FS for the unbanked - mobile money

There are 1.8 billion people in the world who don’t have access to formal financial services like banks. Many of these people can, however, access a mobile phone.

In this article I discuss mobile money which allows users to deposit, transfer and withdraw money using text messages. Mobile money increases financial inclusion by bypassing the need for banks, allowing people to use mobile networks instead.

Banking facilities for the unbanked

M-Pesa is a mobile money service (owned by Vodafone and its Kenyan associate, Safaricom) that launched ten years ago in Kenya, and now serves almost 30 million customers in 10 countries.

Its success shows us how services like this can provide much more than just convenience – they help improve the lives of people in the developing world.

Many Kenyans lack access to banking infrastructure because they live remotely or earn too little for banks to give them an account, but 83% of people over the age of 15 have access to a mobile phone. M-Pesa has made financial transactions accessible to this majority, and transformed many lives.

Prototyping the service

Vodafone, with help from a grant from the Department for International Development (DfID), originally worked on the idea of microfinance loans for the unbanked that would work with just a basic feature mobile phone. This was part of their Corporate Social Initiative.

They piloted a prototype service in Thika, Kenya. But what they found in practice was that people who received the loans were actually using the service to send the money to other people.

So Vodafone adjusted the project to focus purely on transmitting money from one person to another, which was clearly the greatest user need here.

How it works

Safaricom has a distribution network in place that is regulated by a bank.

To get started you buy a prepaid mobile phone and a SIM card that’s enabled for mobile money transfers, and set up a PIN.

M-Pesa ‘agents’ at kiosks on street corners have a pre-loaded account with Safaricom. They buy and sell prepaid mobile airtime and effectively function like bank branches, taking a small per transaction commission.


You can add money to your account by depositing cash with an agent, and the agent sends you a text message adding that amount to your balance.

To make a transfer, you enter the mobile number of the person you wish to transfer money to (the payee) and the amount you wish to transfer, plus your PIN. Money is now transferred to the payee.


To withdraw the money they have received, the payee takes their phone to an M-Pesa agent. They enter the agent’s ID, their own PIN, the amount they wish to withdraw and transfer the eMoney to the agent. The agent then gives the payee cash.

Although still cheaper than using banks or money transfer services, there is a small per transaction fee. For a typical transaction amount of £30, roughly 96p is lost along the way, and no interest is accrued on savings.

7 positive outcomes

  1. Since 2007, access to M-Pesa has lifted an estimated 194,000 (2%) of Kenyan households out of extreme poverty. This is because people can save more efficiently and have a more secure method of storing money as their funds are held virtually.
  2. It provides people with a way of lending and borrowing money. In particular, it has helped Kenyan farmers manage financial uncertainties. When they experience crop failures or droughts they can use a wider network of support to lend to each other, rather than relying on networks formed close by who are likely to have experienced the same problem. Lending to one another is often the only option farmers have because banks don’t want to lend to them, considering them to be higher risk.

  3. People can send money safely without having to travel long distances or paying high rates. In rural areas, it’s common for a family member to get a job in the city and send money back to their relatives. Traditionally they would either travel long distances to bring the cash back to their family, or entrust a bus driver with it who risked getting robbed along the way. Mobile money removes this barrier.

  4. People without credit cards can make online purchases, allowing them to get better deals and pay for services more easily.

  5. People get their full wages when paid via mobile money. When paid in cash, money can be skimmed off by various corrupt parties along the way. Mobile money prevents this from happening.

  6. It allows businesses to extend their reach into rural areas where they were unable to before. For example a remote village in Kenya has a ‘pay per use’ well that dispenses water by payment through an M-Pesa enabled water key.

  7. The most interesting outcome for me is that access to mobile money has helped an estimated 185,000 women in Kenya move from subsistence farming to business and sales occupations. Women in male-headed households who earn a secondary income can manage their own separate income with mobile money services, as opposed to the cash being spent on the whole household. This provides them with the opportunity to set up their own business and the apparatus to manage it.

Iterative design

What’s particularly interesting in this case study from a UX point of view, is that the service that was realised is an iteration of the original idea of micro-finance using mobile phones. Through service prototyping, Vodafone identified the real user need which was a safe way for people to send money.

There are so many social norms like banking that work only for people who are fortunate enough to be able to access these services. Innovations such as mobile money have filled a gap in the market and in doing so are helping people to take their lives in new directions, that weren’t open to them because of the constraints that existed previously.

What’s next

There are many other FS businesses out there that are managing to turn a profit without having to compromise on ethics and humility. Next month I’ll be moving my focus to the developed world, where the new InsurTech start up Lemonade is shaking up the culture of insurance by taking a philanthropic approach.

Have you heard about or are you involved in any ethical endeavours within FS? If so I’d love to hear about them.

A User Experience Consultant whose background is art and anthropology, Anna puts her eclectic skills to use in helping create simple and beautiful interfaces, that people will delight in using.