interested in helping develop the concept. A number of large microfinance-based institutions, and major international development agencies, have already expressed strong interest in being part of his “democratising finance” movement. Further details of the project, and current vacancies, are available on the project website at http://credit.frontlinesms.com
Congratulations Ben!
(You can read an earlier article on CreditSMS (now FrontlineSMS:Credit) on PC World here)
Thanks so much, Ken! We couldn’t have done any of this without you. To infinity and beyond!
Cheers,
Ben
What an incredible idea!! A very simple concept all round. Wow!! 🙂 Can’t wait to read more as this thing rolls out. Well done Ben.
Ben,
I think a focus on the BoP is something all of the Mobile Money buzz has not clearly addressed, so excited to see that focus in your work. A key question we continue to ask is whether the efficiencies and time savings MM could generate for an MFI will allow them to focus on reaching the unbanked. In other words, is it a focus on MFIs that is the optimal channel to the BoP?
Looking forward to discussing these questions and many more with you next week!
Cheers,
Scott
really exciting stuff!
@Scott – I wouldn’t say that MFIs are the only channel, but they’re certainly part of the mix, and for something like Ben’s project they’re likely the best place to start. Looking forward to discussing this more with you!
i’m a big fan of disruptive technologies, and this looks like a great example (as medic was when it came out). fascinating to see these spin-offs coming from the core \o/ tech, of which i’m also a big fan
\o/
We were thrilled to hear your news at Africa Gathering about FronlineSMS:Credit. Thanks for coming along!
very pleased to hear about this development which I have been anticipating for a while now. I think there will be a lot of interest in this not just in the developing world but also in communities who are launching local currencies – such as Lewes, Brixton, Totnes and Stroud have done in the UK.
very interesting
SUPER news!!
great news….now we need FrontLineSMS: LaborMarket
@Ed – A big thanks to you for allowing us to announce the launch. Africa Gathering is a great platform for initiatives like this
@Mike – You know about my interest in local currencies and LETS schemes. It’s funny, but we did have a conversation around a similar kind of SMS initiative a year or two ago. FrontlineSMS:Credit will only work on the back of a network operator-provided money transfer system, so we’ll have to wait a little longer in the UK before we can do anything. 🙁
@Joshua – Tell me more!
Step inside the laptop bank http://tinyurl.com/ykfyhlt