Latest Post for the World Bank CGAP: Smartphone-Led Digital Finance: Three Areas to Watch

This post was published on the World Bank CGAP website here.

The rapid uptake of smartphones stands to enable a transformational opportunity for digital finance. Last year, less than a third of all connections in developing regions were smartphones, while in the next five years, four in every five smartphone connections globally are predicted to come from developing regions. While basic and feature phones aren’t going extinct in the near future, smartphone-based connectivity presents an opportunity to drive forward digital finance efforts where they have yet to take off.

GSMA’s “From Feature Phone to Smartphones: The Road Ahead”

This dramatic trend also raises important questions concerning meaningful access and design for lower-income consumers as well as privacy and data security, as flagged in CGAP’s recent publication, Doing Digital Finance Right.Here are three areas in particular for the digital finance field to watch as more smartphones make their way into the hands of financial consumers in the developing world: new functionalities, new players and new risks.

New Functionality

At the end of last year, there were almost 300 million mobile money accounts, but more than 60% were inactive. Mobile money usability research in India found that on average more than 25 errors were made trying to complete a single financial transaction on feature and basic phones. In contrast, smartphones aren’t constrained by USSD-based interactions, which require numerous steps and are prone to timeouts, providing the potential for more intuitive, advanced services.

With the launch of GCash, Lenddo, M-Ledger, pesaDroid and Zuum, we saw the first wave of these more icon-driven and dynamic digital finance apps in emerging markets. More experimentation is under way. For example:

As these apps gain traction, there is an opportunity to move away from error-prone, one-size-fits-all mobile money services and iterate towards more intuitive and and tailored solutions.

New Players

The flourishing Android smartphone ecosystem is not only driving down prices — as low as $40 on India’s ecommerce platform Flipkart — it’s also opening up market entry opportunities to new players. At the beginning of the year, Xiaomi, now the world’s third largest smartphone maker, launched an interest-bearing mobile wallet; Google recently launched Android Payand is in the process of introducing a peer-to-peer payments app; and this month, Samsung has started trialing its new payment service in South Korea.

Visualization of Android operating services across 682,000 surveyed devices by OpenSignal

The financial inclusion field should also be paying particular attention to efforts tackling costly mobile data rates. This area is fertile ground for new business models and partnerships for serving low-income customers. For example:

As more service providers enter the ecosystem and partnerships solidify, there is an opening for competition to not just drive down prices but also continue to catalyze new mobile financial services.

New Risks

In 2015, the amount of mobile data traffic around the world is expected togrow 59%compared to last year. As a main contributor, smartphones raise the stakes on data privacy and security measures, and consumers are worried, at least in some markets and some segments. A survey of more than 11,000 mobile internet users across Brazil, Colombia, Indonesia, Malaysia, Singapore, Spain and the UK found that 83% have concerns about sharing their personal information when accessing the internet or apps from a mobile device; however, 80% of users agree to privacy notices without reading them because they tend to be too long or legalistic.

Smartphone data may become harder to protect in this more fragmented ecosystem and ever-changing value chain. Security mishaps, such as what occurred at Venmo in 2014,suggest a prioritization in some companies of growth over security and privacy, and protective measures remain largely reactionary. In addition, reports of data breaches and malicious malware strains are hard to ignore, including an Android-based mobile payment malware that reportedly “could extort money from users by hijacking personal information and spoofing bank apps into sharing personal data.” This impacted users in more than 100 countries including, for example, over sixty thousand users in Vietnam.

As providers continue to garner richer user data through smartphone apps, the leaders in this mobile ecosystem will need to have better solutions and clearer answers to consumer concerns about the safety and privacy of their data. Last year, 6,000 consumers in 12 countries were asked the question, “If you are considering trying a mobile money transfer service, what would make you try it sooner?” Details of security and privacy measures were the top answers cited, and even more pronounced by those surveyed in emerging markets like India, Brazil and China regarding mobile payments.

In Conclusion

With these three trends converging alongside the unprecedented proliferation of smartphones to all corners of the world, what remains to be seen is how digital finance will co-evolve and keep pace with mobile technology’s advancement. However, what is clear is that those in the digital finance space that aren’t experimenting with this new functionality, fostering these new partnerships and coming up with cost-effective and robust ways to mitigate these new risks, may very well be left behind.

Profiled In The Wall Street Journal! Globality Wants to Turn Online Connections Into Real-World Success

Article originally from The Wall Street Journal here (excerpt below)

Globality founder Eric Tyler

Globality’s algorithm is based on research from Stanford UniversityMassachusetts Institute of Technology and Osaka University showing that strong online networks correlate with offline success. Studies comparing entrepreneurs’ use of social media with their business success found that those who were well-positioned in online networks were the most successful.

Eric Tyler got the idea for Globality last year while participating in Unreasonable at Sea–a program in which a group of entrepreneurs boarded a ship and traveled to 13 nations in 106 days. They met with investors, government officials and other entrepreneurs to learn how to turn their startups into global businesses. Mr. Tyler, an adjunct fellow at the New America Foundation, had been invited to share his expertise in mobile technology with the entrepreneurs and to write about the trip.

In each port, he asked entrepreneurs about their challenges, and frequently, they cited the difficulty of building networks that would position them for success. After returning to the U.S. he founded Globality and launched it in November.

Simply having a lot of virtual connections doesn’t guarantee a high score from Globality, especially if most of the connections are in the same location or are in the same industry. The system maps out the global reach of your network, finds the gaps in it, and helps identify people in various locations you should get to know. As you extend and diversify your social-networking ties, your score improves.

One Globality user, Catlin Powers, co-founder of One Earth Designs, scored a respectable 286 when she put her network to the test recently. Ms. Powers, whose company makes SolSource, a solar-cooking product, has strong entrepreneurial and scientific connections. With Globality’s help she said she hopes to expand her network among social entrepreneurs and to make new ties in other fields, such as media and retail.

Globality also provides users with access to more than 1,000 tools that entrepreneurs have found useful, such as online courses and project-management and project-design resources, Mr. Tyler said. These services and the network scoring are free to individuals. But Denver-based Globality plans to profit through enterprise partnerships, including alliances with corporations that want to score their own social-network following.


The Momentum Behind the Entrepreneur Movement

This article was originally written for Huffington Post.

Still overcoming their sea legs, the founders of 15 social enterprises took to the stage at the State Department to pitch their technology-driven solutions. After travelling to 13 countries with the shipboard program Unreasonable@Sea, they had finally arrived at their last destination and were standing in front of a crowded amphitheater of government leaders, business executives and social innovators.


Their lightning talks, with slides rotating non-stop every 20 seconds, showed their impressive entrepreneurial efforts: capturing carbon pollution from factories in India and processing it into materials used to make Boeing airplanes; expanding a fleet of sailing drones that were used to clean oil spills in the gulf of Mexico to other needy marine environments; spreading teacher training software being utilized in more than 3,000 schools in India to better achieve educational outcomes in other parts of the world; among other bold efforts.

During the event, the State Department’s Director for Global Partnerships, Thomas Debass, announced, “we believe throughout the State Department that these models are game changing.”

In many ways, these hybrid companies are changing business as usual by not only balancing social impact and financial returns but also by blurring borders by prioritizing needs above country’s boundaries. “Communities approach us to develop our products,” Scott Frank, founder and CEO of One Earth Designs, explained to me after his presentation. “We collaborate in the design and ideation, and we work together to test, iterate, and refine in-field to ensure the product meets both the needs and wants of users.”

Working in tangent with Himalayan populations in China, Frank’s company developed a solar-powered cooking stove that can abate approximately four tons of carbon dioxide a year and reduces as much as 70 percent of the fuel they use. The product stemmed from the nomadic populations concern with smoke being emitted from their wood-fired and coal stoves (globally, it is estimated that these pollutants contribute to four million premature deaths a year). One Earth Designs is the first company based in China to be certified as a B-Corp, joining the likes of Patagonia and 732 companies that meet the nonprofit’s legal and performance requirements of “benefiting society as well as their shareholders.”

However, as these social entrepreneurs break the molds of traditional business, they are being confronted with uncertainty that comes with this unchartered domain. “Across many geographies we’ve come to see a variation among definitions of social entrepreneur,” Frank explained to me. “In some cases, people see this term in a positive light. In others, it elicits confusion or skepticism.”

And this confusion is causing some traditional investors to shy away from social enterprises due to an uncertainty, in the end, of how they prioritize both monetary and social returns. However, this sector is also evolving, and increasingly a new type of investor – referred to as impact investing – is building metrics and filling this gap. Last year, an estimated $4 billion worth of impact investments were made, and this amount is expected to reach $1 trillion in the next decade, according to a report by J.P. Morgan.

Although crucial, funding is just one piece of the puzzle. This new breed of entrepreneurs also requires support systems to evolve with them. Unreasonable@Sea is one of the more elaborate programs to rise to the challenge. The business accelerator is focused on building entrepreneurs’ networks by sailing around the world and bringing together a collage of different mentors on the ship including Archbishop Desmond Tutu (Nobel Peace Laureate), Matt Mullenweg (founder of WordPress), and Hunter Lovins (Time Magazine Hero of the Planet), among others.

The bold and borderless endeavors of these social entrepreneurs are also quickly inspiring a larger global movement. And it is these increasingly plugged-in and globally engaged supporters that are proving to be a crucial platform and legitimizing network for these social entrepreneurs. In the end, policymakers, funders, and social innovators are smart to not overlook the momentum behind this increasingly global and connected movement. And although some will dismiss it as naive and youthful, the creative bravery of its pioneers and resoluteness of its supporters will make you reconsider.

Entrepreneurs take to the seas for inspiration

This article was originally written for CNN International.

What happens when you mix 11 budding startups with Google executives, Stanford professors, a Nobel Peace Laureate and 600 college students and put them on a ship to circumnavigate the world?

The project

An experiment launched this month called Unreasonable at Sea hopes that this eclectic group will unleash global entrepreneurship.

Continue reading Entrepreneurs take to the seas for inspiration

What is the universal impact of mobile technology?

Last week, as part of their Mobile Economy Project, the Brookings Institution invited me to participate in panel discussing the universal impact of mobile technology. The event highlighted how mobile technology is affecting economies, politics, education, and healthcare, and only just getting started. In my remarks, I argued three main points: Continue reading What is the universal impact of mobile technology?

Research Update: A New Direction for Financial Inclusion in India?

After months of research, data collection and interviews with almost 30 of India’s leading financial institutions, colleagues and I released a report this month titled “From Social Banking to Financial Inclusion: Understanding the Potential for Financial Services Innovation In India“.

I was excited to see that The Wall Street Journal wrote up a nice summary of some of the takeaways from the research here: “Why So Few Indians Have Bank Accounts” along with the social enterprise blog, Next Billion: “Innovative Banking Strategies for the BOP in India“.

Continue reading Research Update: A New Direction for Financial Inclusion in India?

Idea for Mobile App to Assist Low-Income Families Wins Award

I’ve been excited by the recent recognition and support shown for a project a colleague and I have been working on in our free time called MOOLAH, which is a mobile application that seeks to empower low-income individuals with personalized financial information and services (more details in the press release below).  Last week, the App design won an award in the US Treasury’s MyMoneyAppUp Challenge and also got some airtime in the White House’s “West Wing Week” Video.

(The press release below was originally posted on The Ladder)

Continue reading Idea for Mobile App to Assist Low-Income Families Wins Award

Mobile phone data: the oil of the digital age

This post was originally written for The Guardian.

When it comes to real-time data on the behavior of emerging markets, mobile phones might offer the best glimpse into this unpredictable and rapidly changing demographic, says Eric Tyler.

Three quarters of the world’s more than six billion mobile phones are located in the developing world, and the ubiquity of these devices in under-served areas provides valuable digital traces of activity that have never existed before.

In particular, there is an unprecedented and largely overlooked opportunity to harness this digital data for global development efforts. From tracking the outbreak of diseases to better understanding unrepresented populations, a few promising examples are coming to light, and this mobile phone data is even proving to offer lifesavings insights.

In the aftermath of the Haiti earthquake two years ago, the largest mobile phone network in Haiti provided anonymized mobile phone data to help coordinate relief efforts and quantify displaced populations.

Continue reading Mobile phone data: the oil of the digital age

Event: Networked Nation – How Technology Is Transforming The Economy

I recently participated in a panel hosted by The Atlantic and National Journal to discuss how technology is transforming the economy and the way individuals interact with companies and institutions. Clive Crook from The Atlantic who was moderating the panel (and did a great job) put me on the spot right at the start by asking how I saw technology disrupting the norm in my work and research. See the video of my panel below: Continue reading Event: Networked Nation – How Technology Is Transforming The Economy